Janet Realty Corp. v. Hoffman's, Inc.

• Decision Date: 23 December 1943
• Citation: 17 So.2d 114,154 Fla. 144
• Court: Florida Supreme Court
• Parties: JANET REALTY CORPORATION v. HOFFMAN'S, Inc.

17 So.2d 114

154 Fla. 144

JANET REALTY CORPORATION v. HOFFMAN'S, Inc.

Florida Supreme Court

December 23, 1943

On Rehearing Feb 29, 1944.

Further Rehearing Denied March 31, 1944.

Redfearn & Ferrell, of Miami, for petitioner.

Simonhoff &amp Simonhoff and Ward & Ward, all of Miami, for respondent.

PER CURIAM.

Certiorari is denied on authority of Jack Davis, trading and doing business as Jack Davis Motors, Petitioner, v. First National Bank of Miami, at Miami, Florida, Respondent, decided Nov. 22, 1943. ^[1]

BUFORD, C. J., and BROWN, THOMAS, and SEBRING, JJ., concur.

TERRELL and CHAPMAN, JJ., dissent.

On Rehearing Granted.

CHAPMAN, Justice.

On January 6, 1943 the Civil Court of Record of Dade County, Florida, sustained a motion to strike a plea to an action on a promissory note and accordingly entered a judgment for the plaintiff. An appeal therefrom was perfected to the Circuit Court, and after counsel was heard, an order of reversal was entered, thereby holding that the stricken plea constituted a good defense to the aforesaid action. The original plaintiff, by petition for a statutory writ of certiorari filed here, contends that the order of reversal as entered by the Circuit Court of Dade County was erroneous and should be quashed.

The stricken plea alleged, in substance, that the plaintiff below owned described real estate situated in Miami Beach and located within about one block of a cafeteria or restaurant owned and operated by the defendant; the plaintiff contemplated the construction of a building on these premises and the operation of a cafeteria or restaurant (or the leasing of the property to a tenant for the construction or operation of a cafeteria or restaurant), which, if carried out, according to plans, would ultimately result in competition to the cafeteria or restaurant business of the defendant.

On April 22, 1941, the parties effected an agreement, reduced it to writing, and signed the same. The terms of the written agreement restricted the use of the described land from date thereof until September 1, 1945. The consideration for the instrument was $8,900. The sum of $2,900 was paid in cash and the residue represented by four promissory notes. The first for $1,500 matured on or before January 15, 1943; the second for $1,000 matured April 15, 1942; the third for $2,000 matured January 15, 1943; and the fourth for $1,500 matured January 15, 1944. The first note on its maturity was paid, and this suit was filed to enforce the payment of the second maturing note.

The consideration of the notes was that the payee and owner of the real estate, between the dates of April 22, 1941, and September 1, 1945, would not directly, or indirectly, operate, engage in or construct a cafeteria or restaurant on the described land, nor would it enter into a lease of the property to any tenant during the period for the construction and operation of a cafeteria or restaurant, and the owner of the land agreed, if the property was sold and conveyed during the period, the owner would place in the deed of conveyance a restrictive clause to the effect that the grantee in the proposed deed, if any, could not or would not be permitted to use the described property for cafeteria, restaurant or eating purposes until after September 1, 1945. Attached to the plea was a copy of the written instrument and by appropriate language made a part of the stricken plea.

The question presented for a decision by the record is whether or not the written agreement, supra, entered into between the parties, is void and unenforceable on the theory that it is in restraint of trade and contrary to public policy? The validity or invalidity of an agreement that in operation tends to restrain trade or to monopolize is in general determined by the elements of whether it is or is not injurious to the public. If injurious in any perceptible degree to any considerable portion of the public, the agreement is contrary to public policy and will not be enforced. If not injurious to the public, it may be enforced. See Stewart v. Stearns & Culver Lbr. Co., 56 Fla. 570, 48 So. 19, 24 L.R.A.,N.S., 649. Public policy favors competition in trade and opposes unreasonable restraints on useful commodities when the public welfare is injuriously affected.

Courts indulge the presumption that all contracts are lawful and if illegality exists it must be alleged and proven. Contracts existing between parties, generally, where no attempt is made to limit production, fix prices, or control commodities, are valid and enforceable. See Lee v. Clearwater Growers' Ass'n, 93 Fla. 214, 111 So. 722.

