23850 | Ohio | Apr 19, 1933
Two main questions of law are urged here by the plaintiffs in error:
(1) As the petition specifically states that the plaintiffs in error "still own the building in which said Princess Theatre was located," and since the prayer *476 of the petition is based upon a contract which in terms applies only to the "use" of the Princess Theatre, it is claimed that the petition does not state a cause of action. In support of this point plaintiffs in error urge that since the Robeys still own the building no interest in real property has been parted with by them to which a contract such as that set up in the petition may lawfully be attached as an incident.
(2) It is claimed that since the petition prays that the defendants be permanently enjoined from using the building for any kind of public gatherings, when the contract related only to a theatre, there is a fatal discrepancy between the cause of action pleaded and the prayer of the petition.
The petition alleges that the Plain City Theatre Company has duly performed all the conditions of the agreement. Hence the demurrer concedes that the contract set out in the petition has been fully executed; that the Plain City Theatre Company has delivered to the Robeys $500 in cash, the note for $700.00 set out in the contract, and to H.C. Robey five shares of the common stock of the Plain City Theatre Company. The plaintiff in error H.C. Robey hence comes into a court of equity as a stockholder of the Plain City Theatre Company, endeavoring to avoid a contract which he made upon a valuable consideration with the company. This is a circumstance which a court of equity must necessarily consider in the case.
We are aware that courts have often held that a contract restraining the use of property or restraining the continuance of an occupation cannot be upheld unless it is ancillary to a lawful contract or transaction in reference to a matter in which the contractee has a legitimate interest in need of protection. 6 Ruling Case Law, 792.
It is also the general rule that contracts which have for their object merely the removal of a rival or competitor in business are unlawful. 13 Corpus Juris, *477 477. Citing these general principles, it is the contention of the plaintiff in error that in order for the contract pleaded to be valid the Plain City Theatre Company must have acquired an interest in the property or business of the Princess Theatre to which the restraint is a reasonable incident.
However, we are impressed with the fact that in this state it has been held that contracts in restraint of trade are not illegal even though the sale of the business and its good will are not involved except when such contracts are unreasonable in character. List v. Burley Tobacco Growers' Co-operative Assn.,
The restraint agreed on in this contract is partial only. The building may be used for any other purpose than for the holding of public gatherings. The restraint is limited to this one particular building. The Robeys can operate a theatre in any building in Plain City other than the Princess Theatre. Whatever possible error existed in the judgment of the court of common pleas because of its issuing an injunction to operate "forever" is eliminated by the modification of the judgment by the Court of Appeals.
Also this contract was an incident to the conveyance of an interest in property.
When the corporation paid the Robeys $500 in cash, gave them a note for $700, and delivered to H.C. Robey five shares of common stock of the Plain City Theatre Company, it contracted with reference to the business of the Princess Theatre. The consideration for the transfer of the cash, the note, and the five shares of stock was the discontinuance of the business in the building occupied by the Princess Theatre. *478
This restraint of trade was certainly no more unrelated to the conveyance of an interest in property than the restraint agreed upon in the case of Grasselli v. Lowden,
Substantial support is found in favor of this doctrine in other states. Thus it was held in Heichew v. Hamilton, 3 G. Greene (Iowa), 596, that an agreement to give up keeping a tavern at a place a half mile from the plaintiff, on the same road, is not in restraint of trade.
In Ulrich v Hull,
Johnson v. Gwinn,
A more recent decision along the same line is Horany v.Treese,
Meridian Amusement Company of Illinois v. Home *479 Theater Company,
A recent and authoritative decision upon the same point is to be found in Dick v. Sears-Roebuck Co.,
It is also urged that the judgment in this case should be reversed because the petition prays for a permanent injunction against the use of the building for public gatherings of any kind, whereas the contract related only to the Princess Theatre. The contract, however, speaks of the Princess Theatre from two points of view. In the second paragraph of the petition, where it is alleged that the defendants owned and operated a theatre, it is evident that the pleading speaks of the operation of a theatre business. In the contract pleaded, where the defendants agreed to forever discontinue the use of the Princess Theatre as a show house, or auditorium for the use of public gatherings of any kind, it is evident that the parties were speaking of the theatre as a building.
Since the judgment of the court did not enjoin the use of the building for any other purpose except that for which the parties agreed that it should not be used, the judgment as entered is responsive to the allegations of the petition and the plaintiffs in error's second contention is overruled. *480
The contract is reasonable, based upon an adequate and valuable consideration, not invalid as being in restraint of trade, and the judgment of the Court of Appeals must be affirmed.
Judgment affirmed.
WEYGANDT, C.J., DAY, STEPHENSON, JONES and MATTHIAS, JJ., concur.
KINKADE, J., not participating.