Barrett v. Curtis

• Citation: 407 S.W.2d 359
• Decision Date: 07 October 1966
• Docket Number: No. 16790,16790
• Parties: Foy BARRETT, Appellant, v. Jesse C. CURTIS, Appellee. . Dallas
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 359

407 S.W.2d 359

Foy BARRETT, Appellant, v. Jesse C. CURTIS, Appellee.

No. 16790.

Court of Civil Appeals of Texas.

Dallas.

Oct. 7, 1966.

Parkhill, Watson & Grantham, Grand Prairie, for appellant.

Carter, Gallagher, Jones & Magee, Charles Gallagher and Ben Warder, Jr., Dallas, for appellee.

CLAUDE WILLIAMS, Justice.

This appeal is from a judgment awarding appellee actual and exemplary damages for breach of a restrictive covenant contained in a written sales contract.

On May 15, 1962 Foy Barrett sold and conveyed his automobile wrecker service business located in Grand Prairie, Texas to Jesse C. Curtis. The contract of sale imposed upon the seller the following restriction:

'That he, the said Foy Barrett, shall not at any time hereafter within a period of 10 years from date of closing of this transaction open or operate, or seek or become employed in any like business, either for himself or as an employee of others within Dallas County, Texas, to that business which is being sold, to-wit: the Wrecker Service Business, and that he shall not participate in any manner whatsoever, in either open direct competition with the said Jesse C. Curtis nor indirectly with him, nor aid and advise any other person, firm or corporation or influence any person whomsoever to so compete, nor furnish aid, assistance nor advice to any such person to so compete.'

Alleging Foy Barrett had violated the above covenant by aiding and abetting his brother, Ike Barrett, to enter into competition with him in a similar business, Jesse C. Curtis brought this action to enjoin the competing business and also to recover damages. A jury trial resulted in a verdict for appellee Curtis for actual damages in the sum of $1,000 and exemplary damages in the sum of $2,500.

Appellant, by his first point of error, makes no complaint concerning that portion of the restrictive covenant dealing with time and geographical area but vigorously assails that part of the covenant which precludes him from aiding and advising any other person to compete with appellee in a similar business. He argues that such restriction is unreasonable, arbitrary, oppressive and against public policy as an unreasonable restraint of trade and therefore illegally incapable of being enforced or made the basis for awarding damages.

Our determination of appellant's point is governed by well established principles of law. Negative covenants are to be closely scrutinized. A restrictive covenant not to compete must be reasonably necessary, must not be oppressive and must not be broader than the business sold. The covenant, to be enforceable, must not impose a greater restraint than is reasonably necessary to protect the business conveyed. In determining the reasonableness of a restrictive contract provision the courts will ordinarily determine the question as one of law. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950; Caraway v. Flagg, Tex.Civ.App., 277 S.W.2d 803; Martin v. Hawley, Tex.Civ.App., 50 S.W.2d 1105.

In Caraway v. Flagg, supra, this court considered a restrictive covenant which was attacked on the same grounds as here asserted. In upholding the contract in that case we referred to the Texas rule as stated in 8 Tex.Law Rev. 422--423, as follows:

'* * * The courts recognize that restriction is a necessary part in the absolute sale of any business, that there is a definite social interest in the freedom of an individual to sell his property ablutely, that good will is a definite property having a salable value, and that these considerations outweigh the social interests that individuals should be free to enter whatever business they please. * * * Consequently a promise imposing a restraint in trade or occupation which is reasonable, which is not wider than is necessary for the protection of the covenantee in some legitimate interest, which does not impose a harsh burden on the covenantor with no corresponding benefit to the covenantee, where the restrictive promise is ancillary to some permissible transaction, and where the contract is made on a good and adequate consideration, is held valid. * * * Hence covenants in partial restraint of trade are generally upheld as valid when they are agreements by the seller of property not to compete with the buyer, in such a way as to derogate from the value of the property or business sold. Such restrictions must be reasonably necessary, however. * * * Such contract must not be characterized by any oppression. * * * The rule is sometimes stated that the restriction must not be broader than the business sold. * * * In situations such as the instant case where the sale is made to one who was not formerly a competitor, there is no diminution in competition by the covenant. Hence it constitutes but a minor restraint of trade. An express stipulation is included to allow the enforcement of the restraint which may not be created by implication. * * * Yet under the Sherman Act (15 U.S.C.A. §§ 1--7, 15 note) a restrictive covenant accompanying the sale of a business is valid. * * * Such a contract has been held legal in Texas. Gates v. Hooper, 90 Tex. 563, 39 S.W. 1079 (1897). * * *.'

