Loftin v. Parker

• Court: Alabama Supreme Court
• Writing for the Court: SIMPSON, Justice.
• Citation: Loftin v. Parker, 253 Ala. 98, 42 So.2d 824 (Ala. 1949)
• Decision Date: 25 November 1949
• Docket Number: 5 Div. 465.
• Parties: LOFTIN v. PARKER.

42 So.2d 824

253 Ala. 98

LOFTIN v. PARKER.

5 Div. 465.

Supreme Court of Alabama

Nov. 25, 1949

[Copyrighted Material Omitted]

Jacob A. Walker and R. C. Smith, of Opelika, for appellant.

Brown & McMillan, Auburn, and Roberts H. Brown, of Opelika, and Knox McMillan, of Auburn, for appellee.

SIMPSON, Justice.

The appeal is from a decree in equity granting an application for a temporary writ of injunction after a hearing under the statute.--Code, Title 7, § 1057.

The hearing was had on the amended bill and the sworn answer and the affidavits and testimony ore tenus before the court of the parties and witnesses, consistent with the provisions of § 1054, Title 7, Code.

The objective of the bill was to enforce by injunctive process an alleged contract whereby appellant, Loftin, sold the 'Grady Loftin's Ready to Wear' business, with its good will, and bound himself not to 'directly or indirectly, engage in or become financially interested in the dry goods or ready to wear business during the next 3 years in the City of Auburn, Alabama, nor within the territory included in a 3 1/2 mile radius from the location known as Loftin's Ready to wear business or store.'

The facts developed, in so far as deemed essential to the proper disposition of the appeal, are substantially the following Appellant owned the aforesaid ready-to-wear business and was the proprietor or manager of an adjoining mercantile business known as 'Grady Loftin,' a 5 and 10¢ novelty store. Sometime in the later part of the year, appellee approached appellant with reference to selling the 5 and 10¢ store and was told by Loftin that that business was not for sale, but he would sell the ready-to-wear business, in consequence of which negotiations they finally came to an agreement that Loftin would sell and appellee would buy the ready-to-wear business, and on December 31st Loftin executed a memorandum to the effect that the transaction would be completed on January 2nd following, which memorandum recited, among other things, 'total amount for both fixtures, good will and merchandise being $23,000.00.' This memorandum was made Exhibit B to the bill. On said January 2nd, a written agreement of sale and purchase was entered into between the parties whereby appellant agreed to sell and appellee to buy the business at the figure stated, which document contained the above-quoted covenant, the basis of this litigation. This agreement was made Exhibit A to the bill. Exhibit C to the bill was the final bill of sale executed by appellant transferring and conveying appellee the property.

The three exhibits, when taken and considered together, clearly establish a covenant for valuable consideration whereby appellant, for the stated locality and period, would refrain from the business mentioned. The mere fact that document C conveying the property, omitted such a stipulation or that document A, agreeing to sell, omitted to include a sale of the good will of the business, in no way detracted from the validity of the covenant. The two documents, together with the memorandum exhibited as B, evidenced the whole transaction and indicate sufficiently that the good will of the business was included in the sale. 'It is not essential that the contract for the sale of a business expressly include the good will thereof. Covenants designed in the nature of them, to protect the good will of the business being sold, imply a sale of the good will.'--Yost v. Patrick, 245 Ala. 275, 280, 17 So.2d 240, 244; Maddox v. Fuller, 233 Ala. 662, 665, 173 So. 12.

After this purchase, appellee became the owner and operator of the ready-to-wear store, which at the time also handled dry goods, and his contention is that, after this sale Loftin, in violation of his covenant to refrain from engaging in or becoming interested in such a business, began selling in the 5 and 10¢ store merchandise similar to that previously sold by him in his ready-to-wear business, or as stated in appellee's brief, 'that the appellant has been using the 5 and 10¢ store as a facade behind which appellant has revived the dry goods and ready-to-wear business sold to the appellee and that for some time the appellant has been violating his covenant by subterfuge.'

The rule to determine the enforceability of contracts of the nature of the one here considered is well settled. It was thus stated by the late Chief Justice Anderson in Crossfield v. Lokey, 212 Ala. 560, 561, 103 So. 649:

'It is undoubtedly the law in this country and in England, that contracts in general restraint of trade are void as against public policy; but contracts, like the one here involved, where one sells his business and good will to another and covenants not to engage in a similar business for himself or another in a certain territory and for a specified time, have been repeatedly upheld by the courts and have been enforced by the restraining effect of injunctive process. * * *'

Our statute law now embodies the settled principle.--Code 1940, Title 9, §§ 22, 23, and 24; J. L. Davis, Inc., v. Christopher, 219 Ala. 346, 122 So. 406.

Section 22 provides:

'Every contract by which any one is restrained from exercising a lawful profession, trade, or business of any kind, otherwise than is provided by the next two sections, is to that extent, void.'

Section 23, as pertinent, provides:

'One who sells the good will of a business may agree with the buyer * * * to refrain from carrying on or engaging in a similar business * * * within a specified county, city, or part thereof, so long as the buyer or any person deriving title to the good will from him * * * carries on a like business therein.'

Section 24 is not germane to the incidents of the present case.

It is to be observed from the established law that an essential to the validity of that character of contract is that the vendor may only contract against competing with the buyer or subsequent title holder of the business sold, that is, he may contract not to engage in a rival business similar to that sold.--Cases, supra. See also Yost v. Patrick, 245 Ala. 275, 17 So.2d 240; Shelton v. Shelton, 238 Ala. 489, 493, 192 So. 55; Maddox v. Fuller, 233 Ala. 662, 665, 173 So. 12; Crossfield v. Lokey, 212 Ala. 560, 103 So. 649; McCurry v. Gibson, 108 Ala. 451, 456, 18 So. 806, 54 Am.St.Rep. 177.

True, the instant contract was not so restricted in verbiage, but such qualification is by law written into it and we think the bill exhibiting it, with a prayer for its enforcement, sets forth allegations of sufficient equity to invite its specific performance if there be sufficient proof to sustain the equity.

The trial court made no finding of fact, but, after requiring the necessary bond, ordered the register to 'issue a temporary writ of injunction,...