Duffy v. Shockey

Hanna, J. This was an action by the appellants against Shockey, upon a written agreement signed by the parties. Averment of performance of the agreement, by the plaintiffs, and failure to perform by Shockey, in this, that he had failed to pay 300 dollars, as by the agreement it was provided that he should. An answer was filed, admitting the execution of the agreement and the non-payment of the 300 dollars; but averring a breach of the agreement by the plaintiffs, where — 71 — by the defendant was discharged from the payment of the 300 dollars, and claiming, by way of recoupment and counter-claim, the sum of 1,000 dollars damages. The agreement is in the record, and thereby it appears that the plaintiffs sold the good will of their marble, monument, and grave-stone shop, in Covington, to the defendant, for the sum of 300 dollars, for which suit is brought. There are also several other stipulations, to-wit: That marble was to be furnished by the plaintiffs, and taken by the defendant, at fixed prices, until a certain time; that the defendant was to take the marble the plaintiffs had left on hand, after filling orders; that he was to give employment to the agents of the plaintiffs for the time they were engaged by the plaintiffs, and at the same wages. The plaintiffs bound themselves in the penalty of 1,000 dollars not to start a marble shop at any point nearer Covington than Lafayette or Terre Haute, nor for the same distance east and west of the Wabash river at Covington, so long as Shockey, or Shockey & Co., should carry on the business in Covington, &c. It is alleged in the answer, that Huffy, one of the plaintiffs, established a shop at Lafayette, and, by himself and agents, sold and delivered large amounts, &c., within the territory named; and that Bilsland, the other plaintiff, took contracts to a large amount, within said territory, and procured the work to be done partly at the shop of said Huffy, and partly at the shop of one Sewall, in Covington, in which shop it is alleged he had an interest. The answer is denied by the reply. The jury found a verdict for defendant for 700 dollars. The evidence would justify the jury in finding that all the portions of the answer above stated were sustained, except the allegation that Bilsland had an interest in the shop of Sewall. There are two questions, then, raised upon the instructions given and refused — First. "Whether there was a breach of the contract by the plaintiffs. Second. If there was a breach, what was the measure of damages?7 It is insisted, by the plaintiffs, that trading within the — 72 — interdicted, territory, in the specific articles named, was not a breach of the agreement; whilst, upon the part of the defendant, it is argued that the spirit of the agreement, and the evident intention of the parties, was to leave the defendant without the competition of the plaintiffs, in that portion of the country named in the agreement, in the business mentioned. Formerly, the law was strict in declaring void, contracts in restraint of trade. Whether the same strictness now obtains, as applicable to this particular class of cases, when many of the reasons for the rule have ceased to exist, is a question we need not now decide. It has long since been held that where the restraint was not general, but applied to a particular person, and within prescribed and reasonable limits, the contract would be enforced. 1 Smith’s Leading Cases, 181, side p.—Beard v. Dennis, 6 Ind. R. 203. We do not see how the defendant was to derive much benefit from the restriction for which he had agreed to pay, if the plaintiffs were permitted to establish shops and manufactories without the interdicted territory, and make a business of soliciting and supplying customers within that territory. Such acts, if followed up to that extent, would, in our opinion, be a breach of the contract. Turner v. Evans, 2 E. and B. 512. The evidence was sufficient to authorize the Court and jury to conclude that the plaintiffs had made it a business, within such territory, to solicit custom and supply the above-named articles. It is, therefore, not probable that the Court and jury passed upon, nor is it necessary for us to decide, whether casual sales made at the shop of the plaintiff, Duffy, in Lafayette, to a customer residing within that territory, would have been a breach of the contract. Whether the prescribed limits are reasonable or not, depends upon the kind of business about which the contract is made. 1 Smith’s Leading Cases, side p. 183. For this business, we cannot say that the limits here agreed upon are unreasonable. That the public interest would not suffer within those — 73 — limits, by the interdiction, is manifest, from the evidence, which shows the number of shops existing therein; and whether such interest would suffer is an important inquiry. Beard v. Dennis, 6 Ind. R. 203, and authorities.—1 Smith’s Leading Cases, 183. ^ As to the question of the adequacy of the consideration, we are inclined to view this as we would any other contract made by parties capable of contracting. They should, in the absence of fraud, be presumed to have determined’ that point for themselves. 6 Ind. R. 203.—Hitchcock v. Coker, 6 A. and E. 439.—Leighton v. Wales, 3 M. and W. 551.