Case ID: ohio-np-ns_14/html/0199-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Brown, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

RESTRAINT OF TRADE.
    Common Pleas Court of Montgomery County.
    James Pappas v. Charles Zonars.
    Decided, December 27, 1912.
    
      Sale of Business — With Stipulation that an Additional Amount Shall he Paid if Business is Operated After a Stipulated Date — Not in Restraint of Trade.
    
    A written agreement between two partners, operating two candy stores on different streets of the same city, by which one agreed to sell to the other one of the stores on condition that if the purchaser should operate said store after a designated date he should pay to the seller a stipulated additional monthly compensation for each and every month said store was so operated, is not against public policy, or in restraint of trade, or oppressive or unreasonable for the reason that both seller and purchaser have a mutual interest in the business so transferred. i
    
      J. D. Clark, for plaintiff.
    
      R. G. Fitzgerald, contra.
   Brown, J.

On demurrer to amended petition.

The plaintiff alleges in substance that prior to March 4, 1908, he owned a candy store at 4 East Third street, Dayton; that upon that date he sold to the defendant his interest therein and that he entered into a written agreement, that one of the considerations of the sale was that he had agreed that if he' continued the candy business at said storeroom after November 1, 1908, he would pay the plaintiff $50 a month as additional consideration, for each and every month he continued to operate the candy business at that number. ITe alleges that the defendant did continue said business after said date until January 21, 1910. He alleges the failure to pay the several installments, as due him from the defendant, the sum of $733.33, with interest on the several installments.

“Exhibit A” sets forth that the parties have agreed to continue their partnership in the candy business at .140 South Main street, Dayton, provided they can obtain a lease -on the premises; it recites a sale by Pappas to Zonars of his candy store at 4 East Third street, and the agreement that if Zonars continues in business after November 1, 1908, he shall pay Pappas $50 a month. Then follows- an agreement that in case either party desires to sell the store at 140 South Main street, there shall be an appraisement, and the further clause that, if the business at 4 East Third street is continued after November 1, 1908, either by Zonars or by a sale to his brothers or his brother, the same provisions should be in force as to penalty.

The law of Ohio has been very clearly stated in Lange v. Work, 2 Ohio St., 520, followed in Thomas v. Miles, 3 Ohio St., 274; Lufkin Rule Co. v. Fringeli, 57 Ohio St., 596; Grasselli v. Lowden, 11 Ohio St., 349.

This principle is clearly stated in Lange v. Werk, supra, in the syllabus, that:

“All contracts in general restraint of trade are opposed to public policy and void, and those in partial restraint are also illegal except when founded upon a valuable consideration and when good reasons appear for entering into the contract. Before such a contract can be enforced, it must appear from the pleadings and the proofs: 1. That the restraint is partial; 2. Founded upon a valuable consideration; 3. That the contract is reasonable, and not oppressive.”

The syllabus in Lufkin Rule Co. v. Fringeli, supra, states that:

"All agreements in general restraint of trade are against public policy and void; but agreements having such partial effect only, made in connection with the purchase of a business and its good will, shown to be reasonably necessary to the enjoyment of the good will of the business purchased, and not oppressive, may be enforced.”

9 Cye. 523 seq; 5 Dec. Dig., p. 145; Black’s Law Dict., p. 1030, and 2 Bouvier’s Law Dict. (Rawle’s Rev.), p. 909, show that these principles are followed throughout the United States as well as in England.

By reviewing these authorities I find that the test of Tyndal, Ch. J.. in Horace v. Graves, 7 Bing, 743, has been universally fo[lowed, viz.:

"We can not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favor or whom it is given, and not so large as to interfere with the.interests of the public.”

The circuit court of this circuit, Judges Stewart, Shauck and Shearer, in Paragon Oil Co. v. Hall, 7 C. C., 240, followed this principle in a very able decision.

The liquidated damages in the ease at bar are reasonable, and the fact that the only restraint in trade, in case the penalty is not required, is the abandonment of the candy business at 4 East Third street, which is a very trifling restraint in trade and surely is not against public policy, as the public can not be affected by the abandonment of many candy stores in Dayton, especially at this holiday season, of which the court will take judicial cognizance. There is no want of consideration, because the conduct of the candy business on Third street by one of the partners would certainly affect the partnership business on South Main street by the firm, and this of itself will import a consideration for the penalty.

Therefore, in the opinion of the court, the amended petition states a good cause of action in the premises-, is not founded upon a contract in the unreasonable restraint of trade, is not oppressive, has a valuable consideration and is not against public policy.

Therefore it becomes the duty of the court to overrule the demurrer to the amended, petition.