Brunswick Corp., Mercury Marine Division v. Hering

• Citation: 619 S.W.2d 950
• Decision Date: 04 August 1981
• Docket Number: No. 42876,42876
• Parties: 1981-2 Trade Cases P 64,245 BRUNSWICK CORPORATION, MERCURY MARINE DIVISION, Plaintiff-Respondent, v. Robert F. HERING, Defendant-Appellant.
• Court: Court of Appeal of Missouri (US)

Page 950

619 S.W.2d 950

1981-2 Trade Cases P 64,245

BRUNSWICK CORPORATION, MERCURY MARINE DIVISION, Plaintiff-Respondent, v. Robert F. HERING, Defendant-Appellant.

No. 42876.

Missouri Court of Appeals, Eastern District, Division Two.

Aug. 4, 1981.

Coburn, Croft & Putzell, Paul M. Brown, St. Louis, for defendant-appellant.

Lewis, Rice, Tucker, Allen & Chubb, St. Louis, for plaintiff-respondent.

PUDLOWSKI, Presiding Judge.

Appeal from an order permanently enjoining defendant from racing the "Toshiba", an outboard motor racing boat, in the 1977 St. Louis World Championship Grand Prix unless the craft was powered by Mercury engines. We affirm.

The facts are substantially undisputed. For approximately 5 years commencing in 1971, defendant, Robert F. Hering, was employed as a race driver by the Racing and Hi-Performance Products Division of the plaintiff, Brunswick Corporation, Mercury Marine Division (hereinafter Mercury). Defendant was a member of the factory team and participated in races in the United States, Canada and Europe. He was one of Mercury's more successful drivers and had an international reputation.

The Toshiba was an outboard racing boat built in 1972 or 1973 by the A. Molinari Boat Yard of Como, Italy. In 1969, Mercury entered into a series of agreements with A. Molinari Boat Yard, Renato Molinari and Angelo Molinari, whereby Renato Molinari agreed, inter alia, to sell racing boats to Mercury. Further, the Molinaris' agreed not to sell outboard racing boats of any type without the prior written approval of Mercury. The Toshiba was shipped to Mercury's facility in Oshkosh, Wisconsin in 1974. In July, 1976, the Toshiba was owned by Renato Molinari although the craft was in the possession of Mercury. On July 7th or 8th, 1976, Renato Molinari, during a telephone conversation, gave the Toshiba to defendant. Defendant terminated his employment with Mercury on July 19, 1976. At that time defendant told Gary Garbrecht, Director of Mercury's Racing Division, that Renato Molinari had given defendant the Toshiba. Garbrecht wanted proof. Shortly thereafter defendant presented Garbrecht with a letter from Molinari dated July 8, 1976, allegedly evidencing this gift. ¹ Mercury agreed to the transfer of possession only after defendant signed the following document, dated July 27, 1976:

In consideration of Mercury Marine Division of Brunswick Corporation, not objecting to the transfer of a Molinari Sprint boat, (Toshiba) to me, I agree to the following:

1. To use only Mercury power on the boat in competition or otherwise.

2. To not copy the boat or allow the boat to be copied.

Defendant also paid $2,689.23 for freight charges and rigging which had been installed on the boat by Mercury. Defendant raced the boat in four races in August and September, 1976, using Mercury power. In 1977, he entered into an agreement with Outboard Marine Corporation (hereinafter O.M.C.) to race Molinari boats using engines supplied by O.M.C. Defendant was to race for O.M.C. in the 1977 championship race to be held in St. Louis County August 20-21. Due to customs problems, the Molinari boats enroute from Italy for use in the Grand Prix were delayed. Defendant thereupon sold the Toshiba to O.M.C. on August 17, 1977 for $5,000. The Toshiba was outfitted with O.M.C. power and defendant intended to race it in the Grand Prix. On August 19, 1977, the day before the race was to commence Mercury obtained an ex parte temporary restraining order enjoining defendant from using the Toshiba in the 1977 Grand Prix with other than Mercury power. By an order dated March 14, 1980, the trial court made this order permanent. This appeal followed.

