Sander v. Hoffman — 39 N.Y. Super. Ct. 307

Majority

p. 307

WILLIAM SANDER and CHRISTOPHER C. EARL, Plaintiffs and Appellants, v. GEORGE M. HOFFMAN and SOPHIA HOFFMAN, Defendants and Respondents.

Headnote

RESTRICTION OE TRADE.

Contract op sals op business, and good-will op the same, and

COVENANTS TO ABSTAIN PROM PROSECUTING LIKE BUSINESS WITHIN CERTAIN LIMITS.

The defendants sold the good-will of a provision business, at 228 Third avenue, to plaintiffs, and covenanted with them that they would not engage in a similar business, for five years, within certain limits. Within the stipulated time, defendants resumed and engaged in a like business at 805 Sixth avenue, beyond the limits prescribed. Some of their former customers residing within the prescribed limits sought them in their new place of business, and solicited them to supply them with meats, &c., and they did so, sending their agent or messenger every day to their houses, situate within the limited district, to receive orders and afterward s'filling the orders given. The orders were not originally sought or procured by defendants, but proceeded from the customers.

The plaintiffs claimed this to be a breach of the covenant of defendants.

Held, by this court, that the acts of the defendants did not constitute a breach of said covenant.

Such contracts are upheld only when it appears that the public interest or convenience will not he prejudiced. The public comfort and welfare are the controlling considerations. A construction or decision that would make defendants liable under the circumstances in this case, would he harsh and unjust. It would be an unwise interference with the usual course of business and trade, and the requirements of public convenience and comfort, which should never be prejudiced by contracts imposing restraints upon traffic.

The following cases reviewed and approved : Lawrence v. Kidder, 10 Barb. 641 ; Smith; Smith, 4 Wend. 468 ; Turner v. Evans, 2 Bilis & Blackburn, 512; Lee v. Ebrhardt, 19 Law Times N. S. 637

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Before Curtis and Speir, JJ.

Decided May 3, 1875.

Appeal from a judgment in favor of 'defendants, and from an order denying plaintiffs motion for a new trial upon the minutes.

This action is to recover five thousand dollars liquidated damages for breach of covenant.

The defendant George M. Hoffman by bill of sale, dated May 1, 1871, for three thousand five hundred dollars, sold to plaintiff the good-will of the butcher, and fish, and vegetable, and provision business, carried on by him at 338 Third Avenue, Hew York City, and also leases of the premises and utensils there. And both the defendants, in consideration thereof and for one dollar, by virtue of a separate instrument dated May 1,1871, covenanted that they would not, either jointly or severally, as agent or principal, engage in or carry on any similar or competitive retail butcher, and fish, and provision business for five years in certain limits in said city, under five thousand dollars liquidated damages, and Mrs. Hoffman bound her own estate to pay that sum in case of her own default.

The plaintiffs then entered upon the premises and conducted the business. It was the purpose of the vendor to go to Germany. He went to Europe, and returned in the fall. In June, 1873, he opened business as a retail dealer in “butcher’s meat, vegetables, and provisions,” at a store Ho. 805 Sixth avenue, beyond the specified limits.

During the period limited, by the agreement, the defendants, in a few instances,- sold-and delivered meat to three or four of his old customers, within the restricted limits. When the meat was sent, the carrier would bring back a new order which would be supplied. The defendants testified, that these persons ap

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plied to them for meats, without any solicitation or procurement on their part. It appeared that the defendants when they sold out, had recommended their old •customers to purchase from the plaintiffs, and that in two or three of the instances complained of, the. customers had become dissatisfied with the plaintiff’s meats, had resorted to other dealers, and ultimately applied to the defendants who then sold to them.

The defendants claimed that these supplies were furnished as a favor or personal accommodation to the applicants, and that it was in no sense an engaging in, or carrying on a similar or competitive business. The defendants’ shop or place of business, where they kept their meats and attended to their occupation, was about, half a mile outside of the prescribed limits. There was conflicting testimony, as to whether the defendants’ went within those limits and solicited the trade and custom of persons who had previously dealt with them. The plaintiffs requested the court to direct a verdict in their favor. The court refused, and they •excepted.

The court charged, that the defendants could not •engage in a business similar to that which was previously carried on within the restricted limits ; that is, that the defendants had no right to go within those limits, and then solicit and procure the custom and trade of persons who had previously dealt with them at their place there.

The court then instructed the jury that they were to pass upon the question of fa,ct arising from the conflicting evidence as to whether there was such solicitation or procurement on the part of the defendants. That if they found that the defendants at any time after the sale to the plaintiffs went by themselves or their agents into the prescribed limits, and there solicited or procured orders for meat, &c., to be sent from their establishment or store in the Sixth avenue,

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between Forty-fifth and Forty-sixth streets, and that the defendants received and filled such orders and sent in pursuance of them their meats to the persons from whom they had thus procured such orders, it was within the meaning of the contract a competitive business, and a breach of the defendants’ covenant.

But if they found that they did not go into the prescribed limits and procure such orders, but that the persons within such limits voluntarily and without solicitation of defendants gave them orders (and whether they gave their orders within such limits or otherwise was immaterial), the filling of such orders was not a breach of the covenant.

That to be a breach of the covenant, it must appear that the defendants solicited the custom of persons residing within the prescribed limits; not that such persons came to the defendants or saw them, or either of them, within the limits, and gave them orders. If it was voluntary on the part of the customers, and not the result of solicitation on the part of the defendants, then, although the defendants filled their orders, it was no breach of their covenant.

