restriction in territory-held valid); United Shoe Machinery Co. v. Kimball, 193 Mass. 351, 97 N. E. 790 (1907) (shoe machinery-no restriction in time or space-held valid); Marshall Engine Company v. New Marshall Engine Co., 203 Mass. 410, 89 N. E. 548 (1909) (no restriction in time or space-held valid-manufacture of machine for reducing pulp to paper); Ruggiero v. Salomone, 248 Mass. 237, 142 N. E. 764 (1924) (barber shop).

Implied Covenants Not to Compete.

In every sale of a business and goodwill, the courts will imply an agreement by the seller that he will do nothing that will impair the value of the goodwill sold. Rosenberg v. Adelson, 234 Mass. 488, 125 N. E. 632 (1920); Hutchinson v. Nay, 187 Mass. 262, 72 N. E. 974 (1905); Dwight v. Hamilton, 113 Mass. 175 (1873) (sale of physician's practice and goodwill); Foss v. Roby, 195 Mass. 292, 81 N. E. 199 (1907) (sale of dentist's practice and goodwill); Munsey v. Butterfield, 133 Mass. 492 (1882) (sale of milk route— seller enjoined from soliciting even new customers in territory); Marshall Engine Co. v. New Marshall Engine Co., 203 Mass. 410, 89 N. E. 548 (1909).

Formerly it was held at common law that an agreement not to complete would not be implied in a sale of a local retail store. Bassett v. Percival, 87 Mass. (5 Allen) 345 (1862) (grocery store); Hoxie v. Chaney, 143 Mass. 592, 10 N. E. 713 (1887). The rule, however, is no longer so rigid. An agreement not to compete will be implied insofar as it is necessary to protect the goodwill of the store sold. Old Corner Book Store v. Upham, 194 Mass. 101, 80 N. E. 228 (1907) (sale of book store, with Episcopalian book department-vendor had charge of the department and was prominent in Episcopalian circles-court enjoined him from competing in the sale of such books); Martino v. Pontone, 270 Mass. 158, 161, 170 N. E. 67 (1930). ("Plaintiffs are entitled to freedom from interference by the defendant in the neighborhood of the store which he sold, but not throughout the entire area of the city.")

Whether or not the court will imply an agreement not to complete is a question of fact, depending on the nature of the goodwill sold, the situation of the parties, and the implications involved in the terms of the contract of sale. Moore v. Rawson, 199 Mass. 493, 85 N. E. 586 (1908); Old Corner Book Store v. Upham, supra; Gordon v. Knott, 199 Mass. 173, 85 N. E. 184 (1908).

A contract not to compete will not be implied, if only the assets and not the goodwill of the business are sold. Webster v. Webster, 180 Mass. 310, 62 N. E. 383 (1902).

A contract not to compete will not be implied where the sale of the goodwill is forced and is not a voluntary one. Hutchinson v. Nay, supra (one member of partnership died-forced sale of goodwill-held surviving partner can compete with buyer and solicit former customers); C. H. Batchelder & Co. v. Batchelder, 220 Mass. 42, 107 N. E. 455 (1914) (receiver's sale of insolvent corporation— held former owner can compete with buyer.)

Construction.

A covenant, in the sale of a milk route, not to "engage in the milk business in any manner whatsoever" does not preclude the seller from operating a pasteurizing plant. Begley v. O'Neill, 281 Mass. 164, 183 N. E. 151 (1932).

Remedies.

Breach of the covenant not to compete will be enjoined despite a provision for liquidated damages. Ropes v. Upton, 125 Mass. 258 (1878).

Assignment.

Benefits of an agreement not to compete are assignable. Rosenberg v. Adelson, 234 Mass. 488, 125 N. E. 632 (1920); Adamowicz v. Iwanicki, 286 Mass. 453, 190 N. E. 711 (1934).

A covenant not to compete is assignable from one partner of a business to another. Jenkins v. Eliot, 192 Mass. 474, 78 N. E. 431 (1906).

