Fleckenstein Bros. Co. v. Fleck Enstein

• Court: New Jersey Court of Chancery
• Writing for the Court: STEVENSON, V. C.
• Citation: Fleckenstein Bros. Co. v. Fleck Enstein, 53 A. 1043 (N.J. Ch. 1903)
• Decision Date: 19 January 1903
• Parties: FLECKENSTEIN BROS. CO. v. FLECK ENSTEIN.

53 A. 1043

FLECKENSTEIN BROS. CO.

v. FLECK ENSTEIN.

Court of Chancery of New Jersey.

Jan. 19, 1903.

Suit by the Pleckenstein Bros. Company against Edward Pleckenstein. On motion for preliminary injunction restraining defendant from engaging in a certain business. Injunction granted.

Charles W. Fuller, for complainant.

James A. Gordon, for defendant.

STEVENSON, V. C. (orally). My conclusion is that the injunction should be granted in accordance, as I recall it, substantially with the prayer of the bill. That is to say, an injunction will go, restraining the defendant from committing any breach of the contract which he entered into; and, so far as I recollect the words of the contract, they may be followed in the injunction.

I laid this case aside to wait for the brief of counsel upon a single point, and during that period entered upon another case that crowded almost everything else from my mind. I shall only undertake now briefly to indicate some of the reasons—the main reasons, as I now recall them—that support the conclusion which I reached.

The defendant sold a business, including the good will of the business, and he backed up his sale by his personal covenant that he would not enter into the same business within three counties of the state for a period of 10 years. The defendant who made this sale had a short time before sold one-half of the business to another party, or at least another party acquired a half, and it was the remaining, half which was sold to the assignors of the complainant; and with these assignors he entered into this contract restraining himself from engaging in a competing business within a limited time, and within a limited area. At the same time the purchaser, the assignor of the complainant, entered into an engagement with the defendant not to sell the business until the purchase price should be paid, or until a portion of the purchase price, which, as I now recollect, was $5,000, was paid. At the time of this sale the business was being carried on in the name of E. Fleckenstein & Co.; E. Pleckenstein (Edward Fleckenstein) being the seller of the business. At that time there was being carried on what was manifestly a competing business by the brother of Edward Fleckenstein, a man named George Fleckenstein. There were thus two Fleckenstein establishments competing in this same bologna and provision business. The covenant of the defendant was intended to prevent him from competing with the one business which he sold. Of course, it could not interfere with competition on the part of the other Fleckenstein establishment. The purchasers from Fleckenstein entered first into a partnership with the person who had the other half of the business, and after a transfer, I think, of that one-half, finally the business was all transferred to a corporation; and, as was stated, and as I understood it was admitted by counsel, at the same time the rival Fleckenstein business was also conveyed to this same corporation. A corporation was organized under the name of Fleckenstein Bros., or Fleckenstein Bros. Co., and the Fleckenstein Bros. Co. are the complainants in this case: and by this consolidation they brought into one business the two rival Fleckenstein establishments.

It does not appear that when the original purchasers from Edward Pleckenstein transferred to the corporation the business, or their interest in it, they transferred, in terms, the covenant which Fleckenstein entered into with them, restraining him from carrying on a competing business. Nor was the covenant made by Fleckenstein with these sellers and their assigns. It is insisted, therefore, that it is a personal covenant, and not assignable. My conclusion, however, is that the covenant, if not intended to be assigned by the original covenantees when they made their transfer to the complainant corporation, about which the testimony, perhaps, is doubtful,—certainly unsatisfactory,—at least was subsequently assignable to the party who took the business. Such covenants have all their vitality and value from their association with the business. They are intended to protect a business, to keep it, and make it valuable to the purchaser; and, even if the transfer by the purchaser to the company was not accompanied by a transfer of this covenant, the corporation might well rely upon their getting the benefit of the covenant as long as it remained in the hands of the purchasers,—the original purchasers. These purchasers became interested in the corporation,— undoubtedly took stock in the corporation. I think t...