Contracts entered into between parties, having as their objectives the removal of a rival competitor in a business, are not to be regarded as contracts in restraint of trade, because they do not close the field of competition but affect only the parties to the agreement. See Massari v. Salciccia, 102 Fla. 847, 136 So. 552; Love v. Miami Laundry Co., 118 Fla. 137, 160 So. 32; Ericson v. Jayette, 149 Fla. 82, 5 So.2d 453; Wilson v. Pigue, 151 Fla. 734, 10 So.2d 561.

The facts in the case at bar can or may be distinguished from similar cases considered by this Court. We have here the owner of land by contract stipulating that the described land for a period of approximately four and one-half years shall not be used as a site for the location of a cafeteria or restaurant. If the property is sold by the owner during the period, the deed or conveyance shall contain the restrictive covenant and for this four and one-half year agreement the consideration is $8,900.

Williston on Contracts, Vol. 5, Rev.Ed., par. 1642, pp. 4602-4606, states the rule, viz:

'1642. Sale or Lease of Property with Restrictive Covenant,--The seller or lessor of property as distinguished from a business or good will may by a restrictive promise reasonably limited agree to refrain from himself engaging in a business or from disposing of his property in such a way that others can engage in a business which would impair the value of the property to the buyer for the purpose for which he intended to use it, or from selling other property remaining in his hands at a price which would depreciate the value of the buyer's purchase. Similarly, a buyer may make a reasonable contract restricting himself from using the property which he has bought in a way which would compete with the seller, or be obnoxious to him. Restriction upon the use of real property for stated purposes is considered less likely to affect the public interest than restraint of the activities of individuals, and accordingly such covenants are usually held not contrary to public policy. The seller of real estate may reserve an easement or he may bind the buyer by a contract, which will not create an easement in the land, to refrain from using his ownership in certain ways; as, for instance, in selling intoxicating liquors. The grantor may stipulate that the land shall not be occupied by certain social groups, or that it shall be used only as a residence.

'The only limits imposed by the law on the owner of property restricting his power to exact contracts from a subsequent purchaser to refrain from using the property in a certain way are those imposed by public policy, and though public policy forbids unreasonable restraint of trade, and therefor forbids a system of contracts attempting to control prices on resale, there seems no reason why it should prohibit contracts which reasonably protect a business of either buyer or seller without tending to affect the public injuriously by monopoly or enhancement of prices. * * * Where the effect of a covenant is for a short time and narrowly limited in space and will not produce a monopoly, its provisions for exclusive dealing are not objectionable. Thus, a covenant by a lessee to sell no beer, except that of a particular brewer, has also been upheld.

'A few late cases have upheld a bargain to restrict the use of certain property so that it should not compete with the promissee's business, although the bargain was not ancillary to a sale or a lease of any property. By the usual tests, such a bargain is in unlawful restraint of trade, since it does not protect any interest passing from the promisor to the promisee. The theory supporting these cases is that the bargain is limited to certain specified property and is not as likely to injure the public as restraints upon persons in the exercise of their trades and profession. * * *'

See 17 C.J.S., Contracts, § 238, pp. 622, 623; § 247, pp. 630, 631; § 249, pp. 632, 633; § 250, pp. 633, 634; Rubel Bros., Inc., v. DuMont Coal & Ice Co., 200 A.D. 135, 192 N.Y.S. 705; Vanover v. Justice, 180 Ky. 632, 203 S.W. 321, L.R.A.1918E, 662; Lumbermen's Trust Co. v. Title Ins. & Inv. Co., 9 Cir., 248 F. 212; Leslie v. Lorillard, 110 N.Y. 519, 18 N.E. 363, 1 L.R.A. 456; Georgia Fruit Exchange v. Turnipseed, 9 Ala.App. 123, 62 So. 542; Kandis v. Pusch, 86 Ind.App. 246, 155 N.E. 618.

A restrictive clause in a deed to the effect that no intoxicating liquors shall be manufactured or sold on the described premises has been sustained. See Cowell v. Springs Co., 100 U.S 55, 25 L.Ed. 547. Restrictive covenants upon a described piece of real estate for reasonable purposes and a reasonable length of time do not violate public policy. See Dick v. Sears-Roebuck & Co., 115 Conn. 122, 160 A. 432. A contract by the owner of a theatre building based upon a valuable consideration by the terms of which the building is not being used as a show house or auditorium is not in restraint of trade. See Robey v....