Faust v. Rohr

• Decision Date: 30 May 1914
• Docket Number: (No. 448.)
• Court: North Carolina Supreme Court
• Parties: FAUST. v. ROHR.

(166 N.C. 187)

81 S.E. 1096

FAUST.

v.ROHR.

(No. 448.)

Supreme Court of North Carolina.

May 30, 1914.

1. Good Will (§ 6*)—Unlawful Competition— Covenants Not to Compete — Enforcement—Termination.

Complainant and defendant, having been partners in the barber business, dissolved the partnership in December, 1902; defendant agreeing not to re-engage in the same business in competition with complainant in the same city. Complainant thereafter employed defendant to work for him for wages until June, 1913, when they again entered into a partnership, which lasted until the succeeding March, when it was dissolved, after which complainant continued the business, and defendant entered the employment of another, who conducted a barber shop in competition with complainant in the same city. Held, that the contract of partnership between complainant and defendant in June, 1913, did not abrogate defendant's covenant, contained in the agreement for the dissolution of the first partnership, not to re-engage in business in the city in competition with complainant.

[Ed. Note.—For other cases, see Good Will, Cent. Dig. §§ 2-5; Dec. Dig. § 6.*]

2. Contracts (§ 147*)—Evidence (§ 461*)— Construction — Intention — Parol Evidence.

Where the intention of the parties clearly appears from the words used in a contract, there is no room for construction; but, if the meaning is not clear, the court will consider the circumstances under which the contract was made, the subject-matter, the relation of the parties, and the object of the agreement to ascertain the intention, for which purpose parol evidence is admissible.

[Ed. Note.—For other cases, see Contracts, Cent. Dig. §§ 730, 743; Dec. Dig. § 147;* Evidence, Cent. Dig. §§ 2129-2133; Dec. Dig. § 461.*]

3. Good Will (§ 1*)—Business.

The good will of a trade or business is the advantage or benefit acquired by an establish ment beyond the mere value of the capital stock, funds, or property employed therein in consequence of the general public patronage and encouragement which it receives from the constant or habitual customers on account of its local position, common celebrity, or reputation for skill, affluence, and punctuality, or from other accidental circumstances, necessities, partialities, or prejudices. It exists in a professional as well as a commercial business, subject to the qualification that it has no local existence, but attaches to the person of the professional man, and when sold the vendor may not thereafter solicit his former customers to deal with him, and not with his vendee. It does not, however, include a covenant by the vendor not to re-engage in the same business in the same locality in competition with his vendee.

[Ed. Note.—For other cases, see Good Will, Cent. Dig. § 1; Dee. Dig. § 1.*

For other definitions, see Words and Phrases, vol. 4, pp. 3128-3130; vol. 8, p. 7673.] 4. Injunction (§ 61*)—Covenant Against

Competition.

A covenant by the vendor of a business not to re-engage in the same business in the same locality in competition with the vendee may be enforced by injunction.

[Ed. Note.—For other cases, see Injunction, Cent. Dig. §§ 120-123; Dec. Dig. § 61.*]

Appeal from Superior Court, Union County; Shaw, Judge.

Suit by E. G. Faust against A. J. Rohr to restrain the violation of a business covenant. From an order vacating a preliminary injunction, complainant appeals. Reversed.

This is a motion to vacate a restraining order, previously granted in the action, by which the defendant was "restrained and enjoined from engaging, directly or indirectly, or concerning himself, in carrying on or conducting the business of a barber, either as principal, agent, or servant, within the corporate limits of the city of Monroe, N. G, until the further order of the court." The defendant was further required to show cause on Monday, May 4, 1914, why the restraining order should not be continued, or an injunction granted, to the hearing. On the return day of the order the matter was heard and decided by the court upon the following case stated by the judge from the affidavits filed:

