Fullerton Lumber v. Torborg

1955

Court: Wisconsin Supreme Court

Facts: Torborg came back frm WWII and worked for Fullerton. He was an important manager guy in their lumber yard. They offered him a pension, and this came with an agreement that included a non-compete clause. He signed, then later quit to open his own lumber business.

Posture: Appeal by plaintiff after the initial complaint was dismissed at trial.

Issue: Are the terms of the non-compete clause unreasonable?

Holding: Not wholly. Reversed and remanded for determination about reasonable length.

Rule: Previously, Wisconsin had an all-or-nothing rule: terms of contracts were indivisible. Now they adopt a blue-pencil test, where if one term can be severed from the others and the remainder of the contract can stand, that will not render the whole thing void.

Reasoning: 10 years is too long, but defense counsel hinted that 5 would be reasonable.

Dicta: Dissent: divisibility of terms should be found in the contract itself, not read in. How can the court go about determining what duration is reasonable, if the parties made an agreement?