This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A contract not to compete in business, if valid, is broken by engaging in such business at such place ;1 or by his manufacturing the medical preparation in which he has agreed not to compete, under another name, claiming it to be superior to that sold before.2 To constitute such breach, the new business need not be carried on in the name of the party who has agreed not to compete. If a corporation which he has organized and in which he is a stockholder3 or a partnership of which he is a member,4 competes in such business, the contract is broken. So breach exists if he holds himself out as a partner in a firm, though he is not one in fact;5 or if he acts as managing agent,6 or as salesman,7 as in a contract not to compete as barber.8 A contract not to act as employe for any share of the proceeds, interest in the business or compensation based on sales is not broken by working in such business as employe on a salary.9 If a partnership agrees not to engage in a certain business, such contract is broken if one of its members so engages.10 A contract not to compete is not broken by engaging in a different though closely allied business ;11 nor by making a contract to engage in such business after the time shall expire during which he was not to compete ;12 nor by assisting his wife to start in the same business with her own money ;13 nor by the act of unauthorized parties who sell his goods within the territory covered by the contract not to compete.14 A contract not to engage in business as long as A is in such business ends when A organizes a corporation and sells his business to it ;15 but it does not end if the corporation is merely nominal, and A owns all the stock and controls the business.10 If A agrees with B not to engage in a certain business, such contract is not discharged by the fact that A and B subsequently form a partnership, the property of which is on dissolution to belong to whichever of them bids the most for it.1' A sale of the good will of a business is broken by the vendor's soliciting the business of his old customers,18 or by using the former trade name, even if it is his own.19 A contract not to compete in abstracting public records is not broken by doing the clerical work of making an uncertified and unexamined copy of another abstract.20
1 Hansen v. Storage Co., 86 Fed. 832; Withers v. Moore (Cal.), 71 Pac. 697; Lassing v. James. 107 Cal. 348; 40 Pac. 534; Lake Shore, etc.. Co. v. Richards. 152 111. 59; 30 L. R. A. 33; 38 N. E. 773; Graves v. Gas Co.. 83 la. 714; 50 N. W. 283; Hunter v. Holmes. 60 Minn. 496; 62 X. W. 1131; Swobe v. Electric Light Co., 39 Neb. 586; 58 N. W. 181: Gage v. Fisher. 5 N. D. 297; 31 L. R. A. 557; 65 N. W. 809.
2 Hunter v. Holmes. 60 Minn. 496; 62 X. W. 1131.
3 Winfield v. Water Co., 51 Kan. 70; 32 Pac. 663.
4 Lassing v. James. 107 Cal. 348; 40 Pac. 534.
5 Withers v. Moore (Cal.). 71 Pac. 697.
1 Nelson v. Hiatt. 38 Neb. 478; 56 N. W. 1029; Cowan v. Fair-brother. 118 X. C. 406; 54 Am. St. Rep 733; 32 L. R. A. 829; 24 S-E. 212.
2 Gregory v. Spicker, 110 Cal. 150; 52 Am. St. Rep. 70; 42 Pac. 576.
3 Kramer v. Old, 119 N. C. 1; 56 Am. St. Rep. 650; 34 L. R. A. 389; 25 S. E. 813.
4 Borley v. McDonald, 69 Vt. 309; 38 Atl. 60.
5 Daniels v. Brodie, 54 Ark. 216; 11 L. R. A. 81; 15 S. W. 467.
6 King v. Fountain, 126 N. C. 196; 35 S. E. 427.
7 McCausland v. Hill, 23 Ont. App. 738. See to the same effect, in ease of agent Meyers v. Merril-lion, 118 Cal. 352; 50 Pac. 662.
8 Pohlman v. Dawson, 63 Kan. 471; 88 Am. St. Rep. 249; 54 L. R. A. 913; 65 Pac. 689.
9 Haley Grocery Co. v. Haley, 8 Wash. 75; 35 Pac. 595.
10 Love v. Stidham, 18 App. D. C. 306; 53 L. R. A. 397. Contra, Streichen v. Fehleisen, 112 la. 612; 84 N. W. 715; sub nomine Steichen v. Fehleisen, 51 L. R. A. 412.
11 Breck v. Ringler, 129 N. Y. 656; 29 N. E. 833. (Contract not to engage in zinc etching not broken by engaging in electrotyping and stereotyping and occasionally buying a zinc etching.)
12 Southland, etc., Co. v. Nelson (1898), A. C. 442.
13 Smith v. Hancock (1804). 2 Ch. 377.
14 Dr. Harter Medicine Co. v. Hopkins, 83 Wis. 309; 53 N. W. 501.