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Behn v. Shapiro

NOVEMBER 16, 1955.




Appeal from the Superior Court of Cook county; the Hon. FRANK M. PADDEN, Judge, presiding. Reversed and remanded with directions.


Plaintiff's complaint is for injunction, accounting and reformation of a partnership dissolution agreement. After issues joined, a general reference was had to a master, who heard evidence and recommended the issuance of an injunction, reserving further hearings as to the accounting for damages. Neither the master's report nor the decree made any mention of the reformation of the contract. Obviously, plaintiff has abandoned that portion of the relief prayed for in the complaint. A decree was entered confirming the master's report and re-referring the cause to the master for the purpose of hearing evidence as to the accounting and damages, from which decree defendant appeals.

The decree provided: "That defendant, Solomon Shapiro, also known as Sol Shapiro, his agents, employees, and servants are hereby permanently restrained and enjoined, directly or indirectly from soliciting or attempting to solicit the produce business of or from any of the following persons, firms, partnerships, or corporations," following which is a list in the decree of sixty names of persons, firms, partnerships or corporations. The injunction is limited to the sixty named.

The record of testimony and exhibits is voluminous. In view of the contentions raised upon this appeal, it becomes necessary, for a better understanding of them, to outline briefly the facts appearing in the record, out of which the controversy arose.

For approximately seventeen years the parties were partners in the produce business, which was terminated by a partnership dissolution agreement, the one involved in this controversy. The agreement was drafted by attorney Seidenfeld, representing both parties, who had a personal interest in some of the real estate owned by the partnership and retained it with plaintiff since the dissolution. It is admitted that the first draft of the dissolution agreement, prepared by Seidenfeld, contained the provision that "Shapiro agrees that he will not interfere directly or indirectly in the operation of the said Skokie Produce Co." When this draft was presented for execution, defendant, not represented by other counsel, objected to the above quoted provision, and declined to sign it. Plaintiff's witness, Seidenfeld, testified that he redrafted the agreement, deleting the provision objected to. The agreement, as redrafted, was executed by the parties on July 10, 1953, though the agreement was dated back to June 1, 1953.

Attorney Seidenfeld did not suggest to the defendant that the deletion of the noninterference provision from the agreement would not permit him to solicit previous customers of the partnership, nor did he explain to the defendant or to plaintiff that the sale of "good will" in itself would bar defendant from soliciting previous customers. However, he did tell defendant that he was free to go into a competitive produce business.

The agreement provided, among other things, that "Shapiro sells, transfers and sets over to Behn all of Shapiro's right, title and interest in and to the property, assets, business and `good will' of said partnership, subject to all partnership debts outstanding and unpaid," which Behn assumed and agreed to pay, and that "Behn shall have the sole right to use the name, style and description of `Skokie Produce Co.' in all future business dealings and Shapiro shall not use or carry on a business under said name directly or indirectly." Except as to the obligations imposed by the dissolution agreement, the parties executed mutual releases. The agreement provided for the payment of $10,000 in cash and the balance of $40,000 in installments of $500 or more per month, beginning August 1, 1953, evidenced by a promissory note signed by plaintiff and secured by a mortgage on real estate owned by the partnership.

The partnership books and records, as well as financial statements furnished by the partnership to the banks and others, contained no entry or valuation of "good will." The master found that the partnership did not carry good will as an asset upon its records or books of account.

Shortly after signing the dissolution agreement, defendant, together with Lirtzman, a former employee of the partnership, who was discharged by plaintiff on July 17, 1953, engaged in the produce business on the South Water Market under the name of Courtesy Produce Company, and was selling produce in the open market to some of the customers of the former partnership. Plaintiff was aware of defendant's competition as early as July 22, 1953. He testified:

"The next time I seen Mr. Shapiro was a week after July 15th, on a Saturday morning, about seven o'clock at the potato track. I walked up to him and I says, `Sol, you are wrong.' I says, `You sold — Julius sold Campbell's some potatoes. They called me first — that is Campbell's Soup Company, and I told them to buy three cars of potatoes from you, because it was way below market price.' I told the buyer of Campbell's Soup to buy from them, from Mr. Lirtzman, if they want to buy below cost. I told that to Sol; and he was on the track."

It further appears from the evidence that substantially all of the items sold by the partnership, and by plaintiff following the dissolution, were cabbages, onions, potatoes, bananas, whatever of these items they could buy and sell. They were brought in on trains in Chicago at 27th Street and Ashland Avenue, where the open market was located. If they could not make a sale at that price they would leave them on the track and abandon them to the railroad for the freight charges, or else lower the price at which to sell. Plaintiff many times abandoned produce to the railroad for freight charges, when he could not get a buyer. During that period there were more than one hundred sellers of produce in that market.

It is clear to us in reading this record, and there is no substantial evidence to the contrary, that the fresh produce of the partnership business was either bought or sold at the track; was what is termed "spot" business; that the sale would depend upon quality, quantity and price; and it was generally not known in advance who the buyers would be, even though former buyers of the produce sold by the partnership would have representatives at the track to examine what was offered for sale. In other words, unlike the sale of nationally known brands, or sales of merchandise made by description or sample, as is present in so much of our commerce, fresh produce dealt in by the partnership was nearly always bought and sold upon inspection at the tracks in the market. We find no showing by plaintiff in the record as to how much business the partnership did with any of the sixty names listed in the decree, or to what extent, if any, sales were made to them in any other way except by inspection and purchase at the tracks. It was stipulated by the parties upon the hearing that none of those listed among the sixty names in the decree bought exclusively from the partnership.

The master concluded, among other things, that there is no evidence of any kind in the record to show that the parties intended to eliminate from the meaning of the phrase "good will" the right to solicitation of partnership accounts. Thus it will be seen that the master recognized it was important to determine what was intended by "good will." He also concluded:

"This good will included the probability that persons, firms and corporations who had purchased merchandise from said ...

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