Cleaver v. Lenhart

37 A. 811, 182 Pa. 285, 1897 Pa. LEXIS 809

• Court: Supreme Court of Pennsylvania
• Decided: July 15, 1897
• Docket: Appeal, No. 184
• Status: Published

Opinion

Opinion by

Mr. Justice Green,

The consideration of the original contract dated June 6, 1895, for the conveyance and sale of the creameries therein described, was the sum of $5,950 in money, which was to be paid for the properties. Nothing was said in that contract about any restriction upon the seller, Lenhart, in the conduct of the same business at any time or place. He did not become subject to any duty or obligation to abstain from carrying on the same business thereafter, and hence he was at perfect liberty to do so if he chose. It cannot, therefore, be said that it was any part of the consideration of the contract that Lenhart should not engage in the same business in the future. That contract was consequently completely performed when the conveyances were made and delivered, and money paid according to its terms. It necessarily follows that when the second agreement was made on the 29th of the same month of June, there was nothing left of the first agreement which could operate as a consideration of the second.

There is practically no dispute as to the law in regard to this class of contracts. The agreement in suit is a contract in partial restraint of trade. As such, under all the .authorities, it must, as one of the essential elements, be founded upon a good and sufficient consideration. In Keeler v. Taylor, 53 Pa. 467, Woodward, C. J., delivering the opinion, said: “The general rule is that all restraints of trade, if nothing more appear, are bad. This was the rule laid down in the famous case of Mitchel v. Reynolds, 1 P. Wms. 181. But to this general rule there are some exceptions, as, if the restraint be only particular in respect to time or place, and there be a good consideration given to the party restrained. . . . The cases are fully collected in Smith’s note to Mitchel v. Reynolds, 1 Smith’s Leading Cases, and from them it will be seen that all such contracts to be good at law must be founded in a valuable consideration, must be reasonable, and must impose no general restraint upon trade and industry.”

The same doctrine was repeated in Gompers v. Rochester, 56 Pa. 194, where Thompson, C. J., said: “ Agreements in restraint of trade generally, are void. They are not so when limited in time, or partial in their operation, and when there is a sufficient consideration.” And again in Harkinson’s Appeal, 78 Pa. 196, Mbrcxjr, J., said: “It must be borne in mind that agreements in restraint of trade generally are void. To give validity to them they must be limited in time, or partial in their operation, and be supported by a sufficient consideration. ” Thus it will be seen that in all these utterances the necessity of a sufficient or valuable consideration is expressed as a requirement additional to the other requirements as to time and place. In all the cases it is also held that the restraining condition must not be involved in any doubt or uncertainty, and all the elements necessary to its validity must appear affirmatively. An instance of this kind appears in the case of Hall’s Appeal, 60 Pa. 458. It was a written agreement of sale of the stock and good will of an undertaking business in Philadelphia for |3,000, and the restraining condition did not appear in the writing, though there was a blank of seven lines left in the instrument, which it was contended, was left for the insertion of such a condition, and there was some verbal testimony of that kind, and also that the seller had said it was unnecessary to have a written agreement to that effect, as he did not intend ever to go into business again in Philadelphia.

There was also some other verbal testimony to similar decía- - rations of the seller made afterwards. The case was a bill for an injunction to restrain the seller from again engaging in the same business in Philadelphia. Williams, J., delivering the opinion said, “We have no doubt of the validity of such a contract, as is alleged in the bill, if founded on a sufficient consideration, or of the power of the court to restrain its breach by injunction. Our doubt in this case arises from the insufficiency of the proof to establish the existence of the alleged agreement. It cannot be inferred from the sale of the good will of the business and it is expressly denied in the answer. The sealed agreement between the parties given in evidence by the plaintiff, contains no stipulation or covenant on the part of the defendant, either to retire from the business, or not to resume it again in the city of Philadelphia, and in this respect it fully corroborates and sustains the hnswer.” The judge then shows that the verbal testimony was insufficient to establish the restraining condition and he proceeds thus, “ As the alleged agreement is in restraint of trade its existence should be established by clear and satisfactory evidence, in order to justify the court in restraining its breach by injunction. There should be no doubt or uncertainty in regard to its terms, or the consideration upon which it was founded.” Other cases are to the same effect as all of the foregoing, but it is not necessary to cite them.

In the present case there is no doubt about the- terms of the restraining agreement. It is sufficiently specific as to time and place within which the restraint is to be operative. But it has no consideration to support it. The previous sale being complete in all respects, the duty of the parties on both sides was clearly defined, and the obligation to perform it was comprehended within its express provisions. The agreement in restraint was no part of its terms and there was no obligation on the part of Lenhart to restrain his operations thereafter. It was held in Wimer v. Overseers, 104 Pa. 317, that where a legal obligation exists, a cumulative promise to perform it unless upon a new consideration, is a nullity. Hence the obligation of Lenhart to perfect the sale under the first agreement and the obligation of Cleaver to comply with its terms could not be a consideration for the restraining agreement of the subsequent date. The latter paper was a mere voluntary agreement in restraint of trade and, as such, cannot have legal sanction. The assignments of error are all dismissed.

Judgment affirmed.