Guerand v. Dandelet

Decision Date20 June 1870
Citation32 Md. 561
CourtMaryland Court of Appeals

APPEAL from the Circuit Court of Baltimore City.

The cause was argued before BARTOL, C.J., STEWART, BRENT MAULSBY, ALVEY and ROBINSON, J.

Joseph S. Heuisler and Wm. Pinkney Whyte for the appellant.

The clause in the contract between F. Guerand and the appellee and Feuillan, if correctly construed by the appellee, as binding Guerand to forbear forever from carrying on the dyeing and scouring business in Baltimore city, was void as being in restraint of trade. The time was unlimited, and the prevention of competition in the whole city of Baltimore was injurious to the public and void. Ross vs. Sagdben, 21 Wend., 166; Hitchcock vs. Coker, 6 A. & E., 438; Pierce vs. Fuller, 8 Mass., 223; 1 Smith's Lead. Cases, Pt. 2, p. 648, 650.

But if the covenant were binding on F. Guerand, it was not binding on his posterity. His son, the appellant, has a right to carry on the business, as it is admitted he is really the party carrying it on.

But the true construction of the clause is, that F. Guerand bound himself, during the lease, not to compete with the good-will of that establishment while Dandelet & Feuillan were occupying that store, as his tenants under the ten year lease. The whole of the covenant is to be looked to in its construction.

There is an adequate remedy at law, if the contract has been violated, and equity cannot be invoked.

Arthur Geo. Brown and George Wm. Brown, for the appellee.

This is a proper case for the intervention and protection of a Court of Equity. Am. Law Reg., Feb. 1870, 65, et seq.; McClurg's Appeal, 58 Penna., 51; Catt vs. Tourle, 4 Chanc. Ap. Cases, 659; Harrison vs. Gardner, 2 Madd. Ch., 198; Williams vs. Williams, 2 Swanst., 253; Butler vs. Burleson, 16 Vermont, 176; Beard vs. Dennis, 6 Indiana, 200; Palmer vs. Graham, 1 Pars., 476.

Contracts restraining the exercise of a trade in particular localities are valid, and the sufficiency of the consideration will not be inquired into. Barney vs. Davis, 2 G. & J., 382; McClurg's Appeal, 58 Penn., 51; Catt vs. Tourle, 4 Ch. Ap. Cases, 659; Mitchell vs. Reynolds, 1 P. Wms., 181; Davis vs. Mason, 5 T. R., 118; Hayward vs. Young, 2 Chitty, 407; Bunn vs. Guy, 4 East, 190.

Francois Guerand having covenanted that he would not, "directly or indirectly, compete with the aforesaid lessees and vendees for the good-will and custom sold," &c., cannot suffer or permit his house, No. 124 N. Howard street, to be used for a dyeing or scouring establishment, nor sell it with the knowledge that it will be so used; and such business, by whomsoever there conducted with his assistance or connivance, is a violation of his contract. Davis vs. Barney, 2 G. & J., 382, 401, &c.

The appellee being, by purchase, the absolute owner of the custom, good-will and name of Guerand's dyeing and scouring establishment, has a right to the name and franchise as against all the world. Croft vs. Day, 7 Beav., 84; Sykes vs. Sykes, 3 B. & C., 54; Howe vs. Howe, &c., 50 Barb., 236.

On appeals from orders granting injunctions, the appellate Court is confined to the case made by the bill, and will not consider the answer. Alexander vs. Worthington, 5 Md., 471; Guyton vs. Flack, 7 Md., 398; McCann vs. Taylor, 10 Md., 419; Hyde vs. Ellery, 18 Md., 499; Haight vs. Burr, 19 Md., 132.

ALVEY J., delivered the opinion of the Court.

This is an appeal from an order granting an interlocutory injunction to restrain the appellant and his father, Francis Guerand, from carrying on a dyeing and scouring establishment, at No. 124 North Howard street, in the city of Baltimore, and from advertising the same in any newspaper, or by card, circular or otherwise.

In determining upon the propriety of the order appealed from, we are confined, on this appeal, exclusively to the bill and the exhibits filed therewith; for if the answer, which is required to be filed as a condition precedent to the right of appeal, could be taken into consideration, we should be reviewing the order by the light of other facts than those presented to the Judge below and upon which he acted. This would not be at all consistent with the exercise of mere appellate jurisdiction, to which this Court is confined.

