McCurry v. Gibson

108 Ala. 451 | Ala. | 1895

HEAD, J.

The bill was filed on the 30th day .of May,, 1893, to enjoin the breach of a contract, which the defendant made with the complainant in January of the same year. A preliminary injunction was granted at’ the institution of the suit, which the city court,.upon de-, fendant’s motion for a dissolution, refused to dissolve and upon final hearing it was continued in force, according to the prayer of the bill. From the final decree the appeal is prosecuted by the defendant, the assignments of error being based upon the overruling of a demurrer" to 'the bill, and a motion to dismiss for want of equity, and upon the final decree awarding the complainant re-:lief. The bill in its amended form, stripped of repetition and redundancy, and appropriately condensed, contains the following allegations:. (Í.), That on the 3rd day of January, 1893, the com-, plainant, “who is also a practicing physician” ,(to quote the exact language of the bill) purchased from the defendant, who “was and had been prior thereto engaged in the practice of his profession as a physician, in the city of Anniston, Ala.,” for the consideration of one hundred and twenty-five dollars, his horse, buggy and s medical practice, the vendor agreeing in writing, as .a part of the contract, not to practice his profession in that city for two years, and making the further stipulation that in case of failure to comply with the agreement-he would pay to the complainant, “as a forfeiture, the sum of two hundred dollars.”

(2) That the defendant, in disregard of his .agree-, ment, continued to practice medicine in Anniston ; was then holding himself out for practice, and was serving' all who desired his services ; that he had refused to pay the stipulated sum mentioned in the contract, and was insolvent.

• (3) That when the contract with defendant was made, the complainant, upon the' faith of the same, as defendant well knew, formed a partnership with one J. B. Simpson, another physician, for the practice of medicine in Anniston, and as such partners, they entered into ..the practice there, moving their office to one formerly occupied by the defendant, who left the city.

(4) That the complainant and said Simpson, (e^ch being equally interested in any practice done by the other) were then engaged in the pursuit of their profession, when the bill was filed, although, in pursuance of an arrangement between themselves, complainant was temporarily absent from Anniston a part of the time; he at no time having abandoned the practice, in that place; and he, or his partner, having, during the whole period, Been engaged in the practice in said city.

(6) . That in consequence of the re-entry of the defendant into the practice of medicine in Anniston, the income of himself and partner had diminished about one-third .

(7) That the complainant elects to insist upon a compliance, upon the part of. the defendant, with his contract to refrain from practicing his profession in said city, for the stipulated time, and he agrees, in case the preliminary injunction be made final, not to sue defendant for damages for a breach of the contract, nor seek to enforce a payment of the sum of two hundred dollars, or any other amount.

■ The demurrer assigned twelve grounds of objection to the bill, but all of them may be embraced and treated within the following classification :

(1.) That the contract alleged was void as being vio-lative of public policy, and in unreasonable restraint of the practice of a learned profession.

(2.) That the contract expressed no adequate consideration.

(3.) That the bill showed complainant had an adequate remedy at law.

.• (4.) That it is not alleged that on January 3d, 1893, the complainant had license to practice medicine in Alabama, nor in Calhoun county, nor in the city of Annis-ton; nor that be was able, competent or authorized, under the law, to supply the city of Anniston with the accommodations the defendant obligated himself not to supply, for the two years covered by the contract, or to make the said contract.

The essential averments of the bill were either admitted by the defendant, in his answer or testimony, or-satisfactorily established by other proof; and most of the questions that have been argued may be resolved by a consideration of the ruling upon the demurrer. The other points urged upon us, for a reversal of the decree of the city court, will be noticed when we come to refer to other matters of defense, set up, or undertaken to be brought forward by the answer.

