Court Opinion

ID: 9701462
Source: CourtListenerOpinion
Date Created: 2023-08-25 22:20:10.720478+00
Date Added: 2024-06-11T18:21:23.849385
License: Public Domain

HENDERSON, Justice
(dissenting).
I specially join in the dissent of my esteemed colleague, Justice Dunn. SDCL 53-9-9 provides:
One who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county, city, or part thereof, so long as the buyer or person deriving title to the good will from him carries on a like business therein.
Cahill (appellee) sold his goodwill in an accountancy practice to Kohlman, Biersch-bach, and Anderson (appellants) and agreed to refrain from carrying on a similar business within Walworth County. Appellee and appellants were partners and had their office located in the City of Mobridge, which is located in Walworth County. The ink was barely dry on the contract when appellee-Cahill set up an accounting office in a farmhouse in Corson County, 1½ miles west of Mobridge. True, appellee-Cahill no longer had an office situs in the City of Mobridge, but as Justice Dunn’s dissent points out, he was soliciting business in Walworth County. It appears to me that appellee-Cahill, immediately after selling his share of the accounting business, set about to deliberately retrieve that which he had sold. Are there sufficient facts to create a material factual question as to whether appellants-Kohlman, Bierschbach, and Anderson, were unjustly deprived of the fruits of their contract? That is the question — and it appears to me that summary judgment was unwarranted under the circumstances.
SDCL 43-35-6 provides that “[t]he good will of a business is the expectation of continued public patronage ... . ” It likewise provides that “[t]he good will of a business is property, transferable like any other” right. Appellee-Cahill sold his goodwill and transferred that right under this statute. Specifically, the contract apportioned the purchase price as follows:
Client files $48,000
Physical assets 25,000
Non-compete covenant 7,000
Goodwill 5,000
Our state statute, SDCL 53-9-9, limits the geographical extent of non-compete agreements and this is rooted in the common law doctrine that covenants in restraint of trade, if unreasonable, are not enforceable. There is no suggestion here that the non-compete covenant is unreasonable. Consequently, the contract is enforceable.
I maintain that the spirit and purpose of this contract cannot be ignored. It must be construed in the light of the surrounding circumstances. I cite as authority Public Opinion Pub. Co. v. Ransom, 34 S.D. 381, 386, 148 N.W. 838, 839 (1914), wherein Justice Whiting, writing for this Court, stated:
Our statute having declared what is a “reasonable” restraint of trade, and the contract in question not violating the provisions of such statute, we cannot agree with appellant in his contention for a strict construction of the contract, but hold that the provisions of such contracts should be construed in the light of the surrounding circumstances, and that the intent of the parties should be carried out, if such intent is one which the law *669sanctions. Well' may the law look with favor upon contracts in “reasonable” restraint of trade.
Certainly, appellee-Cahill has not urged the invalidity of this contract; rather, he rests upon a strict construction of it, albeit like a fox who feeds upon a literal interpretation of its phraseology in a farmhouse just across the river and county line in Corson County. Under the majority opinion, verbiage is vaulting over substance.