Adams v. Adams

• Decision Date: 10 April 1953
• Docket Number: No. 33282,33282
• Citation: 58 N.W.2d 172,156 Neb. 778
• Parties: ADAMS v. ADAMS et al.
• Court: Nebraska Supreme Court

Page 172

58 N.W.2d 172

156 Neb. 778

ADAMS v. ADAMS et al.

No. 33282.

Supreme Court of Nebraska.

April 10, 1953.

Syllabus by the Court.

1. If a defendant in a suit in equity moves at the close of the evidence of the plaintiff for a dismissal of the suit for want of proof to support a judgment, he admits the truth of the evidence and any reasonable conclusions deducible from it.

2. Injunction is a proper remedy to prevent violation of a valid restrictive covenant not to establish a competitive business and a provision therein for liquidated damages for a breach thereof does not make the remedy unavailable.

3. In such an action the plaintiff may recover as an incident of it any damages he is legally entitled to because of default in performance of the obligation of the covenant.

4. The test of equity jurisdiction is generally the absence of an adequate remedy at law.

5. An adequate remedy at law is one that is practicable and efficient to the ends of justice and its administration as the remedy in equity.

6. A remedy at law is not adequate if the situation requires and the law permits preventative relief as preventing the repetition or continuance of wrongful acts.

7. A contract restraining a person from establishing a business competitive with that of the other party to it is strictly construed and doubts are resolved against a latitudinarian construction thereof.

8. The party bound by a contract not to establish a business in competition with the other party to it is not precluded from loaning money to others though they may use it to engage in business in competition with the person for whose benefit the restriction was made.

9. The negative provision of a contract that a party thereto will not set up or establish a competitive business contemplates a business in which he has a proprietary interest, a right of control, or a right of management.

10. The words in a contract that a party will not set up or establish a business competitive with the other party thereto means that the covenantor will not create or bring into being and operate a new business of the character of that operated by the person in whose favor the prohibition is made. The words set up and establish therein are intended to describe something not in existence.

11. An attorney is not barred from representing a subsequent client against a former client if the duties required of him do not conflict with those involved in the first employment.

Baskins & Baskins, V. H. Halligan, North Platte, for appellant.

Beatty, Clarke, Murphy & Morgan, North Platte, for appellees.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

BOSLAUGH, Justice.

The object of this suit in equity brought by appellant is to prevent appellees Wilson T. Adams and Adams-Swanson Funeral Home, a copartnership, from violating the obligation of a written contract prohibiting Wilson T. Adams from setting up and establishing for a stated time and within a limited area a business competitive with the business of appellant.

The basis for the relief as pleaded by appellant is that he and Wilson T. Adams, one of the appellees, were from July 14, 1947, until February 3, 1951, members of the Adams Funeral Home, a copartnership; that the partnership agreement provided that if appellee ceased to be a member of the partnership that he would not set up or establish a new or competitive business in North Platte for 10 years thereafter, directly or indirectly, for himself or in association with others; that if he violated the agreement in this regard it was agreed the damages to appellant would be $10,000 which he could recover by an appropriate action; that appellee caused the Adams-Swanson Funeral Home to be organized with Gladys Adams, the wife of appellee, and Kenneth A. Swanson as the nominal partners; that he financed it, put it in the undertaking and funeral business, has participated in the conduct of its business, and has been active in all of its engagements and activities; that it is a subterfuge employed by appellee to engage in the undertaking and funeral business and to attempt to avoid the terms and effect of the noncompetitive provision of his contract with appellant; and that he has by this instrumentality been conducting that kind of business since July 7, 1951, in competition with the Adams Funeral Home of North Platte, owned and operated by appellant, but he has not paid or offered to pay appellant the $10,000 named in the covenant involved in this case.

Appellees deny the claims of appellant except they admit the restrictive covenant including the provisions thereof for damages and nonpayment of any amount by appellee to appellant, and they allege that Gladys Adams and Kenneth A. Swanson are the members and only members of the Adams-Swanson Funeral Home.

