Case Name: William Sander et al., appellants, v. George M. Hofman and Sophia Hofman, respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1876-02-22
Citations: 50 How. Pr. 449
Docket Number: 
Parties: William Sander et al., appellants, agt. George M. Hofman and Sophia Hofman, respondents.
Judges: 
Reporter: Howard's Practice Reports
Volume: 50
Pages: 449–454

Head Matter:
COURT OF APPEALS.
William Sander et al., appellants, agt. George M. Hofman and Sophia Hofman, respondents.
February 22, 1876.
Breach of covenant on sale of a business and good-will within certain limits.
Where the seller of a butcher’s business enters into a covenant with the purchaser of it that he will not engage in or carry on said business during five years, within certain limits, in connection with a sale of his entire establishment, and the good-will of the business, within the prescribed limits, giving up possession to the purchaser, such covenant is broken by the seller when, within a year, he establishes the same business just outside of the prescribed limits, and by his agent supplies a portion of his old customers residing within said limits, whether such supplies are furnished at the solicitation of the covenantor or his agent, or merely at .the solicitation of the customers, if the traffic is carried on. sufficiently to constitute a business.
Charles M. Smith, of counsel, for appellants.
J. L. Mill, of counsel, for respondents.

Opinion:
Rapadlo, J.
— The covenant for the breach of which this action was brought was that the-defendants would not engage m or carry on the specified business during five years from the date of the agreement, within certain limits in the city of Hew York. This covenant was given in connection with a sale by the defendants of their establishment within the prescribed limits, and of the good-will of the business which the defendants had previously carried on there, and was intended to secure the plaintiffs in the enjoyment of such good-will, and protect them against competition by the defendants, bio question is raised as to the validity of the covenant, and the only point litigated at the trial was whether it had been broken by the defendants. The business was the retail butcher, fish, vegetable and provision business.
The plaintiffs, in support of their allegation of a breach of the covenant, proved that in May, 1872, a year after the covenant was made, the defendants set up a similar establishment to that which they had sold to plaintiffs, a short distance outside of the prescribed limits, but supplied some of their old customers residing within said limits, by sending daily to their residences a wagon with the provisions which they needed, and receiving, through the messenger who carried them, orders for the following day, and so on, from day to day. The number of customers shown to have been thus supplied was few; only four instances were shown upon the trial. One customer was thus supplied for only a few weeks ,• one for about four months, to the amount, in the aggregate, of $180; one from October, 1872; to the time of the examination of the witness; the other from the time the defendants opened their new store, in 1872, down to the time of the examination of the witness, in March, 1873. The amount of the business thus done does not appear.
There was evidence that the custom of these persons, or some of them, had been solicited by the defendants. This was denied by the defendants, who claimed that the customers voluntarily, and without solicitation, proposed to deal with them, on being informed that they had resumed business. The judge charged that if they found that the defendants themselves, or by their agents, went into the prescribed limits and there solicited or procured orders for meats, &c., and that the defendants received or filled such orders, it was a breach of the covenant; but that if they found that the defendants did not go into the pz-escribed limits and procure such orders, but that persons within such limits voluntazily, and without solicitation of defendants, gave them orders (and whether they gave their orders within such limits, or otherwise, was immaterial), the filling of such orders was not a breach of the contract. Exception was duly taken to this last proposition.
The jury having retired, afterward returned and asked the court this question:
" Is the sending an agent every day to the houses in the limited district to take orders and filling them a competitive business or solicting the same?"
To which the court replied: a In the construction I have given to the contract it would not be. The orders must have originally been procured by the .solicitation of the defendants. If they proceeded from the customers, and not by the procurement of the defendants, it was not a breach to fill them."
Exception was duly taken to this ruling.
