Klaff v. Pratt.*

• Decision Date: 09 September 1915
• Citation: 117 Va. 739,86 S.E. 74
• Parties: KLAFF. v. PRATT.*
• Court: Virginia Supreme Court

86 S.E. 74

117 Va. 739

KLAFF.

v.PRATT.^*

Supreme Court of Appeals of Virginia.

Sept. 9, 1915.

Appeal from Law and Chancery Court of City of Norfolk.

Suit by Dwight M. Pratt against Isaac Klaff. Decree for plaintiff, and defendant appeals. Reversed and annulled, and decree entered dismissing the bill.

Jas. G. Martin, of Norfolk, for appellant.

A. B. Seldner, of Norfolk, for appellee.

CARDWELL, J. The bill in this, cause was filed by Dwight N. Pratt against Isaac Klaff to have specifically enforced by injunction an alleged agreement in writing between the parties, filed with the bill as "Exhibit A, " and bearing date the 9th day of August, 1913. This agreement, under seal, sets out that, in consideration of $1 and other good and valuable considerations, paid to Klaff by Pratt, of Lowell, Mass., Klaff for himself, etc., covenanted, promised, and agreed to and with Pratt, his personal representatives, etc., that he (Klaff) for 7 years from the date of the agreement would not— "either alone or jointly, directly or indirectly, with any other person or persons or corporations, excepting the said Dwight M. Pratt, carry on, conduct, continue, or engage in the business of rendering tallow, bones, grease, or dead animals, or the purchase and sale of hides, skins, furs, and wool, in the city of Norfolk, Va., or within a radius of forty (40) miles of said city of Norfolk. In case of my failure herein, I, the said Isaac Klaff, bind myself and agree to pay as liquidated damages the sum of five thousand dollars ($5,000.00) to the said Dwight M. Pratt, or his personal representatives or assigns, as aforesaid."

The bill then sets out that the plaintiff, on the date of said agreement, for some time prior, and at the institution of this suit, was largely interested and had a considerable investment in the business of the Virginia Hide & Fur Company, Incorporated, under the laws of Virginia, and in the Norfolk Tallow Company, unincorporated, which two companies have their respective places of business in the city of Norfolk, the Virginia Hide & Fur Company then and theretofore for several years past having been engaged principally in dealing in hides, skins, furs, and wool, and the business of the Norfolk Tallow Company being that of rendering tallow, bones, grease, and dead animals, and dealing in same; that in the conduct of the business of the two companies large sums of money have been invested and a business of some magnitude had been built up by them; that some years prior to August 9, 1913, the defendant was in the employ of the Virginia Hide & Fur Company, and was performing in the said business such services as were imposed upon him, etc., the Virginia Hide & Fur Company having previous to the month of May, 1912, been also engaged in the business of rendering tallow, bones, grease, and dead animals, and dealing in the same, in the city of Norfolk, and in the county of Norfolk, Va., and the defendant, having been in the employ of the said company at the said time, was familiar with its methods and manner of transacting its business; that subsequently to the month of May, 1912, the businesses of the Virginia Hide & Fur Company and of the Norfolk Tallow Company were operated and owned practically by the same interests and were closely identified and connected with each other. It is then alleged that some time prior to the agreement filed with the bill, and which is sought to be enforced in this suit, the defendant agreed by an oral agreement with the plaintiff that if the latter would purchase or secure a purchaser for certain real estate of the former, situated in Norfolk City, Va., the defendant would enter into an agreement with the plaintiff of the character and nature of the agreement filed with the bill; that the plaintiff, pursuant to said oral agreement, purchased of the defendant said real estate, through his representative and agent, E. L. Field, for a consideration of $5,300, of which sum $1,000 was paid in cash and the remainder secured on the property, the same being the consideration and terms agreed upon between the plaintiff and the defendant, and the title to the property was, at the instance and request of plaintiff, conveyed by the defendant and his wife to the said E. L. Field by deed dated August 9, 1913, and duly recorded, etc.; and that on said date, in consideration of the purchase by the plaintiff of said real estate, the defendant entered into the agreement filed with the bill and sought to be enforced.

The bill then alleges the breach of said agreement on the part of the defendant to be that he, on or about the 1st day of November, 1913, did engage either alone or jointly, directly or indirectly, with some other person, persons, or corporations, excepting the plaintiff, in the conduct or carrying on of the business of purchasing and selling of hides, etc., in the city of Norfolk, and was at the filing of the bill in this cause so engaged in said business at a certain number in said city, where the defendant had an office or place of business for the purpose of carrying on or conducting the business referred to. It is further alleged that the object of the agreement filed with the bill was to prevent the defendant, who was familiar with the methods and manner of con-ducting the businesses in which the plaintiff was interested as aforesaid, from engaging in a like business, and that the true intent and meaning of the agreement is that the defendant would not engage in, or carry on, or conduct, or continue, any one or more of such businesses either alone or jointly, directly or indirectly, with any other person or persons, etc., except the plaintiff, in the city of Norfolk, or within a radius of 40 miles thereof for a period of 7 years from and after the date of the agreement, and that the plaintiff had been reliably informed that the defendant, either alone or jointly, or with some other person or persons, etc., anticipated or was about to engage in the city of Norfolk, or within a radius of 40 miles from the city, in the business of rendering tallow, bones, grease, and dead animals, in further violation and disregard of his said agreement, etc.

The following paragraph also appears in the bill:

"That your orator, upon ascertaining the violation by the said Isaac Klaff of his said agreement, brought a suit at law in this honorable court, returnable to the first November rules, 1913, for the purpose of recovering in said suit a judgment for five thousand dollars ($5,000.00), the amount of damages which the said Klaff agreed to pay to your orator in case of his violation of the terms and conditions of the said agreement. Since the bringing of the said suit, however, your orator has been informed, and therefore charges and alleges, that if a judgment in said suit were obtained in his favor for the said sum of five thousand dollars ($5,000.00) against the said Isaac Klaff, that he would be unable to collect the said judgment from the said Isaac Klaff, and that the said Isaac Klaff, being unable to pay the said judgment, would be insolvent. Under these circumstances, your orator has had dismissed the said suit above referred to, and the said suit is no longer pending or on the docket of this honorable court."

It is further alleged that, unless the prayer of the bill be granted, the plaintiff would sustain irreparable damage, and the relief prayed is that the defendant be, pending this litigation and perpetually, restrained and enjoined from the violation of the terms and conditions of said agreement of August 9, 1913, and from carrying on, conducting, continuing, or engaging in the business of rendering tallow, bones, grease, and dead animals, or the purchase and sale of hides, skins, furs, and wool, or any or either of them, in the city of Norfolk, or within a radius of 40 miles of said city, for a period of 7 years from and after the date of said agreement, either alone or jointly, etc.

The defendant demurred to the bill upon a number of grounds, stated in writing, which demurrer was overruled, and the defendant then filed an answer, and later an amended answer—his answer denying most of the material allegations of the bill, and particularly asserting that the plaintiff was manager of concerns that were part and parcel of a monopoly in the city of Norfolk and elsewhere conducting the businesses of the kind mentioned in the alleged contract filed with the bill in this case as "Exhibit A"; that said contract was a part of the scheme of said concerns to monopolize these businesses, and that such monopoly was inimical to public policy; that the claim made in the bill that the true consideration for the contract "A"...