Jos. Guidone's Food Palace, Inc. v. Palace Pharmacy, Inc., 369S57

• Decision Date: 27 June 1969
• Docket Number: No. 369S57,369S57
• Citation: 248 N.E.2d 354,252 Ind. 400
• Parties: JOS. GUIDONE'S FOOD PALACE, INC., Appellant, v. PALACE PHARMACY, INC., and Gardner and Guidone, Inc., Appellees.
• Court: Indiana Supreme Court

Page 354

248 N.E.2d 354

252 Ind. 400

JOS. GUIDONE'S FOOD PALACE, INC., Appellant, v. PALACE PHARMACY, INC., and Gardner and Guidone, Inc., Appellees.

No. 369S57.

Supreme Court of Indiana.

June 27, 1969.

Alan H. Lobley, Ice, Miller, Donadio & Ryan, Indianapolis, for appellant.

Forrest D. Rau, Indianapolis, for appellees

ARTERBURN, Judge.

This action was brought by plaintiff-appellee, ¹ who was a lessee in a small Indianapolis shopping center against the lessor, Gardner and Guidone, Inc. and another lessee, appellant, to enjoin alleged violations by the appellant of the covenants in restraint of trade contained in the leases. The trial court granted the appellee a temporary injunction pending the trial of this cause. From this order, the appellant appeals.

The evidence shows that on September 1, 1965, Palace Pharmacy entered into a ten year lease with Gardner and Guidone, Inc., which lease contained the following provision:

'Lessee agrees that during the term of this lease or any renewal thereof they shall not at any time have for sale any food or related grocery or meat products, and Lessor agrees not to permit the sale of drugs or cosmetics by others on their premises.' (Our emphasis)

Under this lease Palace Pharmacy began operating as a retail drug store in March, 1966, which operations have continued to the present time.

Jos. Guidone's Food Palace, Inc. (herein referred to as Appellant) was originally owned by the same Joseph Guidone who was connected with Gardner and Guidone, Inc. The grocery store entered into their lease on October 9, 1965 and commenced business in March, 1966. Guidone sold his stock in the grocery store to Scot Lad Foods, Inc. in October, 1967. A subsequent lease was entered into October 25, 1967 for a term of fifteen years. The lease contained the following provision:

'CONDUCT OF BUSINESS BY LESSEE

'SECTION 3.01. Use of Premises.

Lessee shall have the right to use the Leased Premises for the purpose of operating a food store and supermarket on an exclusive basis within the shopping center of which the Leased Premises are a part and for the storage of materials used in the operation of said food store and supermarket; and for the sale of health and beauty aids, when not inconsistent with leases in effect at the date hereof between Lessor and other tenants of the shopping center of which the Leased Premises are a part. In addition, Lessee shall have the right to use the Leased Premises for any lawful use; provided, however, that Lessee shall not use said Leased Premises for the operation of a business which would be substantially similar to a business then being operated by another tenant in the shopping center of which the Leased Premises are a part. A 'food store', as used in this paragraph shall not be construed to include a restaurant, ice cream store or related business' where food is sold for consumption or carry-out in a cooked form.' (Our emphasis)

The Appellant admitted in the trial court that it had knowledge of the lease between Palace Pharmacy, Inc. and Gardner and Guidone, Inc. at the time the lease was executed on October 26, 1967.

In February, 1968, after the sale of the grocery store by Guidone to Scot Lad, the management of the Food Place installed a section of 'health and beauty' aids. These items included: Shampoos, hair sprays, tooth-paste, mouthwashes, denture preparations, shave creams, after shave and preshave items, hemorrhoid preparations, antiseptics, anti-acids, analgesics, cold preparations, razor blades, alcohol, band aids, deodorants, skin preparations, laxatives, sedative items, douche powders and hair bleaching preparations. The manager of the Palace Pharmacy testified that following the incorporation of these items by the Food Palace there was a decline in the increasing volume of sales of the Palace Pharmacy. The manager also testified that there was no change at this time in his method of doing business in the drug store.

Appellant admits selling the items but contends the items come under the heading of 'the sale of health and beauty aids', and not in the category of 'drugs and cosmetics'. To support its contention, the Appellant cites Carroll Perfumers, Inc. v. State (1937), 212 Ind. 455, 7 N.E.2d 970. We think that case is distinguishable from the one presently before us. Carroll Perfumers, Inc., supra, was concerned with what constituted a drug store, as defined by statute. It was necessary to arrive at this determination in order to answer the question of whether a license from the State Board of Pharmacy was required. The opinion is concerned only with the definition of drug store under a specific act. The opinion does not say that 'Patent or Proprietary Medicines' are not drugs, only that the Act (Burns' § 63--1201 et seq.) did not require that a license be obtained in order to sell such merchandise. In this connection it is interesting to note that in various statutory provisions, the term 'drug or medicine' has been construed to include aspirin, laxatives, tincture of iodine, spirits of camphor, and tincture of arnica. 25 Am.Jur., Drugs, Narcotics, and Poisons, § 1, p. 284.

We feel that the definition given to the word 'drugs' as used in the lease, should not be limited to a statutory definition embraced in the case of Carroll Perfumers, Inc. v. State, supra, but rather given the ordinary and broader generic meaning of the term.

'A drug is a substance that is used as a medicine. As was said in State v. Baker, 229 N.C. 73, 48 S.E.2d 61, 66: '* * * a 'drug' is any substance used as a medicine or in composition of medicines for internal or external use, and a 'medicine' is any substance or preparation used in treating disease. (Citing cases and authorities). Hence, the term 'drugs' embraces patent or proprietary remedies possessing or reputed to possess curative or remedial properties sold and used for medicines. This is true irrespective of whether such remedies contain poisonous ingredients or whether they may be purchased without any direction from a physician, or whether they can be obtained at retail stores generally. Calling drugs domestic or family remedies does not rob them of their character as medicines. * * * The test is whether it is administered or employed as a medicine. * * * " Kelly v. Carroll (1950) 36 Wash.2d 482, 219 P.2d 79, 83, 19 A.L.R.2d 1174.

The Appellant uses the case of Mennen Co. v. Kelly, 137 F.2d 866 (3rd Cir. 1942) to define cosmetics. An examination of that case, however, shows that it was concerned only with whether Mennen Antiseptic Oil was a cosmetic within the meaning of the Revenue Act taxing cosmetics. The definition...