Since the 1977 race has long since ended, it would appear that no effective relief could be granted by this court. However, there is still a ripe issue. Mercury posted a $7,500 bond and its liability on that bond depends upon whether the injunction was providently granted. The case is not moot and we will decide the issues on the merits. Adamick v. Ferguson-Florissant School District, 483 S.W.2d 629, 631 (Mo.App.1972). The trial court filed no findings of fact or conclusions of law. Thus, all findings of fact will be presumed to have been found in accord with the judgment and the judgment will be upheld if valid under any reasonable theory presented by the evidence. Porter v. Posey, 592 S.W.2d 844, 848 (Mo.App.1969). Further, because this is a court tried case our scope of review is that set forth in Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). The parties agree the substantive law of Wisconsin is to be applied.

In his first point defendant alleges that the trial court erred in its "apparent" application of Missouri law. However, defendant does not point to any specific instance in which the trial court applied Missouri rather than Wisconsin law. Consequently, defendant has preserved nothing for review and we find his first point is without merit. Rule 84.04(d).

Defendant next argues the July 27, 1976 contract was an illegal restraint of trade, in violation of the Wisconsin anti-trust statute, Wis.Stat. § 133.03. ² Section 133.03 provides that, "Every contract ... in restraint of trade or commerce is illegal." Generally Wisconsin law provides that a negative restrictive covenant must be incidental to a lawful contract in order to be valid. Journal Co. v. Bundy, 254 Wis. 390, 37 N.W.2d 89 (1949). The restraint is ordinarily contained in a contract for the sale of property, a business, or professional practice, or in a contract of employment. Id. The restrictive covenant will be upheld if it is reasonable under all of the circumstances of the transaction including the business involved, and interests which the parties seek to protect. Huntley v. Stanchfield, 174 Wis. 565, 183 N.W. 984, 986 (1921). However, it is well settled that the covenant to be valid must be reasonable as to scope, duration and geographic area of application. Betten Co. v. Brauman, 218 Wis. 203, 260 N.W. 456, 458 (1935). We note also, restrictive covenants attendant to the sale of property are allowed a greater scope of restriction than those contained in an employment contract. Fullerton Lumber Co. v. Torborg, 270 Wis. 133, 70 N.W.2d 585, 588 (1955); Restatement of the Law, Contracts, § 616, Comment (b).

Defendant claims that the contract was unreasonably restrictive as to the scope of its protection, duration and geographic area of application. We will consider each of these three points separately.

The scope of the restriction is not greater than reasonably necessary for Mercury's benefit. Defendant only agreed that if he used the Toshiba it would be propelled by Mercury power. He was not prohibited from using a non-Mercury engine in a boat other than the Toshiba. Nor was he prohibited from selling the Toshiba to or working for a Mercury competitor. Defendant also claims that it is unreasonable to require him to use Mercury power on the Toshiba in non-racing situations such as practice sessions and the testing of new engines. We do not agree. Mercury's interest in having defendant use Mercury power during testing and practice is the same as their interest in having defendant use Mercury power in actual racing competitions. Such tests and practices like races, expose Mercury engines to spectators and other outboard motor boat enthusiasts. This exposure and the good will thereby generated is the primary reason Mercury, and other outboard motor manufacturers, engage in races and the testing and practice sessions attendant to the sport. Thus, we believe the restriction reasonably required defendant to use Mercury power on the Toshiba during testing and practice runs.

The restrictive covenant is also reasonable in duration. We think it axiomatic that the restrictive covenant can last only as long as the Toshiba is a seaworthy race craft. Further, we take judicial notice of the fact that an outboard racing boat does not have a perpetual existence. The restrictive covenant pertaining to the Toshiba's source of propulsion when defendant pilots the craft is impliedly limited to the life of the boat. For that reason we face neither the problem presented in Tecktonius v. Scott, 110 Wis. 441, 86 N.W. 672 (1901), wherein the defendant agreed to bind himself and his heirs forever to refrain from competing with the plaintiff nor the problem addressed in Ruhland v. King, 154 Wis. 545, 143 N.W. 681 (1913), wherein a restrictive covenant contained in a deed was described as "a restriction in perpetuity." Both of these restrictive agreements were held to be unreasonable restraints of trade.

We now examine whether the geographic area to which the covenant applied is reasonable. Both parties concede this agreement was intended to bind the defendant world wide. It has long been the rule in...