Emler v. Ferne , 23 Ohio App. 218 ( 1926 )

Defendant in error, Mack Ferne, brought an action in the court of common pleas against William E.P. Emler, seeking an order restraining Emler from entering into a competitive business, and for damages for breach of contract. The subject-matter of the contract was the establishment and operation of a beauty parlor in the city of Cincinnati; Ferne to purchase and install necessary fixtures, Emler to be the manager and operator and to receive a per centum of the net profits, including a weekly salary.

It appears that after operating the beauty parlor for something over a year, disagreement arose, and Emler opened a beauty parlor across the street. Emler first filed an action to prevent his late associate, Ferne, from using his (Emler's) name. Later, Ferne filed an independent suit against Emler in the court of common pleas, asking for the relief above stated.

Emler's case was dismissed, and this case was heard on Ferne's petition. The trial court found for the plaintiff, and entered a permanent injunction against Emler, enjoining him from operating his business across the street from Ferne's place of business in the city of Cincinnati, and awarded damages in the sum of $500. From that judgment, error is prosecuted here.

Several points of error are suggested. The record is confused, and some of the questions will be passed. However, the question of the legality of the contract is clearly presented and determines the case.

Plaintiff in error stresses the proposition that sections 2, 5, and 6 of the contract make the contract illegal and void in that it is in restraint of trade and opposed to public policy. The sections in question are as follows:

"Second: It is hereby understood and agreed by and between the parties hereto that the party of the second part should devote all of his time for a period of ten (10) years, exclusively to the successful operation of this business, and to have no connection whatsoever with any other party or concern in a similar field of action, or to receive compensation from any other source by reason of his connection therein; that this provision, however, shall not deprive or prevent said William Emler from retaining his interest in the barber shop on the seventh floor of the Keith building, provided only that he does not devote his services, time, and attention thereto.

"Fifth: It is further understood and agreed by and between the parties hereto that this contract of employment should be good and binding upon both parties hereto for a period of ten (10) years from date of this agreement.

"Sixth: It is further understood and agreed by and between the parties hereto that the said William Emler hereby agrees that he will not engage in business of his own, or in his own name, or for any one else in a similar line of business, for a period of ten (10) years from date of this agreement. This provision, however, shall not be binding upon the said William Emler if for any reason, the said Mack Ferne shall sever his connection with him."

That such provisions in a contract void the contract is clearly the law of Ohio. The trial court evidently took the view that the restriction of a ten-year period, without limitation as to space, was divisible, and that the court might, on its own motion, divide the restriction as to space by holding the contract good as to Hamilton county.

In the case of Lange v. Werk, 2 Ohio St. 530, which is a leading case in Ohio on the question of restrictions in restraint of trade, Lange covenanted with Werk that, for a period of about three years, he would not be connected, either directly or indirectly, with the manufacture of sterin or star candles in the county of Hamilton and state of Ohio, or at any other place in the United States, etc. The court held: First, that that part of the covenant which bound Lange not to pursue the business, or give his assistance at any other place in the United States, was void, being a general restraint of trade; second, that the covenant was divisible, and, if attended with other necessary requisites, might be good for Hamilton county. In other words, the court found that it might strike out all reference to any other place in the United States, leaving the covenant to read that Lange could not pursue the business, etc., in Hamilton county for the period designated. The covenant was clearly divisible. On the question of the divisibility of negative covenants, Lord Sterndale, in the cause of Attwood v. Lamont, 3 K.B., (1920) 571, said:

"I think, therefore, that it is still the law that a contract can be severed if the several parts are independent of one another and can be severed without the severance affecting the meaning of the part remaining. This is sometimes expressed, as in this case by the Divisional Court, by saying that the severance can be effected when the part severed can be removed by running a blue pencil through it."

Applying that rule to the case of Lange v. Werk, supra, our Supreme Court of Ohio found that a blue pencil might be run through that part of the covenant referring to the United States and not affect the meaning of the remaining part with respect to Hamilton county. Had the covenant in the contract under consideration provided that Emler should not engage in a business of his own for ten years in the city of Cincinnati, or elsewhere, the covenant would have been upheld, and the trial court would have been correct in so holding. But there is no such limitation. The ten-year covenant, as above stated, is without territorial limitation, and if that part is blue penciled, there is nothing on which to base a restriction. That it is not divisible is clearly decided in the case of Lufkin Rule Co. v. Fringeli,57 Ohio St. 596, 49 N.E. 1030, 41 L.R.A., 185, 63 Am. St. Rep., 736. In that case the covenant was where a seller stipulated that he would not directly or indirectly engage in the same business in the state of Ohio, nor in the United States, for a period of 25 years. The court in the second proposition of the syllabus held:

"Whether necessary or not to reasonable enjoyment of the good will so purchased, the interest of the public in the nonenforcement of such an agreement outweighs the interest of the purchaser in its enforcement, and is void."

The third paragraph of the syllabus reads: "Such an agreement is not divisible, for the reason that if restrained to the limits of the state, still such restraint would be general in its nature, and obnoxious to all the objections that exist against a general restraint of trade."

The negative covenant under consideration is a general restraint of trade. The authorities, both in England and this country, are fully considered in the cases of Lange v. Werk, andLufkin Rule Co. v. Fringeli, supra, and it will not be necessary to examine them further here.

Judge Ranney in the Lange case observed, at page 531: "No case is to be found where such a contract has been upheld, which covered the whole of England or a state of this Union."

In the Lufkin Rule case, Judge Minshall, in the course of the opinion, observes, at page 603 (49 N.E. 1032): "And it will be observed that, in the case before us, the restraint at the least is to the state of Ohio, and hence the agreement is not capable of such a division as, under any circumstances, would make it a valid one."

In the Lufkin Rule case reference is made to some cases supporting the validity of similar contracts. The court says, page 609 (49 N.E. 1034): "The reasoning of the case in which a departure from the common law had been adopted, fails to persuade us that we should disregard the rule that has been so long settled in this state by the decisions of this court; on the contrary, the changed conditions, on which the argument proceeds, tend the more strongly to convince us that, in the interest of a wise public policy, it should be more firmly adhered to."

The negative covenant as to space is a general restraint of trade, and is not divisible. Had the covenant provided that the parties should not engage in the same or similar business for the period of 100 years, it would not be contended that the court might grant the injunction for a period of 5 years. In other words, the court cannot make the contract for the parties. He cannot place a restriction on a negative covenant where there is no valid negative covenant.

We therefore hold that the trial court was without power to grant the injunction and award damages as it did. That judgment will be reversed.

Since the written contract is before us, containing the matter under consideration, and finding as we do that the negative covenant is in restraint of trade and voids the contract, judgment will be entered here for the plaintiff in error.

Judgment for plaintiff in error.

BUCHWALTER, P.J., and CUSHING, J., concur.