Rakestraw v. Lanier

• Decision Date: 13 April 1898
• Citation: 30 S.E. 735,104 Ga. 188
• Parties: RAKESTRAW v. LANIER.
• Court: Georgia Supreme Court

30 S.E. 735

104 Ga. 188

RAKESTRAW v. LANIER.

Supreme Court of Georgia

April 13, 1898

Syllabus by the Court.

1. A contract in restraint of trade, unlimited as to time, and the enforcement of which literally as made would, in certain contingencies likely to arise, and which must necessarily have been in contemplation of the parties, result in needlessly oppressing one of them, without affording any corresponding benefit or protection to the other, is unreasonable, and should not be enforced.

2. Of this nature is a contract for the formation of a medical partnership to continue for 12 months, but which might be dissolved by either of its two members on 30 days' notice to the other, whereby one of them stipulates that, in consideration of the advantages and benefits that will flow to him by reason of the formation of such partnership, he "agrees that, in the event said firm shall at any time hereafter be dissolved, he will not locate or engage in the practice of medicine, surgery, or obstetrics" at a named town, or at any place within 15 miles radius of a specified drug store therein, unless he shall first have obtained the written consent of the other party to the contract.

3. A distinction exists between that class of contracts binding one to desist from the practice of a learned profession, and those which bind one who has sold out a mercantile or other kind of business, and the good will therewith connected, not to again engage in that business. In the former class there should be a reasonable limit as to time, so as to prevent the contract from operating with unnecessary harshness against the person who is to abstain from practicing his profession at a time when his so doing could in no way benefit the other contracting party. In the latter class such limit is not essential to the validity of the contract, but the restraint may be indefinite. In the case of Swanson v. Kirby, 26 S.E. 71, 98 Ga. 586, there was a purchase of property and of a business connected with the same, and necessarily the good will pertaining to that business was involved. That case therefore belongs to the latter of the above-mentioned classes, and is distinguishable from the present case, which belongs to the former.

Error from superior court, Screven county; R. L. Gamble, Judge.

Action by A. B. Lanier against Chauncey Rakestraw. Decree for plaintiff. Defendant brings error. Reversed.

A contract for the formation of a medical partnership to continue for 12 months, but which might be dissolved by either of its two members on 30 days' notice to the other, whereby one of them stipulates that, in the event said firm shall at any time be dissolved, he will not locate or engage in the practice of medicine at a named town, or at any place within 15 miles radius of a specified drug store therein, is unreasonable and should not be enforced.

The following is the official report:

