*1 merely shows that under a service. It capable extending not been undertaken. it has the circumstances wholly municipal Electricity excluded gas hardly furnish Defendant could the same in this case. services plaintiff. capable, the defendant rather evidence shows extending to be territory into the severed sub incapable, territory municipal stantial would services benefits that the enjoy if us to severed. The statute does not authorize sever Moines, territory purpose being annexed Des or consider if so the services benefits it would receive annexed.
Though paid by plaintiff, the amount of tax relation to town, the revenue of large, of severance denial does merely result maintaining tax revenue. Town Coralville v. Great Pipe Co., Lakes NAY.2d 375. Line
The decree of trial and the court is case is re- reversed manded with plaintiff’s petition. directions dismiss —Reversed and remanded.
All except sitting. Justices concur Bliss, J., not Cogley Clinic, partnership, H. F. appellee, Martini,
appellant. No. 50420. *2 January 9, 1962. February
Rehearing Denied Pratt, Bluffs, A. all Porter & Heithoff James of Council appellant. for Peterson, Bluffs,
Smith, Willson, Beckman & appellee. enjoin J. This is an action the viola-
Snell, *3 employment. of the in a tion restrictive covenant contract of Plaintiff, Cogley Clinic, partnership. is a Its members are surgeons together physicians practice and associated profession their in Council and surrounding territory. Bluffs partnership The in was first formed four doctors. Through in changes personnel, 29 doctors have been associated partnership. partners, are now 12 There two associates (doctors), a business employees, administrator includ- ing nurses, technicians, clerks, among etc. The doctors include specialists respective their number in They their fields. have practice an extensive medical patients and draw from a radius They of 100 to 125 miles. 50,000 have patients. about About 30,000 patients of the live within miles of Council Bluffs. large Because of the together, number of doctors associated the partnership “Cogley uses the name Clinic.” For convenience it will referred to as the clinic. enjoys
The clinic a substantial from referral business doc- tors outside practically Council Bluffs. There is no referral business from other doctors in Including Omaha, Council Bluffs. Nebraska, Iowa, and Council Bluffs, 450,000 people live within 25 miles of Council Bluffs. limiting
Prior to 1952 prac- there were no restrictions who the clinic. doctor withdrew Some doctors, tice of a brought in and established plaintiff-partner- who had been practice in engaged ship, withdrew Bluffs clinic. Patients competition with the followed the with- direct remaining doctors and the suffered drawing partners substantial bring To and income. a new fill doctor to patronage loss of get expensive. him established on staff and The vacancy a $10,000. usually clinic is It is cost about two estimated equal produces his work income to his years cost to before clinic. partners, including between a contract asso-
In 1953 forth agreement The set introduced. ciates, was employment, among provisions a partnership was upon partner the withdrawal covenant effective restrictive employment. or termination doctor Martini is a licensed H. F.
Dr. special specializes training He had and 'Wisconsin. passed surgery. He has some examinations orthopedic Orthopedic American Board of Sur- but certified is not dispute indicates without in this ease gery. The evidence surgeon. competent he is a have doctors plaintiff among did not its an ortho- In 1953 part- that field who had pedic surgeon. specialist been introduction of the ner withdrawn before the restrictive had in Council private Bluffs. He is covenant and now deceased. stranger to Martini, time a total the Council at that *4 employee in clinic as an October area, came the
Bluffs Membership part- January 1956. as a partner in He became a again when an em- he became ner terminated October acquaintance patients, with ployee. entire Doctor Martini’s hospital procedures prior local doctors, personnel and referral through associa- employment of was his termination his the action, to this material tion clinic. For reasons not except in Feb- below, employment noted was terminated his ruary con- employment signed each a contract 1960. On following taining the covenant: any termination for cause what- engage, on the
“D. Not to hereunder, in the medicine employment of the soever engage any healing arts, to work for any the or surgery or or engaged or the firm, partnership association individual, arts, any healing or surgery of medicine twenty- Iowa, or radius of Bluffs, within a City of Council the thereof, period (3) years from for a three (25) five miles under this Contract ceases.” employment time the the Martini came to the clinic 1953 he was When Doctor professionally socially and introduced association patients public, the clinic the clinic was announced to territory. All of the medical files and doctors him. only the clinic were available to He was records of specializing orthopedic surgery, of the clinic member al- though surgery. did appears others traumatic It patients surgeon largely an orthopedic patients referred other attending physicians. Doctor Martini eared for such patients referred members the clinic staff and outside doctors. very There was little referral work other doctors in Council Bluffs. present time,
At the than other Doctor Martini and several Omaha, orthopedic specialist there is no closer about 100 orthopedic miles. surgeons Several in Omaha are available to They Council Bluffs area. doing orthopedic have been work in Council many years Bluffs for and are available on They call. away. are not far While Doctor Martini was associated with the clinic, orthopedic surgeons Omaha took care referred work of Council Bluffs doctors not associated with the clinic. While clinic surgeon on staff, Omaha doctors are called in for cases.