Appellees moved at the conclusion of the introduction of the evidence in chief of appellant that the petition be dismissed. The district court sustained the motion, and dismissed the petition and the suit. A motion of appellant for new trial was denied and he has prosecuted this appeal.

The issue is whether or not the evidence accepted as true and all reasonable conclusions deducible therefrom are sufficient to sustain a judgment for appellant. This must be decided as a question of law by a trial de novo on the record. Busteed v. Sheffield, 153 Neb. 253, 44 N.W.2d 471.

Appellant has been in the undertaking business in North Platte since 1934. He was a partner of Fred Hutchins until September of 1939. They operated as Hutchins-Adams Funeral Home. Hutchins retired and appellant continued as Adams Funeral Home until July 14, 1947, when he and his brother Wilson T. Adams, herein identified as appellee, became partners and carried on the business by the name Adams Funeral Home. Appellee had taken instruction in embalming and mortuary work and he on occasions assisted at the Hutchins-Adams Funeral Home when its business required additional help. He was employed by appellant for full-time work at the Adams Funeral Home in July 1945. He continued in that capacity until he and appellant became partners. Appellee withdrew from the partnership on February 3 1951. He took his license and personal belongings, left the place of business without warning or notice when appellant was absent, and he did not return to it or offer to participate in its activities thereafter.

The contract of July 14, 1947, between appellant and appellee in reference to the Adams Funeral Home contains this provision: 'It is further agreed that as part of the consideration of this agreement that if at any time in the future the second party (appellee) shall sever relations with this co-partnership that he will not set up and establish any new or competitive business in the city of North Platte and within three miles thereof for a period of ten years from and after the termination of said co-partnership, either directly, indirectly, for himself or in association with other persons, and in the event that the second party does so set himself up any business and compete with the first party, then it is agreed that the damages inuring to the first party shall be in the sum of Ten Thousand Dollars, which the first party may recover by appropriate action for the breach of this Agreement.'

About mid-year of 1950, appellee and Mr. Benson, an employee for several years of the Adams Funeral Home who assisted in the conduct of its undertaking business, considered going into business in Kimball. About January 1, 1951, appellee proposed to Benson that they establish a funeral home in North Platte. They talked about it on numerous occasions, sometimes at the Adams Funeral Home, and sometimes at the Adams home in the presence of Mrs. Adams and Mrs. Benson. They considered two locations. Appellee before February 3, 1951, presented Benson a floor plan of a home in North Platte and discussed the prospect of establishing a funeral home there. The place under consideration afterwards became the place of business of the Adams-Swanson Funeral Home. The last conversation between appellee and Benson concerning the matter of starting a funeral home was in March or April, 1951, when Benson advised appellee he could not engage in the venture because he could not secure the necessary funds. Benson knew of the restrictive covenant in the contract involved in this case. He and appellee discussed it in the presence of Mrs. Adams, and appellee stated 'that the contract had been broken and that it didn't mean a thing.'

Appellee or his wife by telephone solicited Kenneth A. Swanson in March 1951, soon after Easter that year, to come from York to North Platte for the purpose of considering engaging in the funeral home business in that city. He had not met or had knowledge of appellee or his wife. Swanson and his wife came to North Platte, met appellee and Mrs. Adams, and had a general discussion of matters. He stayed a day and a half, reached no decision, and made no commitment.

About 2 weeks thereafter Swanson was advised by appellee or his wife by telephone about property that 'we could possibly get hold of' and they would like to have him come up and look at it. He came, examined the property, and decided to go into business with Gladys Adams if they could buy the property; if Mr. Trego, her brother-in-law, who Swanson met on his first trip to North Platte, would loan the money required for a down payment; and if Swanson could sell his home in York.

Swanson later came to North Platte when 'they said the papers were ready to be executed or signed.' The articles of copartnership of the Adams-Swanson Funeral Home were signed on May 1, 1951. The purchase agreement for the property where the funeral home is located named Gladys Adams as purchaser, was made on April 8, 1951, and the persons present during the transaction were the real estate man, appellee, Gladys Adams, and Mr. Trego. The deed of the property from ...