On August 10, 1895, Lanier and Rakestraw, physicians residing in the town of Oliver, formed a partnership for the practice of medicine, surgery, and obstetrics. The articles of co-partnership contained, among other stipulations, the following: "In consideration of the advantages and benefits that will flow to said Rakestraw by reason of the formation of said firm and partnership business, he hereby agrees that in the event said firm shall at any time hereafter be dissolved, that he will not locate or engage in the practice of medicine, surgery, or obstetrics at said town of Oliver, or at any place within fifteen miles radius from the drug store of said Lanier unless he shall first have obtained the written consent of said Lanier. And, in the event the said Rakestraw shall violate the terms of this article, the said Lanier shall be entitled to sue and recover, as his damages, the sum of one thousand dollars annually from said Rakestraw so long as he shall violate the terms of this article; said sum of $1,000 being agreed now between the parties hereto as damages, and not as a penalty. This partnership shall continue for the space and term of twelve months from the date when signed by the parties hereto, unless sooner dissolved. This partnership may be dissolved by either member giving to the other, in writing, a notice of his intention to withdraw from the partnership; and, at the expiration of thirty days from the service of such notice by either member on the other, said firm shall be dissolved." On June 3, 1896, Lanier wrote to Rakestraw as follows: "Under the provisions of our contract, a thirty-days notice is required to dissolve the same; and you are hereby notified that, on the third day of July next, you may consider the contract between us in the practice of medicine ended. This will enable you to make all collections of your one-third interest in all accounts now on our books, or what may become due within thirty days, at which time I shall expect a partner in the practice here. If you desire, you can fully withdraw from all the office practice and drug-store duties from date. I shall expect to abide by the contract in the letter and in the spirit in which it was written." The partnership was accordingly dissolved. After the dissolution, Rakestraw continued to reside in the town of Oliver, and to practice medicine surgery, and obstetrics therein, and within the radius of 15 miles referred to in the contract. On September 18, 1897 Lanier wrote to Rakestraw, at Oliver, as follows: "Under our contract, you are now due me $1,000, which you will pay at once, or discontinue practice in this place." Rakestraw refused to comply with this demand; and on October 26, 1897, Lanier brought to the superior court his petition, setting out the foregoing facts, and alleging that Rakestraw was still engaged in the practice of medicine, surgery, and obstetrics in the locality mentioned, contrary to his contract, in violation of equity and good conscience, and in fraud and damage of petitioner; that by reason of this breach of the contract, and under the express terms thereof, defendant became indebted to him in the sum of $1,000 at the expiration of the year from the date of the dissolution, and is still so indebted; that defendant is hopelessly insolvent; that petitioner has no adequate remedy at law; and that the injury complained of is continuing in its nature, and will necessitate a suit at the expiration of each year, and by reason of the bad faith of the defendant, and the nature of petitioner's business, his age, and his circumstances, the injury is irreparable in damages. Waiving discovery, he prayed a judgment against defendant for $1,000, a perpetual injunction, and, until the final hearing, a temporary injunction, restraining the defendant from engaging in the practice of medicine, surgery, or obstetrics at the town of Oliver, or any place within a radius of fifteen miles from the drug store of petitioner, unless he shall have first obtained the written consent of petitioner. The defendant demurred and answered, and, at the hearing of the application for temporary injunction, urged that the petition set forth no ground for injunction or other relief against him; that the stipulation in the contract upon which the petition was based is against public policy and illegal, and is not valid or enforceable against the defendant; that it is not a reasonable or proper stipulation, within the meaning of the requirements of the law, and is unjust, unfair, and against good conscience; that it is without sufficient consideration to support it, and is lacking in mutuality, and does not put the plaintiff under such obligation as would make the agreement of the defendant valid and binding; and, further, that, under the facts, the plaintiff was not entitled to the injunction or other relief. Defendant denied that he had acted in bad faith, or was inflicting any legal injury upon the plaintiff. He denied that he was hopelessly insolvent, but admitted that his assets, which consisted of personal property only, would not, if sold at public outcry, net more than enough to pay what he owed. He alleged: Before signing the agreement, plaintiff called his attention to the stipulation in question, and said that it had been put in by the lawyer as a matter of form, and that he (plaintiff) doubted its legality, and gave defendant to understand that he need not apprehend its enforcement. Before the agreement was entered into, certain residents of the town of Oliver had advertised in the newspaper that a physician was needed in the town, and plaintiff, understanding that defendant might locate in Oliver, induced him to sign the contract, with the purpose of thereby getting rid of defendant's competition. This purpose was fraudulent, and vitiated the contract, if otherwise legal. During the continuance of the partnership, and before any notice of dissolution was given, plaintiff so conducted himself with reference to the defendant as to deprive him of the possibility of gaining any advantage from the association, and made the partnership the means of injuring and damaging defendant, and of efforts to blast his good name and prospects.

Plaintiff before the notice, circulated reports which were untrue and unfounded, reflecting grossly upon the character and life of defendant, and which are set out in the answer. Plaintiff did not comply with his obligations under the contract. He declined upon different occasions to practice with defendant, declined to recognize notes addressed to the firm in the firm name, and announced that he would not notice any request for a visit that was not addressed to him personally. While the co-partnership continued, plaintiff announced that he intended to ruin defendant, and would drive him out of the country. As to these allegations the evidence at the hearing was...