"This cause coming on to be heard upon the return of the temporary restraining order hereinbefore issued by the undersigned, and being heard on affidavits of plaintiff and defendant and of other witnesses filed in support of and against a motion by defendant to dissolve the temporary restraining order, on consideration of same the court finds the following facts: (1) That prior to December 15, 1902, plaintiff and defendant were partners engaged in the business of conducting a barber shop in Monroe, N. C. That on said date plaintiff and defendant entered into the contract evidenced by Plaintiff's Exhibit A. That on December 29, 1902, plaintiff and defendant entered into the contract evidenced by Defendant's Exhibit 2, and under said contract the defendant worked for plaintiff for about a year at a wage of $2 per working day. That ever since the first contract was executed the plaintiff has been, and is still, engaged in the business of running a barber shop in said city of Monroe. (2) That plaintiff and defendant entered into other contracts of employment of defendant by plaintiffto work in his shop as a barber; defendant's wages being increased by plaintiff from time to time until the month of June, 1913. (3) That on June 12, 1913, plaintiff and defendant entered into the articles of copartnership evidenced by Defendant's Exhibit 1, and defendant paid the plaintiff the sum of $400 for a half interest in the business. That thereafter plaintiff and defendant as partners actively engaged in the barber business in the corporate limits of Monroe, N. C. (4) That about the middle of March, 1914, the plaintiff purchased defendant's interest in the partnership business, paying him the sum of $400 in cash. That neither upon the said purchase of defendant's interest by plaintiff nor at any time since has defendant expressly stipulated or agreed that he would not re-engage in the business of barber in the corporate limits of Monroe. (5) That about the last of March, 1914, and while the plaintiff was actively engaged in the business of barber in the corporate limits of Monroe, N. C, the defendant entered the employment of one James Keziah, who conducts a barber shop within the corporate limits of Monroe, N. C, in which plaintiff owns no interest. That defendant was actively engaged in the duties of his employment at the beginning of this action and up till the time of service of restraining order. That the plaintiff is likewise actively engaged in the barber business within the corporate limits of Monroe, N. C. Upon the foregoing facts the court is of the opinion, and so holds, that the contract of partnership mentioned in finding of fact numbered 3 is a discharge and abrogation of the contract under which the plaintiff seeks continuance of temporary restraining order, and the said temporary restraining order is hereby vacated and dissolved. It is further ordered and adjudged that the defendant recover of the plaintiff and his sureties the costs incident to the said restraining order."

Plaintiff appealed from this order.

Adams, Armfield & Adams, of Monroe, for appellant.

Vann & Pratt, of Monroe, for appellee.

WALKER, J. (after stating the facts as above). [1] It may be premised that the articles of copartnership, dated June 12, 1913 (Exhibit 1), contained no terms that expressly, or by necessary implication, abrogated the prior agreement of the parties, dated December 15, 1902, by which the plaintiff, E. G. Faust, purchased from defendant A. J. Rohr, the furniture and fixtures of the partnership, theretofore existing between them, and which firm had conducted the business of barbers in the city of Monroe, N. C., and in which agreement the defendant, A. J. Rohr, covenanted with the plaintiff, E. G. Faust, "that he would not at any time thereafter engage in, directly or indirectly, or concern himself in carrying on or conducting, the business of a barber, either as principal, agent, or servant, within the incorporated limits of the said city, so long as the plaintiff, E. G. Faust, may conduct or carry on the business of a barber therein." But this statement is not to be understood as meaning that the said stipulation in the contract of December 15, 1902, was not abrogated by the partnership articles, if the latter, otherwise, and from their very nature, should, in law, have such an effect. The terms of the copartnership of December 12, 1913, were of the usual charac ter in such cases, providing for its formation, the interest that each of its members should have in its stock and property, the proportion in which losses should be borne, and generally for the proper and orderly management and conduct of its affairs, and finally for the manner of its dissolution, and a just division of its assets and effects upon such dissolution. So we have before us the question whether the mere formation of a partnership afterwards, for the purpose of carrying on the same kind of business and conducting the business for the space of less than a year, should have the legal effect of a waiver or discharge of the negative covenant in the prior agreement. We do not think it should be so construed. This court has before had under consideration contracts of this sort, for the purpose of ascertaining their nature, validity, and the scope of their operation. Baker v. Cordon, 86 N. C. 116, 41 Am. Rep. 448; Cowan v. Fairbrother, 118 N. C. 406, 24 S. E. 212, 32 L. R. A. 829, 54 Am. St. Rep. 733; Kramer v. Old, 119 N. C. 1, 25 S. E. 813, 34 L. R. A. 389, 56 Am. St. Rep. 650; Hauser v. Harding, 126 N. C. 295, 35 S. E. 586; King v. Fountain, 126 N. C. 196, 35 S. E. 427; Teague v. Schaub, 133 N. C. 458, 45 S. E. 762; Jolly v. Brady, 127 N. C. 142, 37 S. E. 153; Disosway v. Edwards, 134 N. C. 254, 46 S. E. 501. No question has been made as to the validity of this contract. In King v. Fountain, supra, the court said with respect to this point:

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