Kaliopulus v. Lumm

• Decision Date: 05 April 1928
• Docket Number: 39.
• Citation: 141 A. 440,155 Md. 30
• Parties: KALIOPULUS v. LUMM ET UX.
• Court: Maryland Court of Appeals

141 A. 440

155 Md. 30

KALIOPULUS v. LUMM ET UX.

No. 39.

Court of Appeals of Maryland

April 5, 1928

Appeal from Circuit Court, Washington County; Frank G. Wagaman Judge.

"To be officially reported."

Action by Charles M. Lumm and wife against James Kaliopulus. From the judgment, defendant appeals. Cause remanded.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, PARKE, and SLOAN, JJ.

Alexander Armstrong and John Henry Lewin, both of Baltimore (Armstrong Machen & Allen, of Baltimore, and Scott M. Wolfinger, of Hagerstown, on the brief), for appellant.

Daniel W. Doub, of Hagerstown (J. Lloyd Harshman, of Hagerstown, on the brief), for appellees.

PARKE J.

James Kaliopulus, the appellant, conducted an eating house in Hagerstown, Md., when, on May 13, 1921, he sold the business, with all its fixtures and equipment, and assigned his unexpired term in the building where the restaurant was carried on to Charles E. Lumm and Ida K. Lumm, his wife, the appellees, for $30,000. The eating house was located on the premises known as No. 76 Washington street, and was called the "Maryland Dining Room." The buyers engaged to pay $1,000 on the making of the contract, $14,000 on or before the 1st of June following, and to give for the residue of $15,000 their 30 equal joint and several promissory notes, dated, and bearing interest from, June 1, 1921; and the first maturing on July 1, 1921; and thence one maturing successively on the 1st of every month thereafter until all had so become due, with the right of the buyers to anticipate the payment of all or any part of these notes.

The only other provisions of the contract of sale that need be stated are those with which this appeal is concerned, and they are found in the following paragraph:

"And it is hereby agreed and understood by and between the parties hereto, and a part of the consideration of the purchase price aforesaid, that the said party of the first part is not to enter into, conduct, or finance any restaurant or dining room business within the corporate limits of Hagerstown, Md., for a period of ten years from June 1, 1921, provided, however, that the said party of the first part may continue to conduct as heretofore the Maryland Cafeteria situate on the west side of the Public Square in Hagerstown, Md., as a cafeteria only, and shall not at any time within said period of ten years conduct or have the same conducted as a restaurant or dining room."

The seller delivered the subject-matter of the sale, and the buyers paid the price agreed, and have, since June 1, 1921, carried on the business thus acquired. The bill of complaint set forth these facts, and further alleged that the seller had broken his contract, in that on or about the 1st of April, 1922, he had entered into, conducted, and helped to finance a certain restaurant or dining room in Hagerstown, known as the Washington Restaurant, adjoining which he operates a hotel. The bill of complaint also charged that the Washington Restaurant is a corporation which was formed by several of seller's former employees and waiters in the Maryland Dining Room, but at the instance and with the co-operation and the financial and other support of the seller and as a mere cover or blind to conceal his interest; that the seller for some time past had been, and was then, "financing, managing, supervising, and in reality operating, the said Washington Restaurant" on the same street with, and within a distance of about 300 feet from, the Maryland Dining Room; and that, by reason of the seller's connection with and management of the Washington Resturant, the business bought by the appellees of the appellant had been greatly and so damaged that the buyers were left without adequate remedy at law.

The specific relief sought by the buyers was that the seller be required to discover what was his official connection with the Washington Restaurant; whether or not he had any of its capital stock or had loaned it any money, and what interest he had as manager or in any other capacity in the conduct of the Washington Restaurant; and that the seller be enjoined from entering into, financing, managing, or supervising or having any other connection with the said Washington Restaurant, or any other restaurant in the city of Hagerstown Md., for the period of ten years from June 1, 1921.

