Rubel & Jensen Corp. v. Rubel

• Decision Date: 28 September 1964
• Docket Number: No. A--697,A--697
• Citation: 203 A.2d 625,85 N.J.Super. 27
• Parties: RUBEL & JENSEN CORP., a New Jersey corporation, Plaintiff-Respondent and Cross-Appellant, v. Irving M. RUBEL, Defendant-Appellant and Cross-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 27

85 N.J.Super. 27

203 A.2d 625

RUBEL & JENSEN CORP., a New Jersey corporation Plaintiff-Respondent and Cross-Appellant, v. Irving M. RUBEL, Defendant-Appellant and Cross-Respondent.

No. A--697.

Superior Court of New Jersey Appellate Division.

Argued Sept. 14, 1964.

Decided Sept. 28, 1964.

Meyer Pesin, Jersey City, for defendant-appellant and cross-respondent.

Justin P. Walder, Newark, for plaintiff-respondent and cross-appellant.

Before Judges CONFORD, KILKENNY and LEWIS.

The opinion of the court was delivered by

KILKENNY, J.A.D.

Defendant appeals from a judgment of the Chancery Division which (1) enjoins him until October 10, 1965 from soliciting, directly or indirectly, in any retail fuel distribution or heating equipment sales and installation business, any customers of plaintiff or its affiliate companies within the counties of New Jersey lying north of Middlesex County; (2) further restrains him for the period of five years from October 10, 1960 within the proscribed area from using the name 'Rubel' as a part of any firm, partnership or corporate name in any retail fuel oil distribution business or heating equipment sales and installation business in which he may engage, and (3) awards plaintiff $6305.09 as damages against defendant for breach of their agreement of October 10, 1960.

Plaintiff cross-appeals from the damage provision of the judgment, claiming that the trial court erred in limiting the measure of damages to the time period of the restrictive covenant.

Defendant contends that the restrictive covenant in issue, contained in a written employment contract executed by the parties on October 10, 1960, (a) is so vague, uncertain and unreasonably broad as to be unenforceable, and (b) exceeds the reasonable requirements of plaintiff because the restrictions in time, area and scope are too great. Defendant further maintains that there was no proof of his violation of the contract; the damages were speculative, remote and erroneously calculated by the trial court, and error was committed in permitting plaintiff's proof of damage, in view of the complaint and pretrial order.

We deem it expedient to note the factual background of the case in order to put the issues in proper focus.

On October 5, 1960 plaintiff, as purchaser, entered into a written agreement with Rubel & Jensen Co., as seller, for the purchase of the seller's retail fuel oil distribution and heating equipment business for $270,000. The sale included, besides some office furniture and supplies, a list of about 1900 customer accounts of the seller, the good will of the seller and the exclusive right to the use of the name 'Rubel & Jensen' in connection with its retail fuel oil distribution, heating and service business. The business being sold was owned essentially by defendant's brother, Harry L. Rubel, who was its president, but defendant had been actively engaged in the business for over 25 years prior to the agreement of sale, principally as a salesman soliciting and handling customers' accounts, and he acted as secretary of the seller, attesting to the October, 5, 1960 agreement in that capacity.

This agreement further provided for the employment of Harry L. Rubel in a personal customer relations capacity at a salary of $15,000 for the period from transfer of title until June 30, 1961, and Harry covenanted that he would not, for a period of five years from the date of delivery of the bill of sale, within those counties of the State of New Jersey lying north of Middlesex County, engage in the retail fuel oil distribution business, or the sale and installation of any type of heating equipment in any residential property consisting of accommodations for six families or less, or use the name 'Rubel' in connection with any fuel oil distribution or heating equipment sale and installation business in which he might engage. This covenant by Harry L. Rubel is not in issue in this case.

In the October 5, 1960 agreement plaintiff purchaser also agreed that it would enter into a contract of employment with defendant for a period of two years at a salary of $15,000 per year, payable weekly, to serve as treasurer of the purchaser and in such other executive, administrative or managerial capacity as might reasonably be required by the purchaser. It was also stipulated with reference to the employment contract to be entered into with defendant:

'Said contract shall provide that Irving M. Rubel shall not, within the counties of the State of New Jersey lying North of Middlesex County (a) For a period of two years from the date of the employment contract engage in the retail fuel oil distribution business or the sale and installation of any type of heating equipment.

