123 Ky. 178 | Ky. Ct. App. | 1906
Opinion by
Reversing.
This action was instituted upon a writing which reads as follows: ‘ ‘ This agreement entered into this 12th day of July, 1904, by and between W. W. Meadows, of the New Meadows Hotel, and Clemons & Wade Bros., of the Usona Hotel, both of Fulton, Ky., witnesseth: That for a period of three years from date hereof W. W. Meadows, who agrees to close and keep closed his hotel, known as the ‘New Meadows Hotel,’ reserving to himself the right to rent th'e same for offices of all kind and description, and also to all roomers for one week or more, when opportunity may occur. That for and in consideration of the aforesaid elimination of the New Meadows Hotel as a factor in the hotel situation for the time named, of Fulton, Ky., Clemons & Wade Bros, agree to pay in advance to W. W. Meadows one hundred dollars cash, and one hundred dollars additional on the 12th day of each succeeding month for three years from this date. It is agreed by both parties that, should any rush of patronage greater than the Usona Hotel can accommodate occur, W, W. Meadows agrees to entertain, for lodging only, any and all guests sent to him by Clemons & Wade Bros., and to receive therefor as compensation 50 per cent, of any revenue derived therefrom. It is further agreed that the price for said lodging shall never be less than $1 per person. However, it is agreed and understood that absence from home or any other good reason shall be suf
Tke appellants claim tkat tke contract is not enforceable, and tkat tkey-cannot be required to .pay tke sums of money tkerein stipulated to be paid, because tke contract is against public policy and without consideration. It is averred in the answer that at the time of the execution of the contract Pulton was a town of 5,000 inhabitants; tkat it was situated at tke crossing of tke Illinois Central Rialroad, running from Chicago to New Orleans and from Louisville to Memphis and New Orleans; tkat it was tke headquarters of the Kentucky & Tennesse Division of the road, and a large number of local and transient persons stopped at the hotels for meals and lodging; that the New Meadows and Usona Hotels were first-class hotels, and were tke .only hotels of tkat class in tke town; tkat tkey were rivals and competitors; tkat there was no consideration for tke execution of tke contract, except tkat which is stipulated tkerein; tkat it was entered into between tke parties for tke purpose of removing competition that existed in the hotel business in Pulton, and for the purpose of giving the Usona Hotel a monopoly of tke hotel business of its class; and tkat tke contract is against public policy. Tke court sustained a demurrer to the answer, and, tke appellants failing to plead further, judgment was rendered against them.
So far as we are aware, the exact question presented by this record has never been decided by this court. This court has upheld contracts which were in partial restraint of trade. Pyke v. Thomas, 4 Bibb, 486, 7 Am. Dec. 741; Grundy v. Edwards, 7 J. J. Marsh. 368, 23 Am. Dec. 409; Sutton v. Head, 86 Ky. 156, 9 Ky. L. R. 453, 5 S. W. 410, 9 Am. St. Rep. 274; Warehouse Co. v. Hobson, 29 S. W. 308, 16 Ky. Law Rep. 869. It was said in Sutton v. Head, “Indeed, a par
The eases in which this and other courts have recognized this rule as correct, are where parties sell their business or trade, together with good will. For instance, cases where a merchant sells to his partner,' or to a stranger, or where one being a professional man, with an established business as a physician or dentist, sell's it, and as part of the consideration the vendor agrees not to engage in the business for a time, in that locality, and in such cases the courts have sustained such a contract, although they be in partial restraint of trade. Such contracts are intended to secure to the purchaser the good will of the trade or business, and as a guaranty the vendor agrees not to engage in like business or trade at that place for a specified time. In these cases the restraint to be valid must be more extensive than is reasonably necessary for the protection of the vendee, in the enjoyment of the business which he has purchased. In this class of cases the court recognizes that the vendor has received an equivalent for his agreement to par
The question for our solution is: Is the contract against public policy and without consideration? Hotels are established and maintained for the purpose of serving the public. The opening of a hotel is an invitation to the public to become its guests. Hotels are not conducted for the social enjoyment of the owners, but for the convenience of the public, that is, those whose business or pleasure may render It necessary that they shall ask and receive food and shelter at a place of public entertainment for compensation. A hotel is a quasi public institution. Those who desire to conduct a hotel must first obtain
The judgment is reversed for proceedings consistent with this opinion.
Petition for rehearing by appellee overruled.