Ceresia v. Mitchell

• Court: Supreme Court of Kentucky
• Writing for the Court: MILLIKEN; CAMMACK, C. J., and MOREMEN; MOREMEN; CAMMACK
• Citation: Ceresia v. Mitchell, 242 S.W.2d 359 (Ky. 1951)
• Decision Date: 15 June 1951
• Parties: CERESIA v. MITCHELL et al.

Page 359

242 S.W.2d 359

CERESIA v. MITCHELL et al.

Court of Appeals of Kentucky.

June 15, 1951.

Rehearing Denied Oct. 12, 1951.

T. O. Jones, Greenville, Woodward, Bartlett, Hobson & McCarroll, Owensboro, for appellant.

W. D. Bratcher, Greenville, Arthur T. Iler, Central City, for appellees.

MILLIKEN, Justice.

This is an appeal from a judgment enjoining the appellant, Ceresia, who was the defendant below, from engaging in competition with the business of the appellees in Central City and Muhlenberg County in violation of the provisions of a contract of sale. The effectiveness of the injunction was made coextensive with the term of a lease which will expire March 31, 1957.

The appellant, Lorenzo Ceresia, is an elderly man, in his early seventies, and had operated a wholesale fruit and vegetable business in Central City and adjoining territory for many years. He has little formal education--about the equivalent of two years in grade school--speaks English brokenly, yet has prospered in the land of his adoption. On the other hand, the appellees are a family partnership comprised of a young war veteran, his sister and his father. Mr. Ceresia pleads that they defrauded him when they purchased his business in 1947, but there is no evidence to sustain his charge.

The situation unfolded by the testimony reveals Mr. Ceresia as an ailing widower with a very young son and a thriving business. Undoubtedly, influenced by the state of his health he wished to sell the business as a going concern in order to realize its full worth, and had made at least two unsuccessful efforts to sell the business on comparable terms before negotiations started between him and the appellees. Alex Mitchell, Jr., a young war veteran, had worked for Mr. Ceresia for six weeks before Mr. Ceresia approached him about purchasing the business. The sale was consummated in March, 1947, for a sales price of $10,000 for the business, including equipment and good will, an additional $1650 for the stock in goods on hand, and a lease of the site of the business for $50 a month for a ten-year period with the right of renewal. The lease and purchase agreement were drafted by a woman, not a lawyer, who had done similar work for Mr. Ceresia over a period of many years. Apparently, neither side to this litigation consulted a lawyer until Mr. Ceresia returned from an extended vacation in September, 1947, restored in health, and found his former business had greatly prospered in the hands of its new owners. The fact that appellees conducted the business in the leased building in the yard back of Mr. Ceresia's home, used the driveway which ran along the side of his house, and, because of the great growth of the business used the driveway more than had Mr. Ceresia, all led to a series of irritations which bred ill will, led to Mr. Ceresia reentering the wholesale fruit and vegetable business in Central City, and finally led to the institution of this litigation in September, 1949.

Mr. Ceresia testified that he renounced the agreement he had made with the Mitchells when he returned home in September, 1947, and that they acquiesced therein, that he was too ill to know what he was doing when he made the agreement with them in March, 1947, but there is no evidence in the record of a tender to the Mitchells of any or all of the $10,000 received from them as the purchase price of the business, and he continued to accept the monthly rental under the lease.

The contract of sale and the lease are ineptly drawn, contain many provisions which courts would not enforce and skilled lawyers would not include, yet they crudely cover the gist of the business transaction consummated by the parties to this litigation. While Mr. Ceresia has alleged fraud in general terms, that he was overreached, that he was too ill to know what he was doing when he signed the contract and lease, that he never understood the contents of the writings which he had signed until he read them upon his return home in September 1947, the evidence adduced does not bear out his contentions. Without detailing the contract of sale and lease, we shall confine ourselves to the portion of them which we consider relevant to the relief sought by the appellees and granted by the chancellor: 'It is distinctly understood and agreed to by all the parties to this Bill of Sale, Agreement and Contract and is an essential part of the consideration in same that the said party of the first part (Ceresia) is forever barred and prevented from engaging in any kind of business of whatsoever kind, character or nature in his own name or in the name of any other person or persons with him as a silent partner in the County of Muhlenberg and State of Kentucky. This forever preventing and barring from engaging in business in Muhlenberg County, Kentucky, of the parties of first part, Lorenzo Ceresia also extends to his children, his Executors and Administrators, for the reputation that has been established by Lorenzo Ceresia in the business of the Central City Produce Company is a most valuable part of the property that is being bought under and by virtue of this Bill of Sale. The said parties not only sold unto the parties of the second part the business of the Central City Produce Company, but there was also sold and conveyed for the purchase money paid in cash, all of the good will and influence of the said Lorenzo Ceresia who does here and now agree to at all times to use his influence and power in behalf of the parties of the second part in order to make this business venture of theirs a perfect success, and this he could not do if he had interest in any other business in Muhlenberg County, Kentucky, or in an adjoining county.'

While this language is too broad in its scope for its specifications to be palatable, it, nevertheless, expresses in lay terminology an intention to transfer the good will as 'a most valuable part of the property that is being bought under and by virtue of this Bill of Sale.' The importance placed on the good will of the business in the minds of the buyers is borne out by our belief that over one-half of the $10,000 given for the business covered the element of good will, for the value of the physical assets transferred was relatively small. From his knowledge of the business the chancellor confined the scope of the restraint imposed upon Mr. Ceresia under the contract to his activities in the fruit and vegetable business in Central City and Muhlenberg County until the expiration of the term of the lease on March 31, 1957. We believe the chancellor's conclusion is practicable and just. As stated in Section 1390 of Corbin on Contracts, Vol. 6, pages 499 to 502, West Publishing Company, 1951:

'An agreement restricting competition may be perfectly reasonable as to a part of the territory included within the restriction but unreasonable as to the rest. Will the courts enforce such an agreement in part while holding the remainder invalid? It renders no service to say that the answer depends upon whether or not the contract is 'divisible.' 'Divisibility' is a term that has no general and invariable definition; instead the term varies so much with the subject-matter involved and the purposes in view that its use either as an aid to decision or in the statement of results tends to befog the real issue.

'With respect to partial illegality, the real issue is whether partial enforcement is quite possible without injury to the public and without injustice to the parties themselves. It is believed that such enforcement is quite possible in the great majority of cases. If a seller whose business and good will do not extend beyond the city limits of Trenton promises not to open a competing business anywhere within the state...