No. 12444 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1973 

- 

HAVRE DAILY NEWS, INC., 

Plaintiff and Respondent, 

-vs - 

CLYDE D. FLOREN, 

Defendant and Appellant. 

Appeal from: District Court of the Twelfth Judicial Dis trict, 

Honorable Truman G. Bradford, Judge presiding. 

Counsel of Record: 

For Appellant : 

Tipp, Hoven and Brault , Missoula, Montana 

Vernon Hoven argued, Missoula , Montana 

For Respondent : 

Burns and Solem, Chinook, Montana 

William Solem argued, and Stuart C. MacKenzie appeared, 

Chinook, Montana 

Submitted: September 25, 1973 

Decided :)JOY 7 .. 1973 

~il~d: NOV 7 1973 
Mr. Chief Justice James T. Harrison delivered the Opinion of 

the Court. 

This is an appeal by defendant, Clyde D. Floren, from 

judgment rendered in the district court, twelfth judicial 

district, County of Hill, after the granting of a motion for 

summary judgment made by plaintiff, Havre Daily News, Inc. 

On September 24, 1963, plaintiff and defendant entered 

into a contract whereby defendant agreed to buy from plaintiff 

certain office supplies and equipment, job printing equipment, 

and job stock for the sum of $36,000. In a separate agreement, 

made on the same day as the original contract, plaintiff also 

agreed not to compete with defendant in job printing or the 

sale of office supplies and equipment for a ten year period. 

This restriction from competition extended to all of Hill County, 

Montana. 

The contract called for a down payment of $9,000 and 

monthly payments of $299.77 commencing on November 15, 1964, with 

a like amount to be paid on or before the 15th day of each month 

thereafter, for a period of ten years. Defendant defaulted under 

the contract by failing to make payments when due. Plaintiff 

commenced this action on April 9, 1971, to recover the unpaid 

balance due under the contract of $11,328.87, together with interest at the rate of 6% per annum from April 15, 1970. Defendant counterclaimed for damages resulting from an alleged breach 

of the restrictive covenant by plaintiff. 

The cause was tried to a jury resulting in no verdict 

because of a divided jury. Subsequently, the matter was set for 

trial before the Hon. Truman Bradford who was called in by virtue of the disqualification of the Hon. B. W. Thomas, judge of 

the twelfth judicial district, Hill County, Montana. 

Prior to trial, a pretrial order was entered, which included 
these certain agreed facts: 

1. That the respective agreements entered into on 

September 24, 1963, by plaintiff and defendant are correct 

and binding on both plaintiff and defendant. 

2. That the unpaid balance on the original contract 

was the sum of $11,328.87, together with interest at the rate 

of 6% per annum from April 15, 1970. 

That the plaintiff did certain printing aside from 

the Havre Daily News in varied amounts, but in excess of the 

sum of $15,000. 

Plaintiff moved for summary judgment on the record and 

the answers to interrogatories previously made by defendant, 

which in substance set forth: 

1. That defendant claimed no loss of business profits. 

2. That defendant claimed a value loss of a restrictive covenant computed at the rate of $500 per month for the 

life of the restrictive covenant, for a total loss of $39,500. 

3. That the $39,500 loss defendant claimed could not 

be substantiated by any business books or records kept by him. 

4. That no part of the purchase price in the original 

agreement between the parties was allocated to the value of 

good will or the restrictive covenant. 

The district court from the court record and answers to 

interrogatories, in its findings of fact set forth the agreed 

facts as set out in the pretrial order, and in addition found: 

"The damages claimed by the defendant must have 

been proximately caused by the Plaintiff's breach. 

The acts of the Plaintiff which are alleged to 

have been acts in breach of the covenant not to 

compete are set out in 11, No. 3 above. These 

acts vary in time, amount and length of breach. 