One of the reasons the termination of Doctor Martini’s employment by complaint the clinic was the of other doctors patients about his failure to see and answer calls and his un- availability when needed. He frequently not as available as doctors from Omaha. annoyance Inconvenience and resulted. opinion
It was the of all witnesses that the location of one orthopedic surgeons or two in Council Bluffs be desirable would *5 seeking clinic is such an associate. The The and convenient. deny plaintiff-partnership they any that desire members surgical field. The record in this monopoly the medical surgeons in lack of resident ease shows that it is inconvenient but does show that Council Bluffs necessarily depends prac- on Doctor public welfare Martini’s Bluffs. tice 1960, pub- 10, 9 and Doctor Martini to be July
On caused daily paper Council Bluffs an announcement as lished in a opening “Dr. H. F. Martini announces the of his follows: orthopedic surgery, City Na- office, for the Bldg. tional Bank —Adv.” injunction restraining followed. action for a
This engaged been in the medi- he has Martini admits that surgery. cine and enjoined for plaintiff found defendant court trial agree contract. trial provisions of his We
under the court. challenges defendant the reasonableness appeal
I. In this Defendant contends that there is the restrictive covenant. justification restriction, it economic that no social required plaintiff; that the re- greater than upon defendant; imposes hardship an undue it striction unreasonably restricts the monopoly; that it to create a tends public; skills; injurious it to the use of defendant’s as to time and areá. is unreasonable that it challenge seriously does II.‘ The defendant general. Restrictive covenants covenants legality restrictive strictly against seeking injunc one employment are construed ap They partial are restraint of trade and tive relief. .are they Under certain reluctance. circumstances proved with some injunctive proceedings. For recognized and enforced been covenants between doctors have many years restrictive Toon, 185 Iowa enforceable. Rowe recognized valid and Leonard, 183 N.W. 38; 169 N.W. Oates *6 a landmark case the frequently called area What is Brown, 627, 235 Iowa 17 is Brecher v. of restrictive covenants history case the opinion N.W.2d The in that discusses affirmed a contract development law. rule was of the The by of gauged of is to be the reasonableness restraint trade necessary imposed protection the as to the the restraint compatible public covenantee interest. There the veterinary medicine restrictive was between doctors of covenant surgery. provided for an area limitation with The contract pointed as to It was a radius of 25 It was unlimited time. miles. be possibly out that it could not served the area was by plaintiff. held to unreasonable. The restriction was be applying general difficult rules the considering “the task of to specific rigid “helpful formulas as facts” the court referred to in appraising quality reasonableness,” the elusive but 1055, controlling. Pierce, 1051, Mutual Loan Co. v. Brown, 65 405, 407, referring N.W.2d to Brecher v. after supra, says: question “It comes to down a of reasonableness. necessary The if reasonably will be enforced to afford restraint a fair to the party business interests of the favor it It strictly whom is to and the given. be construed restric tion greater protect must to the interests employer. oppressive employee of the It must not be to hardship him, proportion create undue on to the out benefits * * may employer expect which the secure. reason to territory It should that can be be remembered that the served by country comparable a veterinarian with a by a clinic territory that can be served medical or an orthopedic specialist. pronouncement
Our recent is in Federated Mutual most Implement Erickson, 1208, Hardware v. Iowa Ins. Co. 264, 1213, 110 267. There the contract was attacked N.W.2d public policy. The were reviewed and as violative of authorities size It are involved: cited. was held that four factors type performed area; element; restricted time of service situation, covenantor; as and the reasonableness applied quoted In the case we facts each case. cited Burroughs, approval 740, Larsen Iowa “ 463, privilege duly physi- follows: ‘The licensed N.W. profession may his chosen when and where
cian to right zealously protect, which the courts will wish is a but it voluntary privilege which, valid, contract, phy- is also a may restrict; providing that sician such contractual restric- ” contrary reasonable, public policy.’ tions and not injunction period years. The was 10 The restricted granted.
