Summary
In Burdine v. Brooks, 206 Ga. 12, 17 (55 S.E.2d 605), we said: "While the argument of counsel for the plaintiff in error — to the effect that contracts of this nature between physicians tend to the public detriment, in that there is an urgent need of doctors to alleviate the pain and suffering of the public presents a forceful reason for condemning the action of physicians in entering into such a contract, nevertheless this court is without authority to abrogate such a contract, if its terms be reasonable.
Summary of this case from Raiford v. KramerOpinion
16775, 16799, 16823.
OCTOBER 10, 1949.
Injunction. Before Judge Brooke. Fannin Superior Court. June 13, 1949.
Thomas H. Crawford, Harris, Henson Spence, and Charles A. Wofford, for plaintiff in error.
Wheeler, Robinson Thurmond and William Butt, contra.
1. The allegations of the petition were sufficient to set forth a cause of action; and the trial judge did not err in overruling the general demurrer to the petition.
2. The special demurrers interposed to the petition are without merit.
3. Under the evidence adduced on the interlocutory hearing, the trial judge did not abuse his discretion in granting a temporary injunction.
Nos. 16775, 16799, 16823. OCTOBER 10, 1949.
Courtney C. Brooks filed in the Superior Court of Fannin County a petition against Dr. James M. Burdine, alleging in substance: that prior to January 24, 1949, he negotiated with Dr. W. E. Burdine, a brother of the defendant, for the purchase of the Burdine Hospital, located in Blue Ridge, Georgia; that the defendant and W. E. Burdine were practicing medicine together prior to January, 1949, with their headquarters at the Burdine Hospital, and the defendant was a surgeon and performed operations at the Burdine Hospital; that the plaintiff negotiated with the defendant and his brother, W. E. Burdine, for the purchase of the hospital and good will established by its conduct by the defendant and his brother, and on January 24, 1949, W. E. Burdine conveyed to the plaintiff the described tract of land on which the hospital was located, and at the same time the defendant entered into a contract with the plaintiff, by the terms of which, in consideration of $1 and other valuable consideration, the defendant agreed that the good will and the practice of what is known as the Burdine Hospital was conveyed and transferred to the plaintiff, and the defendant would not establish or maintain a clinic or office in Fannin County, Georgia, where people might come for treatment, for a period of ten years from April 1, 1949, except that the defendant should have the right to practice medicine in Fannin County by house calls made from an office in an adjoining county.
The petitioner further alleged that he was a surgeon and engaged in the practice of medicine at Cumming, Georgia, and in consideration of the purchase of the hospital he closed his own business at Cumming; that he paid $26,000 for the hospital; that the defendant made the covenant contained in the contract signed by him, knowing that the petitioner was acting upon the understanding and agreement that both the defendant and W. E. Burdine would cease operating a hospital or carrying on the business of actively practicing medicine and surgery in Fannin County after April 1, 1949, for a period of ten years, except as permitted by the agreement.
It was further alleged: That, on or about April 1, 1949, the defendant, in violation of his agreement, did open up an office and clinic in the City of Blue Ridge, Georgia, under the style and name of "Health Institute, Clinic and Pharmacy. Dr. James M. Burdine, Physician and Surgeon" and he was at the time of the filing of the petition on May 14, 1949, carrying on the business of a surgeon and the practice of medicine, writing prescriptions, examining patients, and keeping and maintaining a nurse or assistant, and in general doing a regular business as a physician and surgeon contrary to the terms of his agreement; that each day the defendant continues to operate his business constitutes a new and distinct wrong against the rights of the petitioner and a new violation of his contract; that the damages sustained by the petitioner would be difficult to estimate with a degree of accuracy so as to give the petitioner complete and adequate compensation; and that the petitioner is without an adequate remedy at law.
The petitioner prayed for a temporary and permanent injunction.
A general demurrer was interposed to the petition, upon the grounds that (1) it set forth no cause of action; (2) the allegations of the petition show that the plaintiff has an adequate remedy at law; (3) the petition fails to show that the contract declared upon is reasonably necessary to protect the interest of the plaintiff, and that its enforcement would not be specially injurious to the public; and (4) the petition shows on its face that the contract declared upon is void and unenforceable because it is repugnant to article four, section four, paragraph one of the Constitution of the State of Georgia. The defendant also demurred specially to certain paragraphs of the petition. These demurrers were overruled, and to this judgment the defendant excepted.
