Coker v. Richey

202 P. 551, 104 Or. 14, 22 A.L.R. 744, 1921 Ore. LEXIS 2

• Court: Oregon Supreme Court
• Decided: December 13, 1921
• Status: Published

Opinions

BURNETT, O. J.

The plaintiffs .Coker and Bellamy aver that they are and have been since May 22, 1920, partners under the firm name of “Eastern Oregon Music Company,” and that they have filed the certificate required by law, with the county clerk of Union County, Oregon. The complaint avers that the defendant Bichey was carrying on a general retail music business at La Grande, Oregon, selling pianos, piano-players, phonographs and other musical instruments, and that:

“On January 15, 1920, for a valuable consideration, the said defendant sold and delivered to this plaintiff, B. H. Coker, all the pianos, piano-players, phonographs, piano-player records, phonograph records, music, equipment, office fixtures, shelving, furniture, stock and goodwill of that certain music and piano business then owned and controlled by said G. M. Bichey (Bichey Piano House) then located in the New Foley building, La Grande, Oregon, save and except only one office desk, and that, as a part of the consideration of said transfer and sale of said business of defendant, known as Bichey Piano House, including goodwill, to plaintiff B. H. Coker, defendant G. M. Bichey contracted and agreed not to enter into the piano or music business in any way, shape or form, actively, for himself or otherwise, in La Grande, Union County, Oregon.”

The complaint further avers in substance that in consideration of said covenants and agreements of the defendant, the plaintiff Coker purchased said business, goodwill and stock of the defendant, and that ever since January 15, 1920, the plaintiffs as successors in interest of said business and rights, have been engaged in the said retail music business, including the sale of pianos and musical instruments, and are now so engaged, at La Grande, Oregon. They then accuse the defendant of violating his covenant not to engage in the piano or music business at La Grande, specifying with considerable particularity the various instances which they aver constitute a breach of that covenant.

In his answer the defendant admits that about January 15, 1920, the defendant entered into an agreement with Coker concerning the sale to Coker by the defendant of certain property then owned by the latter, and certain matters connected therewith, but denies all the other allegations of the amended complaint except as stated in the answer. Affirmatively, the answer avers that the defendant for many years prior to January 15, 1920, was engaged in the general retail music business at La Grande, Oregon, including the sale of pianos, under the name of “Richey Piano House,” and that prior to January 15th he and Coker entered into negotiations for the transfer of said business, including the stock of goods then on hand owned by and in the possession of the defendant, and that Coker and the defendant then and there arrived at an agreement upon which defendant would sell and dispose of said business and property to the plaintiff, upon and for the.consideration said plaintiff then' and there agreed to pay defendant therefor. Continuing, the defendant says that:

“The consideration then and there agreed to be paid by said plaintiff to defendant for said property and business was,—

“(a) The payment to defendant in cash upon delivery the invoice and agreed value of the personal property described in a certain written agreement made and entered into between plaintiff and defendant on or about the fifteenth day of January, 1920, a true copy of the whole of said agreement being hereunto attached and marked Exhibit ‘A,’ and made a part of this answer. * * ’ ’

Exhibit “A” referred to is here set out:

“Contract and Agreement.

“This contract and agreement made and entered into this 15th day of January, 1920, by and between R. H. Coker (Eastern. Oregon Mnsio Company) of La Grande, Oregon, and G. M. Rickey (Rickey Piano House) of La Grande, Oregon,

“Witnesseth: Tkat for and in consideration of one dollar and otker valuable considerations, receipt of which is kereby acknowledged by said G. M. Rickey, said G. M. Rickey (Rickey Piano House) sells and delivers to said R. H. Coker (Eastern Oregon Music Company) all tke pianos, piano-players, phonographs, piano-player records, phonograph records, music, equipment, office fixtures, shelving, furniture, stock and goodwill of tkat certain music and piano business now owned and controlled by said G. M. Richey (Rickey Piano House) now located in tke New Foley building, La Grande, Oregon, save and except only one office desk, and the said Rickey (Richey Piano House) hereby conveys and delivers same to said R. H. Coker (Eastern Oregon Music Company), and covenants with said Coker tkat same is free and clear of all- incumbrances.