• The questions of law raised by the demurrer have, for the most part, been so often the subject of judicial decision, in this country, and in England, that in respect of them, but little room is left for argument. It is well settled law, that while contracts, in general restraint of trade are against public policy and void; yet those in partial restraint, founded upon a valuable consideration, and reasonable in their operation, are valid and binding. 3 Am. & Eng. Enc. Law, p. 882, and cases cited in vol. 10, lb. p. 943. The test which is laid down, by which it may be determined whether a contract is’ reasonable is whethor it affords only a fair protection to the interests of the party in whose favor it is made, without being so large in its operation as to interfere with the interests of the public. — Homer v. Granes, 7 Bingham, 735, 743 ; and this test has been uniformly followed in subsequent cases.— Wood v. Johnston, 47 Conn. 175 ; Bremer v. Marshall, 19 N. J. Eq., 547 ; Whappel v. Brockway, 21 Wend. 157. A partial restraint is that which is restricted in its operation in respect to place ; and this may be made, in express terms, or it may result from a construction of the contract, when viewed in the light of the environments and circumstances surrounding the contracting parties. Moore & Handley Hardware Co. v. Towers Hardware Co., 87 Ala., 206. It is very frequently the case, that such contracts, like that made in the present instance, contain a limit as to time also, but there is a distinction between a general restriction as to place, and one as to time; it being now well settled that an agreement not to engage in a certain business, in a stated place, or within a reasonably limited territory, is not rendered invalid by a failure to specify any limit of time for its duration.— Carll v. Snyder, (N. J. Eq.), 28 Atl. Rep. 977 ; French v. Parker (R. I.), 14 Atl. Rep. 870; Cook v. Johnson, supra, and the numerous authorities cited in each, of these cases. Contracts by professional men, such as physicians, surgeons, dentists and lawyers, when coming within the rules stated, not to practice their professions in competition with another pursuing the same.calling, have time and again been enforced ; and no distinction is made between their contracts and those of tradesmen. The suggestion that while valid in a court of law, the agreement of a person not to pursue a profession involving the exercise of skill and learning, will not be specifically performed in equity is not tenable. The doubt' expressed in an early English case, has long since been resolved in favor of the jurisdiction of the chancery court; and numerous instances are to be found of its exercise when invoked to restrain, by injunction, the breach of a .valid contract not to practice law or medicine in competition with the complaining party. As we are dealing with a case between physicians, we will cite a few of the cases directly in point: Cole v. Edwards, (Ia.) 61 N. W. Rep. 940 ; McClung’s Appeal, 58 Pa. St. 51 ; Dwight v. Hamilton, 113 Mass. 175 ; Butler v. Burleson, 16 Vt. 176 ; Zimmerman v. Dercer, 52 Mich. 34; Doty v. Martin, 32 Mich. 462; Wilkinson v. Calley, 26 L. R. A. 114.