—15 id. 657. This presumption is pecularly proper in this case, for the reason that we are left in doubt as to how much the consideration to be paid by the defendant was. In addition to the 300 dollars, he was to relieve the plaintiffs from their contracts with agents—to what amount we are not informed — he was to take the marble, carve or not, remaining after the completion of the outstanding The value of the marble thus dis-He was also to buy of plaintiffs contracts of plaintiffs. posed of is not given. marble at fixed prices; but whether those prices were ad-vantageous to the plaintiffs, or defendant, we are not apprised by the pleadings or evidence. V Upon the question of the measure of damages, it is urged that the word “ penalty” is the controlling word in the contract, and, therefore, the defendant should not, under any circumstances, have been permitted to recover anything exceeding the amount which the evidence showed he had been damaged by the breach of the contract. To this, it is answered that the spirit and intention of the contracting parties, as evidenced by the contract, when read by the light of surrounding circumstances, should control in construing that contract. The instruction of the Court was to the effect that, upon ■ the breach of the contract, the 1,000 dollars was to be viewed as liquidated damages, and the verdict should be for that amount, less the 300 dollars, &c.’ The sum of 1,000 dollars, named in the written agreement a penalty, was doubtless inserted to secure the per — 74 — formalice of but one stipulation, and that was,, that the plaintiffs should not start a shop, &c. The damages which might result from a breach of this agreement, could not be otherwise than uncertain. Hamilton v. Overton, 6 Blackf. 207. The plaintiffs had, by the agreement, deprived themselves of a certain right which they, in common with others, possessed, to-wit, the liberty of carrying on a marble shop, &c., or of making a business of selling certain articles within a designated territory. This right they might repurchase at the price of 1,000 dollars; and the presumption is, from their acts, in resuming that right, that they estimated it at more than the sum designated by them in their agreement. There is a case reported, (April 18, 1849, Sainter v. Ferguson, 62 Eng. Com. Law R. 716,) which is very much in point. That was a suit upon an agreement, by which Sainter agreed to employ Ferguson as an assistant surgeon and apothecary, and Ferguson, in consideration thereof, agreed that he would not, at any time, practice as a surgeon, &c., in his own name, or the name of any other person, at Macclesfield, or within seven miles thereof, under a penalty of 500¿6. Among other questions in the case, that of whether the sum mentioned was to be considered as liquidated damages or not, was fully discussed, and it is there said by Wilde, Chief Justice, that “ whether the sum mentioned in an agreement to be paid for a breach, is to be treated as a penalty or as liquidated and ascertained damages, is a question of law to be decided by the judge, upon a consideration of the whole instrument.” It is further said in that case, that — “ It would be impossible to say, in such a case, precisely what damage might result from a breach of the agreement: it is not unreasonable, therefore, that the parties should themselves fix and ascertain the sum that should be paid. And I think we can only give effect to the contract of the parties by holding the 500£ to be liquidated damages, and not a mere penalty,” &c. As to this point Cottman, one of the judges, said: “I agree with the Lord Chief Justice that, although the word ‘ penalty,’ which would prima facie exclude the notion of stipulated — 75 — damages, is used here, yet we must look at the nature of the agreement, and the surrounding circumstances, to see whether the parties intended the sum mentioned to be a penalty or stipulated damages. Considering the nature of this agreement, and the difficulty the plaintiff would be under in showing what specific damage he had sustained from the defendant’s breach of it, I think we can only reasonably construe it to be a contract for stipulated and ascertained damages.” To the same effect were the opinions of Creswell and Williams, Judges. In that case, Ferguson bound himself “ under a penalty of 500£,” not to practice, &c. In the case at bar, the plaintiffs “ bind themselves in the penalty of 1,000 dollars,” not to start a marble shop, &c. If, in the case cited, the sum named as a penalty was correctly held to be liquidated damages, we cannot see but that the reasons for that decision are fully as strong and as applicable in this case. The damages in that case were said to be uncertain, and difficult to ascertain. They are equally uncertain, and as difficult to arrive at, by proof, in this case. The view here taken, namely, that, in contracts of this character, Courts should, in construing them, look at the nature of the agreement and the surrounding circumstances, is sustained by many authorities in this country. See Harmar v. True, 19 Barb. (N. Y.) 106; Lowe v. Nott, 16 Ill. R. 475; Durst v. Swift, 11 Texas R. 273; Sedgwick on Damages, 441; Dakin v. Williams, 22 Wend. 201; 2 Greenl. Ev. § 257; Richards v. Edick, 17 Barb. (N. Y.) 266. And that the word “ penalty” should not conclusively control the contract, as decided in the case of Sainter v. Ferguson, above cited, is sustained by many authorities. 2 Greenl. Ev. supra.—17 Barb, supra.—2 Story’s Eq. § 1318. We therefore conclude that, under the peculiar circumstances of this case, the amount named should be considered as the measure of damages agreed upon by the parties. Per Curiam. — The judgment is affirmed, with 5 per cent, damages and costs. S. A. Huff, Z. Baird, and J. M. La Rue, for the appellants (1). D. W. Voorhees, for the appellee (2).