Restrictive Covenants Ancillary to Employment.

The rule with respect to agreements not to compete ancillary to employment contracts is, in all respects, similar to the rule with respect to agreements in connection with the sale of a business and goodwill. Hence, an employee's agreement not to engage in a similar business after the termination of his employement, if not injurious to the public, and if not unduly burdensome on the employee, and if reasonably necessary for the protection of the employer will be held valid. Sherman v. Pfefferkorn, 241 Mass. 468, 135 N. E. 568 (1922) (covenant preventing laundry driver from engaging in the business generally is unreasonable; he may be employed by a competitor in a capacity not requiring contact with the customers of his former employer); Chandler, Gardner & Williams, Inc. v. Reynolds, 250 Mass. 309, 145 N. E. 476 (1924) (unique methods of doing business and certain secret processes were taught to employees-held 10 years is not an unreasonable restraint); Boston & Suburban Laundry Co. v. O'Reilly, 253 Mass. 94, 148 N. E. 373 (1925) (agreement for 2 years not to interfere with the company's customers in certain cities

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was held valid); Carnig v. Carr, 167 Mass. 544, 46 N. E. 117 (1897) (restraint on employee so long as he is in the employ held valid); Commonwealth Laundry Company v. Daggett, 283 Mass. 79, 186 N. E. 41 (1933) (agreement "never" to disturb employer's customers-held unreasonable as to time).

An employee in charge of customer's lists is restrained from working for a competitor in a similar capacity. Walker Coal & Ice Co. v. Westerman, 263 Mass. 235, 160 N. E. 801 (1928). But if the information acquired is not confidential, a restrictive covenant will not be enforced. Horn Pond Ice Co. v. Pearson, 267 Mass. 256, 166 N. E. 640 (1929) (list of customers of the employer-ice company comprising the only people in town who used ice held not confidential).

An employer cannot, by contract, prevent his employee from using the skill or intelligence required or increased through experience or instruction received in the course of employment. Club Aluminum Co. v. Young, 263 Mass. 223, 160 N. E. 804 (1928) (salesman of aluminum cooking utensils under a "plan" which was not secret but required training and ability was not restrained). See also Padover v. Axelson, 268 Mass. 148, 167 N. E. 301 (1929), May v. Angoff, 272 Mass. 317, 172 N. E. 220 (1930).

An agreement by a former employee not to engage directly or indirectly in any branch of the laundry business within definite territory will not prevent him from holding stock in a competing company. Sherman v. Pfefferkorn, supra. A restrictive agreement may be enforced even prior to actual breach. Walker Coal & Ice Co. v. Westerman, supra.

The scope of a restrictive covenant if broader than necessary either in territory or duration, or both, may be narrowed by court to more reasonable limits. Edgecomb v. Edmonston, 257 Mass. 12, 153 N. E. 99 (1926) (business of supplying shorthand reporters—restriction in state of Massachusetts narrowed to city of Boston); Metropolitan Ice Co. v. Ducas, 291 Mass. 403, 196 N. E. 856 (1935) (duration of 15 years narrowed to 18 months); Brannen v. Bouley, 272 Mass. 67, 172 N. E. 104; Walker Coal & Ice Company v. Love, 273 Mass. 564, 174 N. E. 199 (1931); Whiting Milk Companies v. O'Connell, 277 Mass. 570, 179 N. E. 169 (1931) (a reasonable time limitation however does not save an unreasonable territorial limitation); Suburban Coat, Apron & Linen Supply Co. v. Le Blanc, 15 N. E. (2d) 828 (1938) (duration narrowed by court).

A restrictive covenant otherwise valid was not enforced in Economy Grocery Stores Corporation v. McMenamy, 290 Mass. 549; 195 N. E. 747 (1935) because employee was unjustifiably discharged during an existing emergency. An employee breaching a similar cove

nant was not enjoined, since he was discharged during the employer company's reorganization under section 77B of the Bankruptcy Act. Southern New England Ice Co. v. Ferrero, 4 N. E. (2d) 359 (1936).

