Helphenstine v. Downey

Contracts, Actions for Breach of; Evidence of Value of Good Will of Business; Questions for Jury; Damages. 1. In an action to recover damages for the breach by the vendor of a covenant in a contract of sale of a business, not to engage in a similar business within a certain territory, testimony offered by the plaintiffs that the vendor at the time of the sale estimated his stock in trade to be wortli $8,000 while the purchase price was $14,000, is admissible for the purpose of showing the value of the patronage and good will of the business. 2. In such a case, where the defence was that the defendant had merely advanced money to his son and another to engage in the new business, it was held that while no one of the circumstances adduced was perhaps sufficient to show that he was the real owner of the business, taken together they made out a sufficient case to go to the jury, even had there been no proof of actual damages. 3. It is not necessary in such a case, although the declaration alleges a loss of customers to the extent of one hundred, that the plaintiffs, before they can be entitled to any damages on account of such loss, should show specifically and by name what customers were actually lost to them. 4. Refusal by the plaintiffs, in such a case, after the commencement of the suit to pay a promissory note representing a part of the purchase price of the business purchased from defendant, upon the ground that he had broken the contract, will not put an end to the contract between them so as to preclude a recovery of damages for its breach.

Hearing on an appeal by the defendant from a judgment on verdict in an action to recover damages for a breach ot a contract not to engage in a certain business within a prescribed territory. The Court in its opinion stated the case as follows : This is a suit at law instituted in the Supreme Court ot the District of Columbia to recover damages for an alleged breach of a contract, not to enter into a certain business within a certain radius in the city of Washington. On January 30, 1890, and for some years prior thereto, the appellant, Rufus K. Helphenstine, was engaged in the drug business, conducting a drug store for that purpose at the corner of Fourteenth street and Vermont avenue, known as “The Portland Drugstore.” On the day mentioned he sold the stock of goods in the store and the business to the appellees, William C. Downey and Frederick S. Smith, for the sum of $14,000, part in cash, and part in promissory notes secured by deed of trust upon the stock and fixtures in the store. There were four notes, due respectively in one, two, three and four years from the date of sale. In the contract and as part of the consideration for it, there was an agreement on the part of the appellant, that for the period of five years he would neither directly nor indirectly engage in the drug business in the city of Washington, D. C., within a radius of ten squares of the Portland drug store, without first obtaining the written consent of the appellees. In or about the month of December, 1891, a drug store was opened in the Cochran Hotel, on the corner of Fourteenth and K streets, which was within two blocks of the Portland drug store, under the sign of “ Helphenstine & Cluss,” without any indication as to the identity of the Helphenstine of the firm. Cluss, it seems, had been a clerk in the Portland store, in the service first of the appellant, and afterwards and up to about the time of the opening of the new store, in the service of the appellees, and a young man wholly without means. The appellant, it was conceded, was concerned in the opening of the new store ; but he claimed that the Helphenstine of the firm was his minor son, Edgar Helphenstine, then about nineteen years of age, and that his only interest was to set up the young men in business. He admitted that he lent them all the money required for the opening of the establishment; but stated that he took notes therefor and a deed of trust to secure them upon the stock and fixtures of the store. The appellees considered that the new store belonged to the appellant, and that he had established it for his own benefit, in violation of his express contract with the appellees. Thereupon, on April 13, 1892, they instituted the present suit to recover damages from him for such violation of the contract and for the loss of patronage claimed by them to have been occasioned by it. Their declaration contained four counts, in which their cause of action was set forth with some variation. In the first it was not alleged that the defendant’s engaging in the business in the new store was without the consent of the appellees ; and in the third and fourth counts there was an allegation of the loss of a large number of customers, stated under a videlicet to amount to one hundred. The pleas interposed by the defendant amounted to the general issue. At the trial there was testimony on the part of the plaintiffs to show that the defendant had solicited the lease of the premises, wherein the new store was established, for himself and in his own name; that he had directed the workmen in fixing up the place, had ordered the gas fixtures, directed the plumbing, given the directions for the purchase of the medicines, and practically selected the whole outfit of the establishment; that he assisted at the store and gave directions there in regard to sales ; that the books of the store were kept at his house; that his son had no means of his own; that there was no change in the management of the business or in the settlement of accounts in consequence of the death of Cluss, which occurred in October, 1894, &c., and there was also testimony tending to show loss of patronage to the Portland store by the use of the name of Helphenstine in the new establishment and the diversion to that establishment of some of the business of the Portland store. In this connection the names were specified of several persons, hotels and boarding-houses, former customers of the Portland store, whose dealings therewith had ceased or had been greatly diminished upon the opening of the new store in the Cochran Hotel. The defendant, in his testimony, conceded that he had advanced the money to establish and fit up the new store ; but stated that he took notes and a deed of trust therefor, which, however, had never been paid. And the purport of the evidence on his behalf was to show that his whole interest in the premises was his natural desire to set up his son and his young friend in business, and that his course of action was entirely in accordance with this theory. In the course of the testimony on behalf of the plaintiffs it was sought to be shown by the plaintiffs themselves, that, at the time of the sale of the Portland store to them by the appellant, the latter estimated the value of the stock in that store at $8,000 — the evident intention being thereby to show that the residue of the purchase price of $14,000, that is about $6,000, represented, according to the understanding and agreement of the parties, the value of the patronage or good will of the business, for the protection and assurance of which to the appellees the covenant of the appellant had been made that he would not again engage in the drug business under the limitation specified in the contract. To this testimony objection was made on the ground that no fraud had been charged in the matter of the price fixed as the consideration to be paid by the appellees. But the testimony was admitted; and exception was noted by the defendant. Upon two exceptions thus taken, two assignments of error, the first and second, are now based. At the conclusion of the whole testimony, there was a motion made by the defendant to direct a verdict in his favor. This was overruled; and upon the ruling of the court in that regard the appellant has based his third assignment of error. Counsel for the defendant then submitted nine prayers for instructions to the jury, of which four were given and five refused. Of the five that were refused, only two are here made the subject of assignment of error, and the others must, therefore, be regarded as having been abandoned. The two, which are brought here for consideration and upon which the fourth and fifth assignments of error are founded, are as follows : “ 8. Before the jury can assess damages on account of the loss of customers, they must be satisfied from the evidence what customers were lost, and that such loss was due to the violation of the contract by the defendant, and proximately, at least, the amount of loss sustained by the plaintiffs on that account. “ 9. If the jury find from the evidence that the plaintiffs have failed and refused to keep and perform their part of the contract with the defendant, in whole or in part, they are not entitled to recover in this action.” The court then charged the jury of his own motion; but no exception was taken to any part of the charge. The jury rendered a verdict for the plaintiffs in the sum of $5,000; and from the judgment thereon the defendant appealed.