Bogart v. Caldwell
66 So.2d 629, 1953 La. App. LEXIS 748 (1953)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An obligation not to do, such as a covenant not to compete tied to the sale of a business, is presumed to be a heritable obligation that benefits the heirs of the obligee unless the contract expressly states otherwise or the obligation is strictly personal in nature, meaning it is for the obligee's personal gratification and provides no financial benefit to their heirs.
Facts:
- John L. Caldwell, Sr. owned two theaters in Farmerville, Louisiana: the Strand Theater and the Union Theater.
- Caldwell sold the Strand Theater to Harry Dalton Bogart, Jr., who was married to Fannye Mae Bogart.
- The act of sale contained a clause stating that Caldwell would not operate a motion picture show in the Union Theater building "for so long as this vendee owns the property herein conveyed to him."
- The agreement further stipulated that the obligation would terminate if the vendee sold the property.
- Harry Dalton Bogart, Jr. died intestate without ever having sold the Strand Theater.
- Following her husband's death, Fannye Mae Bogart acquired full ownership of the Strand Theater through her community property interest and inheritance.
- After Harry Bogart's death, Caldwell began operating a competing motion picture show in his Union Theater building.
Procedural Posture:
- Mrs. Fannye Mae Bogart filed suit against John L. Caldwell, Sr. in a Louisiana trial court, seeking an injunction to prevent him from operating a competing theater.
- After a trial on the merits, the trial court rendered a judgment in favor of the defendant, John L. Caldwell, Sr.
- The plaintiff, Mrs. Fannye Mae Bogart, appealed the adverse judgment to the Louisiana Court of Appeal, Second Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a seller's contractual obligation not to operate a competing business, which is stipulated to last as long as the buyer owns the property, terminate upon the buyer's death, or is it a heritable obligation that passes to the buyer's heirs?
Opinions:
Majority - Gladney, J.
No. A seller's contractual obligation not to operate a competing business is a heritable obligation that passes to the buyer's heirs and does not terminate upon the buyer's death. The court reasoned that under the Louisiana Civil Code, all obligations are presumed to be heritable unless they are strictly personal. An obligation is defined as strictly personal when it is for the exclusive personal gratification of the obligee and could produce no benefit to their heirs. Here, the covenant not to compete was not for Harry Bogart's personal gratification; rather, it was a commercial agreement intended to protect the profitability and value of the theater business. This financial benefit is clearly productive for his heirs, such as his widow. Therefore, the right to enforce the non-compete agreement is a heritable right that passed to Mrs. Bogart along with the ownership of the theater.
Analysis:
This decision clarifies the distinction between personal and heritable obligations under Louisiana law, particularly within the context of commercial non-compete agreements. It establishes a strong presumption that such covenants, which are often integral to the value of a purchased business, run with the business and are not extinguished by the death of the original purchaser. The ruling protects the value of business assets for a buyer's successors, ensuring that the goodwill and market protection paid for in the purchase are not prematurely lost. For future cases, this holding requires that any intent to make a non-compete clause a strictly personal obligation must be clearly and expressly stated in the contract.
Unlock the full brief for Bogart v. Caldwell