Court Opinion

ID: 6238439
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:38:17.968772+00
Date Added: 2024-06-11T08:58:07.366844
License: Public Domain

Mr. Justice Trtinkey
delivered the opinion of the Court,
The plaintiff and defendant were two of the three stockholders of the corporation that owned the machinery and plant for the manufacture of ochre, located in Lehigh countju The firm of Smith & Reazor were carrying on the business under a lease, and were indebted in a small amount to their employés, and in a large amount for royalty. The plaintiff had issued execution on his judgment against said corporation, by virtue of which the sheriff had seized all its property, including property claimed by the defendant, and advertised the same for sale on May 24th, 1883.
On the day before the sheriff’s sale the agreement was made. That all the parties to the agreement were in some way interested in the business and property is obvious. And it is also apparent that they contemplated that Fell would buy the machinery and plant at the sheriffs sale. Among other things they covenanted that Fell should release the levy on the goods claimed by tfie defendant, that he should pay the employés of Smith & Reazor the amount due them, and that he would make no claim for royalty under the contract between Smith & Reazor and said corporation, dated July 15th, 1882; and the other parties jointly and severally covenanted to forthwith cease the manufacture of ochre, and not at anj'- time thereafter either as principals or principal, or by or as agents, or employés, or in any other way, engage in the manufacture of ochre in the county of Lehigh or elsewhere.
Fell purchased the property at the sale as had been contemplated. There is no difficulty about the sufficiency of the consideration for the defendant’s covenant. It is more than the release of the property he claimed, if that is of doubtful sufficiency. C. W. Smith, one of the parties of the second part, is his son ; he jointly and severally with his son and Reazor, covenanted with Fell, the other party, in consideration of Fell’s covenants, to cease the business and not engage in it in the future. The joint and several covenant of the three was the inducement to Fell. The agreement and the sheriff’s sale of the property of the corporation, put all the interested parties out of the business, except Fell, and put him in with a covenant by the three that they would not again engage in the business. In effect the plaintiff became the purchaser of *590the property and relieved the others from payment of indebtedness. It was altogether reasonable to settle the dispute about the ownership of the property claimed by the defendant; there is nothing to show that either party to that dispute was acting in bad faith. That it was’ reasonable for Fell to agree to pay certain debts, and release the claim for royalty, cannot be gainsaid. This agreement seems to be fairly within cases ; of the first class, upheld as legal, as stated in the appellant’s jargument, namely, “sales of stock and good will, with cove- / nant not to carry on the business on the same spot in opposition ' to the purchaser.”
A contract restraining one of the parties from the exercise of a trade within a limited locality, when there is reasonable ground for the restriction, is valid. Inquiry will not be made into the adequacy of the consideration — its value will not be measured against the uncertain value of the right to carry on the trade or business — if it be reasonable, it is enough: Mc-Clurg’s Appeal, 58 Pa. St., 51.
The covenant as to place, “in the county of Lehigh or elsewhere,” is divisible, and valid as to the county; for the present it is conceded to be void elsewhere. This point was decided in a case where the party agreed not to engage in a particular business in Cincinnati or elsewhere: Thomas v. Miles, 3 Ohio St., 274. Other cases are cited by the learned judge of the common pleas, sustaining the same doctrine. .None to the contrary was referred to at the argument. Where a county, or city, or borough, is named as a-limit, and an unreasonable extent of territory in addition is also named, the covenant is divisible and may be valid as to the particular place, which is a reasonable limit.
It has been said that all the cases when they come to be examined seem to establish this principle, that all restraints upon trade are bad, as being in violation of public policy, unless they are natural, and not ’unreasonable, for the protection of the parties in dealing legally with some subject matter of contract. UThe principle is this: public policy requires that every Í man shall not be at liberty to deprive himself or the state of j his labor, skill or talent, by any contract that he enters into. ;On the other hand, public policy requires that when a man has, ¡ by skill or by any other means, obtained something which he •j wants to sell, he should be at liberty to sell it in the most ad vantageous way in the market; and in order to enable him to so sell it, it is necessary that he should be able to preclude himself from entering into competition with the purchaser^/ In such case the same public policy enables him to enter into any stipulation, however restrictive it is, provided the restriction, in the judgment of the Court, is not unreasonable, having *591regard to the subject matter of the contract: Leather Cloth Co. v. Lorsent, 9 Law R. Eq. C., 345.
We are of opinion that the Court of Common Pleas rightly held that the covenant as to place was divisible, that it was competent for the defendant to make the covenant, that it is founded on good consideration, and is reasonable and not oppressive.
Decree affirmed, and appeal dismissed at the costs of appellant.