Augustine v. Fischer

23 Pa. D. & C.3d 208, 1982 Pa. Dist. & Cnty. Dec. LEXIS 334
CourtPennsylvania Court of Common Pleas, Luzerne County
DecidedAugust 3, 1982
Docketno. 100E of 1981
StatusPublished

This text of 23 Pa. D. & C.3d 208 (Augustine v. Fischer) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Luzerne County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Augustine v. Fischer, 23 Pa. D. & C.3d 208, 1982 Pa. Dist. & Cnty. Dec. LEXIS 334 (Pa. Super. Ct. 1982).

Opinion

TOOLE, J.,

On September 25, 1981, plaintiffs, John L. Augustine and Audrey Augustine initiated this equity action seeking to enjoin defendants, Murray Fischer and Frank Giampietro “from using or causing to be used in their business or otherwise the name ‘Augustine’s’ and from advertising as such.” Preliminary objections to the complaint were overruled by the Honorable Bernard J. Podcasy on January 4, 1982. [209]*209Defendants then filed an answer containing new matter and counterclaim, to which plaintiffs filed preliminary objections. Those objections, including a demurrer and motions to strike, are now before us for determination.

In considering and resolving the demurrer, we axe required to comply with the standards set forth in Gekas v. Shapp, 469 Pa.1, 364 A. 2d 691 (1976), wherein the court stated:

“The standards for sustaining preliminary objections in the nature of a demurrer are quite strict. A demurrer admits every well-pleaded material fact set forth in the pleadings to which it is addressed as well as all inferences reasonably deducible therefrom, but not conclusions of law (citations omitted). In order to sustain the demurrer, it is essential that the plaintiffs complaint indicate on its face that his claim cannot be sustained, and the law will not permit recovery. (Citations omitted.) If there is any doubt, this should be resolved in favor of overruling the demurrer. Clevenstein v. Rizzuto, 439 Pa. 397, 266 A. 2d 623 (1970).”

The facts giving rise to the instant dispute may be briefly summarized as follows:

Plaintiffs operated a restaurant under their family name “Augustine’s” at 9-11 North Walnut Street, Wilkes-Barre Township, Luzerne County, Pa., for over 26 years before selling the business to the Giglias. At the time of the sale, plaintiffs executed a document entitled “Covenant By John L. Augustine and Audrey Augustine Not To Compete” which specifically stated:

“JOHN L. AUGUSTINE and AUDREY AUGUSTINE, his wife, agree that they will not, either directly or indirectly, alone or with others, enter upon or engage in the operation of a restaurant/tavem [210]*210business within five (5) miles of 9 North Walnut Street, Wilkes-Barre Township, Luzerne County, Pennsylvania, for a term of five (5) years from the date hereof.”

Following the sale, the Giglias took possession of the real estate and personal property and continued the operation of the restaurant under the name “Augustine’s.” On or about the beginning of September, 1981, the Giglias discontinued their opeation of the restaurant and sold all of their interest in the same to defendants who are now operating the business under the name of “Augustine’s.”

Plaintiffs, meanwhile, are allegedly engaged in the operation of another restaurant outside the radius set in the covenant not to compete. However, plaintiffs’ advertisement of their present operation is disseminated within the restricted area. Defendants, by their counterclaim, seek to enjoin plaintiffs’ advertisements as being in violation of the covenant not to compete. In addition, defendants seek monetary damages and attorney fees.

By virtue of the demurrer filed by plaintiffs, the court is confronted with the following issues:

1. Is the covenant not to compete valid?

2. If valid, is the covenant enforceable by subsequent purchasers of the business such as defendants?

3. Assuming the covenant is valid and defendants have standing, is there an alleged violation of the covenant?

In determining whether the covenant in this case is valid, we begin with an examination of the classic statement of the law in Piercing Pagoda, Inc. v. Hoffner, 465 Pa. 500, 351 A. 2d 207 (1976), wherein the court stated:

“The law in this Commonwealth for more than a [211]*211century has been that in order to be enforceable, a restrictive covenant must satisfy three requirements: (1) the covenant must relate to either a contract for the sale of good will or other subject property, or to a contract for employment; (2) the covenant must be supported by adequate consideration; and (3) the application of the covenant must be reasonably limited in both time and territory (citations omitted).”