A competing employer hiring a discharged employee with knowledge of the restrictive covenant and with intent to injure the others business is liable in tort for damages to employee's former employer. Suburban Coat, Apron & Linen Supply Co. v. Le Blanc, 15 N. E. (2d) 828, (1938) Cf. New England Co. v. Pritchard, 15 N. E. (2d) 440 (1938).

A covenant not to compete will not be implied where a laundry route man makes solicitations after terminating his employment, when there has been no use of confidential lists of the employer, but solicitations are made solely from memory. Wooley's Laundry v. Silva, 23 N. E. (2d) 899 (1939).

III. TYING CONTRACTS AND EXCLUSIVE DEALING ARRANGEMENTS

Ann. Laws (1933), c. 93

Sec. 1. Sales on condition that buyer deal only in seller's goods penalized. No person, firm, association, or corporation, doing business in the commonwealth, shall make it a condition of the sale of goods, wares, or merchandise that the purchaser shall not sell or deal in the goods, wares, or merchandise of any other person, firm, association, or corporation; but this section shall not prohibit the appointment of agents or sole agents for the sale of, nor the making of contracts for the exclusive sale of, goods, wares, or merchandise. Whoever, as principal or agent, violates this section shall be punished for the first offence by a fine of not less than fifty nor more than one hundred dollars, and for a subsequent offence by a fine of not less than one hundred nor more than five hundred dollars or by imprisonment for not more than one year, or both. (1901, 478; R. L. 56, sec. 1.)

Sec. 14. Conditions for sale or lease of machinery regulated; penalty. No person, firm, association, or corporation shall insert in or make it a condition or provision of any sale or lease of any tool, implement, appliance, or machinery that the purchaser or lessee thereof shall not buy, lease, or use machinery, tools, implements, or appliances or material or merchandise of any person, firm, association, or corporation other than such vendor, or lessor, but this provision shall not impair the right, if any, of the vendor or lessor of

any tool, implement, appliance, or machinery protected by a lawful patent right vested in such vendor or lessor to require by virtue of such patent right the vendee or lessee to purchase or lease from such vendor or lessor such component and constituent parts of said tool, implement, appliance, or machinery as the vendee or lessee may thereafter require during the continuance of such patent right; and all leases, sales, or agreements therefor made after July 1st, nineteen hundred and seven, shall be void as to any and all of the terms or conditions thereof in violation of this section; provided, that nothing in this section shall be construed to prohibit the appointment of agents or sole agents to sell or lease machinery, tools, implements or appliances. Whoever, himself or by his agent, violates this section shall be punished by a fine of not more than five thousand dollars. (1907, 469.)

Cooperatives

Ann. Laws (1933), c. 157

Section 16 provides that agricultural cooperative associations organized under secs. 1-14 of c. 157 may enter into marketing contracts with its members by which the members shall agree to sell for any period of time, not exceeding 10 years, all or any specified part of their products or of certain specified products exclusively to or through the corporation or any agency designated by it. Such marketing contract shall not be considered illegal as in restraint of trade, under c. 93 secs. 1-7.

Tying Contracts.

Judicial Decisions

Application of the Common Law.

An agreement whereby plaintiff loaned defendant a gas pump at no cost but on condition that defendant purchase plaintiff's gas exclusively, was held valid. At comon law, a contract in restraint of trade is valid if the restraint is such as affords only a fair degree of protection to the legitimate interests of the party in whose favor it is imposed, and is not so large as to interfere with public interests. Quincy Oil Company v. Sylvester, 238 Mass. 95, 130 N. E. 217 (1921).

Constitutionality of Statute.

Chapter 93, section 14 is constitutional as a valid exercise of the state police power. Opinion of the Justices, 193 Mass. 605, 81 N. E. 142 (1907).