Hudgens v. Olmstead Mfg. Co.

• Court: Arkansas Supreme Court
• Writing for the Court: GEORGE ROSE SMITH
• Citation: Hudgens v. Olmstead Mfg. Co., 300 S.W.2d 26, 227 Ark. 475 (Ark. 1957)
• Decision Date: 04 March 1957
• Docket Number: No. 5-1179,5-1179
• Parties: C. C. HUDGENS et al., Appellants, v. OLMSTEAD MANUFACTURING COMPANY, Inc., et al., Appellees.

Page 26

300 S.W.2d 26

227 Ark. 475

C. C. HUDGENS et al., Appellants, v. OLMSTEAD MANUFACTURING COMPANY, Inc., et al., Appellees.

No. 5-1179.

Supreme Court of Arkansas.

March 4, 1957.

H. B. Stubblefield, Little Rock, for appellants.

Frank J. Wills, Little Rock, for appellees.

GEORGE ROSE SMITH, Justice.

This is a suit by the appellees to enjoin the appellants from violating a contract by which the principal appellant, C. C. Hudgens, agreed that for a period of three years he would not engage directly or indirectly in any business competitive with that of the appellees in that part of Pulaski county lying west of Hayes Street as extended southward to the county line. This appeal is from a decree in favor of the plaintiffs.

On March 29, 1954, Hudgens was the principal stockholder in two corporations. One of these corporations, Rosedale Building & Supply Company, Inc., was actively conducting a building materials business at 8108 Asher Avenue, which is west of Hayes Street. The other corporation, Asher Avenue Building Supplies, Inc., had an office east of Hayes Street but was not doing an active business.

On the date mentioned the Rosedale corporation and Hudgens individually executed a contract by which the assets of the 'building supply business' at 8108 Asher Avenue were sold to the appellee, Olmstead Manufacturing Company, Inc. This contract defines the Rosedale area as that part of Pulaski county described above and further provides: 'A part of the consideration for said sale is that neither the Seller nor C. C. Hudgens, individually, shall engage directly or indirectly in the Rosedale Area for a period of three years from April 1, 1954, in any business competitive with that to be conducted by the Buyer * * *, it being contemplated that the business to be conducted by the Buyer * * * shall be similar to that heretofore conducted by the Seller.' The plaintiffs were permitted in the court below to show that during the negotiations for the sale Hudgens represented that the Rosedale corporation was engaged in the sale of building materials and in the construction of houses. Whether the latter activity is forbidden by the contract is the basic dispute in the case.

At the time of the sale Hudgens owned more than a hundred vacant lots in the Rosedale area. Within a few months after the sale Hudgens reactivated his other corporation and began constructing and selling homes on these lots, the materials being furnished by the corporation. At the trial Hudgens readily admitted that he was still building houses in the prohibited area and intended to continue to do so.

The chancellor correctly enjoined this course of business on Hudgens's part. We do not agree with the appellants' contention that the parol evidence rule was violated by the proof that the selling corporation had, before the sale, been building houses and in that way selling building materials. The contract refers to a building supply business, which is not an exact term, and provides that it is contemplated that the buyer's business will be similar to that previously conducted by the seller. This general language is open to more than one interpretation and therefore may be clarified by oral evidence. 'The testimony merely makes certain that which the face of the contract leaves uncertain as to what the intention of the contracting parties was.' Montgomery v. Arkansas Cold Storage & Ice Co., 93 Ark. 191, 124 S.W. 768, 769. It is immaterial that Hudgens carried on his operations in the prohibited area from a headquarters outside that area, as there is still a violation of the contract. Corbin on Contracts, § 1386; Johnson v. Stumbo, 277 Ky. 301, 126 S.W.2d 165; Foxworth-Galbraith Lbr. Co. v. Turner, 121 Tex. 177, 46...