Southworth v. Davison

Decision Date20 November 1908
Docket NumberNos. 15,838-(85).,s. 15,838-(85).
PartiesGEORGE A. SOUTHWORTH and Another v. JAY DAVISON and Another.<SMALL><SUP>1</SUP></SMALL>
CourtMinnesota Supreme Court

Action in the district court for Rice county to recover $5,000 damages for an alleged breach of contract and to restrain defendants from engaging in the laundry business within a radius of five miles from the city of Northfield. From an order, Buckham, J., overruling defendants' demurrer to the complaint, they appealed. Affirmed.

William W. Pye and Charles R. Pye, for appellants.

Childress & Barrett and Thomas H. Quinn, for respondents.

BROWN, J.

This action was brought to restrain and enjoin defendants from engaging in the laundry business within a radius of five miles from the city of Northfield. Defendants interposed a general demurrer to the complaint and appealed from an order overruling it.

The complaint alleges that prior to December 21, 1906, defendants had established, and for several years theretofore had conducted, in the city of Northfield a steam laundry under the copartnership name of Davison & Lyman, and were enjoying a large and profitable trade; that on the date stated plaintiffs and defendants entered into a contract under and by which plaintiffs purchased from defendants said business and all property used in the operation and conduct of the same for the consideration of $5,000. The contract was in writing and contained, among other things, the following stipulation: "It is further stipulated that vendors hereby sell and transfer the good will of the Davison & Lyman steam laundry to the vendees herein and agree not to engage in the laundry business within a radius of five miles from the city of Northfield, Minnesota." The complaint further alleges that thereafter, and notwithstanding the sale of said business and the good will thereof, as above stated, defendants in violation of the above agreement, organized and equipped a corporation for the purpose of conducting and carrying on a laundry business in said Northfield, and that they are now operating the same with others associated with them. The prayer for relief is that plaintiffs recover of defendants $5,000 damages for the violation of the contract, and that defendants be restrained and enjoined from continuing in said business either as members, stockholders, or agents of the corporation, or as individuals.

The sufficiency of the complaint is challenged in three respects: (1) That the contract by which the good will of the steam laundry was sold to plaintiffs is void for the reason that it is unlimited as to time; (2) that the contract bound defendants only as copartners, and not as individuals; and (3) that the contract is void for want of a sufficient consideration to support it. The objections are not well taken.

1. The rules of law applicable to the sale of the good will of business establishments have in recent years undergone material change. Formerly it was generally regarded as essential to the validity of such contracts that they be limited both as to time and place. Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355; Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. 37; 24 Am. & Eng. Enc. (2d Ed.) 848, and cases cited. And numerous expressions in the adjudicated cases still give out the impression that contracts not so limited are void and unenforceable. Kronschnabel-Smith Co. v. Kronschnabel, 87 Minn. 230, 91 N. W. 892; Espenson v. Koepke, 93 Minn. 278, 101 N. W. 168; National Benefit Co. v. Union Hospital Co., 45 Minn. 272, 47 N. W. 806, 11 L. R. A. 437. The settled modern law, however, is, both in England and in this country, that limitation as to both time and place is unnecessary, if the agreement in other respects be reasonable, and not in conflict with public policy or the general welfare. 9 Cyc. 529. The validity of such contracts often depends upon the nature and character of the business, and whether the restraints afford the grantee reasonable protection or impose restrictions either as to time or place which are unreasonable. Maxim v. Nordenfelt, 62 L. J. Ch. 273; Leather v. Lorsont, 39 L. J. Ch. 86; McCurry v. Gibson, 108 Ala. 451, 18 South. 806, 54 Am. St. 177; Diamond v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. 464. But in cases involving ordinary business establishments or occupations the failure to prescribe a time limitation does not invalidate the contract. The rule, broadly stated, seems to be that no contract of this kind is void as being in restraint of trade where it operates simply to prevent a party from engaging or competing in the same business. Leslie v. Lorillard, 110 N. Y. 519, 18 N. E. 363, 1 L. R. A. 456. Though there are authorities which hold that no limitation of time renders the contract invalid (Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. 37; Carroll v. Giles, 30 S. C. 412, 9 S. E. 422, 4 L. R. A. 154), the great preponderance of authority sustains the converse of the proposition where there is a proper limitation as to place (Pemberton v. Vaughan, 10 Q. B. 87; Cook v. Johnson, 47 Conn. 175, 36 Am. 64; Swanson v. Kirby, 98 Ga. 586, 26 S. E. 71; O'Neal v. Hines, 145 Ind....

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