Court Opinion

ID: 6549866
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:23:13.291136+00
Date Added: 2024-06-11T15:56:04.804218
License: Public Domain

Hart, J., (after stating the facts). It is first contended by counsel for defendant that the contract was void, as being in restraint of trade; but we can not agree with him in this contention. In the case of the Edgar Lumber Co. v. Cornie Stave Co., 95 Ark. 449, we held that a contract in partial restraint of trade is valid when founded upon a valuable consideration, if the restraint is reasonable as between the parties and not injurious to the public by reason of its effect upon trade, and whether a restraint is reasonable depends upon whether it is such as affords fair protection only to the party in whose favor it is given and is not so large as to injure the public. Other cases 'announcing this rule are: Hampton v. Caldwell, 95 Ark. 387; Fort Smith Light & Traction Co. v. Kelley, 94 Ark. 461; Webster v. Williams, 62 Ark. 101; Bloom v. Home Insurance Agency, 91 Ark. 367. It is next insisted by counsel for defendant that the contract under consideration was void, as being in violation of an act of the General Assembly of the State of Arkansas commonly known as the ‘ ‘ anti-trust law; ’ ’ but this contention of counsel has been decided adversely to him in the case of Bloom v. Home Insurance Agency, supra. The object and purpose of the contract under consideration was not to stifle competition but to sell and transfer a business and the good will of that business. After Kimbro sold out to Wells, he was not interested in any manner in the conduct of the business, and it made no difference to him whatever what price was fixed by Wells for the lumber sold by him. It is next urged by counsel for defendant that the court erred in refusing to give instruction No. 7, asked by them, and also in excluding certain testimony offered by them on the question embraced in the instruction. Instruction No. 7 is as follows: “If you believe from the evidence that the plaintiff purchased from the defendant his entire planing mill outfit and lumber on hand and entered into a written contract of the entire transaction, as plaintiff alleges was done in his complaint, and if you further believe that thereafter without any new or additional consideration the defendant signed and executed the 'obligation herein sued on, then the court tells you that such obligation was void and your verdict should be for the defendant. ’ ’ The plaintiff stated that the two instruments were prepared and executed at the same time and as part of one transaction. It is the contention of counsel for plaintiff that because the two instruments were executed on the same day and related to the same subject matter, and because the latter refers to the former and expressly states that it is a part of the former instrument, the, two instruments are, in legal contemplation, contemporaneous and should be construed as one contract. See Vaugine v. Taylor, 18 Ark. 85; Mann v. Urquhart, 89 Ark. 239; Wood v. Kelsey, 90 Ark. 272. The defendant admitted that the two instruments were executed on the same day, but stated that the second instrument was executed either a half hour or two hours after the first instrument was executed. This evidence was admitted. He also stated that the first instrument embraced all the matters that had been agreed upon by the parties up to the time of its execution and that the matters embraced in the second instrument were an after-thought on the part of the plaintiff and were not the subject of negotiation between the plaintiff and the defendant until after the first instrument had been signed by the parties. The court excluded this testimony on the ground that it tended to vary or contradict the written contract; but we think the court erred in this ruling. It is true, as we have already pointed out, that a person, in selling his business and good will at a certain place, may, as part of the consideration therefor, agree that he will not engage in the business again at that place, and that such contract is reasonable and enforceable, but, acording to the evidence of the defendant which was excluded by the court, the first instrument executed by the parties embraced all the matters that had been agreed upon by them up to the time of its execution. He stated, in effect, that at the time the first instrument was signed by the parties he had not agreed with the plaintiff that he would not begin another lumber business in the town of Monticello; that this agreement was made after the first contract had been signed by the parties and was a wholly independent agreement. Therefore, counsel for defendant contend that the new agreement was without consideration and is not binding upon the parties. We think they are correct in this contention. If the jury believed the testimony of the defendant, it is apparent that the two instruments were wholly independent and separate' agreements and that there is no consideration between the parties to support the second agreement. The excluded testimony did not tend to contradict or vary the written instruments, but only tended to show that they were distinct and separate