James T. Reilly, Lebanon, for appellants.
W. Parker, Lebanon, with him Charles V. Henry, III, Lebanon, for appellee.
Watkins, President Judge, and Jacobs, Hoffman, Cercone, Price, Van der Voort and Spaeth, JJ. Hoffman, J., concurs in the result. Spaeth, J., files a dissenting opinion in which Price, J., joins. Watkins, former President Judge, did not participate in the consideration or decision of this case.
[ 254 Pa. Super. Page 511]
This action was brought in equity seeking enforcement of a covenant not to compete executed in connection with the sale of a restaurant. The sole issue on which appeal has been taken is the measure of damages resulting from the undisputed breach of the covenant.
For approximately twenty years appellants, Foster S. Shutter and his wife Mary, owned and operated the Railroad House Restaurant in Lebanon County. In April of 1972, appellants executed a written agreement to convey to the plaintiff-appellee, Gordon Ebright, their entire restaurant business including the real estate, equipment, liquor license, and good will for a total consideration of $105,000.00. The
[ 254 Pa. Super. Page 512]
aforesaid consideration was apportioned among the various assets comprising the business. Thus, the agreement, in relevant part, stated:
"F. It is agreed that the good will covenant not to compete shall have allocated thereto a consideration of Twenty-eight Thousand Three Hundred Eighty-three Dollars ($28,383.00)."
The "good will covenant not to compete" provides:
"The Sellers agree that for a period of five (5) years, commencing from the time of settlement between the parties, they will not engage in any way, directly or indirectly, in any business competitive with the Purchaser's business within the radius encompassing Lebanon County, Pennsylvania."
In May of 1973, appellee's attorney advised appellants that he had learned they were planning to violate the restrictive covenant by opening another restaurant, and if they persisted appellee would resort to his legal remedies. Notwithstanding the restrictive covenant and the foregoing warning, in October of 1973, appellants purchased and opened the Fireside Restaurant in Lebanon County. Appellee responded by instituting the instant equity action. Following a hearing, a decree nisi was entered enjoining appellants from engaging in the restaurant business in Lebanon County. In addition, damages in the amount of $9,812.05, plus $15.55 per day for any future violations of the covenant, were assessed against appellants. From the court en banc's dismissal of appellants' exceptions pertaining to the determination and computation of damages, this appeal ensued.
The only issue before us is whether the court below employed an appropriate measure of damages in calculating the loss resulting from appellants' breach of the non-competition or restrictive covenant. In this regard, the ...