Sanford Dairy Co. v. Sanford — 114 A.D. 862

Majority

p. 862

Sanford Dairy Company, Respondent, v. Milton L. Sanford, Appellant.

Second Department,

July 24, 1906.

Headnote

Partnership—covenant against injury to business by retiring partner— when same too indefinite for enforcement — solicitation of customers enjoined.

A covenant in a partnership agreement that upon withdrawing from the firm no partner shall -“thereafter carry on the same kind of business in such manner as to interfere with, draw any customers from, be in opposition to, or in any way hurt or damage the business already established and carried on by said firm ” does not prevent a retiring partner from carrying on the business in the same locality, but means only that he shall not do so in a manner to interfere with or draw any customers from or damage, etc., the old firm.

As the covenant is so indefinite as to what shall constitute a violation thereof, equity will enforce the same only so far as its meaning is not open to doubt. Under such covenant it will merely enjoin direct or indirect solicitation of the customers of-the firm by a retiring partner.

p. 863

Appeal by the defendant, Hilton L. Sanford, from an interlocutory judgment of the Supreme Court in favor of the plaintiff entered in the office of the clerk of the county of Orange on the 30th day of June, 1905, upon the decision of. the court, rendered after a trial at the Orange Special Term, restraining and enjoining the defendant from violating a certain covenant in a contract between partners in the firm of P. E. Sanford & Co.

The defendant and Pierson E. Sanford were copartners carrying on business as dealers in milk and other dairy products. Their partnership agreement contained a provision that “ Upon the retirement of any partner upon the dissolution of said copartnership by reason of the expiration of its term or otherwise, he shall not thereafter carry on the same kind of business in such manner as "to interfere with, draw any customers from, be in opposition to, or in any way hurt or damage the business already established and carried on by said firm.”

In an action brought by the defendant for that purpose the said partnership was dissolved, and all of the assets thereof sold by a receiver, “ including the good will of the said business heretofore conducted by the said copartnership, together with the rights to enforce any and all of the covenants and agreements in said copartnership agreement contained ” (i. e. the partnership agreement of the said partnership).

The said copartner Pierson E. Sanford became the purchaser of all thereof at the sale, and he afterwards transferred the same to the plaintiff, a corporation, including the right to enforce the said covenant, and became a stockholder and officer of the plaintiff.

Other facts are in the opinion.

Henry Bacon, for the appellant.

Edwin S. Merrill, for the respondent.

The defendant was not precluded by the partnership agreement from' carrying on the same kind of business, nor restricted or excluded therein in respect of territory, on retiring from the partnership business. The agreement is only not to carry on such business “ in such manner as to interfere with, draw any customers

p. 864

from, be in opposition to, or in any way hurt or damage the' business already established and carried on by said firm.” A controversy can arise under this in respect of numberless acts, business methods and policies of the defendant in his new business in respect of whether they violate the agreement. How is it to be determined whether they “ interfere with, draw any customers from, be in opposition to, or in any way hurt or damage the business ” of the plaintiff? Many or most cases of alleged ’violation would involve the consideration of the question whether they in fact amounted to carrying on the business in a way to affect the plaintiff’s business within the general prohibition of the agreement. Courts of equity will not take upon themselves the burden of interpreting and enforcing an agreement as imprecise, as infinite in its details and ramifications, as obscure as this. Parties have no right to cast such a burden on courts of equity; on the contrary, it is for them to make such an agreement specific. It was for the parties in this instance to have specified the things which would interfere with, hurt, be in opposition to, or draw away the customers of the business (Caswell v. Gibbs, 33 Mich. 331 ; High on Inj. [3d ed.] § 1178; Stokes v. Stokes, 148 N. Y. 708 ).

This agreement should be enforced only in the respect in which it is not open to doubt. Beyond doubt it prevents the defendant from soliciting the plaintiff’s customers, directly or indirectly, for himself, or any one else, and in this respect only should it be enforced. The trial court has found that he did this in respect of five customers. The interlocutory judgment should have been restricted to that way of violating the agreement, and empowered the referee to take evidence of the damage done in the five cases, and like cases, and no other evidence.

The agreement includes not only the old customers of the partnership, but all who have since become customers of the plaintiff’s business ; it contemplated a changing and growing business.

The interlocutory judgment should be modified as above, and as thus modified affirmed, without costs.

Hirsohberg, P. J., Hooker, High and Miller, JJ., concurred.

Interlocutory judgment modified in accordance with opinion by Gaynor, J., and as modified affirmed, without costs.

Cases cited

Stokes v. Stokes 148 N. Y. 708 N.Y. 1896-03-13 p. 864