69 Vt. 309 | Vt. | 1897
It appears by the referee’s report that the plaintiff had a large well-established and profitable fire, life and accident insurance business in St. Albans, representing twenty-three or more companies; that in the spring of 1888 the defendant, entered his employment as a clerk in his insurance office, and that on October 28,1889, while he was so employed, the parties entered into the following written contract with each other:
The defendant had no previous knowledge of the insurance business, but for some time before he left the plaintiff’s service he had been the general manager of the business and had access to and knowledge of the insurance registers and other books kept by the plaintiff. He remained in the plaintiff’s employment under the contract from its
September 25, 1890, the defendant, A. D. Tenney and S. S. "Watson formed a partnership, and for the purpose of carrying on a like insurance business as equal partners, they bought and established a business in St. Albans and have ever since prosecuted it under the firm name of Tenney & Watson, their business being in active competition with the plaintiff’s.
The plaintiff considered that the defendant’s entering into this partnership was in violation of the contract and that he had otherwise broken it, and in January, 1891, brought a bill in equity against him "and procured an injunction by which the defendant was enjoined from directly or indirectly prosecuting insurance business in violation of the written contract. Proceedings were subsequently instituted against the defendant for an alleged violation of the injunction; the matter was referred to amaster who reported the facts to the court, whereupon the court of chancery, at the September Term, 1891, for the county of Franklin, considered and adjudged that the defendant had violated the injunction and was guilty of a contempt and imposed upon him the payment of a fine of fifty dollars and costs.
It is unnecessary to decide the question, which has been discussed by counsel, whether the decree of the chancellor in the proceeding against the defendant for violating the injunction is conclusive of a breach by him of the written contract, for the referee has found such breach as a fact from the evidence.
The fact of the defendant’s entering into a partnership which was engaged in a business in competition with the plaintiff’s, with the fact that the defendant’s partners did at different times during the year solicit and obtain insurance business from parties in the town of St. Albans who were insured in the plaintiff’s companies and known by the defendant’s partners to be so insured, was a violation of
Evidence that the plaintiff understood at the time of making the contract that the defendant had a right to represent any insurance company and to solicit any insurance that was not held by the plaintiff at the time the defendant left the plaintiff’s employment, and to solicit any additional insurance of parties that held insurance with the plaintiff, was inadmissible. The contract is clear and explicit upon this subject.
The referee also found a breach of the contract by the defendant in his soliciting and obtaining insurance of C. L. Moren.
The next question is whether the plaintiff shall recover the actual damages found by the master, or the sum of five hundred dollars, named in the contract as liquidated damages.
It was clearly error for the referee to find from extrinsic evidence that when the parties entered into the contract they both understood that for a breach of it only actual damages would be recoverable. The contract was the best evidence of their understanding.
In Barry v. Harris, 49 Vt. 392, the defendant sold the orator a freight business over certain routes and gave a wilting promising the orator that he would pay him five hundred dollars if the defendant re-engaged in that business. It was held that the damages were stipulated, upon the ground of the practical impossibility of ascertaining the damages consequent upon abreach of the contract, the reasonableness of the sum named and the purpose of the contract. The court said: “Contracts whereby a party agrees not to exercise his vocation for a limited time or in a particular place, under an obligation to paya stipulated amount, have often, perhaps generally, been held to be contracts conditioned for the payment of liquidated damages rather than penalties. The difficulty of ascertaining the actual
It was said in Stevens v. Pillsbury, 57 Vt. 205, that: “It has rarely been held that, in a contract by which a party has agreed to refrain from exercising a particular trade or profession within a named locality, and agreed upon the sum to be paid, if he breaks his agreement, that the sum thus agreed upon has been held other than liquidated damages,” citing several authorities. One of the principal reasons given for this holding was the difficulty of measuring the damages. The same rule is given in Chase v. Allen, 13 Gray 42, and in Hall v. Crowley, 5 Allen 304. In 13 Am. & Eng. Ency. 854, numerous cases are considered and the rule stated that:
“It is now well settled that a sum, if it be at all reasonable, stipulated to be paid as ‘liquidated damages’ for the breach of a covenant, will be regarded as such, and not as a penalty, where, from the nature of the covenant, the damages arising from its breach are entirely uncertain, and cannot be ascertained upon an issue of fact.”
“Where an agreement is for the performance or nonperformance of only one act, and there is no adequate means of ascertaining the precise damage which may result from a violation, the parties may, if they please, by a separate clause of the contract, fix-upon the amount of compensation payable by the defaulting party in case of a breach; and a stipulation inserted for such a purpose will be treated as one for ‘liquidated damages,’ unless the intent be clear that it was designed to be only a penalty.”
It is true that where the terms, “liquidated damages,” and
Judgment affirmed.