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MUSSELMAN, et al. v. THE GLASS WORKS, L.L.C., et al.



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MUSSELMAN, et al.

v.

THE GLASS WORKS, L.L.C., et
al.


September 15, 2000

Record No. 992887

PEGGY A. MUSSELMAN, EXECUTOR OF THE

ESTATE OF ROBERT C. YOUNG, ET AL.

v.

THE GLASS WORKS, L.L.C., ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE

Robert P. Doherty, Jr., Judge

Present: All the Justices


OPINION BY JUSTICE BARBARA MILANO KEENAN

In this appeal, we consider the issue whether
the death of a party to a non-competition agreement, which was
executed as part of the sale of a business, relieved the
purchaser of the business of its obligation to make payments
under the agreement.

The facts in this case are undisputed. In July
1995, The Glass Works, L.L.C. (Glass Works) entered into an Asset
Purchase Agreement (the purchase agreement) with
B & L Auto Glass & Mirror, Inc.
(B & L Auto) and its principals, Robert C. Young,
Peggy A. Musselman, and Marian L. Gray (collectively, the
sellers). Under the purchase agreement, Glass Works purchased
from the sellers, among other things, the inventory, equipment,
and business name of B & L Auto in Roanoke.
[1]

In paragraph 2 of the purchase agreement, Glass
Works agreed to pay B & L Auto a total purchase
price of $515,000. As provided in that paragraph, the purchase
price was payable as follows: $1,000 deposit, $114,000 cash at
closing, $340,000 in the form of a secured promissory note to the
sellers, and a total of $60,000 in payments to Young, Musselman,
and Gray under three non-competition agreements.

The non-competition agreements were executed at
the same time as the purchase agreement. Young agreed in his
non-competition agreement with Glass Works (the non-competition
agreement) not to engage for five years in any business similar
to that of B & L Auto as an owner, shareholder,
employee, or consultant within a 100-mile radius of Roanoke. The
non-competition agreement provided that "in consideration of
[Young's] agreements," Glass Works would pay Young $615 per
month for 60 months, for a total payment of $36,900. The
principals of Glass Works, Lury W. Goodall, Jr., Charles C.
Nimmo, and Michael E. Puckett, also executed a Guarantee
Agreement, personally guaranteeing Glass Works’ obligations under
the purchase agreement, the promissory note, and the
non-competition agreements.

After its purchase of the business in July
1995, Glass Works began making the monthly payments to Young
under the non-competition agreement. When Young died on April 18,
1998, Glass Works stopped making the payments. Musselman
qualified as executor of Young’s estate and filed this breach of
contract action against Glass Works, Goodall, Nimmo, and Puckett
(collectively, the defendants), seeking recovery of the amounts
allegedly due Young’s estate under the non-competition agreement.

Musselman alleged in her motion for judgment
that the amount due under the non-competition agreement was
"part of the purchase price" for B & L
Auto and, thus, did not abate when Young died. She also alleged
that B & L Auto agreed to "separate the value
for the Non-Competition Agreement out of the principal balance of
the [promissory] note . . . to allow [Glass Works], at
its request, to report a lower ‘notes payable’ for credit
reporting purposes."

The parties submitted the case to the trial
court on stipulated evidence. The trial court ruled that the
purchase agreement was ambiguous because its initial declaration,
that the purchase price was consideration for the sale of the
specified business assets, conflicted with the purchase
agreement’s later recitation that the purchase price included
consideration for the non-competition agreements. The trial court
concluded from this language that the parties intended
"separate contracts and separate consideration for the
non-competition agreements." The trial court held that the
non-competition agreement was a personal service contract that
terminated on Young’s death, and that no further payments were
due under the agreement. The court entered final judgment in
favor of the defendants.

On appeal, Musselman argues that the payments
due under the non-competition agreement were an integral part of
the purchase price of B & L Auto’s assets, which
effectively represented payment for the good will of the
business, and did not constitute consideration for a separate
personal service contract. She asserts that Glass Works should
not receive a lesser price for the business simply because Young
agreed to accept monthly payments under the non-competition
agreement rather than a lump sum payment. Musselman also contends
that since the non-competition agreement did not require Young to
provide any personal service to Glass Works, but simply required
him to refrain from competing with Glass Works, the agreement did
not constitute a personal service contract that terminated on his
death.

In response, the defendants contend that the
non-competition agreement was a separate, personal service
contract that required Glass Works to make payments only to
Young, rather than to B & L Auto, and that Young’s
death prevented him from fully performing the contract. The
defendants also assert that Young’s estate is not entitled to
further payment under the non-competition agreement because that
agreement did not obligate Glass Works to continue making
payments in the event of Young’s death. We disagree with the
defendants’ arguments.