(b) For a period of five years from the date of the employment contract use the name 'Rubel' as a part of any firm, partnership or corporate name of any retail fuel oil distribution business or heating equipment sales and installation business in which he may engage, and will not solicit, directly or indirectly, any customers of the Purchaser or any of its affiliate companies.'

Such a written employment contract was entered into between plaintiff and defendant on October 10, 1960 and defendant made a covenant therein as quoted above.

Defendant was in plaintiff's employ at a salary of $15,000 for each of the first two years of his employment and thereafter was paid at the rate of $17,500 per annum until March 23, 1963, when his employment was terminated. During this engagement of about 2 1/2 years he served as treasurer of plaintiff and as office manager of 'Rubel & Jensen, Liberty Fuel Oil and Lindeman Fuel Oil,' the latter being affiliates of plaintiff. While in plaintiff's employ, he dealt with various customers on credit matters, matters of delivery, service and complaints. This knowledge and service were in addition to his 25 years of personally dealing with and handling the business problems of the various customers in his brother's business which plaintiff purchased.

I.

Defendant's primary attack upon the propriety of the judgment against him is his contention that the restrictive covenant in issue is so vague, uncertain and unreasonably broad in time, territory and scope as to be unenforceable. We are not concerned herein with subdivision (a) of the covenant, quoted above, because the two-year limitation therein expired on October 10, 1962 and plaintiff makes no claim as to any violation thereof. We limit our consideration hereinafter to subdivision (b).

Contrary to defendant's contention of vagueness and uncertainty, we find that the covenant is clear and definite as to time, territory and scope. The time provided for in subdivision (b) is 'five years from the date of the employment contract.' The employment contract is dated. October 10, 1960. Obviously, therefore, this covenant extended to and will expire on October 10, 1965. The territory embraced by the covenant consists of 'the counties of the State of New Jersey lying North of Middlesex County.' The parties agree that there are ten such counties, to wit, Essex, Union, Hudson, Bergen, Passaic, Morris, Somerset, Sussex, Warren and Hunterdon. The other 11 counties of New Jersey are excluded.

The covenant makes plain the restrictions upon defendant's activities during the prescribed time and within the designated area. (1) He may not 'use the name of 'Rubel' as a part of any firm, partnership or corporate name of any retail fuel oil distribution business or heating equipment sales and installation business in which he may engage.' (2) He may not 'solicit, directly or indirectly, and customers of the Purchaser (plaintiff) or any of its affiliate companies.' The prohibition upon the use of the name 'Rubel,' as part of a competitive business name, is clearly expressed and easily understood. The restrictions upon the solicitation, directly or indirectly, of the customers of plaintiff or any of its affiliate companies, is certainly not vague or uncertain. Defendant was a salesman for his brother's company in this retail fuel oil distribution and allied heating equipment business for more than 25 years. He knew what it meant to 'solicit' customers. He knew plaintiff's customers. A list of the customer accounts purchased by plaintiff from Rubel & Jensen Co. was annexed to the bill of sale, pursuant to the agreement of October 5, 1960 which defendant had attested as secretary of the seller. He knew plaintiff's affiliates in this business. As hereinafter noted, he admitted in an affidavit filed in the cause that he did, after terminating his employment with plaintiff, 'solicit about a dozen persons with whom I did have business contact when I was office manager of Rubel & Jensen Co.'

This limitation upon defendant's business activities was not unreasonably broad or in excess of plaintiff's reasonable requirements for the protection of the business and property rights which it had purchased for $270,000 from defendant's brother. The list of Rubel customers, the good will of the business, and the exclusive right to use the name 'Rubel & Jensen' were principal assets and property rights for which plaintiff had paid a substantial purchase price. Defendant knew this and was an interested party in the transaction, even though he may have been only a nominal stockholder in his brother's company. The covenant restricting him was clearly part of the consideration bargained for by the purchaser, and defendant was willing to enter into it to enable his brother to effectuate the sale of this business.

The covenant did not restrict defendant at all in personally conducting a competitive business or being employed by a competitor of plaintiff even during the five-year period and within the ten counties lying north of Middlesex County, so long as he did not within that time and area use 'Rubel' in the competitive business name and did not 'solicit' plaintiff's customers. He could have, at any time, formed a new...