Scotton v. Wright

117 A. 131, 13 Del. Ch. 214, 1922 Del. Ch. LEXIS 39
CourtCourt of Chancery of Delaware
DecidedMay 12, 1922
StatusPublished
Cited by32 cases

This text of 117 A. 131 (Scotton v. Wright) 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
Scotton v. Wright, 117 A. 131, 13 Del. Ch. 214, 1922 Del. Ch. LEXIS 39 (Del. Ct. App. 1922).

Opinion

The Chancellor.

A question is first made as to parties. The covenant having been made with George P. Scotton individually, has the firm of George P. Scotton, George C. Scotton and [219]*219Lyman J. Scotton, trading as George P. Scotton & Sons, and also trading as Smyrna Nash Motors Company, any right to relief because of breach thereof?

The covenant in terms is in favor of George P. Scotton, his heirs, executors, administrators and assigns. There is no evidence showing a formal assignment by the convenantee of the benefits of the covenant to the partnership. It is admitted, however, that when George P. Scotton took possession of the garage property on February 2, 1920, and undertook to conduct the business which he had purchased, he associated with himself his three sons, one of whom withdrew from the business about September 1, 1920, since which time the other sons have continued with their father in the business. The evidence shows the father and sons to have been associated in the business as partners. It is clear that whatever may have been the manner in which the partnership was organized, whether by formal articles and written assignments and transfers to it of the assets, the partnership did as a matter of fact take over from George P. Scotton, conduct and carry on the business which George P. Scotton had purchased from the defendants.

Does the fact that there is no evidence of a formal assignment by George P. Scotton, the purchaser, to the partnership of the covenant on the part of the defendants not to engage in a similar business, operate to prevent the granting of relief to the partnership which George P. Scotton formed? I think not.

The purpose of the covenant was to protect the purchaser in the enjoyment of the business and its good will. Such a covenant “is not personal, but inures to the benefit of one to whom it is assigned with the business.” 20 Cyc. 1281. And where the business is transferred, the agreement not-to compete goes with it even though not specially mentioned. Palmer v. Toms, 96 Wis. 367, 71 N. W. 654; Knowles, et al., v. Jones, et al., 182 Ala. 187, 62 South. 514; Public Opinion Publishing Co. v. Ransom, 34 5. D. 381, 148 N. W. 838, Ann. Cas. 1911A, 1010; Gompers v. Rochester, 56 Pa. 194. If, therefore, the case is otherwise a proper case for relief, the fact that the bill is filed by the partnership, the transferee of the purchaser from the -defendants, cannot serve to defeat it.

[220]*220The next inquiry is: Does the bill set forth a case calling for equitable relief?

At the heart of the case, of course, is the restrictive covenant by which the defendants agreed that—

“They would not hereafter operate a garage or service station, or engage in the sale of automobiles, or the supplies, or repairs or accessories for same, except by and according to the above and foregoing reservation anywhere in or adjacent to the Town of Smyrna any time after the said second day of February, A. D. 1920." . '

The reservation referred to is the right on the part of the defendants “to sell Buick cars, parts fpr Buick cars and to repair Buick cars.”

The population of- the town of-Smyrna numbers about 1,800 or 1,900. It is a square mile in area.; The center of the town is at the intersection of Main and Commerce'Streets, and the town limits extend a half mile from this intersection along the two streets in a north, south, east and west direction. The garage erected by the defendant, George D. Wright, where he and his son, the other defendant, carry on the general- garage business about which the bill complains, is located on the north and south highway running through Smyrna, two thousand and ten feet south of the southern line of the town, less than three-tenths of a mile, making a distance from the center of the town of about four thousand six hundred and fifty feet. The garage which defendants sold to the comT plainant, George P. Scotton, is located on the same highway (Main Street) between the center of the town and its southern boundary-line. So that the distance between the two garages is less than the distance from the center of the town to the garage of the defendants. The north and south traffic through Smyrna goes on Main Street, passing both garages. The towns nearest Smyrna on the north and south highway aré Odessa on the north, a small village some twelve or fourteen miles distant, and Dover, which is eleven miles to the south. To the west of Smyrna is Clayton, a fair size town, two miles distant. Cheswold off the main highway to the south, is an incorporated town between Smyrna and Dover.

One of the points to be passed on is whether, or not, the business conducted by the defendants is being conducted “in or ad[221]*221jacent to the town of Smyrna.” Of course it is not being conducted in the town of Smyrna. Is it being conducted “adjacent” thereto?

The reported cases defining and construing the word “adjacent” are numerous. It would be profitless to refer to the many cases in which the word has been defined. In 1 C. J. 1194, the following are given as some of the meanings which courts have attributed to it:

“Abutting; adjoining; adjoining or contiguous; attached; beside; bordering on; bordering upon something; close or contiguous; close or near by; in the neighborhood or vicinity of; lying close; lying close or near to; neighboring; lying near, close or contiguous, but not actually touching; near, nigh, neighboring, close; near by; neighboring, but not necessarily in contact; next; touching or bounded by.”

In terms of lineal measurement it has, according to the circumstances of each case, ranged from immediate contact with a line, to a distance of miles therefrom. The meaning to be attributed to the word is to be derived not from arbitrary definitions, but from the context in which it is found, the circumstances surrounding its use and the purposes sought to be subserved by its employment. In People ex rel. Sackmann v. Keechler, 194 Ill. 235, 241, 62 N. E. 525, 527, the court in construing a clause in a school law, after noticing various meanings which had been given to the word “adjacent,” said:

“We do not regard any of these cases as furnishing a guide by which to arrive at a definition of the word as used in the foregoing sedtion. It has no arbitrary meaning or definition. Its meaning must be determined by the object sought to be accomplished by the statute in which it is used. This consideration manifestly controlled each of the courts in the interpretation placed upon the word in the cases cited.”

Likewise in the pending case, the word as used in the agreement of sale, is to receive that one of its meanings which in fairness can be said to best meet the object sought to be accomplished by the parties who used it. The primary, and indeed the only, purpose of the covenant was to protect the business and good will which were being sold, from any loss or 'damage in the hands of its purchaser by reason of competitive encroachment on the part of its former owners. This protection, the purchaser bought, and this, the seller sold. If “adjacent” to Smyrna has the narrow meaning [222]*222of being in immediate contact therewith, it must be manifest that the purchaser could have no security in the enjoyment of that which he had bought.

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Bluebook (online)
117 A. 131, 13 Del. Ch. 214, 1922 Del. Ch. LEXIS 39, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scotton-v-wright-delch-1922.