When a business transaction is based on more
than one document executed by the parties, we will construe the
documents together to determine the intent of the parties. First
Am. Bank of Va. v. J.S.C. Concrete Constr., Inc.
, 259 Va. 60,
67, 523 S.E.2d 496, 500 (2000); Daugherty v. Diment, 238
Va. 520, 524, 385 S.E.2d 572, 574 (1989); American Realty
Trust v. Chase Manhattan Bank
, 222 Va. 392, 403, 281 S.E.2d
825, 830 (1981). In ascertaining the parties’ intent, we consider
the plain meaning of the language the parties used in the
documents. Pollard & Bagby, Inc. v. Pierce Arrow, L.L.C.,
258 Va. 524, 528, 521 S.E.2d 761, 763 (1999); Waynesboro
Village, L.L.C. v. BMC Properties
, 255 Va. 75, 79-80, 496
S.E.2d 64, 67 (1998).

When the terms of the parties’ documents are
clear and unambiguous, the interpretation of those terms presents
a question of law. Pollard & Bagby, 258 Va. at 528,
521 S.E.2d at 763; Gordonsville Energy, L.P. v. Virginia Elec.
& Power Co.
, 257 Va. 344, 352-53, 512 S.E.2d 811, 816
(1999). The issue whether particular documents are ambiguous is
also a question of law. Pollard & Bagby, 258 Va. at
528, 521 S.E.2d at 763; Donnelly v. Donatelli & Klein,
Inc.
, 258 Va. 171, 180, 519 S.E.2d 133, 138 (1999); Tuomala
v. Regent Univ.
, 252 Va. 368, 374, 477 S.E.2d 501, 505
(1996). Thus, on appeal, we are not bound by the trial court’s
resolution of these questions of law, and we are afforded the
same opportunity as the trial court to consider the terms of the
documents at issue. Pollard & Bagby, Inc., 258 Va. at
528, 521 S.E.2d at 763; Donnelly, 258 Va. at 180, 519
S.E.2d at 138; Gordonsville Energy, L.P., 257 Va. at
352-53, 512 S.E.2d at 816.

We conclude that the purchase agreement and the
non-competition agreement are unambiguous, and that their terms
formed an integrated business transaction in which the various
non-competition agreements effectively represented a purchase of
the business good will of B & L Auto. The language
of the purchase agreement demonstrates the integrated nature of
the purchase transaction by stating that the sum due under the
three non-competition agreements was part of the purchase price
of the business, B & L Auto. Glass Works’ payment
of $60,000 for the three non-competition agreements was referred
to specifically as part of "the purchase price for all of
the property referred to in Paragraph 1." In that paragraph,
which is entitled "Sale of Business," the
property purchased included all "inventory, equipment,
supplies, appliances, vehicles and office furniture owned by
[B & L Auto] and used in [its] business."

Our conclusion that the non-competition
agreement was an integrated part of the purchase transaction,
rather than a separate, personal service contract, also is
supported by the terms of the non-competition agreement. Those
terms did not require Young to perform any affirmative duties or
services for Glass Works after it purchased B & L
Auto. Thus, the agreement entered into by Glass Works and Young
manifested only their intent to benefit Glass Works in its
purchase of the business, and not to benefit Glass Works in
obtaining Young’s expertise or skill in the performance of
personal services related to the conduct of the business.

We find no merit in the defendants’ argument
that Glass Works is not obligated to continue performing its
duties under the non-competition agreement because the agreement
does not state that Glass Works’ duty to make payments under the
agreement would continue in the event of Young’s death. Since the
non-competition agreement represented part of the purchase price
of the business, Glass Works’ payments under the non-competition
agreement remain due as part of that purchase, which was fully
executed and was not conditioned on Young’s survival for any
period of time. If Glass Works had intended to be excused on
Young’s death from its duty to pay this particular part of the
purchase price for B & L Auto, Glass Works should
have inserted a provision to this effect in the purchase
agreement. We will not, by construction, insert a term in a
contract that the parties to the contract omitted. Lansdowne
Dev. Co. v. Xerox Realty Corp.
, 257 Va. 392, 400, 514 S.E.2d
157, 161 (1999); Hutter v. Heilmann, 252 Va. 227, 231, 475
S.E.2d 267, 270 (1996); Bridgestone/Firestone, Inc. v. Prince
William Square Assocs.
, 250 Va. 402, 407, 463 S.E.2d 661, 664
(1995).

Glass Works’ argument that Young’s death
prevented him from performing his duty of forbearance from
competition does not alter this result. It is self-evident that
Young’s death did not constitute a breach of his agreement to
refrain from competition with B & L Auto and did
not deprive Glass Works of the benefit of its bargain.

For these reasons, we will reverse the trial
court’s judgment and remand the case to the trial court for entry
of judgment in favor of Musselman, as executor of Young’s estate,
for the remaining amount due under the non-competition agreement.

Reversed and remanded.

FOOTNOTES:

[1] After the sale, B & L Auto Glass &
Mirror, Inc. changed its corporate name to Bobs, Inc.

 

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