Reeves v. Sargeant

• Decision Date: 06 July 1942
• Docket Number: 15437.
• Citation: 21 S.E.2d 184,200 S.C. 494
• Parties: REEVES v. SARGEANT.
• Court: South Carolina Supreme Court

21 S.E.2d 184

200 S.C. 494

REEVES v. SARGEANT.

No. 15437.

Supreme Court of South Carolina

July 6, 1942

Melton & Belser, of Columbia, for appellant.

John C. Payne and C. T. Graydon, both of Columbia, for respondent.

FISHBURNE Justice.

This action was commenced in December, 1940, to enjoin the breach of a contract which the defendant, J. A. Sargeant, made with the plaintiff in April of the same year. A restraining order was granted at the institution of the suit. When the case was reached for trial, the defendant submitted an oral demurrer raising the issue that the complaint should be dismissed upon the ground that the contract was invalid and unenforcible. The demurrer was sustained, and the restraining order was dissolved. From this judgment the appeal is prosecuted by the plaintiff.

It is made to appear from the allegations of the complaint that prior to April 20, 1940, the defendant, who was a photographer of wide experience and clientele, living and conducting his photographic business in the city of Columbia Richland County, published in certain photographic trade journals an advertisement offering his business for sale that the plaintiff, likewise a photographer of long experience, was then living and conducting a photographic business in Atlanta, Georgia. That he was induced by the advertisement to enter into negotiations with the defendant which resulted in the purchase by him of the business of the Sargeant Photo Company in Columbia for the sum of $3,500 paid in cash, together with all of its assets, good will, and the exclusive right to use the name of "Sargeant Photo Company."

This purchase, and the contract entered into between the parties as a part thereof, was executed on April 20, 1940, and immediately thereafter the plaintiff leased a building and commenced the conduct and operation of the photographic business in the city of Columbia as the successor of the defendant, in the name of Sargeant Photo Company.

It is alleged that the defendant represented to the plaintiff, in the effort to effect the sale of the business and assets that the name of Sargeant was well established in the city of Columbia and in the county of Richland; and that the good will established by the defendant through many years constituted a valuable asset in the continuation of such photographic business in the name of Sargeant Photo Company. It is alleged that this was the moving consideration which led the plaintiff to make the purchase and enter into the contract.

That portion of the contract pertinent to this controversy reads as follows: "Said party of the first part furthermore covenants and agrees that he will never again enter into the photograph business, either in his own name or under any other name, in Richland County, South Carolina, nor will he permit anyone else to enter into the photograph business in the said county under his name, but said party of the second part is given perpetual authority to operate said studio under the name it is now operated, or under the name of Sargeant's Studio, or to use the name Sargeant, in connection with said business in any manner he may see fit."

It is further alleged that the physical assets of the business were reasonably worth the sum of approximately $500, and that in purchasing the business the plaintiff considered the name "Sargeant," when used in connection with the photographic business in Richland County, together with the long established good will connected with that name, as its principal asset, and worth $3,000.

It appears that subsequent to the consummation of the sale, and after the plaintiff had embarked upon the photographic business in the city of Columbia, the defendant commenced a systematic effort to drive the plaintiff out of business. He would enter the plaintiff's place of business, and, in the presence of customers in a loud voice, would make derogatory remarks to the effect that the plaintiff was defrauding the public, and would request plaintiff's customers to discontinue doing business with him; threatening his employees and in other ways endeavoring to humiliate and embarrass the plaintiff. It is also alleged that the defendant has threatened to commence various and sundry lawsuits against the plaintiff if he does not desist from conducting his photographic business in the name of "Sargeant;" that the defendant, in direct and flagrant breach of his contract with the plaintiff, is continuing and will continue to take pictures and make photographs in Richland County, and unless restrained by the court will irreparably damage the plaintiff and render his contract nugatory.

The defendant successfully contended in the lower court that the contract being one in partial restraint of trade is void and against public policy, because the duration of the restraint upon the defendant is unreasonable, in that it is without time limit. The execution of the contract was admitted. For the purpose of deciding the issue, the allegations of the complaint which we have recited will be deemed to be true.

The question presented by the appeal is the validity of the covenant imposing the restraint. This question has so often been the subject of judicial decision in this country and in England, that in respect to it but little room is left for argument. It is well settled that while contracts in general restraint of trade are against public policy and void, yet those in partial restraint, founded upon a valid consideration and reasonable in their operation, are valid and binding. Metts v. Wenberg, 158 S.C. 411, 155 S.E. 734. The test which generally is laid down by which it may be determined whether a contract is reasonable is whether it affords a fair protection for the interests of the party in whose favor it is made, without being so large in its operation as to interfere with the interest of the public. 17 C.J.S., Contracts, § 240, p. 623, 36 Am.Jur., section 52, page 533, and cases cited.

It will be observed that, by the contract in question, the defendant agreed to abstain from ever again engaging in the photographic business in Richland County, either in his own name or under any other name; and, in addition thereto, granted to the plaintiff "perpetual authority to operate said studio under the name it is now operated, or under the name of Sargeant's Studio, or to use the name Sargeant in connection with said business in any manner he may see fit."

Taking the facts stated in the complaint to be true, it is manifest that the alleged conduct of the defendant does now, and, unless he be restrained therefrom, will continue to interfere with and work injury and damage to the property rights and business interests of the plaintiff. It is clear that the defendant possessed valuable rights, and that they were in the nature and character of property rights. It is equally clear that it was in consideration of the transfer of those rights to the plaintiff that he entered into the contract of purchase and paid to the defendant in cash the sum of $3,500. Common fairness requires that the plaintiff should be protected in the rights thus acquired by him, unless some consideration of general public policy dictates that his grievance should go unheard.

In the case of Herreshoff v. Boutineau, 17 R.I. 3, 19 A 712, 713, 8 L.R.A. 469, 33 Am.St.Rep. 850, it has been well said: "Public policy is a variable test. In the days of the early English cases, one who could not work at his trade could hardly work at all. The avenues to occupation...