In McMurray Faust, 224 276 N.W. also involving doctors, case years. the restricted time was five approved. restriction was *7 days good rapid
In roads, transportation these expanding perimeter an professional influence, for business and for patient go miles is not far a client or to pro to see a fessional us, plaintiff man his choice. In the case before patients draws over an 30,000 area 100 miles. The clinic has patients within miles. shown, Under the facts 25-mile a limitation is reasonable. three-year
A period of cited, time is reasonable. See cases supra.
III. past The record shows in clinic has partners suffered personal following financial loss when with a withdrew. Except pro- in previous clinic’s investment professional motion of Doctor in recognition Martini’s the com- munity, very there is little present evidence loss caused competition. showing There period is that in the six-month between opening of Doctor office and Martini’s the trial of this case district any court there of patients was exodus from the clinic to defendant’s office. We do not consider this important too nor the for basis determination of the issues. There are many too intangibles contingencies and variable a situation such as we have here to have the case decided on whether there has been gain a or loss of income the first six months of the contract violation.
A court of injunctive will grant relief unless there is an invasion or threatened right invasion of a a injury reasonably is result or such injury will substantial prove relief one who asks is on apprehended. The burden 971, 63 N.W.2d Kirkpatrick, elements. these Schmitt eight years past in the sub is clear that The record withdrawal and sub clinic followed stantial loss to the Doctor Martini competition by former members. was sequent Bluffs and recommended introduced, sponsored plaintiff present from his years. for Loss to plaintiff about seven apprehended. It competition may reasonably be damage. Such prove specific items or amount of plaintiff pro in the requirement render restrictive covenants would fessional field almost useless. argues that a contract restraint em-
IV. Defendant employer gives protection to the ployment greater which general required With statement is unreasonable. agree, agree do not that the contract before us law we but we is unreasonable. imposing undue hard- argues
V. Defendant that contracts argu- the facts in this case ship are not enforceable. Under vitality. 1953, again again ment loses its agreed to restrictive covenant. He is Doctor Martini man. There no coercion or con- mature, highly educated As far his contract is con- cealment. He was not misled. *8 anywhere except may practice profession within cerned say Bluffs. We cannot that the withdrawal miles of Council of 25 opportunity from his field of one area with a radius unduly place harsh that we should years for three is so miles open stamp judicial approval upon his violation of a thé frequently do agreement. said, As our court has we solemn ignoring fairly parties generally in contracts encourage desire to entered into. employment which
VI. A in restraint of injurious rights is unreasonable general public to the of the not enforceable. rights public showing that the
Here there is right in no vested danger. public has the services The always right He had the to retire or Martini. move community. legally complain No if one could he did. writing to refrain from within 25 agreed in miles He years. for There are Bluffs three over 60 doctors of Council Omaha, including specialists over 400 in Bluffs and in Council surgery. seriously in- public The welfare is not case. volved residing
VII. With over 460 doctors Bluffs and seriously (446 plaintiff-clinic), outside of it cannot Omaha partners plaintiff-partnership have contended that the profession. monopoly their proof contrary VIII. The burden of that a contract is upon him public policy Burroughs, who asserts it. Larsen v. supra. prove any public Defendant has failed to violation of policy.
A page say: in 58 A. L. R. on note has this to “It firmly is a established doctrine that a member of one of the upon becoming professions, learned assistant to another member consideration, thereof, may, upon a sufficient bind himself not engage profession upon of his the termination employment, of his contract of within a reasonable territorial agreement an is not in extent, as such restraint trade or against public policy. Such contracts have been held valid physicians, surgeons, healing made where others profession.” study plaintiff
We find from a of the entire record that proof necessary injunctive has met the burden relief. stay order heretofore entered this case is vacated and the decree of the trial court is affirmed.—Affirmed. J.,C. and Thompson, JJ., Oliver
Garfield, Thornton, concur.
