This is an appeal by the defendants Frank Hayes (Frank) and Emily Hayes (Emily), and Grafton Oil Company, Inc. (Grafton Oil), from a final decree which (a) enjoined Frank and Emily from engaging in the oil business in Worcester County for ten years from February 2, 1960, and from in any way soliciting oil customers of any of the plaintiffs, and (b) enjoined Grafton Oil, its officers, servants, and agents from soliciting in any way the oil customers of the plaintiffs.
The judge was not requested to file a report of the material facts under G. L. c. 214, § 23, as appearing in St. 1947, c. 365, § 2. He did, however, file a voluntary statement of findings of fact. We have a report of the evidence pursuant to designations made under Buie 2 of the Buies for the Begulation of Practice before the Full Court (1952),
In 1950, upon the death of his father, Frank, then twenty-six years old and married, took over the operation of S. J. Hayes & Son, the name under which his father had been engaged for many years in the retail fuel oil business in North Grafton. Frank had been identified with his father in the business since 1945. The business at all times was conducted from the Hayes residence which was owned by Frank’s mother. The property consisted of a large house and yard. The business office was on the first floor of the dwelling. In the yard were five fuel oil storage tanks, two of 12,000 gallon capacity, one of 10,000 gallon capacity, and two of 5,000 gallon capacity. Frank’s wife, Emily, who had participated in the business to a limited extent prior to the father’s death, actively assisted her husband after 1950, particularly in receiving and processing telephone orders for oil and in collecting bills. Emily’s business aptitude, interest, and capabilities were greater than those of her husband. The business employed two truck drivers and a part time bookkeeper. Fifty per cent of the Hayes customers lived in North Grafton; the remainder lived in Shrewsbury, Grafton Center, Worcester, and Millbury.
Under Frank’s management the business was not a success. By 1960 the liabilities were nearly $43,000; the tangible assets consisted of three or four used trucks, some fuel oil, and office equipment. The accounts receivable were estimated at $19,000. One of the principal creditors was the plaintiff Central Oil of which the plaintiff Sulmonetti was an officer.
On February 3,1960, Frank by a writing sold the business to Sulmonetti (the buyer). The agreement expressly recognized that the Hayes oil business was in financial diffi
The buyer thereafter organized the plaintiff Hayes Oil Corporation, employed Frank as manager at $100 a week plus a flat weekly expense allowance, paid $80 a month for the use of the office and yard on the Hayes premises, hired the two truck drivers and part time bookkeeper, and paid for two of the telephones on the premises including the business office telephone.
Although Emily did not sign the agreement with the buyer on February 3, 1960, she was then, or shortly thereafter, aware of it. As the winter of 1961 approached, and probably much earlier, following consultations with a lawyer known to both Frank and his wife, a decision was made and a plan devised by them to resume the business of selling fuel oil at the Hayes premises commencing January 1,1962. To this end in December, 1961, Grafton Oil was organized, with Emily as the sole stockholder and as president and treasurer. The part time bookkeeper was temporary clerk. Toward the close of December, 1961, and during the days immediately thereafter, the following took place: fliers were sent to all householders in Grafton and to household
During this period, Frank remained in the employ of the buyer and played an apparently passive role in organizing Grafton Oil and in soliciting the buyer’s customers. Although asked by the buyer’s representative to help win back customers the buyer had lost, Frank made no effort to do so. He did not personally make any deliveries to the buyer’s customers, or try to expedite deliveries by drivers newly hired by the buyer. Deliveries to the customers of Grafton Oil were prompt; those to the buyer’s customers lagged behind schedule.
The buyer filed this bill of complaint on January 12,1962.
The judge quite rightly concluded that Frank and his wife, acting in concert, had contrived to deprive the buyer
The principal question is what relief, if any, the buyer should be granted against the defendants.
As to Frank, the governing principles are clear. He is bound by his express covenant not to compete if it is limited reasonably in time and place.
Old Corner Book Store
v.
Upham,
The decree as against Emily presents a different question. It is identical with the decree against Frank, which was founded on the express covenant. Emily, however, did not sign the covenant not to compete, and, since she was not the seller of the Hayes business, there is no basis to imply an
The evidence does, however, clearly establish that Emily deliberately and wilfully connived with her husband, and purposefully acted both with him and independently of him, to appropriate to herself and her husband the good will that the buyer had purchased from Frank. The good will thus bought and the good will which enured to the buyer after the purchase were exploited by Emily and her husband to their joint advantage in derogation of the sale and in breach of Frank’s duty as an employee of the buyer. Although we are not aware of any reported case where the factual situation is sufficiently similar for us to cite as being precisely in point, we recognize that one of the concepts underlying the principle which restricts the right of a seller of a business to compete with the buyer in such a way as to deprive the buyer of the good will which he has purchased is the fundamental concept of fair dealing. See
Novelty Bias Binding Co.
v.
Shevrin,
The decree is to be modified in accordance with the foregoing and, as so modified, it is affirmed with costs.
So ordered.