Opinion
06-08-1898
SCUDDER v. KILFOIL.
Aaron V. Dawes, for the motion. Linton Satterthwaite, for petitioner.
Petition by William Kilfoil to vacate an injunction entered on a bill by William N. Scudder against the petitioner. Heard on motion to dismiss the petition. Granted.
Aaron V. Dawes, for the motion.
Linton Satterthwaite, for petitioner.
REED, V. C. The petition is filed to vacate a writ of injunction. The petition sets out that on June 20, 1894, the petitioner, the defendant in this cause, and William N. Scudder, the complainant therein, entered into a contract, by the terms of which Kilfoil agreed not to engage in the same business (butcher and dealer in meats, game, and poultry) in Princeton, Mercer county, N. J., as long as Mr. Scudder should carry on the same business in Princeton. On September 5, 1895, Mr. Scudder filed a bill in this court for an injunction against Kilfoil, in which suit a decree was entered on October 29, 1895, restraining Kilfoil, his servants and agents, from carrying on the business of butcher and dealer in meats, game, and poultry, either directly or indirectly, within the borough of Princeton, so long as Scudder should continue in said business, and from soliciting orders for meats, game, or poultry, and from supplying the citizens of Princeton with meats, game, or poultry, etc. The petition then sets out that in August, 1896, the parties entered into co-partnership for the carrying on of the business of buying and selling meats and the general butcher business in Princeton, each contributing fixtures and cash to said partnership; that they continued the joint butcher business in said borough (which business had been sold by the petitioner to said Scudder at the time of making the said contract, and had been continued by said Scudder until they entered into the contract of co-partnership) until October 30, 1896, when the petitioner sold his interest in said co-partnership to Scudder, without restriction or condition as to the good will of said business, or as to the right of the petitioner to engage again in business in said borough of Princeton. The claim of petitioner is that, by the agreement of partnership, Scudder obtained all claims and right to enforce the first contract, and therefore the injunction which restrained the petitioner should be vacated.
It is perceived that the petition sets up a matter occurring since the original decree, as a reason for vacating the decree or restraining the writ of injunction. I had some doubt whether this matter could be called to the attention of the court except by a bill in the nature of a bill of review, but am inclined to think that it may be presented by petition. It is not an application to change the decree originally entered, but is analogous to an application to stay process issued, to enforce a decree or judgment, where a judgment has been paid or performance of a decree has been waived, or any other ground has arisen by which the enforcement of it would be inequitable and oppressive. In the case of Spann v. Spann, 2 Hill, Eq. 152, upon amotion to set aside an attachment issued to enforce a decree, which motion the chancellor had granted, the judge who wrote the opinion for the court of appeals said: "It is clear that the courts, both at law and equity, have the power, and duly exercise it, of suspending the execution of even final process, on account of subsequent matter, which would render the execution of it oppressive or inequitable." I will therefore express my views of the rights of the parties under the facts set forth in the petition.
The contention of counsel for the petitioner is that, subsequent to the making of the decree, the complainant, by taking the defendant into partnership, and so permitting him to carry on the enjoined business, abandoned his right under the original agreement. It is not stated that the complainant, upon entering into the partnership relation with the petitioner, expressly agreed that the former covenant should be rescinded. Nor, at the termination of their relation, was there any agreement to that effect The waiver of abandonment of the previous agreement, it is insisted, arose from the fact that they entered into a partnership to transact the same kind of business, and then dissolved their partnership relation. The line of reasoning by which this result is put forward is that the covenant by which the petitioner bound himself not to transact business in Princeton was equivalent to a sale to complainant of the good will of the business, which petitioner then sold to complainant; that, when they entered into partnership, this good will became a part of the property or assets of the firm, in which the petitioner acquired an equal interest; that, upon dissolution of the firm, a moiety of this interest remained his property, and entitles him personally to engage in the same business. It seems to me that this line of argumentation is defective. The negative covenant entered into by the petitioner, by which he bound himself not to engage in the same business within the borough, was of much more consequence than a mere sale of the good will of the business to Mr. Scudder. The sale of the good will would have only precluded the vendor from soliciting trade from the old customers of the firm, but would not have prevented him from setting up a rival business in Princeton or anywhere else. Labouchere v. Dawson, L. R. 13 Eq. 322; Coal Co. v. Spangler (N. J. Ch.) 34 AO. 932; Althen v. Vreeland (N. J. Ch.) 36 AO. 479.
By virtue of the contract, Scudder therefore got much more than the "good will," namely, the right to prevent Kilfoil from soliciting the old customers of the business. He got a right to exclude Kilfoil from doing any business at all in the same line in the same place. If Scudder had entered into partnership with a third person, no right to enforce Kilfoil's covenant would have passed to the partnership, but would have remained the sole right of Scudder, the covenantee. So, when Kilfoil became a partner, he obtained no inter est in the covenant as such partner, which could annul his obligation as covenantor. The question then is reduced to this: Did the consent by Scudder that Kilfoil should engage in the same business in Princeton as his partner imply a waiver of his rights under the contract? I am clear that it did not. The two contracts were not incongruous or inconsistent. The covenant in the original contract provided against Kilfoil entering upon the same business in rivalry with Scudder. The permission implied by the partnership arrangement was that he might engage in the same business in co-partnership with Scudder. If Scudder had hired Kilfoil to assist him in his business, I do not see how this could be tortured into a consent that the latter could work for himself. Now, their relation as partners, both interested in the business of the firm, made the consent of Scudder that Kilfoil should so work as partner of much the same quality as would have been his assumed consent that Kilfoil should work as his servant. His consent in the latter case would have been that he could work for Scudder; in the former, that he could work in the interest of Scudder. To this extent only was there a consent that Kilfoil should engage in business while Scudder was still in business. When Kilfoil ceased to be a partner, and even that consent was withdrawn by the cessation of the firm relationship, he had acquired no right to engage in business on his own account, in contravention of the terms of his original contract.