The Defendant is not claiming actual damages for 

each specific breach. The Defendant is claiming 

damages in the amount of Thirty Nine Thousand 

Five Hundred Dollars ($39,500.00) which was computed at the rate of Five Hundred Dollars ($500.00) 
per month during the life of the restrictive 

covenant. The Defendant's claim for damages 

was not made in conjunction with, or in consideration of the number of acts in breach, or the 

time, amount and length of each breach by the 

Plaintiff. Damages claimed by the Defendant 

cannot be substantiated by any book or records 

kept by him. No damages are being claimed for 

the loss of business profits. The Defendant 

is not claiming damages for business losses 

as a result of Plaintiff's breach. No part 

of the purchase price under the original contract was allocated to the value of good will, 

or the restrictive covenant." 

court 

From such findings, the district/concluded: 

"No damages can be recovered for a breach of a 

contract which are not clearly ascertainable in both 

their nature and origin. The correct measure of 

damages, if any, to the Defendant, is the value of 

or profits, on the business lost, as a result of 

the Plaintiff's breach of their restrictive 

covenant." 

The district court entered summary judgment in favor of 

plaintiff and against defendant. Defendant appeals. 

The issue presented to this Court for review is the 

proper measure of damages resulting from a breach of a restrictive covenant. 

In Leiman-Scott, Inc., v. Holmes, 142 Mont. 58, 381 

P.2d 489, a case with an almost identical factual situation as 

the instant case, the plaintiff, entered into an agreement with 

Holmes, the defendant, wherein the defendant was given exclusive 

territorial rights for establishing sales outlets and distribution of certain items in exchange for a $10,000 note made payable to the plaintiff. Plaintiff sued for $6,000, the remaining 

balance due on the note. Plaintiff violated the agreement by 

sending into the restricted sales area its own sales representative who sold approximately $1,500 of merchandise. The district 

court granted defendant's motion for nonsuit at the close of 

the plaintiff's testimony. This Court reversed and remanded 

the cause to the district court, agreeing with plaintiff's 
contention that the judgment of the district court should 

have been for $6,000, less the profit realized on the business 

performed by Leiman-Scott, Inc., in breach of the contract. 

In reaching our decision in Leiman-Scott we cited the 

general rule found in 38 C.J.S. Good Will S16, p. 961. We 

again state that general rule: 

"Where the seller of a business and its good 

will improperly interferes with the good will 

transferred, or commits a breach of his restrictive covenant, the purchaser may have an action 

for damages, or he may counterclaim for damages 

in an action by the vendor for recovery of the 

price. General rules of procedure apply in such 

actions. 

"The damages accruing to the purchaser if the 

seller improperly interferes with the good will 

transferred, or commits a breach of a restrictive covenant, are the loss which the purchaser 

sustains by reason of the wrongful conduct of 

the seller." 

In the instant case, the district court properly concluded that the measure of damages to defendant is the value of 

the profits on the business lost as a result of plaintiff's 

breach of their restrictive covenant. In other words, the damage 

to defendant is the loss of the business performed by plaintiff 

which would have been realized by defendant had he performed 

the business. The amount of loss suffered by defendant is 

determined by the extent of the breach by plaintiff. 

Under Rule 56(c), M.R.Civ.P., one of the items which may 

be considered by the trial court in ruling on a motion for summary judgment is "answers to interrogatories". Plaintiff served 

upon defendant several interrogatories. To certain interrogatories defendant answered: 

"INTERROGATORY 1: Are you claiming any damages for 

the loss of business profits? 

"ANSWER: No. 

"INTERROGATORY 8: Are you claiming damages for the 

loss of the value of the restrictive covenant? 
"ANSWER: Yes. 

"INTERROGATORY 9: If so, state: 

"a) The amount of such loss you are claiming. 

"ANSWER: $39,500.00. 

"b) The facts on which you will rely to prove such loss. 

"ANSWER: The testimony of Clyde Floren as to values. 

"c) How the amount of such loss was computed. 

