Summary
In American Ice Co. v. Meckel (109 App. Div. 93) the defendant and another sold a business and the property connected with it together with the good will and entered into a restrictive covenant for ten years.
Summary of this case from Jochum Bros. v. Ridgewood Pie Baking Co.Opinion
November, 1905.
Hyman Pouker, for the appellant.
Thomas D. Adams, for the respondent.
On the 21st day of November, 1898, one Charles Mulford and the defendant, "ice dealers doing business individually and also in the name and style of West Washington Market Ice Company, also Mulford Brothers," in consideration of the sum of $18,000, executed to Charles W. Morse and William H. Gelshenen, "their executors, administrators and assigns," a bill of sale of the property connected with their ice business and of the business itself, "together with the whole of the good will of said ice business and all our ice routes." The bill of sale contained a covenant of warranty. The vendors further covenanted with the vendees, "their executors, administrators and assigns, that we will not, either by ourselves, or with any other person or persons, corporation or corporations, do or cause to be done any wilful act or thing to the prejudice of said ice business heretofore carried on and conducted by us in the City of New York and this day sold to the said parties of the second part, and that we will at all times hereafter, when requested so to do, recommend the said parties of the second part and their executors, administrators and assigns, to all our present customers for the purpose of inducing them to deal with the said parties of the second part and their executors, administrators and assigns." They further covenanted, in consideration of the premises, as follows: "We do for ourselves, our heirs, executors and administrators, hereby further covenant and agree to and with the said parties of the second part, their executors, administrators and assigns, that we will not at any time or times within the period of ten years from the date hereof, engage directly or indirectly or concern ourselves in carrying on or conducting the business of selling ice at retail or wholesale, either as principals, agents, servants, or otherwise, within the corporate limits of the City of New York as now legally bound, except upon the written consent of the said parties of the second part or their executors, administrators or assigns." The bill of sale contained a liquidated damage clause by which the vendors bound themselves in the sum of $18,000 liquidated damages for any breach of this covenant on their part, and contained the further clause: "Provided, nevertheless, that the foregoing covenant is not intended to and shall not in any way be construed to relate to the existing interest of said Mulford in the wholesale ice business of the Glasco Ice Company." The bill of sale was signed by Mulford and Meckel individually.
It is contended by the appellant that these covenants did not preclude him from engaging in business individually and that they only obligated the vendors to refrain from engaging in business as copartners. The language employed in the bill of sale clearly shows that this was not the intention of the parties. Such a construction would be utterly inconsistent with the clause by which they covenanted not to engage in the business either as principals, agents, servants or otherwise, and the clause expressly providing that the covenant should not be construed as extending to the existing interest of Mulford in a particular corporation was only necessary upon the theory that the covenant bound them as individuals as well as copartners. The other covenants by which they obligated themselves to recommend their customers to the vendees and their assigns whenever thereunto requested are not reconcilable with the theory of the appellant. The instrument taken as a whole clearly shows that the conditions exacted, as a condition of the purchase, were that the vendors should retire from the business both as partners and individuals within the confines of the city of New York for the period of ten years.
The vendees transferred the business to the Crystal Lake Ice Company by a bill of sale on the 24th of December, 1898. This bill of sale was quite general in terms, but it purports to transfer "the ice businesses, and all the property used in connection with them, including the good will, that we recently acquired from N.B. Shute, Charles Mulford and F. Busch." Then follows a general description of the property, specifying wagons, horses, harnesses, tools, office furniture, blankets "and the good will of the business which includes about 2,000 customers." The Crystal Lake Ice Company, by a bill of sale on the 21st day of June, 1899, transferred the property which they acquired by virtue of the bill of sale from Morse and Gelshenen to it, including the good will of the business, to one Sprague, who on the same day transferred the same to the plaintiff. It is further contended on the part of the appellant that these restrictive covenants were not assigned by Morse and Gelshenen and that the plaintiff has not succeeded thereto. It is alleged in the complaint that it was intended by the bill of sale from Morse and Gelshenen to transfer the business acquired by them from Mulford and Meckel and that the name "Charles Mulford" in the bill of sale "stands for and means Charles Mulford and Edward A. Meckel, the defendant herein." Under these allegations it will be competent for the plaintiff to prove these facts upon the trial. The defendant was not a party to the subsequent bills of sale and as against him it may be shown as alleged that by the name of Charles Mulford used in the bill of sale executed by Morse and Gelshenen was intended Mulford and Meckel; and that part of the business, property and good will transferred thereby was that acquired under the bill of sale from Mulford and Meckel. ( Folinsbee v. Sawyer, 157 N.Y. 196. ) The terms of the covenants clearly show that they were not intended to be personal to the vendees alone but they were assignable. ( Diamond Match Co. v. Roeber, 106 N.Y. 473, 487; Francisco v. Smith, 143 id. 488; New York Bank Note Co. v. Hamilton Bank Note Co., 180 id. 292.) It is also contended that even if the bill of sale from Morse and Gelshenen relates to the property which they acquired under the bill of sale from Mulford and Meckel that still these covenants on the part of the defendant and Mulford not to engage in the business for the period of ten years were not assigned. We are of the opinion that the plaintiff has succeeded to these covenants as an incident of the good will which was expressly assigned. It is manifest that the good will and these covenants formed the principal part of the consideration for the bill of sale from Mulford and Meckel and also for each successive bill of sale until title passed to the plaintiff. The defendant remained in the business in the employ of the successive owners and for several years had charge of the business at West Washington Market as the agent of the plaintiff. The plaintiff presents a prima facie case that the defendant left its employ and entered the employ of one of its competitors and has endeavored with considerable success to solicit the customers of the plaintiff, who were former customers of Mulford and Meckel, to become customers of his new employer. This is clearly a violation of his covenant to the right to enforce which the plaintiff has succeeded. The temporary injunction was, therefore, properly granted. The scope of the order was evidently inadvertently extended to the entire State whereas it should have been limited to the city of New York. The defendant could doubtless have had this correction made on motion, but he was not obliged to do so and is entitled to have it corrected here.
It follows that the order should be modified by limiting its scope to the city of New York and as modified affirmed, without costs.
O'BRIEN, P.J., and PATTERSON, J., concurred; INGRAHAM and McLAUGHLIN, JJ., dissented.
I do not think the plaintiff ever acquired the right to enforce the covenant in the contract between the defendant and Morse and Gelshenen. That covenant was that the vendors, the defendant and one Mulford, would not "at any time or times within the period of ten years from the date hereof, engage directly or indirectly or concern ourselves in carrying on or conducting the business of selling ice at retail or wholesale, either as principals, agents, servants or otherwise, within the corporate limits of the city of New York as now legally bound, except upon the written consent of the said parties of the second part (Morse and Gelshenen)." This was a personal covenant with Morse and Gelshenen. It was undoubtedly a covenant in connection with the transfer of their business; but a mere assignment of the property acquired by Morse and Gelshenen under that contract did not, I think, transfer to the assignee a right to enforce this negative covenant.
I think the motion for an injunction should have been denied.
McLAUGHLIN, J., concurred.
Order modified as directed in opinion, and as modified affirmed, without costs.