It is settled by the authorities that the purchase by one party of the property and good will of the business of another, furnishes a sufficient consideration for an agreement by the latter, in enhancement of the value of the good will, not to compete with him in the conduct of the business. The rule is the same when a physician sells his property and practice to a professional brother. It was at an early day supposed that the consideration, in such cases, must be adequate; that is, equal in value to the restraint imposed; but this idea has been exploded ever since the decision in Hitchcock v. Coker, 6 Ad. & Ellis, 438, which has been repeatedly approved and followed; and in which C. J. Tin dal said : ‘ ‘If by adequacy of consideration more is intended, and that the court must weigh whether the consideration is equal, in value, to that which the party gives up or loses by the restraint under which he places himself, we feel ourselves bound to differ from that doctrine. A duty would thereby be imposed upon the court, in every particular case, which it has no means whatever to execute. It is impossible for the court to say, whether in any particular case, the party restrained has made an improvident bargain or not.” In a note to Lugier v. Webber, 92 Am. Dec. 748, 754, many authorities to the same effect are collected. We may add that the same doctrine upon the subject of adequacy of consideration obtains generally in cases of specific performance, and it is now recognized by the leading text writers, as the modern and more reasonable rule, as we declared in South & North R. R. Co. v. Highland Ave. & Belt R. Co. 98 Ala. 400. The written contract, exhibited with the bill showed upon its face, a sufficient consideration, and the court will not assume the task of ascertaining whether the defendant made a good or a bad bargain. It is not infrequently the case, that contracts in restraint of trade contain provisions for the payment to the parties, for whose benefit they are made, of a stipulated sum in case of a breach by the other contracting party. The language of such agreements varies .widely, as we find from an examination of the .cases. Sometimes the sum is called a “penalty,” sometimes, “liquidated damagesand in still other instances, a “forfeiture the latter being the word used in the contract between the parties to this controversy. Courts have not always agreed in their views, upon the question whether such stated sums were to be treated as penalties, or liquidated damages, although the current of authorities is, to treat the sum named as liquidated damages, rather than a penalty. — Keeble v. Keeble, 85 Ala. 552 ; Roper v. Upton, 125 Mass. 258 ; Halbrook v. Talby, 66 Me. 410, and authorities cited therein. The word, is not decisive of the character of the stipulation. We need not repeat the rules which have been adopted for the determination of the question, and which are only different in their application. Upon the authority of' the cases cited, and others upon which they are based, we are of. opinion that the contract, averred in the bill, contained a valid agreement for the payment of two hundred dollars, as liquidated damages for its breach ; and it is out of this fact that the supposed adequacy of the legal remedy, ousting the equitable jurisdiction, is thought to gx-ow. There are some cases, decided by courts of last resort, which so hold, (Hahn v. Concordia Society) 42 Md. 460 ; Martin v. Murphy, 129 Ind. 464); and we have been cited to like decisions by courts of inferior jurisdiction in New York. Such, however, is not the rule adopted by the New York Court of Appeals, nor is it supported by the weight of authority. We have recently declared’ that' such a provision for liquidated damages was no bar to a decree for specific performance, in a case otherwise sufficient, and we are satisfied the decision was correct. — Morris v. Lagerfelt, 103 Ala., 609. No one doubts that the parties might stipulate for the payment of a sum, which upon a proper construction of the contract, would be deemed a price paid for the privilege of resuming business, by the party theretofore restrained. Such was the nature of the agreement construed in Dills v. Doebler, 62 Com. 366, (20 L. R. A.), by which it was provided that the party sought to be restrained should be “at liberty to practice dentistry in said Hartford at any time after the termination of this contract by paying to said Dills one thousand dollars and, in that case, it was held that the insolvency of the defendant would not suffice to give jurisdiction to enjoin his resumption of practice, until he paid the stipulated sum, which evidently was not designed to prevent a breach of the contract to refrain from practicing, but was in truth the price of the privilege of again pursuing his calling in the city of Hartford. Of the rule we adopt, Cooley, C. J., in Watrous v. Allen, 57 Mich. 362, used the following language : “This is perfectly reasonable and equitable, for the penalty, forfeiture or fixed demages are only agreed upon to render it more improbable that the act against which they are directed will be committed.” The same thought, but with more elaboration, was expressed by the Court of Appeals in Diamond Match Co. v. Rocher, 106 N. Y. 464; and we quote from the opinion an accurate statement of the law, as exactly applicable to this case : ‘ ‘It is of course competent for parties to a covenant to agree that a fixed sum shall be paid in case of a breach by the party in default, and that this should be the exclusive remedy. The intention, in that case, would be manifest that the payment of the penalty should be the price of non-performance, and to be accepted by the covenan-tee in lieu of performance. Phoenix Ins. Co.v. Conti nental Ins. Co. 87 N. Y. 400 — 405. But the taking of a bond in connection witb a covenant, does not exclude the jurisdiction of equity in a case otherwise cognizable therein; and the fact that the damages in the bond are liquidated, does not change the rule It is a question of intention, to be deduced from the whole instrument, and the circumstances; and if it appears that the performance of the covenant was intended, and not merely the payment of damages in case of a breach, the covenant will be enforced.” All that is settled by the insertion of a simple agreement to pay liquidated damages; so that, if an action is brought for damages, the recovery shall be for the amount named, neither more nor less.— Long v. Rowring, 33 Beav. 585. No doubt can be entertained in this case, that the parties were not contemplating a breach of the contract, nor a return by the defendant to the practice of medicine in Anniston. He was on the eve of departure to another State, which he expected to make his future home, and had decided and declared that he would no longer practice in said city. The stipulation to which we have adverted is no barrier in the way of granting complainant relief by injunction, which is a negative specific performance of the contract.— Dooley v. Watson, 1 Gray, 414 ; Howard v. Woodward, 10 Jur. (N. S ) 1123 ; Fox v. Scard, 33 Beav. 327 ; 2 High Inj. § I175. The complainant had his election to sue for damages, or to have the agreement performed, according to its terms.