We find all three of the criteria set forth in Piercing Pagoda, Inc. satisfied in the instant case. This court finds that the terms of the covenant are reasonably limited in both geographical extent and duration of time for a business of this type. Without belaboring the point, suffice it to say that numerous other courts have considered similar covenants and found them reasonable. See generally, 8 P.L.E., Contracts §§108, 109, 112; 18 P.L.E., Injunction, §63-65; 17 C.J.S. Contracts, §245-247.

We turn now to the second issue wherein we are required to determine whether these defendants have standing to sue on the covenant. Although the legal position of plaintiffs is not entirely clear, it would appear to the court that they contend that the covenant was a personal one to their purchaser and did not extend to subsequent purchasers.

In resolving the legal nature of this particular covenant, we must determine whether it is a personal one between the original contracting parties which cannot be enforced by a subsequent purchaser of the business, or whether it is one which may be termed real and under the instant facts, enforceable by defendants as subsequent purchasers.

Our analysis begins with an examination of the seminal Pennsylvania case on the subject, Gom[212]*212pers v. Rochester, 56 Pa. 194 (1867). In that case, plaintiffs purchased defendant’s store and the real estate upon which it was situate. Defendant-seller covenanted that he would not engage in the same business within a radius of ten miles for a period of five years. The purchasers consisted of three partners. Subsequent to the initial transaction, two of the partners sold their interest to a third who subsequently sold his interest to the original vendor, Rochester, whom he also agreed to release from the covenant not to compete. Plaintiffs argued that upon dissolution of the partnership, no one of the former partners had the power to rescind the covenant not to compete because the covenant attached and was incident to them personally. The Supreme Court rejected this position stating (p. 198):

“The fallacy of the position of the plaintiffs in error seems to consist in regarding the covenant as attaching, or incident to them personally; whereas, it was alone an incident to the property which they had parted with, and the business also. It would not have been binding for want of consideration, unless as incident to the property sold at the time of the relinquishment covenanted for. I doubt if any case can be found in which such a covenant has been enforced, where it had no effect to protect the business or trade of the covenantee. Indeed it would be against public policy, and every principle upon which such contracts are sustained.”

The court reiterates this point by concluding that the covenant passed with the business, which it had been its object to protect.

Although we have discovered a scarcity of subsequent Pennsylvania decisions addressing the issue at bar, our research reveals a plethora of cases [213]*213in other jurisdictions squarely addressing the problem:

In Public Opinion Pub. Co. v. Ransom, 34 S.D. 381, 148 N.W.

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Related

Piercing Pagoda, Inc. v. Hoffner
351 A.2d 207 (Supreme Court of Pennsylvania, 1976)
Chatham Communications, Inc. v. General Press Corp.
344 A.2d 837 (Supreme Court of Pennsylvania, 1975)
Clevenstein v. Rizzuto
266 A.2d 623 (Supreme Court of Pennsylvania, 1970)
Gekas v. Shapp
364 A.2d 691 (Supreme Court of Pennsylvania, 1976)
Nisonoff v. Cerebe
62 A.2d 496 (New Jersey Superior Court App Division, 1948)
Gompers v. Rochester
56 Pa. 194 (Supreme Court of Pennsylvania, 1868)
Public Opinion Publishing Co. v. Ransom
148 N.W. 838 (South Dakota Supreme Court, 1914)
Burchell v. Capitol City Dairy, Inc.
163 S.E. 81 (Supreme Court of Virginia, 1932)
Sickles v. Lauman
185 Iowa 37 (Supreme Court of Iowa, 1918)
Palmer v. Toms
71 N.W. 654 (Wisconsin Supreme Court, 1897)

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Bluebook (online)
23 Pa. D. & C.3d 208, 1982 Pa. Dist. & Cnty. Dec. LEXIS 334, Counsel Stack Legal Research, https://law.counselstack.com/opinion/augustine-v-fischer-pactcomplluzern-1982.