The appellee, the complainant below, by his bill and exhibits, presented, we think, a clear case for the injunction that was granted. By the lease of the 17th of October, 1859, Francis Guerand, the father of the appellant, let to Jean Feuillan and the appellee his house and lot, No. 124 North Howard street, theretofore used as a dwelling, store and dyeing and scouring establishment, for the term of ten years, at an annual rent of $1,000; and in this lease we find incorporated an agreement by which the lessor sells to the lessees the custom, good-will, name and utensils then in, upon and about the leased premises, theretofore known as "Guerand's Dyeing and Scouring Establishment," together with the right to use the same name and style as theretofore, and carry on the business of dyeing and scouring, for the sum of $3,000, payable in instalments; and Guerand, the lessor, covenanted that, on the payment of the purchase money for the custom, good-will, name and utensils sold, he would not, at any time thereafter, "exercise or conduct, in the city of Baltimore, the trade or profession of a dyer or scourer, nor directly or indirectly compete with the aforesaid lessees and vendees for the good-will and custom sold as aforesaid."

The purchase money for the custom, good-will, name and utensils has all been paid, and the term of the lease has expired, and there has been no renewal of it. The co-partnership between the complainant and Feuillan, entered into at the date of the lease, has been dissolved, and upon such dissolution, Feuillan, in pursuance of the terms of the articles of co-partnership, sold and assigned to the complainant all his interest in the partnership and its property and effects. The complainant, shortly before the expiration of the lease, applied for its renewal to him, but the amount of rent asked being largely increased over the former rent, he declined to accept a renewal on the terms proposed to him; and, on having to surrender the premises at No. 124 North Howard street, he rented the premises next door thereto, and established himself, by a considerable outlay of money, in his regular business of dyer and scourer, where he has continued to carry on such business to the present time. And the ground of complaint now is, that since his removal from No. 124 North Howard street, Guerand has recently opened, or caused and permitted to be opened there, a dyeing and scouring establishment, with conspicuous signs and advertisements of the business, intended to re-call former customers; such signs and advertisements containing the name of E. F. Guerand, the son, as proprietor; but it is alleged that the use of such name is a mere cover and blind adopted with the intent to conceal the interest of the father in the establishment; that the capital employed in the business, as well as the property occupied by the establishment, belongs to Francis Guerand, and not to the son in whose name the business is apparently conducted. It is also alleged that the competition thus brought into existence is seriously injurious to the business of the complainant, and that it is in derogation of the contract with Francis Guerand of the 17th of October, 1859.

By the contract the restriction on the exercise of the trade in the city of Baltimore is plain and unequivocal. Guerand covenanted that he would not, at any time thereafter, be engaged in the particular business, nor directly or indirectly compete for the good-will and custom sold. The restriction as to locality is limited, but as to time it is without any limit whatever; and it has been contended by the appellant that the whole covenant is void, because its observance would operate to the prejudice of trade and industry.

As a general rule, it is true, a contract, whether under seal or otherwise, in unlimited restraint of trade, or of any particular vocation, is absolutely void, as being contrary to public policy, as well as oppressive in its operation upon individual industry. This has been the law from an early period in the history of English jurisprudence, as is abundantly shewn in the elaborate judgment of LORD MACCLESFEILD, in the leading case of Mitchel vs. Reynolds, 1 P. Wms., 181. But while this is the general rule, the same leading case just referred to fully establishes the principle that contracts only in partial restraint of any particular trade or employment, if founded upon a sufficient consideration, are valid and enforcible.

The restraint, however, to be lawful, must be confined within reasonable limits. "Where it is larger and wider than the protection of the party with whom the contract is made can possibly require," said the Court in Hitchcock vs. Coker, 6 Ad. & El., 454, "such restraint must be considered as unreasonable in law, and the contract which would enforce it must be therefore void." If the restraint therefore be general, and not confined to any particular locality, the shortness of the time for which it is imposed will not make it good. Ward vs. Byrne, 5 M. & W., 548. But if it be reasonable as to locality, the fact that it is indefinite as to its duration will not affect its validity. Add. on Conts., 100. "Contracts restraining the exercise of a trade or profession in a particular...

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