United Shoe MaChinery Co. v. Kimball

• Decision Date: 01 January 1907
• Parties: UNITED SHOE MACHINERY CO. v. KIMBALL et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

193 Mass. 351

79 N.E. 790

UNITED SHOE MACHINERY CO. v. KIMBALL et al.

Supreme Judicial Court of Massachusetts, Suffolk.

January 1, 1907

COUNSEL

J. Winthrop Pickering and Everett H. Hadley, for appellants.

Walter B. Farr, for appellee.

OPINION

KNOWLTON C.J.

The defendants were manufacturing and dealing in needles, awls drivers and similar articles, and on June 11, 1904, they sold their business to the plaintiff. The plaintiff is a corporation engaged in the business of manufacturing and selling machinery and devices for manufacturing boots and shoes, including needles, awls and drivers, and other similar articles. The bill of sale from the defendants to the plaintiff included the business previously carried on by them, 'together with the good will thereof, and all business, good will, property interests and rights of every name and nature * * * relating to needles, awls, drivers and like articles,' etc. Besides other covenants of the defendants designed to effectuate the purpose of the parties the instrument contained a covenant as follows: 'And for the same consideration we and each of us do hereby covenant and agree to and with the said United Shoe Machinery Company its successors and assigns, that we will not, nor will either of us, at any time within fifteen years from the date of these presents, directly or indirectly, individually or in combination with others, as manager, agent or employé, or as officer or stockholder in a corporation or otherwise, in any manner enter into or be engaged or interested in, or financially or otherwise assist any person, firm or corporation in entering into, developing or carrying on any business which consists in whole or in part of, or relates to, manufacturing or dealing in needles, awls or drivers.' In the spring of 1906 the defendants established a business in Lynn where the business previously sold to the plaintiff was conducted, for the purpose of manufacturing and selling needles, awls and other articles like those which they were manufacturing when they made the sale. This suit was brought to enforce the covenant quoted above, by an injunction to prevent the defendants from carrying on the business so established.

The first defense relied on is that the instrument and the covenant contained in it were obtained by the fraud of the plaintiff. In reference to this contention the judge who heard the case found that 'there was no fraud, there was no mistake, and there was no accident about the contract that was entered into.' A careful examination of the evidence, which was reported by a commissioner, shows that the only foundation for this contention is that there had been competition between the plaintiff and the defendants in the sale of needles, and that this was referred to by both parties in the course of the negotiations for the sale of the business, and that the plaintiff's agent told the defendants what difficulties they might encounter in conducting their business against the plaintiff's competition. The judge found that the matters referred to were only such as legitimately might result from competition while each party was striving to obtain an advantage over the other by the usual methods of business. In a case of this kind the findings of the single justice must stand unless they are plainly wrong. The evidence before us discloses no error in this finding.

The more important and difficult question is whether the covenant is invalid as being against public policy. The defendants contend that it is void because it is to continue in force for an unreasonably long time, and is unrestricted in space.

The testimony shows that considerably more than half of the consideration paid by the plaintiff was for the good will of the business, or to obtain relief from the competition of the defendants. It is not disputed that the business of the plaintiff is conducted in all parts of the civilized world where shoes are manufactured by machinery. Although the business carried on by the defendants was not large, it was of such a kind, and might be so extended, as to affect the market throughout this country and in other countries. The plaintiff made its purchase with a view to obtain the advantage of controlling the good will of this business in every part of the extended...