Maddox v. Fuller

• Decision Date: 21 January 1937
• Docket Number: 4 Div. 899
• Citation: 173 So. 12,233 Ala. 662
• Parties: MADDOX v. FULLER et al.
• Court: Alabama Supreme Court

173 So. 12

233 Ala. 662

MADDOX v. FULLER et al.

4 Div. 899

Supreme Court of Alabama

January 21, 1937

Rehearing Denied March 18, 1937

Appeal from Circuit Court, Coffee County; W.L. Parks, Judge.

Bill for injunction by S.D. Fuller and another against J.W. Maddox and others. From a decree overruling a demurrer to the bill the respondents appeal.

Affirmed.

Rowe &amp Rowe, of Elba, for appellant.

Sollie & Sollie, of Ozark, and J.C. Fleming, of Enterprise, for appellees.

BOULDIN Justice.

Bill to enjoin breach of covenants not to engage in certain lines of business in competition with the purchasers of such businesses with the good will incident thereto.

The appeal is from a decree overruling demurrers to the amended bill.

Briefly stated, the case made by the amended bill is this On and prior to July 1, 1927, the respondent, J.W. Maddox, owned and operated ginning and warehouse plants in the town of New Brockton. In connection with the ginning business, he was engaged in the business of buying and selling cottonseed, the ginning and cottonseed business being so related that each supplemented and promoted the other; that he was also engaged in the commercial fertilizer business, a business in which the purchasers were also engaged.

On July 1, 1927, said respondent sold and conveyed to complainants S.D. Fuller and W.H. Ward the ginning and warehouse plants and real estate connected therewith, and in connection therewith sold the ginning business, the warehouse business, the cottonseed business, and the fertilizer business, with the good will of each, all for a total purchase price of $22,500, which was duly paid. Contemporaneous with the conveyance of the physical properties, respondent, J.W. Maddox, executed a separate instrument in writing containing the covenants sought to be specifically enforced. This contract, made exhibit to the bill, appears in the report of the case.

Later W.H. Ward sold and conveyed his interests to complainant Enterprise Oil Company, a corporation, and thereafter, down to the filing of the bill in 1935, co-complainants S.D. Fuller and Enterprise Oil Company conducted these several businesses under the partnership name of Farmers Gin & Bonded Warehouse.

At the time of the filing of the bill respondent, J.W. Maddox, was engaged in erecting a ginnery and seed house in the same town within a quarter of a mile of complainants' plant, and was preparing and proposing to engage in the ginning business, the cottonseed business, and warehouse business in competition with those of complainants, in breach of said covenants, to the damage of complainants in an unascertainable sum, but in excess of $5,000, the amount of liquidated damages stipulated in the contract.

Further allegations will appear as we proceed.

The bill prays that respondent be restrained by injunction from erecting the proposed ginning plant, warehouse, and seedhouse and engaging in the ginning, warehouse, cottonseed, or fertilizer businesses in competition with complainants.

Injunction is the recognized remedy in such cases.

The specific performance of covenants not to engage in such business is effectuated by injunction. The stipulation for payment of a stated sum by way of liquidated damages for a breach does not defeat the right to such relief. As applied to a sale of properties valuable chiefly because adapted to a specific business, or the sale of a going business with the good will thereof, the extent of injury from a breach not being ascertainable, specific performance through injunction is deemed the more adequate remedy.

If the contract, by fair intendment, stipulates for alternate methods of performance, one by staying out of business, the other by payment of a specified sum upon going into business, leaving it optional with the covenantor, the case is different.

The contract exhibited here imports an unconditional obligation, stamps the acts here complained of a "breach," and the sum stipulated to be paid as "liquidated damages." It is not of the class upon which injunctive relief is denied because of alternate provisions for payment of money. Eaton v. Sadler, 215 Ala. 161, 110 So. 10; Harris v. Theus et al., 149 Ala. 133, 43 So. 131, 10 L.R.A. (N.S.) 204, 123 Am.St.Rep. 17.

This rule is now written into a statute. Code, § 6832.

Covenants by a vendor of a plant suited to and mainly valuable for a going business, theretofore conducted by him, not to engage in a rival business within such boundaries and for such stipulated time as will materially depreciate the value of the property sold, are, in the absence of special circumstances causing injury to the public, valid and enforceable contracts. Harris v. Theus et al., supra; Flowers & Peagler v. W.T. Smith Lumber Co., 157 Ala. 505, 510, 47 So. 1022; McCurry v. Gibson, 108 Ala. 451, 18 So. 806, 54 Am.St.Rep. 177; J.L. Davis, Inc., v. Christopher, 219 Ala. 346, 122 So. 406; Crossfield v. Lokey, 212 Ala. 560, 103 So. 649; Saxon v. Parson, 206 Ala. 491, 90 So. 904; American Laundry Co. v. E. & W.D.-C. Co., 199 Ala. 154, 74 So. 58; Code, § 6827.

It is not necessary that the contract specifically mention a sale of the business, nor the good will thereof. The taking over of the same business by the vendee, and the covenants designed, in the nature of them, to protect the good will, which in much consists in the disposition of customers to continue to do business of the same kind at the same place, imply a sale of the good will, and all the circumstances may be averred and proven to show such intent. Smith v. Webb, 176 Ala. 596, 58 So. 913, 40 L.R.A. (N.S.) 1191; J.L. Davis, Inc., v. Christopher, supra; Moore & Handley Hardware Co. v. Towers Hardware Co., 87 Ala. 206, 6 So. 41, 13 Am.St.Rep. 23.

The chief insistence of appellant is that specific performance will not be decreed in this case because the cotton ginning business in the cotton belt is a quasi public business; that all contracts imposing any restraint, whatever, on such business are opposed to the public interest, against public policy, and void.

In Tallassee Oil & Fertilizer Co. et al. v. H.S. & J.L. Holloway, 200 Ala. 492, 493, 76 So. 434, 435, L.R.A.1918A, 280, it was said: "We live in a great agricultural state, and cotton has long been recognized as our chief staple, considered as the foundation of the wealth and prosperity of the agricultural sections of the state. Its preparation for market is therefore of the utmost concern to the public at large. Any one has of course the right to erect a gin for his own private purposes, but when he undertakes the ginning of cotton for the public his gin is dedicated to the public use, and under the authorities above cited, it becomes clothed with a public interest affecting the community at large and subject to governmental regulation."

Again in Dothan Oil Mill Co. et al. v. Espy et al., 220 Ala. 605, 127 So. 178, 184, "It is a matter of judicial knowledge that the business of ginning cotton is a business affected with a public interest, and is an essential element of the great cotton industry in this state."

It may be added that by statute the Commissioner of Agriculture is "empowered to supervise and control public gins as to character of service which they render." Agricultural Code 1927, § 346, p. 147.

A permit is required to operate a public gin. "In the issuance of the permit the Commissioner shall consider the responsibility, the reliability and qualifications, as well as the capacity of the person or persons or corporation to do such ginning business, so far as to afford all reasonable facilities, conveniences and services to the public, and shall have the power and authority to require such facilities, conveniences and services to be afforded the public before a permit is granted." Agricultural Code 1927, § 347, p. 147, amended Acts 1935, p. 234.

A public...