Source: http://masscases.com/cases/sjc/347/347mass390.html
Timestamp: 2019-04-22 19:57:27+00:00

Document:
BILL IN EQUITY filed in the Superior Court on January 12, 1962.
Dominic A. Caronna (Ernest S. Hayeck with him) for the defendants.
Edward J. McCabe for the plaintiffs.
KIRK, J. This is an appeal by the defendants Frank Hayes (Frank) and Emily Hayes (Emily), and Grafton Oil Company, Inc. (Grafton Oil), from a final decree which (a) enjoined Frank and Emily from engaging in the oil business in Worcester County for ten years from February 2, 1960, and from in any way soliciting oil customers of any of the plaintiffs, and (b) enjoined Grafton Oil, its officers, servants, and agents from soliciting in any way the oil customers of the plaintiffs.
and additional facts as we deem to be justified by the evidence. Carroll v. Markey, 321 Mass. 87 , 87-88. Hanrihan v. Hanrihan, 342 Mass. 559 , 564, and cases cited. We accordingly summarize the findings made by the judge and by us, augmented by admitted or undisputed facts in the report of the evidence, in order to pass upon the propriety of the relief granted in the decree.
In 1950, upon the death of his father, Frank, then twenty-six years old and married, took over the operation of S. J. Hayes & Son, the name under which his father had been engaged for many years in the retail fuel oil business in North Grafton. Frank had been identified with his father in the business since 1945. The business at all times was conducted from the Hayes residence which was owned by Frank's mother. The property consisted of a large house and yard. The business office was on the first floor of the dwelling. In the yard were five fuel oil storage tanks, two of 12,000 gallon capacity, one of 10,000 gallon capacity, and two of 5,000 gallon capacity. Frank's wife, Emily, who had participated in the business to a limited extent prior to the father's death, actively assisted her husband after 1950, particularly in receiving and processing telephone orders for oil and in collecting bills. Emily's business aptitude, interest, and capabilities were greater than those of her husband. The business employed two truck drivers and a part time bookkeeper. Fifty per cent of the Hayes customers lived in North Grafton; the remainder lived in Shrewsbury, Grafton Center, Worcester, and Millbury.
Under Frank's management the business was not a success. By 1960 the liabilities were nearly $43,000; the tangible assets consisted of three or four used trucks, some fuel oil, and office equipment. The accounts receivable were estimated at $19,000. One of the principal creditors was the plaintiff Central Oil of which the plaintiff Sulmonetti was an officer.
On February 3, 1960, Frank by a writing sold the business to Sulmonetti (the buyer). The agreement expressly recognized that the Hayes oil business was in financial difficulty.
The buyer bought the assets and the good will, including the right to use the name Hayes in any reasonable variation, and agreed to pay off the scheduled liabilities of the business, to exonerate Frank from liability, and to employ Frank on mutually agreeable terms. Frank agreed not to "reenter the business of selling fuel oil in any capacity, directly or indirectly, or compete with Buyer in the fuel oil business in any way in Worcester County for a period of ten (10) years" after the date of the agreement, or after he ceased working for the buyer, whichever event occurred later. As separate compensation for the agreement not to compete the buyer paid Frank $10,000 with the understanding that if Frank broke the agreement not to compete the buyer could recover the entire $10,000 or, at his option, specifically enforce the agreement. The agreement recognized Frank's right, on his own, to sell, install and service heating systems, but, in so doing, he was not to solicit customers of the buyer.
The buyer thereafter organized the plaintiff Hayes Oil Corporation, employed Frank as manager at $100 a week plus a flat weekly expense allowance, paid $80 a month for the use of the office and yard on the Hayes premises, hired the two truck drivers and part time bookkeeper, and paid for two of the telephones on the premises including the business office telephone.