“And said G. M. Rickey kereby contracts and agrees not to enter tke piano or music business in any way, shape or form, actively, for himself or otherwise, in La Grande, Union County, Oregon.

“Executed in triplicate this 15tk day of January, 1920.

“(Signed) G. M. Richey.

“(Signed) R. H. Coker.”

This was executed in tke presence of two subscribing witnesses.

As further elements of- tke consideration, tke answer states in substance tkat tke plaintiff was to receive and pay in cask tke inventoried cost and freight charges on all pianos and otker musical goods then ordered and not yet received by tke defendant tkat tke latter should desire or ask plaintiff to receive; tkat tke plaintiff would pay to tke defendant one half tke profit on all goods not included in tke sale to tke plaintiff, on sales made by tke defendant while closing up his business; and that the defendant was to have the right to receive and resell all goods of every description commonly known as “reverts,” that had been previously disposed of by the defendant under contract or otherwise. He also says that on his part he was entitled to complete all business of every nature in his line as a piano and music dealer that he had already commenced, either by negotiation, solicitation or incomplete contracts or agreements, concerning sales or business, or prospects for sales of every nature. He contends that the plaintiff Coker violated his agreement as stated in the answer, in sundry ways, among others that after making the sale the defendant received a carload of pianos, on which the plaintiff, as part of the consideration of the sale and transfer of the business, had contracted to pay the actual cost and freight paid by the defendant.

The reply admits the execution of the contract set out as exhibit “A” but otherwise traverses the affirmative matter of the answer.

The trial court made findings of fact and conclusions of law in favor of the defendant and dismissed the suit, from which ruling the plaintiffs appeal.

1. As a preliminary matter, it is objected that the plaintiff Bellamy has no right to rely upon the covenant made by the defendant with the plaintiff Coker, not to engage in business. Such a covenant does not run with the business of dealing in personal property like covenants run with the title to realty. So long as Coker remains in business, he will have a right to enforce the covenant, but he cannot transfer that privilege to Bellamy. The decree was right in dismissing the' suit so far as it applied to the plaintiff Bellamy.

2. The defendant further objects to the complaint in that it does not expressly state that the plaintiff Coker had performed all the terms of the contract. It does not appear by the- complaint, however, that anything was to be performed by Coker more than had been done by him. In other words, so far as the complaint was concerned, it does not appear that the contract was not fully executed on his part. No objection was urged against the complaint by demurrer. As this stage of the proceedings, at the worst, it may be classed as a defective statement of a good cause of suit, which it is obvious is cured by the answer, pleading the contract in full. That document recites that for and in consideration of one dollar and other valuable consideration, “receipt of which is hereby acknowledged” by Eichey, the latter contracts not to enter the piano or music business in any way, actively, for himself or otherwise, at La Grande. This plainly means that Coker had performed his part of the contract, because the receipt of the consideration is acknowledged by Eichey. The agreement states that Eichey sells and delivers to Coker, which would indicate completion on the part of Eichey. If the recitals of the contract are to be believed, there was nothing left for Coker to do on his part. In other words, the answer states an executed agreement in writing leaving nothing to be done or omitted by either party except the covenant of Eichey not to enter into the piano or music business at La Grande. Taking the complaint and answer together, it appears as a matter of pleading that Coker did everything he was required to do, because the written contract signed by Eichey acknowledges receipt of the “other valuable considerations.”

