Foltz v. Struxness, 37880

• Decision Date: 28 February 1950
• Docket Number: No. 37880,37880
• Citation: 168 Kan. 714,215 P.2d 133
• Parties: FOLTZ v. STRUXNESS.
• Court: Kansas Supreme Court

Page 133

215 P.2d 133

168 Kan. 714

FOLTZ v. STRUXNESS.

No. 37880.

Supreme Court of Kansas.

Feb. 28, 1950.

Syllabus by the Court

1. The old rule as to limitations of time and space with respect to contracts involving restraint of a trade or profession has given way to the modern doctrine of reasonableness, and the real test is never whether there is any restraint but always whether the restraint is reasonable under the facts and circumstances of the particular case.

2. An agreement fairly entered into, whereby a physician and surgeon with an established practice employs a young doctor on a salary basis for one year with the understanding that in the event they fail to enter into a partnership agreement upon termination of the comployment the young doctor will not engage in the practice of medicine or surgery '* * * within a radius of 100 miles from Hutchison, Reno County, Kansas, for a period of 10 years from the date of this Agreement,' is not invalid on its face.

3. Where the territory designated in a contract, such as that mentioned in the preceding paragraph, is found to be more extensive than necessary to provide reasonable protection against professional encroachment, courts of equity have the power to reduce such territory to the extent reasonably necessary to insure the contemplated protection, to enforce the contract to that extent and to deny enforcement as to the remainder of the territory.

4. The equitable doctrine stated in the last preceding paragraph is applicable whether the territory in the form stated in the contract be divisible or indivisible.

5. It is the duty of courts to sustain the legality of contracts in whole or in part when fairly entered into, when reasonably possible to do so, rather than to seek loopholes and technical legal grounds for defeating their intended purpose.

6. Although restrictive provisions in contracts of employment must be reasonable and not such as to contravene the public welfare, the paramount public policy is that freedom to contract is not to be interfered with lightly.

7. The record in an injunction action examined, considered and held: Findings of fact made by the trial court (1) that the original contract was fairly entered into; (2) that plaintiff in good faith endeavored to negotiate a subsequent partnership agreement; and (3) other findings discussed in the opinion are supported by substantial evidence and cannot be disturbed.

8. It is further held, the judgment reducing the territory to include: '* * * the City of Hutchinson, Kansas, and within five miles from said City as now constituted, and in the hospitals or elsewhere in such space or territory * * *' rested in the sound judicial discretion of the court and, absent evidence disclosing abuse of such discretion, will not be reversed on appeal.

William D. P. Carey, of Hutchinson, argued the cause, and Donald C. Martindell, Wesley E. Brown, Edwin B. Brabets, Robert J. Gilliland, John F. Hayes, C. William Miller and Robert C. Martindell, all of Hutchinson, were with him on the briefs, for appellant.

Roy C. Davis, of Hutchinson, argued the cause, and Frank S. Hodge, Eugene A. White, Robert Y. Jones, Jr., and H. Newlin Reynolds, all of Hutchinson, were with him on the briefs, for appellee.

WEDELL, Justice.

This action was instituted to enjoin the defendant from practicing medicine and surgery by reason of alleged violation of a written contract. Plaintiff prevailed and defendant appeals.

Defendant was a young doctor from Chicago, Illinois. He was well qualified by educational training but his practice experience was limited to less than one year. He was seeking a location and contacted appellee, a physician and surgeon with a well established practice in the city of Hutchinson, through a Chicago placement agency. Appellee was sixty-nine years of age and anxious to secure a good young doctor who would relieve him of some of his heavy responsibilities. After a visit and conference with appellee at Hutchinson covering a period of a few days the following contract was executed:

'This Agreement, Made and entered into this 29th day of December, 1947, by and between J. E. Foltz, of Hutchinson, Reno County, Kansas, party of the first part and Erling Struxness, of Chicago, Cook County, Illinois, party of the second part;

'Witnesseth: Whereas both parties hereto are duly qualified, licensed and practicing physicians and surgeons, and whereas it is the mutual desire of said parties to enter into this agreement upon the terms and conditions listed below, it is now therefore agreed and covenanted by and between said parties as follows:

'The said party of the first part hereby hires and employs the said party of the second part, in the business of the said party of the first part, in the City of Hutchinson, Kansas, in the capacity of a physician and surgeon, and agrees to pay him during the time he shall remain in such employment the sum of $400.00 per month all upon the terms and conditions herein stated.

