Vaughan v. General Outdoor Advertising Co.

• Decision Date: 03 November 1961
• Citation: 352 S.W.2d 562
• Parties: W. R. VAUGHAN et al., Appellants, v. GENERAL OUTDOOR ADVERTISING CO., Inc., Appellaee.
• Court: United States State Supreme Court — District of Kentucky

Page 562

352 S.W.2d 562

W. R. VAUGHAN et al., Appellants, v. GENERAL OUTDOOR ADVERTISING CO., Inc., Appellaee.

Court of Appeals of Kentucky.

Nov. 3, 1961.

Rehearing Denied Jan. 26, 1962.

William A. Stephenson, Sidney Hanish, Louisville, for appellants.

Henry J. Tilford, Charles W. Dobbins, Stuart E. Alexander, Louisville, for appellee.

WADDILL, Commissioner.

This is an appeal from a judgment granting appellee, General Outdoor Advertising Company, Inc., a permanent mandatory injunction requiring the removal of all outdoor advertising displays and devices which appellants, Southeastern Displays, Inc., and their agents, have caused to be erected upon a certain lot now owned by appellant Rosalie Lockard, the widow of Homer Lockard. Appellants ask for reversal of the judgment on grounds hereinafter set forth.

On June 8, 1954, appellee entered into a written lease-agreement with Homer Lockard by which appellee obtained the right to erect and maintain billboards upon an easterly portion of the southern boundary of a city lot owned in joint survivorship by Lockard and his wife, Rosalie. The primary term of the lease was five years, with the privilege of yearly renewal thereafter for five years. The lease contained a provision that:

'The lessor [Lockard] represents that he is the owner of the premises above described and has authority to make this lease, and covenants that he will not permit any adjoining premises, owned or controlled by him, to be used for advertising purposes or permit lessee's [appellee's] signs to be obstructed.'

After appellee's billboards had been erected upon the Lockard property, and on June 9, 1958, W. R. Vaughan, acting as the agent of Mary A. Vaughan who was then conducting an advertising business under the name of Southeastern Displays, entered into a lease-agreement with Homer and Rosalie Lockard, whereby Southeastern Displays was granted the privilege of erecting billboards upon a portion of the southern boundary of the Lockard lot which was not included within appellee's lease. Southeastern Displays subsequently assigned its lease to Southeastern Displays, Inc., a corporation principally operated by Mary Vaughan. Pursuant to this lease, Southeastern Displays, Inc. (hereinafter called Southeastern), erected billboards which were located west of those of appellee.

On August 4, 1958, appellee sued Southeastern, the Lockards, and the Vaughans seeking damages and an injunction requiring the removal of the billboards erected upon the Lockard property by Southeastern. The Chancellor entered a judgment granting the injunction, which was made a final and appealable judgment by a recitation as required by CR 54.02, but he reserved for further adjudication appellee's claim for damages.

Appellants contend that the restrictive covenant in appellee's lease, which limits the use of the Lockard lot for advertising purposes, is invalid because it is in restraint of trade and tends toward creating a monopoly in the outdoor advertising field. We have held that restrictive covenants in partial restraint of trade are enforceable if they are not unreasonable, i. e., they do not have a tendency to unduly restrict competition and are not inimical to the public interest. Ladd et al. v. Pittsburg Consolidation Coal Co. et al., 309 Ky. 405, 217 S.W.2d 807; Johnson v. Stumbo, 277 Ky. 301, 126 S.W.2d 165; Anderson v. Jett, 89 Ky. 375, 12 S.W. 670, 6 L.R.A. 390. The test of reasonableness ordinarily applied in cases of this character is whether the restraint, considering the situation and circumstances involved, is so extensive as to interfere with the interests of the public. 36 Am.Jur., Monopolies, etc., Sections 51 and 52. While the purpose of the covenant in question is to prevent competition in trade, yet the restriction as it here applies is so limited as to territory (a city lot) and duration (a maximum period of 10 years) that it is a legitimate restraint of the use of the Lockard lot. Vanover v. Justice, 180 Ky. 632, 203 S.W. 321, L.R.A.1918E, 662. Consequently, the Chancellor correctly found that the restrictive covenant is valid.

Appellants argue that Southeastern's lease does not violate the restrictive covenant of appellee's lease because the property leased to Southeastern does not adjoin the property leased to appellee inasmuch as the Lockards had, with appellee's consent, leased to another company a small portion of their lot lying between that leased by appellee and that subsequently leased by Southeastern. However, the mere circumstance of coexisting leases on different portions of this lot does not alter the fact that each portion adjoins the remainder of it. We are in accord with the view of the Chancellor who held that all parts of the Lockard lot constitute 'adjoining premises' within the meaning of that term.

Appellants maintain that the evidence is insufficient to support the Chancellor's finding that appellee's agents had not consented to the Lockards' leasing a portion of their lot to Southeastern. Since the appellee's agents...