Court Opinion

ID: 9566861
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:44:05.788016+00
Date Added: 2024-06-11T09:40:41.585969
License: Public Domain

K. N. Hansen, J.
(concurring). I concur in the holding of the majority that the trial court’s decision must be reversed, but arrive at that decision by different reasoning.
The present action is for breach of the contract *282executed May 20, 1982, whereby defendants sold to plaintiff the assets, equipment, and goods of their business known as Wolverine Vending Company including the trade name. Said contract contained the following provision:
The Sellers hereby covenant with the Buyer that they shall not, directly or indirectly, as principal, agent, employee, consultant, director, officer, owner of an equity interest, or in any other capacity become engaged or interested in any business which directly or indirectly competes with the business sold by the Sellers to the Buyer within a radius of 250 miles from the present location of any of the commercial bulk vending machines conveyed by the Sellers to the Buyer for a period of five (5) years from and after the closing date then [sic] the entire balance of the Promissory Note executed by the Buyer to the Sellers herein, including principal and any accrued and business [sic] shall be totally, absolutely, and unconditionally forgiven and shall otherwise be considered by the parties paid in full. [Emphasis added.]
In commencing the present action, plaintiff alleged that defendants had breached the above covenant. Accordingly, plaintiff maintained that the balance of the purchase price it owed to defendants was forgiven. It is undisputed that, prior to any of the alleged violations of the covenant, plaintiff had conveyed its entire interest in Wolverine to Castle Enterprises, Inc., although plaintiff did retain a security interest in the business. The contract of sale between plaintiff and Castle contained a covenant whereby plaintiff agreed not to compete with Castle. However, said contract made no mention of the above-quoted covenant between plaintiff and defendants.
The trial court concluded that, since plaintiff *283had sold Wolverine to Castle prior to defendants’ alleged violations of the above-quoted covenant, plaintiff was not a real party in interest. Since. MCR 2.201(B) provides that "[a]n action must be prosecuted in the name of the real party in interest,” the trial court granted defendants’ motion to dismiss.
The majority concludes that the trial court erred in finding that plaintiff was not a real party in interest, based upon the following reasoning:
In the instant case, the court reasoned that, since plaintiff had sold the vending machine business, neither the corporation nor the named shareholders could be real parties in interest. We conclude that the lower court erred and that as a matter of substantive law the plaintiff corporation’s retention of a security interest in the assets of the vending machine business is sufficient to establish that it is a real party in interest. To the extent that plaintiff may be able to prove that defendants’ activities have adversely affected the business of Castle, Castle’s ability to make payments to plaintiff under the promissory note may be diminished. If the alleged breach can be shown to damage Castle’s business, then plaintiff’s security is of lesser value. [Emphasis added.]
Thus, in the view of the majority the fact that plaintiff retained a security interest in Wolverine is determinative as to whether it is a real party in interest. In my view, however, that fact is irrelevant. The fact that a plaintiff holds a security interest might well be sufficient to make him a real party in interest for purposes of maintaining an action for impairment of security by a third-party tortfeasor. However, that is not the question presently before this Court. By way of the present action, plaintiff seeks to enforce contract rights it received under the contract of sale executed on *284May 20, 1982. Plaintiff never conveyed its right to enforce the restrictive covenant contained in that contract to Castle or to anyone else. Accordingly, plaintiff remains the owner of said right and thus is a real party in interest in seeking its enforcement. This could remain true even if Castle had paid in cash to plaintiff the entire purchase price for Wolverine and plaintiff retained no security interest in the business, as long as plaintiff did not convey to another its right to enforce the above-quoted restrictive covenant. Therefore, I concur in the holding of the majority that plaintiff is a real party in interest for purposes of bringing the present action.
It is necessary to emphasize, however, that neither the majority in its opinion nor I in this concurrence have made any findings as to the extent of the restrictive covenant plaintiff seeks to enforce. The covenant provided that the balance of the purchase price owed by plaintiff to defendants would be forgiven if defendants competed with "the business sold by the Sellers to the Buyer.” It will be for the trial court to determine whether the parties intended this phrase to encompass Wolverine only so long as it was owned by plaintiff or whether they intended it to encompass Wolverine no matter who subsequently owned the business as well as any other factual matters.