Beam v. Rutledge

• Decision Date: 08 June 1940
• Docket Number: 672.
• Citation: 9 S.E.2d 476,217 N.C. 670
• Parties: BEAM v. RUTLEDGE.
• Court: North Carolina Supreme Court

9 S.E.2d 476

217 N.C. 670

BEAM v. RUTLEDGE.

No. 672.

Supreme Court of North Carolina

June 8, 1940

Civil action to enjoin the defendant from engaging in the practice of medicine in restricted territory for limited time in violation of agreement with the plaintiff.

The plaintiff is a physician--ear, eye, nose and throat specialist--and has practiced his profession for more than twenty-five years in Robeson County, this State. He has a large and lucrative practice, well established and covers a wide territory. On or about the 1st of May, 1938, the defendant came to Lumberton and was employed as an assistant in the office of the plaintiff at a salary of $75 a week, with the understanding that if the employment proved unsatisfactory, the defendant "was not to practice medicine in Lumberton, or within 100 miles thereof for a period of five years after the employment ceased". About a year later, plaintiff and defendant, at the solicitation of the latter, formed a partnership for the practice of their profession under an agreement containing provision for division of profits, etc., with stipulation that either might dissolve the partnership on ninety days' written notice. The firm name and style was to be "Beam and Rutledge".

The following clause in the partnership agreement is the one here in controversy: "In the event of a dissolution of the copartnership herein created, it is agreed by Dr. H. M Rutledge, one of the partners, that he will not engage in the practice of the profession of medicine in the Town of Lumberton, Robeson County, North Carolina, or within 100 miles of said Town of Lumberton, Robeson County, North Carolina, for a period of five years from the date of said dissolution."

It is admitted that upon written notice the partnership was dissolved on January 23, 1940, and that, thereafter, in disregard of the above covenant, the defendant opened an office in the Town of Lumberton for the practice of medicine limited to the diseases of the ear, eye, nose and throat. Both plaintiff and defendant had limited their practice to this field of medicine.

This action was brought to enforce compliance with the terms of the partnership agreement.

Order to show cause was duly issued, and upon return thereof, the defendant was restrained from engaging in the practice of medicine in the Town of Lumberton, or within 100 miles thereof, until the final hearing of the cause on its merits.

From the signing of this order, the defendant appeals.

McLean & Stacy, L. J. Huntley, Jr., and Varser, McIntyre & Henry, all of Lumberton, for plaintiff-appellee.

McKinnon, Nance & Seawell, of Lumberton, for defendant-appellant.

STACY Chief Justice.

The case, as presently presented, turns on the validity of the defendant's agreement not to engage in the practice of medicine in the Town of Lumberton, or within 100 miles thereof, for a period of five years following the dissolution of the partnership between himself and the plaintiff.

There being no request to find the facts, and no challenge to any fact found, it will be presumed that the court found sufficient facts to support the judgment. Wood v. Woodbury & Pace, 217 N.C. 356, 8 S.E.2d 240; McCune v. Mfg. Co., 217 N.C. 351, 8 S.E.2d 219. The case then comes to the single question whether the restrictive covenant in the partnership agreement is valid and enforceable under the law of this State. It would seem that an affirmative answer was adumbrated in the cases of Scott v. Gillis, 197 N.C. 223, 148 S.E. 315, and Hauser v. Harding, 126 N.C. 295, 35 S.E. 586.

In Teague v. Schaub, 133 N.C. 458, 45 S.E. 762, a restrictive covenant in a contract between physicians was not upheld because of its indefiniteness. Even so, two members of the Court thought otherwise and expressed their views in a strong dissent. Here, there is no doubt as to the meaning of the stipulation. It is clear and unambiguous.

Speaking to a similar situation in Butler v. Burleson, 16 Vt. 176, it was said: "This contract is not forbidden by any principle of policy or law. Dr. Burleson can be as useful to the public at any other town as at Berkshire, and the lives and health of persons in other villages are as important as they are there. Communities are, therefore, not injured by any stipulation of this kind between two practicing and eminent physicians".

The application of two principles are here involved: freedom to contract and public policy. The plaintiff invokes the one; the defendant the other.

The parties evidently thought the plaintiff had a legitimate interest to protect when the agreement was signed. They so stipulated. And he did. The existence of such an interest is the first thing to look for in passing upon the validity of a restrictive covenant. Its presence is essential to make it enforceable in equity. Williams v. Thomson, 143 Minn. 454, 174 N.W. 307. This right of the parties to say upon what terms and conditions they are willing to form a partnership, or to enter into a contract of the character here disclosed, is not to be lightly abridged. Indeed, it is no small part of the liberty of the citizen. Adkins v....