Hays JJ., Larson, dissent. J.,
Peterson, part. takes no Bliss, J., sitting.
551
respectfully
Hays,
dissent.
J.
I
equity,
or
case,
single
As I
the
issue is whether
not
view this
through
injunctive relief, should
the
means of
enforce
restrictive
by plain-
employment
entered into
covenant
contract
the
tiff and
This in turn reduces the issue to whether
defendant.
reasonably necessary
or
not the
is fair and
the
covenant
injunctive relief.
protection of
covenantor who seeks the
the
question
partial
That
is
fact one for the
the covenant
recognized by
restraint
trade is so
all authorities but will be
reasonable,
enforced if
only
such restraint
is
that
it
is—if
party
affords a fair
to
the interests
favor
large
of whom
given
it is
not so
as
interfere with the
public,
person
interests of
or
undue
on
impose
hardship
Contracts,
restricted.
S.,
246,
254;
17 C. J.
247 and
sections
Contracts,
Law,
515; Annotation,
Restatement of the
section
43 A.
94, 116;
L. R.2d
v. Brown,
627,
Brecher
235 Iowa
17
N.W.2d 377;
Pierce,
Mutual
v.
1051,
Loan Co.
65
405;
N.W.2d
Implement
Federated Mutual
and Hardware Ins.
Co. v. Erickson, 252
1208,
Iowa
The burden establishing upon party reasonableness is seeking to enforce the covenant, being per se entitled to its Pierce, supra, enforcement. Mutual Loan Co. should strictly be against seeking equity. construed one relief In Division VIII of majority opinion, is it said that “the proof burden of that contrary policy public upon it”, him who asserts states then that the defendant has not carried Burroughs, such burden. It cites Larsen v. Toon, 463. In N.W. the case of case Rowe
Iowa 848, authority 169 N.W. is cited for the statement. pages At Iowa, 853 of 185 it is said: clearly
“That will refuse its aid to enforce a unrea- oppressive sonable or may admitted, contract of this nature nothing upon agreement but there is particular of this face indicating inequitable any respect. it is or unreasonable * * *. upon being contract sued on its unreasonable face, plaintiff required was not existence of negative * * possible rendering conditions *.” it void voidable. *10 says per are se effect, it covenants valid such i.e., illegality, show un- being the defendant upon
burden yardstick is the reasonableness, reasonable or unreasonable difficult for be determined. It is me legality is to which the reasoning expression our later Mutual with to reconcile such 1051, 1056, 65 N.W.2d Pierce, 245 Iowa Loan Co. v. enforcing “The who seeks the supra, which is that covenantor showing of the restrictive injunction has the burden reasonably protection for the covenant is fair and of business.” space of majority opinion recognizes that element reasonableness, upon question of important
and time three-year agree. I finds that a restriction is reasonable It agree. shown, 25- with this I It that under the facts states When it is under the mile limitation is reasonable. said facts shown, reasonable, I agree. a limitation is It is true cannot many there are instances where a 25-mile has been rea- radius majority opinion but the to overlook the fact sonable chooses particular that this 25-mile radius includes all of the cities Bluffs, Omaha, Nebraska, Iowa, part also a - County greater County, part Harrison Mills and a Potta- County Iowa, part Sarpy County, wattamie and a Wash- Douglas County in ington County Nebraska and embraces 450,000 persons residing therein. I some am unable to brush population question by merely saying, aside this as does the majority opinion IV, agree in Division do that the that “we in Restatement, contract before us is unreasonable.” is stated As Contracts, 515(a), “A is unreasonable section restraint of trade * * * required greater if it is than is person imposed.” Under Mu- whose benefit the restraint is and, Pierce, supra, tual Loan Co. v. burden the Clinic’s my opinion, cursory even a of the record shows examination carry failure such burden. when he orthopedic surgeon. Defendant is an He was such joined training needed. As period the Clinic and no Cogley, qualifications stated Dr. J. P. had all of “he orthopedic surgeon an Clinic.” Cogley before he to work came at In this respect, least, Burroughs, supra, at the case Larsen v. distinguishable. It is stated record with the de- parture of Doctor Clinic, they Martini from the suffered a $21,000 placed financial loss of that could be at the hands of the orthopedic department. Assuming departure this was to his due rather- than could he attributed thereto, nothing this has to do operating separately. Martini appear It does not money what came to the Clinic because of Doctor Martini and require this is not an him action to to remain with it. Such *11 testimony merely shows that after left, Doctor Martini the pay for an orthopedic surgeon to surgeons went Omaha who were called into case the instead of to the Clinic. It was the same as it was before Doctor Martini employed. upon