The various grounds of demurrer which we have consolidated under the fourth head of the foregoing classification, were directed to the failure of the bill to allege that complainant was authorized to practice medicine, in Anniston, where the contract was made. The bill di d not aver that complainant was practicing, at that time, and it will hardly be contended that it was necessary to show that a physician is actually practicing before he can contract for the property and good will of another. The bill not alleging that complainant was practicing when the contract was made, and it being unnecessary to so allege, it must be obvious that it was likewise unnecessary co make the allegations upon the subject of license and compliance with the law, suggested by the demurrer. If a failure upon the complainant, to. comply with legal requirements necessary to constitute him an authorized practitioner, if he was practicing when the contract was made or even when the bill was filed, constituted any reason why he should not have relief against the defendant, an appropriate method of presenting the defense is by plea or answer. It is a familiar rule, that a complainant must allege every fact essential to his right to relief; at the same time illegality is not presumed, and when the facts alleged are sufficient to entitle a party to relief, and no illegality or unlawful conduct is shown upon the face of the bill, the pleading is sufficient; and if there be such illegality as will defeat the suit, the defendant must bring it forward by plea or answer. — Nelms v. Edinburg American Land Mortgage Co., 92 Ala. 157, and authorities cited. What we have said, will suffice to explain the' ground of our opinion that the city court committed no error in overruling the demurrer.

The bill was very full and complete in its averments, containing some even that were unnecessary. It contained equity, and the motion to dismiss was properly overruled.

The answer, in view, no doubt, of the rule of pleading above stated, undertakes to defend against the bill, by making allegations, which were doubtless designed to show, and which it is argued do show, first that when the contract was made the complainant had not procured a city license, in accordance with the ordinances of Annis-ton, to entitle him to practice there, and that he was not, at that time, authorized, under the laws of the State to practice in Calhoun county; and, second, that when the bill was filed, complainant was practicing, in that county, in violation of law. From these premises the legal conclusion is drawn by counsel for appellant, that the contract was void in its inception; and furthermore that the bill cannot be maintained, since it was filed, they say,' in'aid and protection of the practice, which complainant was carrying on in violation of the laws of the State.

These are the questions which have been earnestly pressed upon us, for a reversal of the decree, and to decide them correctly will require an examination of the averments of the answer and the evidence in the case, bearing thereon. It is sufficiently averred and proven, that to authorize ohe to practice medicine, in Anniston, oh January 3d, 1893, a license was required, and that .complainant had not taken out a city license, at .that time. It does not clearly appear from the evidence that he had then begun his professional career, in that plg.ce, hut it may be conceded that such was the case. There was no law requiring any license to make the contract we have under consideration. It was not unlawful,'nor was any violation of law necessary to its execution. It does not appear that any infraction of the law was contemplated in the making of it. It was not void. A short time after it was made, the city license was taken out, and it is not contended that when the aid of the court was sought, the complainant was violating any law or ordinance of the city of Anniston. We cannot, therefore, deny relief for anything growing out of the omission of the complainant to have a city license, when the contract was made.