elsewhere, including the buyer's customers, announcing, over Emily's name as proprietor, the opening for business of Grafton Oil at the Hayes premises, with telephone number, on January 1, 1962; an advertisement to the same effect was published in the local newspaper; notice was sent by Frank's mother to Hayes Oil to vacate the premises on January 31, 1962; the two truck drivers and the part time bookkeeper who had been working for the buyer were hired by Grafton Oil; on the order of Grafton Oil on December 31, 1961, a 6,000 gallon trailer tank from another wholesaler was parked in the yard to dispense oil to smaller tank trucks operated by the two drivers who commenced on January 1, 1962, the delivery of oil on behalf of Grafton Oil to the buyer's customers; telephone calls to the Hayes residential line were answered "Grafton Oil"; the extension line from the residence to the office on January 2, 1962, was severed to Frank's and Emily's knowledge but not reported to the telephone company or to the buyer. During the early days of January, 1962, Emily actively solicited the buyer's customers and others to buy from Grafton Oil. In soliciting the buyer's customers, she made use of the buyer's customer list. Thirty-seven customers of the buyer cancelled their orders to the buyer. Emily planned to take away from the buyer as many customers as she could, and actually took away approximately two hundred.
During this period, Frank remained in the employ of the buyer and played an apparently passive role in organizing Grafton Oil and in soliciting the buyer's customers. Although asked by the buyer's representative to help win back customers the buyer had lost, Frank made no effort to do so. He did not personally make any deliveries to the buyer's customers, or try to expedite deliveries by drivers newly hired by the buyer. Deliveries to the customers of Grafton Oil were prompt; those to the buyer's customers lagged behind schedule.
The buyer filed this bill of complaint on January 12, 1962.
of the fruits of his purchase for their own advantage. He reasonably inferred that Frank's passive role was an assumed one to give the impression that he was not violating his agreement with the buyer. Similarly, the judge inferred that testimony of a marital rift between Frank and Emily was, in part at least, a screen to conceal the fact that they were acting in collaboration to achieve a common end.
The principal question is what relief, if any, the buyer should be granted against the defendants.
As to Frank, the governing principles are clear. He is bound by his express covenant not to compete if it is limited reasonably in time and place. Old Corner Book Store v. Upham, 194 Mass. 101 , 104-105. Tobin v. Cody, 343 Mass. 716 , 720-721, and cases cited. We find nothing unreasonable in either respect in the terms of the covenant quoted earlier in this opinion. The decree, however, goes somewhat beyond the terms of the covenant in one respect, and falls short of its terms in another respect. The covenant provided that Frank should not "reenter the business of selling fuel oil in any capacity . . . in Worcester County for a period of ten (10) years after the execution of . . . [the] Agreement, or after he ceases to work for the Buyer, whichever event occurs later." The decree in part provides that Frank is "enjoined . . . from . . . engaging in the oil business in" Worcester County. The decree against Frank should be modified by substituting the words "the business of selling fuel oil" for the words "the oil business." The decree also makes the injunction effective for ten years from February 2, 1960. It should be effective for ten years from January 12, 1962, the day when the bill of complaint was filed which for practical purposes may be said to be the date when Frank's employment by the buyer terminated.
agreement by her not to compete. The evidence does not bring the case within the class of cases where a third party induces or causes the covenantor to violate his covenant (Moran v. Dunphy, 177 Mass. 485 ; Beekman v. Marsters, 195 Mass. 205 , 209-213; Comerford v. Meier, 302 Mass. 398 , 404-405; Lumley v. Gye, 2 El. & Bl. 216), or of those cases where a third party merely assists or acts as the covenantor's agent in avoiding his covenant. Weickgenant v. Eccles, 173 Mich. 695, 700-701. Howell v. Keck, 127 N. J. Eq. 87. Lyle v. Haskins, 24 Wash. 2d 883, 901.
protection from the activities engaged in by Emily. Foss v. Roby, 195 Mass. 292 , 297-298. Accordingly, the decree should be modified to provide that Emily be enjoined for a period of ten years commencing January 12, 1962, from soliciting, directly or indirectly, for the sale of fuel oil, any person who was a customer of S. J. Hayes & Son and, for the same period, from engaging, directly or indirectly, in the business of selling fuel oil in Worcester, Grafton Center, North Grafton, Millbury, and Shrewsbury.
The decree is to be modified in accordance with the foregoing and, as so modified, it is affirmed with costs.
[Note 1] The other plaintiffs are Hayes Oil Corporation (Hayes Oil) and Central Oil Company of Worcester (Central Oil).
[Note 2] The other defendants are Emily Hayes, wife of the defendant Frank, Emma F. Hayes, mother of Frank, and Grafton Oil Company, Inc. The bill was dismissed as to the defendant Emma F. Hayes, and there has been no appeal from that aspect of the decree by the plaintiffs.

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