General Baking Co. v. Soles

162 A. 58, 18 Del. Ch. 343, 1932 Del. Ch. LEXIS 33
CourtCourt of Chancery of Delaware
DecidedJune 7, 1932
StatusPublished
Cited by7 cases

This text of 162 A. 58 (General Baking Co. v. Soles) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Baking Co. v. Soles, 162 A. 58, 18 Del. Ch. 343, 1932 Del. Ch. LEXIS 33 (Del. Ct. App. 1932).

Opinion

The Chancellor:

In the present showing it cannot be, and is not in fact, seriously questioned that the defendant is engaged in the business of selling bakery products for himself as proprietor of the business. He buys his supplies from Dalton’s Bakery which is in the wholesale as well as retail business. What he buys from Dalton’s Bakery he pays for, and if he should fail to market all his purchases, the loss is his. He is not an agent for Dalton’s Bakery, nor in any sense an employee for that concern.

The question then is whether the act of the defendant [345]*345in going in business for himself and in the course of that business serving bread on the route formerly served by him as the complainant’s employee, constitutes a breach of the agreement referred to in the statement of facts.

The defendant concedes that the agreement entered into by him is not in unreasonable restraint of trade and that it is therefore binding on him. He contends however that there is nothing in the agreement which obligates him not to go in business for himself as an independent proprietor and in that capacity supplying customers on his former route with bakery products. All that his agreement contemplates, he contends, is that he will not serve the route as the employee of a competitor of the complainant.

The defendant relies on the contention that, quoting from Tarr v. Stearman, 264 Ill. 110,105 N. E. 957, 961, “the party complaining of an infraction of a contract in restraint of trade will be held to a strict interpretation of the language of the agreement.” Other cases which it is unnecessary to cite give expression to the same view.

This does not mean however that the language of such contracts should be examined in a spirit of hypercritical exactitude. If there be any room for latitude of meaning supplied by the language employed, judges I think have almost without exception adopted that interpretation which is calculated to serve the general objects which it appears the parties on the whole intended to secure. In our own State Scotton, et al., v. Wright, 13 Del. Ch. 214, 117 A. 131, affirmed 13 Del. Ch. 402, 121 A. 69, 31 A. L. R. 1162, was decided in harmony with this view. In that case a garage business in Smyrna, Delaware, with its goodwill was sold to the complainant and the defendant agreed not to re-enter said business “in or adjacent to” Smyrna. The word “adjacent” was held not to mean in immediate contact with the Smyrna town limits. Akin to this case is the case of Counts v. Medley, 163 Mo. App. 546, 146 S. W. 465, cited by the complainant, in which it was decided that “at” a place could mean either in or near or about the place, especially [346]*346since the business which the defendant sold to the plaintiff and which the former had agreed not to engage in “at Rogersville” was a business that had been carried on by the defendant not only in but around and about Rogersville. Those cases which hold that an agreement not to engage in business, directly or indirectly, similar to that sold, is breached by entering the business as the employee of another rather than as owner, are to be understood as exemplifying the same principle of interpretation. In such cases the words “engage in” have been held to possess an elasticity of meaning capable of embracing activity in a business broader than that indicated by the mere proprietorship thereof. In Lanberg, et al., v. Wagner, 101 N. J. Eq. 383, 139 A. 518, 519, it was said that the words “engage in, transact, or carry on, either directly or indirectly” a business, were meant not to limit the prohibited activity to such as would be engaged in by a principal or proprietor, but rather indicated that such limitation was excluded.

The complainant cites other cases in support of the contention that a contract in reasonable restraint of trade should be construed in the light of its manifest purpose. There can be no serious doubt as to the propriety of that principle of interpretation. It presents an element which, in conjunction with others, is generally taken into account by courts when called upon to interpret contracts. Much depends on the particular language in which the agreement is expressed for the extent to which the court will go in resorting to the purpose, or so-called spirit of the contract, as an interpretative aid in the ascertainment of its meaning. In the cases cited by the complainant as justifying its contention that the particular agreement here involved should be so interpreted in the light of its spirit and purpose as to prohibit the defendant from transacting the business he is engaged in, the contracts involved are so different in their phraseology from the contract now before the court as to be of little assistance in disposing of the present rule. For instance, in Owl Laundry Co. v. Banks, 83 N. J. Eq. 230, 89 A. [347]*3471055, 1056, the agreement was not to “solicit orders * * * either for myself or as employee of any other * * * persons * * * not engage in the wet wash business in any capacity for myself or others.” The court, it is true, said that the complainant was “entitled to an injunction as broad as may be necessary to insure a compliance with both the letter and spirit of the defendant’s agreement.” The remark was made, as I gather, to rebut the contention that an agreement not to engage in the wet wash business “in any capacity” would prevent the defendant from serving as a janitor, watchman, machinist or wash scrubber, and so would be unreasonable and therefore illegal. The court said no to this contention, because, as I understand the opinion, the spirit of the agreement was only to protect the complainant from the defendant’s competition and hence the language was to be limited accordingly. Therefore, the court concluded, the injunction should be only as broad as was necessary for the complainant’s protection. Manifestly, the New Jersey case is of no pertinency to the one now before this court.

I shall not burden this opinion with a review of the other cases cited by the complainant upon the point that a liberality of interpretation should be favored in such cases as this one. A careful reading of the cases will demonstrate the limitation of their application.

If the contract in question prevented the defendant from engaging in the business directly or indirectly, it may be conceded without deciding that the injunction should issue. Such however is certainly not its express language. Where such is the language, authorities are to be found which would prevent the defendant from engaging in the business as the employee of another. This defendant is not however engaged as an employee.

The question here is whether the agreement does not by its language limit 'the restraint upon the defendant solely to his working as an employee for another. If so, there can be no justification for restraining him from acting as the proprietor of the business. Certainly it is competent for the [348]*348parties to restrict their agreement tq a prohibition that the former employee shall not act as employee for another, leaving him free to act on his own behalf as principal.

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Bluebook (online)
162 A. 58, 18 Del. Ch. 343, 1932 Del. Ch. LEXIS 33, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-baking-co-v-soles-delch-1932.