We have only now to consider the last question, which has been insisted upon, and it grows out of the ayer-mentof the answer, wherein it is alleged that complainant had not, up to the time of the answer, filed a certificate, issued by any medical board, in the State of Alabama, with the probate judge of Calhoun county, to be registered by said probate judge, so as to entitle him to practice medicine in Calhoun county. No matter what may be the rule in a court of law, in an action for a breach of the contract, it is everywhere asserted that the ground of the jurisdiction in equity to enjoin a violation, of a valid contract, in restrain of competition, is the difficulty, not to say impossibility, of computing the actual damages which the complaining party may sustain, by the loss of business, he might otherwise procure. If the complainant were not engaged in business, or interested therein, it is obvious he could suffer no injury by a resumption of business by the covenantor. For these reasons, it was held in Berges v. Armstrong, 41 Iowa, 447, that a bill filed for an injunction in a case of this character was wholly insufficient, if it did not show that the complainant was himself, when the injunction was applied for, engaged in the business, which the defendant had agreed not to carry on in a town of that 'State. Thus it is that the business, or .some .substantial'interest’ therein, is ap essential part of the case "to'be .made by. .the Ijill.' .-From these premises, it’is argued ábd'Apíh g$e£t*jQyce, that since it is necessary to call ip Cpmpiaah-ant’s aid, in making out his case, the practice of his profession, or some substantial interest therein, a court of equity will repel him, if he is violating the law, in the very practice he seeks to profect. The law out of no consideration for a defendant, but from a resolution to maintain its own supremacy, will not aid a plaintiff or complainant to recover for injury to an unlawful business. — Smith v. Dinkinspiel, 91 Ala. 528. The illegality of the complainant’s business, whether conducted by. himself, or conjointly with his partner, not appearing by his pleadings or proofs, it must be set up by the defendant, and the averments whether contained in a plea or answer must be sufficient in their statement of facts to show the illegality.— Wilde v. Wilde, 37 Neb. 891. The only averments of the answer upon the subject of the, status of complainant’s business, when the bill was filed, is-that quoted above. It asserts simply, in substance, that complainant had not filed a certificate doubtless meaning a certificate of qualification — with the probate judge of Calhoun county, and the evidence goes no further than this extent. Does this show a violation of the law? If an indictment against the complainant contained no more than this, would it not be subject to demurrer or motion to quash? If the defendant had brought forward the defense by a plea containing, only that averment, would it have been adjudged valid, if set down for-hearing upon its sufficiency,? A demurrer to an answer is unknown to chancery practice, and if the answer, setting up new matter, fails to contain sufficient matter to bar relief, the defendant alone must bear the consequence of the imperfect manner in which he puts forward his defense. — Salma v. Clagett, 3 Bland (Md.) 141. We are compelled to say, that whatever the real facts may have been, we cannot conclude from anything contained in the answer, or even from the evidence, that complainant was illegally practicing medicine ' in. Anniston,' which is situated in Calhoun county, • where he' instituted his suit. The act of Ebb.'. 18th. 1891,' amendatory of séction ' 4078: o'f ' the. ‘ criminal Code, (Acts 1890-91', ' p'A 857),' prohibits the practicing of medicine' or surgery in the State without having first obtained a certificate of qualification from one of the authorized boards of medical examiners of this State, with-a proviso excepting from its operation physicians then practicing in the State, who were graduates of a respectable medical college, and had complied with the law by having their diplomas recorded by the judge of probate in the county in which they were practicing, and also physicians who had practiced in this State .for five years. An indictment under this act, making the charge in the language of the main cause would be good with out negativing that the defendant came within the exceptions contained in the proviso. — Bell v. State, 104 Ala. 70. Under this act, there is no authority to practice under a license, and hence an indictment for practicing without a license is no longer good. — Nelson v. State, 97 Ala. 79. If the answer had alleged that the complainant was practicing medicine in Calhoun county without having obtained a certificate of qualification from one of the authorized boards of medical examiners of this State, it would have made a prima facie case of illegal practicing, which he would have been forced to meet, either.by bringing himself within the proviso, or by proving that he had the proper certificate of qualification, (Porter v. State, 58 Ala. 66) ; and thatithad been recorded in the office of the probate judge in the county where he resided when it was issued. — Code of 1886, § 1306. Until recorded, it cannot be said to be complete, nor to possess any efficacy of an authority to practice medicine. — Nicholson v. State, 100 Ala. 132. Construing the averments of the answer most strongly against the pleader, it must be held, that complainant had procured a certificate of qualification, which he had not recorded in Calhoun county. - It was not averred that the complainant resided in Calhoun county when the certificate was issued to him., and it was not necessary to record it there unless such was the case. Non constat, but that he procured it in another county where he then resided, and it had been there recorded. In the absence .of a sufficient answer defendant was put to no proof on this, subject. .The attempted, defense, has.'not .]5een .maintained-. .; ... '

1 There is no error in the. record and' the decree is. affirmed.. •