"ANSWER: $500.00 per month, (see Interrogatory 7c)." 

[At the rate of $500 per month for the life of the 

restrictive covenant.] 

"INTERROGATORY 10: Can your answers to questions 9a, 

9b and 9c relative to the loss thereof, be substantiated by any books or records kept by you in the 

ordinary course of business? 

"ANSWER : No. " 

Defendant claimed no loss of business profits but claimed the 

loss of the value of the restrictive covenant at the rate of 

$500 per month. Defendant's method is irreconcilable with the 

theory that the amount of loss is determined by the extent of 

the breach by the plaintiff,.' Defendant admitted that no part 

of the loss which he was claiming could be substantiated by 

business books or records. 

Section 17-302, R.C.M. 1947, provides: 

"No damages can be recovered for a breach of 

contract which are not clearly ascertainable 

in both their nature and origin." 

In Vancil v. Anderson, 71 Idaho 95, 227 P.2d 74, 78, a 

case which also involved a breach of a restrictive covenant not 

to compete, the Supreme Court of Idaho in considering whether 

the owner could testify as to the business lost stated this 

general rule: 

"The broad general rule is to the effect that a 

witness cannot state his conclusion as to the 

amount of monetary damage that has been sustained 

by himself or another by reason of the invasion 

of a legal right, without first testifying to the 

facts upon which his opinion is predicated." 
The Idaho Court examined the evidence of the party 

claiming damages to determine "the presence or absence of any 

facts upon which his opinion evidence may be predicated." The 

evidence concerning such damages included testimony of the decline of daily receipts, reduction of gross sales, increase in 

overhead expenses, and business records. 

Furthermore, here defendant admitted that no part of the 

purchase price had been allocated to good will or the restrictive 

covenant. Defendant in his answer to interrogatories answered: 

"INTERROGATORY 18: Was a portion of the purchase 

price in the oriqinal aqreement between the Plaintiff and ~efendant allocated to the value of'the 

restrictive covenant or good will? 

"ANSWER: No. 

"INTERROGATORY 19: If your answer to Question 

No. 18 is yes, scate the specific amount allocated for the value of the-restrictive covenant 

or good will. 

"ANSWER: Not applicable. 

"INTERROGATORY 20: Was it stated in the original 

contract in Exhibit "A" that no part of the purchase price was allocated for good will, franchises 

or other intangible assets? 

"ANSWER: Yes. 

"INTERROGATORY 21: Are you claiming that the 

covenant not to compete is not an intangible asset? 

"ANSWER: No." 

Defendant, however, contends the district court should 

have found that the parties agreed there was a value to be 

attached to the restrictive covenant, but that the value was 

not specified and that testimony should be adduced as to the 

value of the restrictive covenant. 

Clearly, the district court ruled properly that no part 

of the purchase price had been allocated to good will or the 

restrictive covenant, since its findings were taken directly 

from the answers of defendant. In addition, the terms of the 
original contract stated: 

"It has been agreed between the parties that no 

part of the purchase price has been allocated 

for good will, franchises, or other intangible 

assets. " 

It is clear that no part of the purchase price under 

the original contract was allocated to good will or the restrictive covenant; that the defendant's claim of damages is 

speculative and conjectural in nature and unsupported by business books or records or claim of loss of business profits; 

and, that the correct measure of damages for breach of a restrictive covenant not to compete is the business or profit 

lost to the party relying on such covenant. The district 

court, after its examination of the record and defendant's 

answers to interrogatories, properly concluded that plaintiff 

was entitled to summary judgment as a matter of law under Rules 

56 (a) and (c) , M.R.Civ.P. 

The judgment of the 

Chief Justice 

We concur: 

i 

L.- Y"*;>,~&- ----- - 

/* 

Hon. M. &mes Sorte, District 

Judming in of Mr. 

Hon. Peter G. 

Judge, sitting 

John C. Harrison.