The Keene Syndicate v. The Wichita Gas

• Decision Date: 07 May 1904
• Docket Number: 13,589
• Citation: 76 P. 834,69 Kan. 284
• Parties: THE KEENE SYNDICATE v. THE WICHITA GAS, ELECTRIC LIGHT AND POWER COMPANY
• Court: Kansas Supreme Court

76 P. 834

69 Kan. 284

THE KEENE SYNDICATE v. THE WICHITA GAS, ELECTRIC LIGHT AND POWER COMPANY

No. 13,589

Supreme Court of Kansas

May 7, 1904

Decided January, 1904.

Error from Sedgwick district court; D. M. DALE, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

CONTRACTS -- Restraint of Trade -- Lease Held Contrary to Public Policy and Void. A corporation engaged in the business of generating and furnishing electricity for public and private use leased to a rival corporation in the city, for a period of ten years, machinery and appliances used in generating electricity, obligating itself by the provisions of the lease not to engage in the business of furnishing electric light and power to public or private consumers in the city during that period, and not to dispose of any of the property, machinery or appliances retained by it, for producing or generating in that city electric light and power. Held, that the lease is in contravention of public policy, and that no action to recover rents can be maintained thereon by the lessor or its assignee.

Kos Harris, J. V. Daugherty, and Thomas B. Wall, for plaintiff in error.

Houston & Brooks, for defendant in error.

ATKINSON J. All the Justices concurring.

OPINION

ATKINSON, J.:

On the 14th day of May, 1897, the Wichita Electric Railway and Light Company, a corporation under the laws of Kansas, with its place of business at the city of Wichita, entered into a contract, or lease, in writing, with the Wichita Gas, Electric Light and Power Company, a corporation under the laws of Kansas, with its place of business at the city of Wichita. By its terms the former leased to the latter, for a period of ten years, at an annual rental of $ 3000, payable semiannually, certain machinery and appliances in the city of Wichita, adapted to, and used by the lessor for, the purpose of generating electricity for light, heat, and power. On the 20th day of March, 1900, the Keene Syndicate, a corporation, purchased of the lessor, the Wichita Electric Railway and Light Company, the property covered by the lease, and also its interest in the lease, taking a written assignment thereof. The lessee, the Wichita Gas, Electric Light and Power Company, being in default for three years' rent, in August, 1900, the Keene Syndicate, as assignee of the Wichita Electric Railway and Light Company, commenced its action in the district court of Sedgwick county to recover the rent--the amount claimed due it from the lessee. The petition of plaintiff presented seven causes of action, and attached thereto was a copy of the written lease. The first six causes of action were each a specific claim for recovery upon one of the semiannual payments of rent. Each cause of action made reference to said lease and made it a part thereof. The seventh and last cause of action in the petition was intended by plaintiff to state a cause of action upon a quantum meruit, for the use of the machinery delivered to defendant under the lease, and by defendant received and used. This last or seventh cause of action made reference to the preceding counts, adopted portions of each, and made them a part thereof, which adoption had the effect to include also in the seventh cause of action the lease attached to, and made a part of, the petition. It became thereby also an action for recovery on the lease, and not a cause of action for recovery on a quantum meruit, as was contemplated by plaintiff. Defendant filed a, demurrer to the petition, which was sustained by the court. Plaintiff elected to stand upon its petition, and judgment was entered against it for costs. Plaintiff brings error.

Does the petition on its face disclose a cause of action--a right of plaintiff to recover from defendant? It is charged by defendant that the petition discloses, the lease sued on to be against public policy and void. The district court found it to be void for that reason. It is the only question before us for determination.

The petition of plaintiff, by its averments, in addition to embodying the facts above stated with reference to location, corporate existence, the execution of the lease, the leasing of the machinery for the term and consideration mentioned, and the assigning of the lease by the lessor to plaintiff, may fairly be said also to disclose that the lessor and the lessee, at the time the lease was entered into, were rival public-utility corporations in the city of Wichita, engaged in generating and furnishing electricity for public and private use for light, heat, and power. The petition also in substance avers that the assignor of plaintiff, the Wichita Electric Railway and Light Company, had delivered to defendant all the property described in the lease and had duly performed all the conditions, agreements and stipulations in said lease to be by it performed. The lease contains the following language:

"The said first party hereby binds and obligates itself not to engage in the business of furnishing electric light and power to private or...