That if they found there was such a solicitation on the part of the defendants, then their verdict must be for the plaintiffs, and that the only amount they were authorized to give was the full amount of the liquidated damages agreed upon between the parties, namely, five thousand dollars.

The plaintiffs excepted to that part of the charge in which the court instructed the jury, that the defendants had a right to fill orders within the prescribed limits, if customers came to them voluntarily.

The jury asked this question of the court: "Is the sending of an agent every day to the houses in the limited district to take orders, and filling them, a competitive business, or soliciting the same 1 ” The answer of he court was, “ In the construction I have given to the

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contract, it would not be. The orders must have originally been procured by the solicitation of the defendants. If they proceeded from the customers, and not by the procurement of the defendants, it was not a breach to fill them. To this, the plaintiffs excepted. The jury found for the defendants.

Charles H. Smith, Jr., for appellants.

A. F. & W. H. Kireheis, attorneys for respondents; John L. Mill, of counsel.

From wise considerations of public policy, contracts imposing a restraint upon trade throughout an entire state or county are held void, but this rule is sometimes relaxed as to small districts or towns, when it appears that the public interest or convenience will not be prejudiced. The public comfort and welfare are the controlling considerations (Lawrence v. Kidder, 10 Barb. 641 ). In the present case no question arises as to the validity of the restraint.

In Smith v. Smith ( 4 Wend. 468 ), where a physician bound himself in a penal sum for ten years, not to reside or practice within six miles of a certain village, and had removed seven miles therefrom, and it was shown that he practiced for two months in and around the village during the period, and claimed the right to do so at any time, it was held a breach of the bond. The mere removal of his residence beyond the restricted limits, does not appear to have been considered a compliance with the covenant, but it was construed to extend to a prohibition of a resumption of practice therein. The question was not before the court as to whether, if in three or four instances, old patients had sought his attendance, and he, as a matter of kindness or personal consideration for them, had attended them, that would constitute a breach of the bond.

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This question is what we now have before us. There is no dispute but that, in a few instances, the defendants supplied meat to old customers, within the limits; and the jury, in effect, find that this was not done at the solicitation or procurement of the defendants. The defendants’ place of business was outside of the restricted limits. Can we establish the rule, that the obligor in this common species of obligation, who in a large town removes his place of business, in conformity to it, is to be held to have violated it, if subsequently by chance in the current of business at his shop, or as a matter of favor or accommodation, and with no procurement or seeking on his part, he supplies some articles to three or four of his old customers in the forbidden territory % This would be a harsh construction, and one which, the courts have avoided giving to this covenant. It would be an unwise interference with the usual course of business, and the requirements of public convenience and comfort, which . latter can never be prejudiced or made secondary by contracts imposing restraints upon traffic.

In the case of Turner v. Evans (2 Ellis & Blackburn, 512), where the vendor of the business of a wine merchant covenanted, “that he would not set up, embark in, or carry on the business in certain limits,” and removed his place of business outside of the limits,' it was held, that the systematic soliciting and supplying orders within the limits in fifty instances, was a breach of the covenant. Says, Lord Campbell, C. J.: “If done now and then, to oblige an old customer, or the like, it would be no breach of the contract, for that would not be carrying on business ; but it was done on system.” Earl, J., concurred. Compton, J. : “I think the question was one of fact. Was he doing this on system ? For he would not be carrying on business, if he did it only now and then.”

The view of the court of Queen’s Bench seems to

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confine the question, as to whether the soliciting orders and supplying was done as a system, and to hold-that where it was done, as appears in the present case, now and then to oblige an old customer, it was no breach.

When the question between these parties was before the court of chancery (2 De Gex, M. & G. 740), the application for an injunction was denied, the court appearing to consider the removal of the place of business as the substantial requirement of the contract, and to be reluctant, from regard to the public interest, to enforce a restraint upon the general freedom of soliciting orders, or to sustain any interference in conveying of intelligence to the public of opportunities and requests to make purchases in the ordinary course of trade.

In Lee v. Ehrhardt (19 Law Times N. S. 637), it was held, that occasional assistance of the vendor rendered by him to his daughter, was not a breach of the cove-nan t ‘ ‘ not to take, keep, or be concerned in any public house within the prescribed distance of the one sold.

charged the jury that the question was one whether defendant acted in good faith as a matter of kindness; but if they were of opinion that his conduct was in the nature of a juggle, to find for the plaintiff. The defendant had a verdict. On a review of the question, Cockburn, Ch. J., considered that the covenant must be taken to mean, that he shall not be concerned in any public house, so as to be interested in it; that is, have any share in its profits, or any interest in it that could prejudice the' other party to the cove na-nt. Blackburn, J., concurred.

stated the interest must be such at. would induce the person having it, to support one pub' lie house, and to prejudice the other. Casual assistance in carrying on business is not a breach. To hold so would be a very harsh construction. Hats, J., concurred.

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Applying the construction given to the covenant in the last two decisions to the one under consideration, which is substantially the same, it will appear that the plaintiff failed at the trial to establish the breach of the covenant complained of, and that the defendant’s exceptions can not be sustained.

There are substantial reasons why such construction should be given. It is reasonable, and in comformity to the interest of the parties, and to what is due in this class of obligations to the public welfare.

The judgment appealed from, and the order denying the motion for a new trial should be affirmed, with costs.

Speie, J., concurred.

Cases cited

Lawrence v. Kidder 10 Barb. 641 N.Y. Sup. Ct. p. 307, p. 311
Smith v. Smith 4 Wend. 468 N.Y. Sup. Ct. p. 307, p. 311