On the interlocutory hearing, the plaintiff introduced in evidence his original verified petition, a deed from W. E. Burdine to the plaintiff, dated January 24, 1949, conveying the tract of land on which is located the Burdine Hospital, and containing a covenant that the grantor, for a period of ten years from the date of the conveyance, would not maintain a hospital, clinic, or office in Fannin County, except that the grantor would have the right to practice medicine by house calls made from an office in an adjoining county. The plaintiff also introduced in evidence the contract sued on, containing the following covenant by the defendant: "That the said party of the first part, for and in consideration of the sum of one dollar, and other valuable consideration, does hereby agree and covenant that the good will and practice of what is known as the Burdine Hospital is hereby conveyed and transferred to the party of the second part, and the said party of the first part hereby stipulates and covenants that he will not establish or maintain a hospital, clinic, or office in Fannin County, State of Georgia, where people might come for treatment, for a period of ten years from April 1, 1949, except the said party of the first part shall have the right to practice medicine by house calls made from an office in an adjoining county to the said County of Fannin."
The defendant introduced in evidence the affidavit of Dr. W. A. Arnold, being to the effect that he was a practicing physician and surgeon, and in his opinion no community in Georgia should have fewer than one physician for each 1000 to 1500 population; that in his opinion a physician who makes house calls should have laboratory facilities in order to render efficient service to his patients; that to reduce the number of physicians in any community below the ratio mentioned in his affidavit would be specially injurious to the public; and that, to make it necessary for a physician to practice medicine and minor surgery without a clinic and reasonable laboratory facilities, would be injurious to his patients. The affidavit of W. H. Rogers was to the effect that, in his opinion, Blue Ridge and Fannin County have too few physicians and surgeons to really accommodate and fill the needs of the people, and to close the clinic of Dr. Burdine would work a hardship on a great number of people, for the reason that one doctor and one clinic can not properly serve the needs of the people, and would cause some of the people to have to suffer for the want of a physician and hospital; that it was to the best interest of the people to keep all the physicians and hospitals now in the county. Affidavits to the same effect, signed by a number of people, were introduced in evidence. The defendant also introduced in evidence a joint affidavit, signed by many citizens of the county, to the effect that in their opinion it was to the best interest of the health and welfare of the county to allow Dr. James M. Burdine to continue to practice medicine and maintain an office in the City of Blue Ridge. The defendant testified that he was licensed to practice medicine in the State of Georgia, and he adopted the allegations of his sworn answer as evidence.
At the conclusion of the hearing, the trial judge entered an order granting the temporary injunction prayed for. To this judgment the defendant excepted. By a cross-bill of exceptions, the plaintiff excepted to the rulings of the court admitting certain evidence over objections of the plaintiff.
1. Contracts in general restraint of trade are void. Code, § 20-504. But a contract regarding a lawful and useful business or profession in partial restraint of trade, and reasonably limited as to time and territory, and not otherwise unreasonable, is not void. Rakestraw v. Lanier, 104 Ga. 188 ( 30 S.E. 735); Hood v. Legg, 160 Ga. 620, 627 ( 128 S.E. 891); Strauss v. Phillips, 180 Ga. 641 ( 180 S.E. 123); Kutash v. Gluckman, 193 Ga. 805 ( 20 S.E.2d 128).
"A distinction exists between that class of contracts binding one to desist from the practice of a learned profession, and those which bind one who has sold out a mercantile or other kind of business, and the good will therewith connected, not to again engage in that business. In the former class there should be a reasonable limit as to time, so as to prevent the contract from operating with unnecessary harshness against the person who is to abstain from practicing his profession at a time when his so doing could in no way benefit the other contracting party. In the latter class such limit is not essential to the validity of the contract, but the restraint may be indefinite." Rakestraw v. Lanier, supra.