'Second party hereby covenants and agrees that he will devote his exclusive time, energy, skill and efforts as a physician and surgeon in the employ of the first party turning in any and all fees received to said first party; and further, that said second party will make all housecalls, hospital visits and will perform any and all medical services as designated for him to do by said first party.

'First party, at his sole option and provided he deems second party's services warrant such, hereby agrees to increase said second party's salary from $400.00 to $450.00 per month commencing the seventh month wherein this agreement is in effect. It is further agreed and understood that at the expiration of this Agreement, and provided that same is agreeable to both parties, the said parties hereto will enter into a partnership agreement under such terms and conditions as shall then be determined.

'It is further understood and agreed by and between the parties hereto that this Agreement may be terminated at any time by either party on giving the other one month's notice in writing; and further, that upon termination of this agreement and failure on the part of the parties hereto to agree and enter into a partnership agreement as afore-mentioned that second party will not engage in the practice of medicine or surgery within a radius of 100 miles from Hutchinson, Reno County, Kansas, for a period of 10 years from the date of this Agreement.

'This Agreement shall be for the term of one year from the date first above written unless otherwise terminated by mutual agreement of the parties hereto, or in the manner as set forth heretofore herein.

'Witness our hands the day and year first above written.' (Our italics.)

After executing the contract appellant left for Chicago, and on February 1, 1948, returned to Hutchinson and started work pursuant to the executed contract. Appellee was anxious that appellant's acquaintance and active participation in the practice should progress as rapidly as possible. Accordingly he did everything in his power to further that objective. Appellant cooperated in the same spirit. He was a good young physician and his services were very satisfactory to appellee. It appears except for matters of minor consequence the relationship was pleasant and satisfactory.

The parties started in November, 1948, to discuss terms of a proposed partnership agreement. In view of the terms of the previous contract it is unnecessary to detail the various suggestions of the respective parties relative to terms and provisions each of them sought to have incorporated in such agreement. Quite naturally each of them, as the court found, sought to protect his own interests as he viewed them. The trial court found each of them acted in good faith. The unfortunate but important fact, in view of the terms of the previous contract, is they did not agree upon the terms of the contemplated future agreement. They did not agree by December 29, 1948, or by February 1, 1949. By mutual agreement appellant remained on a salary basis while the parties continued their effort to reach an agreement. Failing in such effort appellant left appellee on March 2, 1949, and started his own practice in the city of Hutchinson. Appellee informed appellant by letter if he engaged in the practice in violation of the contract he would be obliged to seek legal redress to protect his interests. Appellant continued his practice. Being a competent young physician and having ingratiated himself with appellee's patients it was quite natural a substantial number of them should follow him. That occurred and appellee's practice suffered accordingly.

The trial court made findings covering, in substance, the foregoing facts and others which will be noted as required.

Appellant does not claim duress or fraud in the execution of the contract. He does contend the contract was not fairly and equitably entered into. This issue was sharply litigated. The trial court resolved the issue against appellant's contention. On appellate review this court is concerned only with evidence which supports the findings made and not with evidence contrary thereto. Notwithstanding this well recognized rule we have studiously examined the entire record. There is ample evidence to support the finding and conclusion of the trial court on this issue and we cannot disturb it.

Appellant argues the events in this case never brought the restrictive provision of the contract into operation. The argument is based on the theory the words, '* * * upon termination of this agreement', cannot be interpreted to mean 'upon expiration of this agreement' and that the word 'termination' can apply only in the event a thirty day notice to terminate the contract has been giver. The trial court disagreed with that interpretation. It took the position the contract, considered as a whole, was intended to mean that if the contract expired or was discontinued for any reason and no...