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George W. Jenkins, plaintiff in error, vs. James D. Temples, defendant in error

Supreme Court of Georgia1869-12
39 Ga. 655

Summary

Holding. The court reversed the dismissal and reinstated the case, determining that Jenkins stated a valid legal cause of action for breach of a non-compete agreement and that damages need not be pre-stipulated or deemed too remote to support recovery.

Jenkins purchased the defendant Temples's grocery inventory at inflated prices in exchange for Temples's promise not to sell groceries in the town of Spring-place for one year and to support Jenkins's business. Temples breached this agreement by opening a competing grocery store in the same town during the contract period. The trial court dismissed the case, reasoning that Jenkins could not recover without a pre-agreed damages amount and that any damages were too speculative. The court reversed this dismissal, holding that agreements restricting business activity in a specific location for a reasonable time are enforceable when supported by valuable consideration, and that Jenkins need not have negotiated a fixed damages clause to pursue relief.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Enforceability of non-compete agreements with valuable consideration
  • Whether stipulated damages are required to recover for breach of a restrictive covenant
  • Whether damages for breach of a geographic non-compete are too indefinite or remote

Procedural posture

The trial court dismissed the plaintiff's declaration on legal grounds; the plaintiff sought review of that dismissal.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Brown, C. J.

We are of opinion that the Court erred in ordering this case dismissed, on the ground that the plaintiff could not recover unless he and the defendant “had agreed upon a certain sum as damages for breach of said contract,” and on the ground that the damages were “too indefinite and remote.” The declaration alleges, that plaintiff purchased defendant’s stock of groceries “at very high figures or prices,” and rented his grocery house for seventy-five dollars, in consideration that the defendant would not “deal, in any of said articles thus billed to petitioner at any place within the corporate limits of the town of ¡ápring-place, in said county, until after the expiration of his license, which was taken out on or about the 26th day of January, 1868, and which was to run for twelve months,” and upon the further pledge, that said defendant would not open, or expose to market in said town of Spring-place, any one of said articles of merchandize, for the time above stated, and that he agreed and bound himself to use all his influence in behalf of plaintiff. The declaration also alleges, that the defendant, fraudulently and with design to injure the plaintiff, has set up, in said town of Spring-place, a grocery, consisting of the same articles of merchandize of those sold and billed to plaintiff, and is using his influence and sales in opposition to plaintiff.

We are unable to see why this does not constitute a legal cause of action. While a contract in restraint of trade in general is against the policy of the law and cannot be enforced, we need not cite authorities to sustain the well established rule, that a party may legally bind himself for a valuable consideration, not to conduct a particular trade or business in a particular village, or at a specified -place agreed upon by the parties, for a reasonable and definite period of time.

And it is not necessary to enable the party injured, to recover for a breach of such contract, that he should prove that there were stipulated damages, or in other words, that the parties agreed upon a specified sum, as the damage to which plaintiff should be entitled for a breach of the contract by the defendant. The plaintiff in such case is entitled to recover the actual damage which he has sustained. The jury must find the amount, if any, from the evidence submitted upon the trial.

We are equally well satisfied that the position, that the damage in such case is too remote to justify a recovery, is not-Well founded. If the plaintiff paid an exorbitant price, for the defendant’s stock of goods, in consideration of the contract and undertaking, which has been violated by the defendant, he would at least be entitled to recover the difference between, the price paid and the actual value of the goods at the time of the trade. But this is not all, he may recover any other damage, which the jury is satisfied from the evidence has been in fact sustained by him, by reason of the failure of the defendant to comply with the contract on his part.

Let the judgment be reversed and the case reinstated.