Having carefully examined the portion of the contract complained of by appellant we are unable to agree with him that the same is invalid, as a matter of law. The covenant in question expressly applies only to the wrecker service business sold by appellant to appellee and does not restrict appellant from engaging in any other type of business. It does prohibit appellant from entering into a similar type of business personally and also goes further and prevents him from aiding and abetting others in competition of the business conveyed to appellee. We find nothing unusual or oppressive about such a restriction. Such appears to be reasonably necessary for the protection of appellee in the operation of the wrecker service business that he purchased from appellant. The covenant is not broader nor more comprehensive than the business conveyed. It refers to and is limited specifically to the automobile wrecker business. Since appellee was not a competitor of the appellant prior to the time he purchased the wrecker service business it cannot be said that the covenant complained of diminished the competition as between the parties. We hold as a matter of law that the covenant in question is valid and enforceable . Appellant's first point is overruled.

Appellant's second point is multifarious in that it contains two separate complaints, both relating to Special Issue No. 1 as submitted to the jury. Such issue inquired:

'Do you find from a preponderance of the evidence that the Defendant (Barrett) has violated the said agreement of 15 May 62, sued upon in this case and contained in Plaintiff's Exhibits No. 1 and 2?'

Appellant says that (1) such issue was not an ultimate issue but was a general charge and (2) there is no evidence to support the jury's affirmative answer thereto.

Appellant's first objection to the issue may not be considered by us for the simple reason that the same was not properly preserved by an assignment of error in the motion for new trial. Nowhere in appellant's objection to the court's charge nor in his motion for new trial is there any complaint that such issue was a submission of a question of law as opposed to one of fact or that the issue was a general charge. It is elementary that in the absence of a proper assignment directing the trial court's attention to the alleged error we have no right to consider the point on appeal.

As to the second portion of appellant's point complaining of the absence of testimony to support the jury's affirmative answer to such issue we have carefully examined the statement of facts and find ample testimony upholding appellee's contention that appellant violated the agreement.

In considering this 'no evidence' point we must disregard all evidence adverse to the finding of the jury and consider only the evidence favorable to such finding, indulging every legitimate conclusion which tends to uphold it. Fisher Construction Co. v. Riggs, 160 Tex. 23, 325 S.W.2d 126.

Without entering into a detailed account of the testimony of both the parties and other witnesses it is sufficient to state that the evidence revealed that Foy Barrett did aid and assist his brother, Ike Barrett, in the operation of a wrecker service business in competition with appellee. Foy Barrett owned and operated the only automobile wrecker service business in Grand Prairie, Texas. He sold and conveyed this business to appellee Curtis, who operated the same for a year. At this time Ike Barrett, brother of Foy Barrett, started the operation of his wrecker service business in the place of business owned by Foy Barrett. Foy leased the back lot, driveway and a back room in his garage to Ike Barrett for $100 a month. Various employees of Foy Barrett drove Ike Barrett's wreckers and answered the phone for Ike. Foy aided his brother by signing his note at the bank for the purchase of a wrecker and also sold a wrecker to Ike. Ike was engaged in another type of business, operating a dragline during the day, and one of his employees, Pallet, operated the wrecker business. Pallet was a former employee of Foy Barrett and the evidence revealed that...