Tode v. Gross — 22 N.Y. St. Rep. 818

Majority

p. 818

Adolph Tode and Ferdinand Wolff, Resp’ts, v. Lena Gross, App’lt.

(Supreme Court, General Term, Second Department,

Filed February 11, 1889.)

Headnote

1. Husband and wife—Covenants of wife fob husband.

Defendant, who was the owner of certain lands with buildings and necessary fixtures for manufacturing cheese, sold the lands together with the secret of the manufacture of the cheese to plaintiffs, and covenanted for herself, her husband and two others that they would refrain from communicating the secret to any one other than the plaintiffs, nor engage in the business of manufacturing or selling such cheese for a certain period of time. Held, that defendant was liable for a violation of the covenant by her husband.

3. Contbacts—Validity—Rbstbaint of tbade.

Such covenant is not void as in restraint of trade.

3. Same—Measube of damages.

When the contract prescribed a penalty of $5,000, “ which sum is hereby named as stipulated damages ” for a violation of the covenant, Held, that in view of the extreme difficulty, if not the entire impossibility of definite proof of damages in case of breach, defendant will be held liable for the sum named. .

Appeal from a judgment rendered upon a trial of the •action before the court without a jury at a special term, Orange county.

p. 819

Henry C. Botty (John Fennel, of counsel), for app’lt; Bacon & Merritt, for resp’ts.

—The facts are not in dispute. The defendant was the owner of certain lands in Orange county with buildings and necessary fixtures and appurtenances for manufacturing cheese. The business was conducted by defendant aided by Conrad Gross, her husband, J ohm Huffman and August Gross.

The cheese was of a certain kind and was manufactured by a secret process known to them. It was part of the arrangement of the sale of the land that this secret was to be communicated to the plaintiffs, and that they were to continue the manufacture of the cheese under the same names, and that they were to have the sole right. To that end this covenant was made and executed by the defendant and delivered to the plaintiffs: “and that she (meaning the defendant herein), and the said Conrad R. Gross, John Huffman and August Gross will refrain from communicating the secret recipe and instructions for the manufacture of said cheese, or either of them, to any and all persons other than the above-named parties of the second part (meaning the plaintiffs herein), and will also after the 1st day of April, 1885, refrain from engaging in the business of making, manufacturing or vending of said cheese, or either of them, and from the use of the trade mark or names of either of them, hereby agreed to be transferred in connection with the said cheeses, or either.of them, or with any similar product, under a penalty of $5,000, which sum is hereby named as stipulated damages to be paid by the party of the first part (meaning the defendant herein), or her heirs, executors, administrators or assigns in case of a violation of the party of the first part (meaning the defendant herein), of this covenant, of this contract, or any part thereof, within five years of the date hereof.”

The deed and covenant were delivered in 1884, and the-plaintiffs entered upon the business of manufacturing cheese under this secret process. In May following, the defendant’s husband, Conrad R. Gross, who was in business in Hew York selling cheeses was discovered to be selling cheese with the same maks and being a similar product to that made by defendant before the sale to plaintiffs, and by them afterwards. It was part of the covenant that the defendant’s husband with the others should not sell.

A married woman may contract with respect to her separate property the same as if she was single. The covenant is not one in restraint of trade. She sold a secret process and the trade-mark of the product manufactured. Diamond Match Co. v. Roeber, 106 N. Y., 473 ; 11 N. Y. State Rep., 47; Jarvis v. Peck, 10 Paige, 118; Hodge v. Sloan, 107 N. Y., 244 ; 11 N. Y. State Rep., 770. The agreement established $5,000 as liquidated damages. The words men

p. 820

tian a penalty of $5,000, but add the words u which sum is hereby named as stipulated damages,” to be paid in case of a violation within five years. In view of the extreme difficulty, if not "the entire impossibility of definite proof of damages in cases of breach, the words should be held to convey their strict meaning. Bagley v. Peddie, 16 N. Y., 469 .

The plaintiffs sold to the defendants the secret process, and received a large sum. The secret was known to three other persons. She covenanted that they would refrain from communicating the process and from selling the product. She must perform her covenant. Tompkins v. Dudley, 25 N. Y., 273 ; Beebe v. Johnson, 19 Wend. 500 .

The judgment should be. affirmed, with costs.

All concur.

Cases cited

Beebe v. Johnson 19 Wend. 500 N.Y. Sup. Ct. p. 820