Opinion
May 17, 1935.
June 27, 1935.
Present: RUGG, C.J., PIERCE, DONAHUE, LUMMUS, QUA, JJ.
Contract, Validity, Agreement by seller of business not to compete with buyer, Of employment. Unlawful Interference.
Even if a covenant made by a seller of a business who entered the employment of the buyer, not to compete with the buyer after termination of the employment, imposed unreasonable restrictions as to time and territory, it could be enforced in equity to the extent of a reasonable time and territory.
BILL IN EQUITY, filed in the Superior Court on March 6, 1935.
The suit was heard by Morton, J.
R.J. Muldoon, for the defendant.
A.M. McDonough, for the plaintiff.
This is an appeal by the defendant from a final decree entered on March 12, 1935, enjoining the defendant from engaging directly or indirectly in the ice business within the cities of Cambridge and Somerville, for the period of eighteen months from the date of the entry of the decree. The testimony is reported under Rule 76 of the Superior Court (1932) without findings of fact.
The defendant and one Booas until 1926 conducted an ice business in Somerville and Cambridge in this Commonwealth, under the name "Daylight Ice Company." In 1926 they entered into an agreement with the plaintiff, under seal. By this agreement the defendant and Booas sold to the plaintiff their ice business, and agreed "to use their best efforts to assist in the turning over of their entire going ice business to said Company." They also "both jointly and severally agree that they will not directly or indirectly engage in the ice business in any territory now covered by teams or trucks of the Metropolitan Ice Company or in the cities of Waltham and Woburn or the towns of Watertown, Stoneham or Winchester for a term of fifteen years from the date of the termination of their employment by said Company." In accordance with the agreement of the plaintiff "to employ both said Ducas and said Booas for a period of at least one year from the date of this contract . . . on condition that their services are rendered in a manner satisfactory to said Company," the defendant was employed by the plaintiff from the time of the agreement until about the middle part of December, 1934, excepting about a year's time when he was in Greece. In December, 1934, the defendant voluntarily left the employ of the plaintiff, and in February, 1935, was hired by one Spinos to peddle ice from a truck, owned by Spinos, in Cambridge and Somerville. There is no dispute but that the defendant thereafter delivered ice as a peddler in Cambridge and Somerville nor that Cambridge and Somerville are in the territory in which the plaintiff operates its ice business.
The defendant admits that he "had been employed by another dealer in the ice business, in substantially the same territory where he had worked for the plaintiff," but contends that the bill should have been dismissed for the reason that the decree necessarily indicates that the trial judge found the covenants unreasonable and unnecessary for the plaintiff's protection as to time and territory. It is settled in this Commonwealth that an agreement made by the seller of a business in connection with the sale thereof, which is designed to prevent the seller from competing in that business with the buyer, is valid, provided the restraint is reasonably necessary to enable the buyer to secure fully the good will of his purchase. Gilman v. Dwight, 13 Gray, 356, 358. Anchor Electric Co. v. Hawkes, 171 Mass. 101, 105. Edgecomb v. Edmonston, 257 Mass. 12, 18. Similar agreements made by employees with their employers to become binding upon the termination of the employment are likewise valid provided they are reasonable as to time and territory. Sherman v. Pfefferkorn, 241 Mass. 468, 474. Boston Suburban Laundry Co. v. O'Reilly, 253 Mass. 94, 97, 98. Becker College of Business Administration Secretarial Science v. Gross, 281 Mass. 355, 358. Economy Grocery Stores Corp. v. McMenamy, 290 Mass. 549, 552. In both classes of cases, if the restrictive agreement would involve unreasonable restrictions, in this Commonwealth the provision is nevertheless enforceable for so much of the performance as would be a reasonable restraint. Edgecomb v. Edmonston, 257 Mass. 12, 20. Whiting Milk Co. v. Grondin, 282 Mass. 41, 44. This rule as to agreements covering too wide a territory is applicable whether or not the agreement is by its own terms divisible. Edgecomb v. Edmonston, 257 Mass. 12, 21. Sherman v. Pfefferkorn, 241 Mass. 468, 475. Brannen v. Bouley, 272 Mass. 67, 71. Whiting Milk Co. v. O'Connell, 277 Mass. 570, 574. Compare Am. Law Inst. Restatement: Contracts, § 518; but see Mass. Annotations, § 518. The decree of the trial judge limiting the restrictions in the instant case to the cities of Cambridge and Somerville does not appear to be unreasonable. Compare Boston Suburban Laundry Co. v. O'Reilly, 253 Mass. 94, 97. No reason presents itself why the rule of reasonable enforcement as to space should not be applicable to time. It is not necessary to consider whether the agreed restriction for a period of fifteen years was as matter of law unreasonable when made, and there is no evidence in the record to support a ruling or finding that the statement in the decree that the defendant "is hereby strictly restrained and enjoined from engaging directly or indirectly in the ice business within the cities of Cambridge and Somerville for the period of eighteen (18) months from the date hereof" (March 12, 1935) was unreasonable for the protection of the plaintiff's business or in space of time covered by the injunction.
Decree affirmed with costs.