What effect the Clinic has resulted from Doctor opening Martini own in office Council Bluffs? Robert J. Prichard, business administrator of the Clinic, stated “As a result of Doctor leaving Martini we have lost no accounts to Eugene date.” B. Floersch, Dr. a member of Clinic, the stated “I gained believe we actually have patients some since he [Doc- tor left Clinic.” the Doctor Cogley stated Martini] “The same doctors that did refer business to referring our Clinic are still business to our Clinic.” Doctor Martini states that his business is is patient’s such as referred attending physician, and as to appears dispute this there no to be in record, and that exception, with one he has no referral previously cases go would to the Clinic. There is not one instance shown record where Doctor Martini used or called for Clinical records from the Clinic. I imply While do not specific damage must be shown before will enforce a type, say I do showing injury that a no mythmg due to other than his leaving Glmic, appears this record, has a strong upon bearing whether such restriction calls for more than reasonably protect to the Clinic’s Also interests. having bearing upon material question 450,000 per- are residing sons in the restricted area. Other than Doctor Martini orthopedic there surgeon city 55,000 Bluffs, people, and, on the Iowa River, side of the Missouri none closer There are five Oak, Iowa. Red except one at 100 miles 301,000. population has a Nebraska, which Omaha,
six area. care for this surgeons to seven This means from a radius coming 50,000' patients The Clinic some 400,000 leaves some area, which 25-mile restricted excess of the un While not no contact. Clinic has people with whom the that, consider argue miles, I think it too clear reasonable capabilities beyond the an far it covers area ing population, Brecher See unreasonable. and is of the Clinic serve therefore Murray 377; Arthur 627, 17 N.W.2d Brown, supra, 685; Pl.), 105 N.E.2d (Ohio Witter Com. Dance Studios v. 508, A.2d Md. System Maryland, 186 Tawney v. Mutual record which is overlooked stands out in this Another factor Pierce, Loan Co. majority opinion. Mutual “Every said, 405, 408, supra, it is 1051, 1056, N.W.2d * * * his covenant right his livelihood man has a to earn by the cov- calling be enforced not to a certain cannot follow being exactly any penalty.” That is what is enantor as sort of sought here. Clinic, states: Prichard,
Mr. administrator business objection any number “Cogley Clinic does not have an *12 Bluffs. orthopedic surgeons that wish to come to Council purpose litigation sole enforce a written this con- Martini and a restrictive covenant entered with Doctor lo- therein, orthopedic surgeons from keep tained and not to added.) cating (Italics in Council Bluffs.” surgeons our Cogley “There are none of stated: would be qualified orthopedic surgeons our who Clinic who are did when things able to do some of the that Doctor Martini was with us.” miles) case, in this
Comparing (25 this area situation therein, such bearing 450,000 people in mind included McMurray 95; 276 N.W. Larsen Faust, cases as v. Brown, like com- Burroughs supra, and Brecher both Erie Lake paring dropping spoonful of a of lemonade into my spoonful In and a of water. arsenic a half tumbler beyond any judgment far this record shows a restraint competition require anticipation of unfair reasonable injunctive to refuse its aid relief. hardship upon other factors involved: Undue Two depriving public Doctor Martini and this area of the professional A services a skilled man. careful examination my conclusion, record can, judgment, this one lead but to equities the balance of the rests with Doctor Martini and the public. supra, Brecher v. Brown, page it is at 633 of said “
Iowa: ‘Covenantees contracts between character em- [in ployer desiring and employee] the maximum have they fail, doubt task. commonly difficult When it is be- cause, dog like fable, they much grasp too and so ” lose all.’
Such is this case. I would reverse the decree the trial court. J., joins in this dissent.
Larson, Clyde Newlon, G. v. John E. appellant, Bennett, appellee.
No. 50493.