The effect of these instructions to the jury wa°s so to limit the operation of the covenant as to restrain the defendants merely from soliciting the patronage of customers within the district, and leave them at liberty to carry on business there to any extent, by sending their wagon daily to the houses in the district, receiving orders there and delivering the provisions ordered, provided the original proposition so to deal proceeded from the defendants. Such a construction of the covenant would, in our judgment, entirely defeat the purpose' for which it was taken, and substantially deprive the plaintiffs of the protection which it was intended to afford them, or in consideration of which they had bought and paid for the good-will of the defendants' business. The business of supplying the inhabitants of the district with meat, provisions, &c., and sending to their dwellings to receive orders was the very business which the plaintiffs purchased. If the defendants were at liberty to carry on the same business, naturally their old customers and those to whom they were known by reputation would prefer deal ing with them, to employing the new concern. It was immaterial to the customers where the store or shop was; for the supplies were brought to their door and orders received there. .It was this very good-will, the disposition of the inhabitants of the district to deal with the defendants, which they undertook to sell to the plaintiffs. The covenant of the defendants bound them to do more than refrain from soliciting patronage. It bound them not to carry on the business within the prescribed district, and if applied to for that purpose it was their duty to decline, on the ground that they had covenanted not to do so.
The greater the reputation of the defendants' establishment and the disposition of their former customers to deal with them, the more valuable was the good-will which the plaintiffs purchased; but upon the construction put upon the covenant by the court below, if the defendants were sufficiently popular to cause their former customers to seek them they might retain all their former business, so long as they did not take the initiative in soliciting the continuance of the custom.
In the case of Smith agt. Smith (4 Wend., 468), which was an action upon a bond given by a physician, that he would not locate himself and practice his profession within prescribed limits, and in case he should so locate or practice, that he should pay a certain sum per month, the obligor located himself outside the limits, but visited patients within them, and he was held liable. It was not intimated in that case that it was necessary to constitute a breach of the condition of his bond, to show that he had solicited the custom of his patients. The covenant here is just as absolute as in that case. It is that the defendants will not carry on the business within the district.
It cannot be doubted that sending his wagon and an agent daily within the district, supplying the inhabitants and receiving their orders for further supplies, if carried on to a sufficient extent to constitute a business, would be a breach of that covenant. What excuse is it to say that these acts were done at the request of the customers? The object of the covenant was to secure the withdrawal of the defendants from the business, in order that the trade which would have gone to them, had they continued, should go to the plaintiffs. If the defendants continued the business and supplied their former customers or others in the district, the damage to the plaintiffs is the same whether the defendants sought the customers or they voluntarily came to the defendants. If the defendants declined to do the business as their covenant bound them to do, this trade might have gone to the plaintiffs. The case of Turner agt. Evans (2 El. & Bl., 512), is much relied upon by the defendants5 counsel to sustain the proposition that to constitute a breach the orders must have been solicited by the defendants.
In that case the defendants sold the good-will of their business at Caernavon and contracted with the purchaser not to carry on the business of a wine merchant there. He set up business at another place, but had agents at Caernavon who received orders for wine, which he executed. The fact was, in the case, that these agents solicited orders, and that fact was commented upon, but was not essential to the decision. The essential ground was¿ that the defendants supplied wine so systematically within the district as to have made a business of it. The reasoning of the case shows that if he had had an agent within the district who received orders, even without solicitation, which the defendants supplied, the result would have been the same and the injury to the plaintiffs the same, and that it was no difference whether the wine was supplied from stores within or without the district. In discussing the question of fact, lord Campbell remarks that if, to oblige an old customer, he should now and,then sell him some wine, that would be no breach, for it would not be carrying on a business, and the same remark would apply to the present case. If once in a while, to oblige an old customer, the defendants had sent him a piece' of meat, the case would be analogous. But this is vastly different from systematically sending an agent every day to the houses of his old customers in the district and receiving orders and supplying them.
The true question in the case was, whether the defendant had done these acts systematically and for profit, to an extent sufficient to constitute the carrying on of a business within the district. If so, it matters not at whose solicitation the dealings were inaugurated. But the case was not disposed of or submitted to the jury on any such question. The ground upon which it was disposed of is, we think, untenable, and the judgment should therefore be reversed and a new trial granted, with costs to abide the event.
All concur.
Reversing 7 Jones & Spencer, 307.