Alcock v. Giberton

Headnote

An instrument, under seal, was executed, upon a sale made by the plaintiff to the defendants, by which the former sold to the latter all his interest in the manufacture and sale of porcelain teeth in the city of New York, with his stock on hand, and the good-will of the business. The plaintiff covenanted to instruct one of the. defendants in the art of manufacturing porcelain and incorruptible teeth, and to furnish him with his recipes therefor. The agreement also contained the following clause: “And the party of the first part will not carry on, or cause to be carried on by any person with whom he shall be interested, the manufacture of porcelain teeth, or impart the knowledge of manufacturing the same to any person, other than as aforesaid.”

It was alleged, in the complaint, that the said art of manufacturing porcelain teeth, in which the defendant was to be instructed, was a secret of the plaintiff, and known to be such by the defendant.

Held, on demurrer, that the covenant in question was valid, and not one in restraint of trade.

Quere, as to the effect of one covenant, void, as against public policy, being united in the same instrument with a valid covenant ?

Ruling of the judge at, Special Term, that, ordinarily, it will not vitiate the whole contract, not passed upon by the court at General Term.

The case arose upon an appeal from an order of Justice Hoffman at Special Term, overruling a demurrer to a complaint, and giving judgment against the defendants, unless they should answer and pay costs within twenty days.

The statements of the complaint, and the points raised, are fully set forth in the opinion of the Judge at Special Term, which is as follows:—

The questions arise upon an agreement, dated the twenty-ninth day of December, 1853, made between the present plaintiff and defendants. By that agreement, the plaintiff engaged to sell to the defendants “all his right, title and interest, in the manufacture and sale of porcelain or mineral teeth hitherto held by him in the city of New York, with all his porcelain teeth contained in the dépóts, with the moulds, machinery, and materials used in con

nection with such manufactory, and also the good-will of the business,” upon the terms therein specified. The good-will was estimated at the sum of $8,000.

The mill and materials, including biscuit teeth, were to be inventoried at theiz actual ■ cost; the othez tools and fixtures, at fifty per cent, below their cost: all the stock and merchantable teeth, at fifty per cent, below their then retail prices, viz., pivot and plate teeth ten cents each, and gum teeth twenty cents each.

The periods and amounts of the payments are then specified. And it was covenanted, that the sale of the good-will of the business, tools, fixtures, and materials, should not be perfected, nor a bill of sale therefor executed, until the payment of $10,000; and of the first-mentioned instalment, agreed to be paid on or before the thirty-first of July, 1854, various particulars, as to the mode of payment, are there stated.

The instrument contains the two following clauses—“ and it is further agreed by the parties hereto, that the party of the first part shall, from the 2d day of January next to the 31st of July, 1854, give directions and instructions to Adrian Giberton, one of the parties of the second part, in the art of manufacturing porcelain, or incorruptible teeth, and also his receipts for the fabrication of the same, and that the party of the first part, will allow and permit the said John Binsse, the other party of the second part, to be present at the tuition of the said Adrian Giberton in the art of manufacturing the teeth as aforesaid, and that the said party of the first part will not carry on, or cause to be carried on by any person with whom he shall be interested, the manufacture of porcelain teeth, or impart the knowledge of manufacturing the same to any person other than as aforesaid.”

The amended complaint contains the following passage, which was not in the original complaint—“ and the said plaintiff avers, that the mode of manufacturing the said porcelain teeth, mentioned in the agreement aforesaid, in the art of manufacturing which the said plaintiff agreed to instruct the said defendant, Giberton, and the manufacture of which, in and by said agreement, the said plaintiff agreed not to carry on, or cause to be carried on by any person with whom he should be interested, and the knowledge of manufacturing which teeth, said plaintiff, in and by the same agreement, stipulated not to impart to any person other than the

said defendant, was a secret with the said plaintiff, and the said defendant knew it was when said agreement was made.”

The want of an allegation of this nature is understood to have been the ground of the allowance of the demurrer to the original complaint. It was supposed that it did not sufficiently appear on the face of the instrument that a secret was disposed of.

With the present allegation, the case appears to be a very plain one.

The cases of Bryson v. Whitehead, (1 Sim. & Stewart, 74,) and Peck v. Jarvis, (10, p. 118,) seem decisive. Here is the sale of a business secret, and an engagement by the vendor not to use that secret in conducting any business himself. The validity of this covenant is to my mind clear. See, upon the subject of such covenants generally, Ramine v. Irving, (7 Marn. & Graing, 976,) and Mullan v. May, (11 Meeson & Welsby, 633.)

The case presents another question which was adverted to by the Chancellor in Jarvis v. Peck. I had decided that case as Assistant Vice-Chancellor, (see Hoffman’s Reports, 497,) and placed the decision on the ground that there was a large consideration for the bond, entirely independent of the covenant supposed to be in restriction of trade. ' The Chancellor, upon the appeal, notices some cases in support of this view, but deemed it unnecessary to pass upon it. (See 10 Paige, 119.)

In the present case, the consideration was a sale of the good-will, which the parties estimate at $8,000, and of the stock of materials and tools, as well as of teeth already made, of a large, though unascertained value. The question is, whether, if the particular covenant is void, the contract may not still be sustained upon these considerations.

In addition to the numerous authorities cited in the opinion in Hoffman’s Reports, and those referred to by the Chancellor, the following may be noticed:—Oheseman v. Naseby, in the House of Lords, (1 Br. P. C. 234,) settled that a bond given by a hired servant or apprentice, not to exercise the trade of a linen draper after the expiration of her time of service, at any place within half a mile from the dwelling house of the party, or any other house, she should remove to, was valid.

Price v. Green, (16 Meeson & Welsby, 347,) applied the same principle to a covenant, and determined that where the covenant

was not to practice .the trade of a perfumer in London or "W est-minster, or within six hundred miles from the same respectively, the covenant was void as to the latter clause, but good as to the cities. In this case, the distinction is noticed betwen void and illegal covenants. The stipulation as to the six hundred miles was of the former class. The fact was also adverted to, that the whole covenant, doubtless, formed the consideration for the payment of the £1,500, the amount given; but it was answered, that the rest of the restriction formed a sufficient consideration for the agreement.

This decision followed and supported that of Mullan v. May, (11 Meeson & Welsby, 643.) In this case, the doctrine upon these covenants in restraint of trade, is stated and explained by Baron Parke, as carefully as in any case of which I am aware. The chief test is, whether the contract will be prejudicial or not to the .public interest. It was held in the case, that a covenant that the party should not carry on the business of a surgeon-dentist in London was valid, but the further restriction, “or in any of the towns or places in England or Scotland, where the plaintiffs, or the defendant, on their account, might have been practicing before the expiration of his service,” (as an assistant,) was void.

It cannot be questioned that in many cases much difficulty must attend the application of this doctrine. In the present case, for example, probably the principal consideration of the contract was the agreement to abstain from carrying on the business, or instructing others in it. If this is void, and cannot be enforced, it would be hard to sustain the contract on the ground of the other portions of the consideration.

This view was considered by Baron Parke in Price v. Green, before stated, and the rule of that, and the many other cases seems to be, that if a sufficient valuable consideration remained, after rejecting the illegal one, to support the contract, the court would enforce it.

On both grounds, I am of opinion that the demurrer must be overruled, and judgment be rendered for the plaintiff upon the same, with liberty to answer in twenty days.