Thomas v. Gavin

• Citation: 110 P. 841,15 N.M. 660,1910 -NMSC- 060
• Parties: THOMAS v. GAVIN.
• Decision Date: 30 August 1910
• Court: Supreme Court of New Mexico

110 P. 841

15 N.M. 660, 1910 -NMSC- 060

THOMAS v. GAVIN.

Supreme Court of New Mexico

August 30, 1910

Syllabus by the Court.

An agreement not to engage in the business of buying and selling lumber in a certain town or its vicinity for two years, in consideration of the purchase at stipulated prices of the entire stock of lumber of the seller then on hand in the business in which the seller is then engaged, in the lumber business, is not void as being in restraint of trade.

While a single sale of lumber would not in itself amount to engaging in the lumber business, it would be evidence on the question whether the seller was engaging in that business, and, in connection with other circumstances, might furnish proof that he was so engaged.

In an agreement for the sale of a stock in trade, and that the seller for a time abstain from engaging in the business in which it was employed, there was a provision that a sum named should be considered liquidated damages in case of a breach of the agreement by either party to it. Held, that it was for the court to determine from the circumstances of the case whether the sum named should be considered a penalty or liquidated damages. And, the trial court having found actual damages only instead of the stipulated sum for a breach of such a contract, it was at liberty, in addition to its judgment for damages, to enjoin the defendant from further violating the agreement in question.

(Additional Syllabus by Editorial Staff.)

Findings of fact of the trial court without a jury will ordinarily not be set aside by the Supreme Court where there is substantial evidence to sustain them.

Where the amount stated as liquidated damages obviously and grossly exceeds just compensation, the court may treat it as a penalty, and award actual damages.

Appeal from District Court, Chaves County; before Justice Wm. H Pope.

Action by G. E. Gavin against C. E. Thomas. Judgment for plaintiff and defendant appeals. Affirmed.

Where the seller of a stock in trade agreed to abstain from engaging in the same business at the same place for a certain length of time, and that a certain sum should be considered liquidated damages in case of a breach of the agreement by either party, it being for the court to determine on the circumstances of the case whether the sum named should be considered a penalty or liquidated damages, the court having found actual damages only, instead of the stipulated sum, for a breach of the contract, could, in addition to its judgment for damages, enjoin the seller from further violation of the agreement.

This is a suit in which the plaintiff, here the appellee, seeks to recover damages from the defendant, here the appellant, for the alleged breach of a written contract which was entered into between them on May 5, 1909, which contract contained the words: "That, whereas the party of the first part (appellant) is the owner of a certain lot of lumber and building material and is engaged in the business of buying and selling such merchandise, but for reasons sufficient to himself, is desirous of closing out all of the said material and discontinuing the business, and the party of the second part is willing to purchase the same provided the first party will not again engage in such business in the city of Roswell, or vicinity for a period of two years from this date. *** Now, therefore, in consideration of the above and foregoing the party of the first part agrees to sell and the party of the second part agrees to buy," etc. At the trial, which was by the district judge without a jury, it appeared that the defendant had sold to one Brooks a car load of lumber, which, however, was ordered by him before May 5, 1909, but arrived and was delivered after that date, and had taken an order for a car load for one Levers after that date which for some reason he did not accept, and for which the defendant found another customer; that the lumber was ordered from a mill located at St. Augustine, Fla., in which his brother was part owner, and there was evidence to the effect that he derived profit from each transaction; that he claimed the right to take and fill similar orders in the future provided that he did not have a lumber yard and buy and sell lumber at it, as he had done before the agreement with Gavin; and that he meant to take and fill such orders as he had opportunity. It also appeared that the stock purchased by the plaintiff amounted to $1,103.77 at the agreed price, and that the plaintiff removed the same from the place where the defendant had been doing business, and did not continue the business there.

R. D. Bowers, for appellant.

Reid & Hervey and J. M. O'Brien, for appellee.

ABBOTT, J. (after stating the facts as above).

The attorneys for the appellant claim that the provision of the contract in question that he should not engage in the business of buying and selling lumber in Roswell or the vicinity for a period of two years is void for being in restraint of trade. They attach significance to the fact that by the terms of the contract neither the business itself nor the good will of it was sold, but a quantity of lumber only. It is well settled both at the common law and under the anti-trust act that an agreement to refrain from engaging in a certain business within reasonable limits of time and place is valid if it is made as subsidiary to the main purpose of disposing of property employed in that business on better terms than could be obtained without such an agreement. To bring the transaction within the rule, it is not necessary that the "good will" of the business should be in terms included in the sale. The seller might have obtained a stock of goods for the purpose of going into business, and have no business or "good will" to sell and through some change of circumstances be desirous of selling his stock of goods. It would be unreasonable to hold that he is forbidden in the public interest to better his...