The averments of the bill of complaint upon which the complainants' equity depended have been stated in the language of the bill of complaint, so that their significance in relation to one another may best appear, since the demurrer of the appellant admits all the well-pleaded facts. The appellant does not deny that the bill of complaint charges him with a breach of contract for which, under the circumstances, the complainants would be entitled to relief in equity, but his demurrer raises three objections which are designed to bar the buyers' relief under the present bill of complaint. The first point is that exhibits are not filed with the bill of complaint showing that the appellees have title to the Maryland Dining Room; and the second is that necessary parties have not been made defendants; and the third is laches. The first two points grow out of the pleadings, and are not a bar to relief, but simply to the pending procedure, while the third point would prevent any redress on the ground that it was lost by delay.

1. The allegations of the bill of complaint are sufficiently precise and specific to show the sale and purchase of the eating house and the assignment of the residue of the term of the lease of the premises wherein the business was conducted; and the payment by the buyers of the contract price; and the delivery by the seller to the buyers of the premises and the business where they "have been conducting the same as a restaurant and dining room ever since"; and the breach by the seller of his covenant whereby "their business has been greatly damaged and reduced and the volume of business greatly decreased to their great injury and damage." It is clear that these averments, with the context, definitely state that the complainants are acting in their own proprietary capacity, and negative any reasonable inference that their possession and operation of the Maryland Dining Room are not as owners deriving their title through their purchase and assignment from the appellant.

Under these circumstances, the right of the buyers to enjoin the seller from the violation of his covenant depends primarily solely upon the instrument containing that broken covenant, which is only to be found in the original contract between the parties. It is true that the seller agreed by this contract "to execute and deliver to the said parties of the second part a good and sufficient deed of conveyance conveying to the purchaser the goods, chattels, and property herein sold, free and clear of all liens and incumbrances," upon the buyers making the cash payments agreed upon and making the delivery of the promissory notes for the rest of the purchase price. However, on the payment of the purchase price, the delivery of the goods and chattels and of the business, with its good will, the complete title in the personalty sold passed to the buyers, and made the execution and delivery of a deed of bargain and sale a supererogation. Nor would the production of the assignment of the leasehold estate have shown any present interest in the premises at the time of the filing of the bill of complaint by virtue of the lease which the seller had at the time of the contract, since the term thereby created had expired on April 1, 1926; and the subsequent occupancy of the same premises by the buyers would be under the owner of the reversion.

Furthermore, it is to be observed that the performance of the obligations of the covenant which is alleged to have been violated by the seller did not depend upon the condition that the covenantees should carry on the Maryland Dining Room at any particular place in Hagerstown or as owners or as tenants by a lease in writing of the premises occupied. Venable's Real Property, pp. 41, 42. It is enough that the complainants were in possession of the premises and there conducting the restaurant; whether the lease be in writing or oral is immaterial. The covenantees were engaged in keeping an eatinghouse on the original site, and so it follows that their right to proceed against the covenantor by injunction did not depend upon the execution of a conveyance, an assignment, or a lease to them in writing, but upon a breach of a written contract, and, since this contract was produced and filed as a part of the bill of complaint, the appellees have complied with the requirement that in applications for an injunction there should generally be filed by the plaintiff the papers or instruments of writing in his possession on which his equity rests. Didier v. Merryman, 114 Md. 434, 438, 79 A. 597; Havre de Grace v. Lewis, 127 Md. 367, 371, 96 A. 515; Washington County Water Co. v. Hagerstown, 116 Md. 497, 509, 82 A 826, Ann. Cas. 1913C, 1022; Stinson v. Ellicott City, etc., Co., 109 Md. 111, 116, 71 A. 527; Miller's Equity, §§ 582, 583.

2. Another ground of demurrer is the nonjoinder of necessary parties defendant. The allegations in substance are that the Washington Restaurant is a corporation which was organized by the covenantor and some of his former employees and waiters as a cover under which he managed and operated an eating house in breach of his covenant. If this be true, the corporation was the covenantor's conscious tool, and bound by its notice of the original contract to refrain, with the covenantor, from a breach of the covenant. The negative covenant here is express, and its negative specific performance by injunction is no longer...