Fleischman v. Rahmstorf

GILBERT, Circuit Judge (after stating the facts as above). At the close of the testimony the defendant, following the practice in Alaska, moved for judgment on the pleadings and evidence, on the ground that the defendant’s agreement not to engage in general merchandise business at Rampart was separate and distinct from the sale of the goods, and not related thereto, and that the defendant had not in fact violated the same, and that there was no competent evidence that the plaintiff had sustained damages. Upon the conflicting evidence the court below found as one of the facts that the sale and agreement were so united in time and purpose as to be one contract, and we must take that finding to be conclusive here. The fact that [351] there was in this case no sale of the good will of the defendant’s business is immaterial. The sale of the stock of merchandise was a good consideration for the accompanying agreement not to engage in such business. Nelson v. Brassington, 64 Wash. 180, 116 P. 629, Ann.Cas.1913A, 289; Beard v. Dennis, 6 Ind. 200, 63 Am.Dec. 380. In United States v. Freight Ass’n, 166 U.S. 290, 329, 17 S.Ct. 540, 41 L.Ed. 1007, the court recognized the right of parties to make such a contract, with a view of — “granting to a vendor the freest opportunity to obtain the largest consideration for the sale of that which is his own.” It is urged that the act of the defendant in accepting employment as clerk for a rival store was not a breach of the agreement. But the court found that the defendant did more than merely to act as a clerk on a salary. It found that he acted in the capacity of manager and managing clerk of the rival store. The obligation in such a case is to observe the spirit, as well as the letter, of the agreement. In 24 Am. & Eng.Enc. of Law, 859, it is said: “A covenant not to carry on a certain trade is broken where the covenantor does so as the agent or manager or employé of another.” Decisions supporting that rule are Wilson v. Delaney, 137 Iowa, 636, 113 N.W. 842; Meyers v. Merillion, 118 Cal. 352, 50 P. 662; Smith v. Webb, 176 Ala. 596, 58 So. 913, 40 L.R.A.(N.S.) 1191; McAuliffe v. Vaughan, 135 Ga. 852, 70 S.E. 322, 33 L.R.A.(N.S.) 255, Ann.Cas.1912A, 290; Kramer v. Old, 119 N.C. 1, 25 S.E. 813, 34 L.R.A. 389, 56 Am.St.Rep. 650; Finger v. Hahn, 42 N.J.Eq. 606, 8 A. 654; Knowles v. Jones, 182 Ala. 187, 62 So. 514. It is contended that the court below erred in construing the promise of the defendant to forfeit $2,000 in case of breach of the agreement to be a provision for the payment of liquidated damages, and it is asserted that it is an agreement for the payment of a penalty, and that upon the breach thereof the plaintiff must prove the actual damages sustained. In general, it may be said that the contracting parties are permitted to agree upon the precise amount of damages to be paid in all cases in which the damages are uncertain in their nature, or difficult to ascertain, or impossible to be estimated with certainty, and this is es [352] pecially true of contracts such as that which is here under consideration. In 13 Cyc. 99, it is said: “Where a contract has been made not to engage in any particular profession or business within stated limits, it has been the policy of the courts to construe such an agreement as liquidated damages, rather than as a penalty, in the absence of any evidence to show that the amount of damages claimed is unjust or oppressive, or that the amount claimed is disproportionate to the damages that would result from the breach or breaches of the several covenants of the agreement. While the decisions in this class of cases are usually based upon the fact that the damages are uncertain and cannot be estimated, it has also been held that, where there is a promise to pay a particular sum in case of breach, or where the payment of the sum named is the very substance of the agreement, a recovery may be had for the sum named.” In Potter v. Ahrens, 110 Cal. 681, 43 P. 388, the court said: “The damages for breach of contract for the purchase of the good will of an established trade or business are so absolutely uncertain that courts have recognized the fullest liberty of parties to fix beforehand the amount of damages in that class of cases.” See, also, McCurry v. Gibson, 108 Ala. 451, 18 So. 806, 54 Am.St.Rep. 177; Streeter v. Rush, 25 Cal. 67; Holbrook v. Tobey, 66 Me. 410, 22 Am.Rep. 581; Cushing v. Drew, 97 Mass. 445; Geiger v. Cawley, 146 Mich. 550, 109 N.W. 1064; Canady v. Knox, 43 Wash. 567, 86 P. 930; Martin v. Murphy, 129 Ind. 464, 28 N.E. 1118; Kelso v. Reid, 145 Pa. 606, 23 A. 323, 27 Am.St.Rep. 716; Newman v. Wolfson, 69 Ga. 764. We find nothing in the contract itself, and nothing was developed upon the pleadings or the trial, to show that the sum so agreed to be paid as damages was so unjust or oppressive, or disproportionate to the damages sustained, as to render-the case an exception to the general rule, and we are not convinced that the court below erred in ruling that the damages were liquidated by the parties. The judgment is affirmed.