3. The written agreement signed by the parties must govern them, unless the defendant may explain the term “other valuable considerations” by enlarging the contract, as he essays to do by his answer, so as to include certain executory covenants to be observed by Coker. In effect, the effort of the defendant is to interpolate into the written agreement other things which he claims are part of the consideration. No attack is made upon the contract by way of fraud or in an effort to reform it as for a mistake. That the contract cannot be enlarged in the manner delineated in the answer is settled by such cases as Leavitt v. Dimmick, 86 Or. 278 (168 Pac. 292); Sund v. Flagg & Standifer Co., 86 Or. 289 (168 Pac. 300); Feenaughty v. Beall, 91 Or. 654 (178 Pac. 600); Duncan Lumber Co. v. Willapa Lumber Co., 93 Or. 386 (182 Pac. 172, 183 Pac. 476); O’Neill v. Twohy Bros., 98 Or. 481 (190 Pac. 306); and Marks v. Twohy Bros., 98 Or. 574 (194 Pac. 675). There is a class of cases dependent upon and within the terms of Section 713, Or. L., declaring that:

“When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing,” etc.

There are other cases which allow parol proof of that part of the contract which lies in parol although another part may be in writing. Discussing this matter, Mr. Justice Harris in Sund v. Flagg & Standifer Co., supra, said:

“It is a nearer approach to accuracy to say that if by proper and competent means it is made to appear that a writing contains only a part of the agreement entered into, parol evidence may be received to prove the entire contract; but if the writing contains all that is necessary to constitute a contract and purports to be a complete expression of the whole_ agreement, it is presumed that the parties have introduced into it every material item and term, and parol evidence is not admissible to add another term to the agreement, although the writing does not mention the particular item to which the parol evidence is directed. * #

“Obviously, the mere fact that the parties did in truth agree upon an additional term not found in the writing, is not of itself enough to open the door for extrinsic evidence, for if such were the doctrine but little would remain of the rule against varying written contracts by parol.”

The principle is thus succinctly stated in 22 CL J. 1290:

“The parts of the agreement proposed to be proved by parol must not be inconsistent with, or repugnant to, the intention .of the parties as shown by the written instrument; for, to receive parol proof of a part not reduced to writing, which is directly repugnant to the intention of the parties as expressed in the written instrument, would contravene the rule that parol evidence cannot be received to contradict or vary the terms of a written agreement.”

Applying this precept by way of illustration to the contract in hand, we note that the property which is the subject of sale is described as “now located in the New Foley building, La Grande,- Oregon.” This cannot be enlarged by mere construction or inquiry into the consideration, in the absence of fraud or mistake, to include a carload of pianos to arrive in the future. That carload of pianos .coming after-wards was not located in the New Foley building when the “now” of the contract was written and signed by the parties. To include them by parol, would be repugnant to the contract within the meaning of the precedents cited. The plaintiff’s refusal to receive them seems to be the principal grievance of the defendant.

According to the statements of the pleadings, the written contract was the culmination of previous negotiations and must under the terms of our Code be considered as containing its terms. Consequently, by neither averment nor testimony can there be anything considered as to the terms of the agreement aside from the contents of the writing, with certain exceptions not here involved. If the defendant would have avoided the effect of this principle, he should have pleaded a mistake or fraud inducing him to enter into the contract and based his defense on either reformation or annulment of the covenant; but no attempt of the kind is disclosed by the record.

4. That it is competent to contract that one of the parties who sells the goodwill of a business shall not engage in like business in a certain place, is abundantly established by the authorities. The precedents are examined in Seeck v. Jakel, 71 Or. 35 (141 Pac. 211, L. R. A. 1915A, 679), and Feenaughty v. Beall, supra. In the latter case, while the principle was recognized it was not applied, because the language of the contract was not sufficiently definite. The terms of the covenant here in question on that subject are complete and definite, so that there can be no misunderstanding about its scope. If the defendant would engage in the piano or music business, he must do it elsewhere than at La Grande while that contract is in force.

The decree of the Circuit Court is reversed and one here entered enjoining the defendant from carrying on the piano or music business in any way, shape or form, actively, for himself or otherwise, at La Grande, Union County, Oregon. The plaintiff Coker will recover the costs and disbursements of this litigation. No costs or disbursements will be allowed in favor of either of the other parties.

Rehearing denied March 14, 1922. (204 Pac. 945.) Messrs. Cochran é Eberhard, for the petition. Messrs. Ivanhoe & Ringo, for the cross-petitioners.

In Banc.

Reversed and Decree Entered.