210 N.W. 397 | Minn. | 1926
The law applicable to contracts in restraint of trade has received the attention of this court in numerous cases. In one respect this case differs from most of those heretofore considered in that it involves a sale of stock in a corporation which continued the business in which the seller agreed that he would not re-engage. In 3 Williston, Contracts, p. 2888, it is said:
"In certain corporations the value of the business is largely dependent on the good will of one or more officers or stockholders, and just as the corporation might on sale of its business contract to refrain from competition, so officers or stockholders either on selling their stock, or on the corporation selling its business, may make effectively a reasonable restrictive agreement not to compete with the corporation or with a purchaser of its business."
Kronschnabel-Smith Co. v. Kronschnabel,
We think the rules of law governing contracts in partial restraint of trade are applicable. *477
We also think that the contract is not open to attack on the ground that it imposes an unreasonable or oppressive restraint upon Share's right to follow the occupation for which he is fitted by training and experience. In The Menter Co. v. Brock,
The law of contracts in restraint of trade is expounded in National Ben. Co. v. Union H. Co.
The contract is attacked on the ground that it is not supported by a consideration. The court found that there was a sufficient consideration, and we think the finding is supported by the evidence. As we understand it, the contention of the appellants amounts to this: The evidence shows that Share's stock was worth $8,000 when he sold it. No separate or independent consideration was given for his covenant to refrain from competing with respondent. The contract is worded in the past tense, speaking of the sale of the stock as having already taken place. If this were all, there would be much force in appellants' contention. But there was evidence tending to show that the sale of the stock and the execution of the contract were contemporaneous and parts of one and the same transaction, and the trial court found that such was the fact. In view of the evidence and the finding, it must be held that Share *478 received the money and notes in consideration of his agreement to refrain from competing with respondent as well as in payment of the purchase price of the stock. The corporation was under no obligation to buy the stock. Neither was Share bound to sell it. The corporation saw fit to require him to execute the contract as one of the conditions of the purchase of the stock. The facts fairly warrant the inference that, unless the contract had been executed, the corporation would not have made the purchase.
It is argued that Share sold his stock pursuant to the contract the stockholders made in 1920; that, although it was not sold to the other stockholders but to the corporation, the result is the same because the corporation holds the stock in the treasury, thereby increasing the several interests of the remaining stockholders. This fact does not change the effect of the transaction between Share and the corporation or deprive the contract of a sufficient consideration. The evidence fell short of demonstrating that the contract to which the stockholders were parties cut any figure in the sale and the court might properly ignore its existence.
Other matters referred to in the briefs do not affect the conclusions we have reached. The judgment is affirmed. *479