Sternberg v. O'Brien

• Decision Date: 20 July 1891
• Citation: 22 A. 348,48 N.J.E. 370
• Parties: STERNBERG v. O'BRIEN.
• Court: New Jersey Court of Chancery

22 A. 348

48 N.J.E. 370

STERNBERG

v. O'BRIEN.

Court of Chancery of New Jersey.

July 20, 1891.

(Syllabus by the Court.)

On final hearing on bill, answer, and proofs taken orally.

F. E. Bradner, for complainant.

Louis Hood, for defendant.

VAN FLEET, V. C. The main question presented for decision in this case is whether or not the complainant is entitled to a decree restraining the defendant from violating his contract. The case is before the court on final hearing. The parties to the suit, on the 20th day of January, 1891, made a contract under seal, by which the complainant employed the defendant in the capacity of collector in the installment clothing business carried on by the complainant in Newark and Jersey City, at a weekly salary of $20, and agreed, in addition, to keep the defendant in his employ as collector so Ions as the defendant performed his work honestly and faithfully and to the satisfaction of the complainant: and the defendant agreed, in consideration of such employment, that during its continuance, and for one year after he ceased to be employed by the complainant, whether he voluntarily abandoned such employment or was discharged therefrom, he would not engage in or be concerned or interested in the installment clothing business in the city of Newark or Jersey City, on his own account or as the agent or employe of any other person, In any capacity. The defendant served the complainant underthecontract from its date until the 23d day of February, 1891, a period of between four and five weeks, and then abandoned his service, and shortly afterwards accepted employment as collector from a person carrying on a rival business in Newark. It is undisputed that the defendant has, without cause, violated one of the most important provisions of his contract. Against the injury which is thus inflicted the complainant asks to be protected by injunction. He wants the defendant prohibited from being employed in any capacity in the installment clothing business, by any person carrying on that business either in Newark or Jersey City, for the space of one year from the time the defendant left his employ.

The relief asked is resisted on several grounds. The defendant says, first, that the contract in question is void, because the restraint which it imposes upon him is unreasonable; in other words, that?it is greater than is necessary for the protection of the complainant. The law is settled that a contract in restraint of labor, which seeks to prevent one of thecontracting parties from exercising his skill or labor generally, without limitation as to place or time, or which attempts to put a restraint upon his right to lahor or to exercise his skill greater than is necessary for the fair protection of the other party to the contract, is void. "Public policy," said Vice-Chancellor James, afterwards one of the lord justices of the court of appeal of England, in Leather Cloth Co. v.

Lorsont, L. R. 9 Eq. 345. 354, "require that every man shall be at liberty to work for himself, and shall not be at liberty to deprive himself or the state of his labor, skill, or talent by any contract that he enters into." "The law,"said Best, C. J., in Homer v. Asbford, 3 Bing. 322, 326, "will not permit any one to restrain a person from doing whatthe public welfare and his own interest require that lie should do. Any deed, therefore, by which a person binds himself not to employ his talents, his industry, or his capital iu any useful undertaking in the kingdom would be void, because no good reason can be imagined for any person imposing such a restraint on himself." "So far has this principle been carried," said Chief 1 ustice Beasley, in Brewer v. Marshall, 19 N. J. Eq. 537, 547, "that even in cases in which the restraint sought to be imposed is only partial it has been repeatedly held that such agreement will be void, unless it be reasonable; and that no such agreement can be reasonable in which the restraint imposed on the one party is larger than is necessary for the protection of the other. "The test which the law prescribes in all such cases is this: The restraint, in order to be valid, must be only such as is necessary to afford a fair protection to the party in favor of whom it is given, and not so large as to interfere with the interest of the public. This is the principle which controlled the decision in Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. Rep. 37, and must, I think, be adopted as the rule of decision in this case. The contract under consideration, it is insisted, violates this principle. It is said that, while the contract gives the defendant employment in only one capacity, or of but a single kind, it attempts to prohibit him, for a year. after he has ceased to be employed by the complainant, from accepting, within the cities designated, and from a certain class of persons, employment of any kind whatever, though such employment is not in the installment clothing business, but entirely outside of it. Put in another form, the fault imputed to the contract is this: Though employed in a single capacity, in a particular business, the defendant cannot, for a year after he has ceased to be employed by the complainant, takeemployment as acoachman, waiter, or in any other capacity, from any person engaged in the installment clothing business, in either Newark or Jersey City, without committing a breach of his contract. To me it seems to be entirely plain that, if the contract is subject to the vice which is thus imputed to it, it must be held to be invalid. If it be true that it restrains the defendant from doing work which, though done for another person, carrying on the same business that the complainant carries on, can in no event and under no circumstances result in loss or injury to the complainant, it is clear beyond dispute that the restraint which it imposes on the defendant is larger than the fair protection of the complainant requires. It is manifest that the restraint, so far as it prevents the defendant from doing work for a rival of thecomplainant, outside of the installment clothing business does the complainant no good,—he derives no benefit from it; and that the only purpose its enforcement would serve would be to oppress the defendant. A contract, of this class, which cannot be enforced without resulting in such consequences to one of the contracting parties, is, by the uniform course of decision on this subject, held to be unreasonable and void. Is this contract subject to the fault imputed to it? At the argument I thought it was, and so intimated, but subsequent examination and consideration has resulted in a conviction that it is not. The defendant does promise that he will not serve any rival of the complainant, carrying on business in Newark or Jersey City, "in any capacity;" but the broad meaning of these words is plainly limited by other words of the contract. The restraint which the defendant put upon himself is expressed in these words: That "he will not engage in, or be concerned or interested in, the installment clothing business in the city of Newark or Jersey City, on his own account, or as agent or employe of...