agreements; that they were not executed at one and the same time,but that the execution of the first agreement was completed before negotiations for matters embraced in the second agreement were entered into by the parties. In the case of Graham v. Remmel, 76 Ark. 140, and other cases of like' character, it was held that parol evidence tending to show that a written instrument was not delivered as a present contract but was left in the hands of the obligee on condition that it should not become a binding contract except in a certain contingency, was competent. The court said that evidence of such parol agreement would show that the contingency never happened, and would not be a contradiction of the writing. With equal force in the present ease, it may be said that the excluded evidence tended to show that the two instruments were not executed at the same time as a part of one transaction, but that the matters embraced in the second instrument were not even the subject of negotiation between the parties when the first instrument was executed. We are, therefore, of the opinion that the excluded evidence did not tend to vary or contradict the writing. If we are correct in holding that the action of the court in excluding the testimony referred to was erroneous, the action of the court in refusing to give instruction No. 7, copied above, was also erroneous because no other instruction given by the court submitted the theory of the defendant to the jury. It is next insisted by counsel for defendant that the court erred in instructing the jury that the plaintiff’s measure of damages was the sum of $2.50 for each day that the defendant engaged in the lumber business in the town of Monticello after the execution of the contract under consideration. No general rule exists in all cases as to distinguishing a penalty from liquidated damages, and each case must depend, to a great extent, upon its own peculiar facts. The general rule is that where the damages arising on a breach of a contract are uncertain and difficult of ascertainment, a stipulation for the payment of a designated sum as liquidated damages, if reasonable, will be sustained, and the question of whether the damages are difficult of ascertainment is to }¡>e determined from a consideration of the status of the parties at the time the contract was entered into and not at the time it was broken. Wait v. Stanton, 104 Ark. 9; Blackwood v. Liebke, 87 Ark. 545. Applying these principles to the case under consideration, it is apparent that the damages were the subject of estimate between the parties. They realized that it would be a difficult matter to prove the amount of damages which might be suffered by a breach of the contract and that such proof would entail considerable expense. It was impossible for the parties to foresee the 'amount and extent of the injury which might 'be sustained by the plaintiff if the defendant again opened up a lumber yard in the town of Monticello. They could foresee, however, that such a course on the part of the defendant would seriously affect the business of plaintiff, and the very uncertainty of the loss likely to arise made it reasonable for the parties to agree beforehand what the damages should be. The amount agreed upon was not, when the situation of the parties and the attending circumstances are considered, so unreasonable that it should be considered as a penalty. Finally, it is contended that the judgment should be reversed because there is not sufficient testimony to warrant a jury in finding that the defendant again opened up a lumber yard in the town of Monticello after the contract sued on was executed. It will be noted that the contract sought to be enforced by the plaintiff provides that the defendant should not thereafter establish a lumber yard within the corporate limits of Monticello and should not become interested in the sale of lumber at Monticello in competition with the plaintiff. Testimony was introduced by the plaintiff tending to show that on numerous occasions after the contract was entered into the defendant sold and delivered lumber to persons in the town of Monticello; that he had an office in the town for that purpose, and had made and entered into contracts for the sale of lumber with parties in the town of Monticello and collected the money therefor; that he also, on some occasions, had lumber piled around his office and in his dwelling house yard, which he sold to persons in the town. From this the jury might have found that he had violated his contract with the plaintiff. The plaintiff took a cross-appeal, and insists that under the undisputed evidence he should have judgment for a greater amount than that obtained by him. Inasmuch as the judgment must be reversed for the errors indicated in the opinion, it becomes unnecessary to consider this question. The testimony on this point may be different on a retrial of the case, and we do not express any opinion on the matter. For the error in refusing to give instruction No. 7 and in excluding the testimony of the defendant, as stated in the opinion, the judgment must be reversed and the cause remanded for a new trial. Wood, J., being disqualified, did not participate.