Kochenrath v. Christman

• Decision Date: 31 May 1918
• Citation: 180 Ky. 799,203 S.W. 738
• Parties: KOCHENRATH v. CHRISTMAN.
• Court: Kentucky Court of Appeals

203 S.W. 738

180 Ky. 799

KOCHENRATH v. CHRISTMAN.

Court of Appeals of Kentucky.

May 31, 1918

Appeal from Circuit Court, Oldham County.

Suit by Charles A. Kochenrath against Otto W. Christman. From the judgment for defendant on his counterclaim, plaintiff appeals. Affirmed.

E. B Beard, of Shelbyville, and Edwards, Ogden & Peak, of Louisville, for appellant.

Willis Todd & Bond, of Shelbyville, and W. V. Bulleit, of New Albany, Ind., for appellee.

CLAY C.

Prior to January 1, 1912, Chas. A. Kochenrath was conducting in the city of New Albany, Ind., the business of a wholesale and retail liquor dealer under the name of the City Bottling Works. Besides beer and whisky he sold mineral water temperance beer, dry beer, etc. The greater portion of his business was what is known as mail order business. On January 17, 1912, Kochenrath by a written contract which became effective January 1, 1912, sold and conveyed his business to Otto W. Christman for a large consideration, a part of which was represented by a note for $4,000 secured by a mortgage on real estate located in Shelbyville, Ky. By the contract in question, Kochenrath obligated himself not to engage directly or indirectly in the manufacture or sale, either wholesale or retail, of spirituous, vinous, malt liquors, mineral water, kolas, temperance beer, dry beer, etc., in any portion of the state of Indiana for a period of five years. A few months later Kochenrath violated his contract by engaging in the same business in the city of New Albany under the name of the Crescent Liquor Company.

In the year 1914 Kochenrath brought suit against Christman in the Shelbyville circuit court to collect the note for $4,000 subject to a credit of $1,000, paid September 8, 1912, and to enforce his mortgage lien. Christman interposed a counterclaim for damages in the sum of $10,000, based on Kochenrath's violation of the contract of sale. After proof had been taken by deposition and the case had dragged along for about three years, Kochenrath dismissed his petition without prejudice, and asked a transfer of the action to the common-law docket for the trial of the issue of damages. This motion was overruled, and the case then submitted. The court held as a matter of law that the contract was valid, and had been violated by plaintiff. It further held as a matter of fact that defendant had been damaged in the sum of $4,000 by the violation of the contract. Judgment was entered accordingly, and Kochenrath appeals.

It will be observed that by the agreement in controversy the seller disposed of the entire business, and that the restraint imposed is ancillary to the contract of sale, and therefore the contract falls within the rule that the restraint imposed must be incident to, and in support of, another contract or sale in which the purchaser acquires some interest in the business needing protection. 13 C.J. 477; Barrone v Moseley, 144 Ky. 698, 139 S.W. 869; Nickell v. Johnson, 162 Ky. 520, 172 S.W. 938. It will also be observed that the restraint is limited both as to time and place. Hence the only question to be determined is whether the restraint is no more than is reasonably necessary for the protection of the business transferred, and is not so large as to interfere with the interest of the public. 13 C.J. 475, 476; Linneman v. Allison, 142 Ky. 309, 134 S.W. 134. At one time it was the rule in certain jurisdictions that an agreement not to carry on a business anywhere within a state was invalid (More v. Bonnet, 40 Cal. 251, 6 Am.Rep. 621; Taylor v. Blanchard, 13 Allen [Mass.] 370, 90 Am.Dec. 203; Lawrence v. Kidder, 10 Barb. [ N. Y.] 641); but in the later cases this doctrine has been rejected (13 C.J. 472; Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 22 L.Ed. 315; Beal v. Chase, 31 Mich. 490; National Ben. Co. v. Union Hospital Co., 45 Minn. 272, 47 N.W. 806, 11 L.R.A. 437; Diamond Match Co. v. Roeber, 106 N.Y. 473, 13 N.E. 419, 60 Am.Rep. 464; Cowan v. Fairbrother, 118 N.C. 406, 24 S.E. 212, 32 L.R.A. 829, 54 Am.St.Rep. 733; Herreshoff v. Boutineau, 17 R.I. 3, 19 A. 712, 8 L.R.A. 469, 33 Am.St.Rep. 850). Furthermore, the nature of the business restrained has an important bearing on the question of reasonableness. 13 C.J. 475; American Brake Beam Co. v. Pungs, 141 F. 923, 73 C.C.A. 157. Following this rule, it was held that an agreement not to carry on the liquor business was valid on the ground that the business was not a trade to be encouraged. Harrison v. Lockhart, 25 Ind. 112. Indeed it has also been held that a combination of persons and firms in a city for the control of beer and the cessation of competition inter se was not void at common law as against public policy, although in restraint of trade, on the ground that beer is not an article of prime necessity, and its sale is closely restricted by public policy. Anheuser-Busch Brewing Ass'n v. Houck (Tex. Civ. App.) 27 S.W. 692. Here, to, plaintiff was engaged in selling liquor a business not favored by the law. He had an extensive trade covering a large portion of the state of Indiana. The business was conducted by mail orders received at New Albany, his place of business. Because of this feature, plaintiff could have conducted the same business successfully at any other point in the State, had it not been...