Rowe v. Toon
| Decision Date | 23 November 1918 |
| Docket Number | 30473 |
| Parties | F. N. ROWE, Appellee, v. L. B. TOON, Appellant |
| Court | Iowa Supreme Court |
REHEARING DENIED MARCH 20, 1919.
Appeal from Crawford District Court.--M. E. HUTCHISON, Judge.
ACTION in equity to enjoin the defendant from pursuing the practice of medicine and surgery in Crawford County, Iowa. Decree as prayed, and defendant appeals.
Affirmed.
L. H Salinger and Clement L. Welch, for appellant.
Conner & Powers, for appellee.
For some years prior to the 18th of September, 1912, the defendant, Toon, was engaged in the practice of medicine and surgery at Dow City, in Crawford County, Iowa. In July, 1912, the plaintiff, a young man who was a graduate of the medical department of the Iowa State University, and holder of a certificate of due qualification from the state board of medical examiners, came to Dow City, and entered into negotiations with Dr. Toon for the purchase of the latter's business. The parties reached an oral agreement, whereby, in consideration of the sum of $ 1,000, to be paid by the plaintiff, part down, and remainder in one or more deferred installments, the defendant would relinquish his business to the plaintiff, and retire from practice in Crawford County for a period of ten years. As plaintiff would not be ready to move to Dow City before the following September, it was also agreed that defendant should continue his practice there until plaintiff arrived, and for a period of thirty days thereafter would remain with plaintiff, introducing him to his patrons, and giving such proper assistance as he could in getting plaintiff started in the practice there. At the time of the oral agreement, plaintiff paid defendant $ 100, it being understood that a further cash payment was to be made when the plaintiff arrived in September, and the remainder at a later date. Plaintiff reached Dow City early in September; but, finding that another doctor had settled there, he complained to defendant that he was as yet without sufficient introduction to the people of the vicinity, and that his purchase of defendant's business was not likely to give him any proportionate advantage over the other stranger competing for local patronage. For the purpose of strengthening plaintiff's position in this respect, and to enable him, if practicable, to overcome or eliminate the unexpected competition, the parties agreed to enter into a nominal partnership for the period of one year, when defendant was to retire from practice in that county. It was also agreed that plaintiff would pay down the further sum of $ 200, and give defendant his promissory note for $ 700, due in one year, which sum, with the $ 100 paid in July, made up the amount of the original agreed consideration. As witnessing this agreement, the parties signed a contract, prepared and written by the defendant, as follows:
Plaintiff and defendant continued for a time occupying the same office, and to some extent practicing together, and apparently holding themselves out as partners; but there seems to have been no division of earnings, each collecting and retaining the income derived from patients to whom he was called. In the spring of 1913, and before the year had expired, defendant withdrew from Dow City and settled in Denison in the same county, where he pursued and still pursues the practice of his profession. When the note given by plaintiff was about to fall due, defendant wrote him, giving notice he would expect payment thereof. Plaintiff answered, saying that defendant had not kept his agreement, and that he (plaintiff) did not propose to buy any more "blue sky," pay him for his practice, and "still allow him to remain in the territory and carry on his practice. " To this, defendant replied that plaintiff could not expect him to live up to his contract until plaintiff paid the note; that the thing for him (plaintiff) to do was to pay the note, and he would then be in a position to enforce the contract; and that, when the note was paid, he (defendant) was prepared to leave the territory. Thereupon, plaintiff paid the note in full, since which time defendant has remained in Crawford County, and continues to practice his profession therein. The plaintiff also introduced evidence tending to show that the defendant is insolvent, and that a judgment against him for damages would be uncollectible. The defendant did not testify in his own behalf, nor did he offer any other evidence relating to the negotiations or contract between himself and the plaintiff. On this showing, the trial court found for the plaintiff, as we have already indicated.
Confining our attention to the points argued by the appellant for a reversal, they are as follows:
I. That the contract sued upon is unreasonable and oppressive in its restrictions, in that the area within which the defendant is to be excluded from the practice of medicine bears no just relation either to the practice which the defendant theretofore enjoyed or to the practice which the plaintiff could reasonably expect to acquire or obtain if left free from competition by the defendant.
That equity will refuse its aid to enforce a clearly unreasonable or oppressive contract of this nature may be admitted, but there is nothing upon the face of this particular agreement indicating that it is unreasonable or inequitable in any respect. It excludes the defendant from practice in Crawford County only. All the rest of the wide world is open to him. And even in Crawford County, the period of exclusion is limited to ten years. We cannot say, as a matter of law, that the restriction, either as to territory or to time, is unreasonable. It is not an unheard-of or very unusual thing for a well-established physician, of good repute, to enjoy a practice co-extensive with his county; and even a young physician, whose present practice is comparatively limited, both in the number of his patients and in the area in which he finds his patrons, may yet reasonably hope, if well qualified, to extend his practice much beyond the immediate vicinity of his office or home. The contract sued upon not being unreasonable on its face, plaintiff was not required to negative the existence of possible conditions rendering it void or voidable. Defendant offered no testimony tending to show that the restraint provided for by his own voluntary agreement was materially greater than was necessary for the protection of the plaintiff in the enjoyment of the fruits of his contract, and the argument that such agreement operates oppressively, or in a manner to offend against public policy, finds no support in a fair and candid reading of the terms agreed upon and reduced to writing by the defendant himself, or in the nature or effect of the prior negotiations leading up to it. This conclusion has the support of the great weight of authority, as indicated by the precedents to which we shall soon refer.
But counsel say that, while there is a class of contracts by which the seller of a business may validly agree to reasonable restrictions against his re-entry into the same business in competition with his purchaser, yet such rule is not available to defendant in this case, because the defendant's agreement not to continue practice in Crawford County "is not incident or ancillary to any other contract of lawful purchase and sale," but is "no more than a bald agreement to pay a man not to practice his profession or exercise his trade." If we understand this somewhat cryptic statement, it is to the effect that a valid contract to refrain from a lawful business or occupation, even for a limited time or in a limited territory, can be made only where it is entered into as incident to or a condition of the sale of something more substantial and tangible than the sale by a physician of his professional practice. The inference would seem to be that, unless the seller is disposing of some tangible property, like an office, or residence, or stock of instruments, medicines, or supplies, used by him in and about his business, there is nothing to support the so-called ancillary agreement to retire from his practice in that neighborhood. The position so taken cannot be successfully maintained. It is true, it is a generally recognized rule that a mere agreement to retire and refrain from a given business, and no more, is of no validity, and to sustain such a contract, it must appear that the agreement was made in support of some other agreement,--ordinarily, a sale or transfer of something which the law recognizes as property or property rights, which may be lawfully bought and sold. The purpose of such auxiliary agreement is the protection of the purchaser in the...
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