In the Rakestraw case, a contract growing out of the formation of a medical partnership was under consideration; and in that case one partner covenanted with the other that, in the event of a dissolution of the partnership, he would not "locate or engage in the practice of medicine, surgery or obstetrics at said town of Oliver, or at any place within a fifteen miles radius from the drugstore of said Lanier, unless he shall have first obtained the written consent of said Lanier." The court held that the contract was limited as to space, and was therefore in partial restraint of trade, but further held that the contract was void because unlimited as to time, stating: "The restrictions imposed upon the promisor in this contract were larger than were necessary for the protection of the promisee. Full protection would have been afforded to the latter if the time in which the restraint should apply had been limited to the life of the defendant in error, or to the time in which he was engaged in the practice of his profession in the county of Screven. Had this contract been so limited, it is obvious, from the view which we take of the law, that it could be upheld and would be enforced."
The contract here under consideration contains a limitation as to both time and space. Unquestionably, it is reasonable as to its space limitations, being limited to one county of this State. After mature deliberation, we are of the opinion that it is also reasonable as to its time limitations. While it prohibits the promisor from maintaining a clinic, hospital, or office in Fannin County for a term of ten years, it yet permits him, from an office outside the county, to practice medicine within the county by making house calls on patients in the county. It does not, therefore, purport to entirely prohibit him from practicing his profession within the territorial limitations embraced in the contract.
While the argument of counsel for the plaintiff in error — to the effect that contracts of this nature between physicians tend to the public detriment, in that there is an urgent need of doctors to alleviate the pain and suffering of the public — presents a forceful reason for condemning the action of physicians in entering into such a contract, nevertheless this court is without authority to abrogate such a contract, if its terms be reasonable. The right to enter into such a contract has long been recognized by this court; and, so long as the contract meets the tests laid down by this court, as fully set forth in Rakestraw v. Lanier, supra, this court must hold the contract valid. Whether the restraints imposed by such a contract are reasonable is a question of law for determination by the court. Rakestraw v. Lanier, supra; Hood v. Legg, supra.
Although the allegations of the petition reveal that the physical properties, that is, the land and the hospital located thereon, were in the name of the brother of the defendant, and were purchased from him, the allegations further reveal that the defendant and his brother were engaged in the practice of medicine together at the hospital, and both negotiated with the plaintiff for the sale of their business, and both agreed to sell, and did sell, at the same time and place, their business and good will (there being included in the sale an operating table owned by both), and both executed written instruments at the same time, the defendant executing the agreement hereinbefore referred to, and his brother executing a deed to the real estate, containing a covenant similar to the one sued on. Accordingly, the fact that the real estate was not owned by the defendant does not render the contract made by him unenforceable. Compare McAuliffe v. Vaughan, 135 Ga. 852 (6) ( 70 S.E. 322, 33 L. R. A. (N.S.) 255, 22 Ann. Cas. 1912A, 290); Nelson v. Woods, 205 Ga. 295 ( 53 S.E.2d 227). "On the question of consideration, if there be a legal consideration, this is sufficient. The court will not make a bargain for the parties, and equity will not refuse to enforce the restrictive covenants unless there be such gross inadequacy of consideration as to shock the conscience and amount in itself to evidence of fraud." Shirk v. Loftis Bros. Co., 148 Ga. 500, 505 ( 97 S.E. 66); Rakestraw v. Lanier, supra.
In Griffin v. Vandergriff, 205 Ga. 288 ( 53 S.E.2d 345), this court decided, adversely to the contentions of the plaintiff in error, the question as to the validity of such contracts since the adoption of the Constitution of 1945.
The allegations of the petition were sufficient to set forth a cause of action, and the trial judge did not err in overruling the general demurrer.
2. Special demurrers were interposed to the petition, principally directed at the paragraphs relating to transactions with W. E. Burdine, the brother of the defendant. The demurrers raised the point that these matters are impertinent, immaterial, and prejudicial, and should be stricken. Although counsel for the plaintiff in error, in their brief, insist upon these grounds of special demurrer, they are not argued at length. We have carefully examined each ground of such demurrers, and in the light of the allegations in the petition showing that the entire transaction leading up to the execution of the contract sued on was between the plaintiff and both the defendant and his brother, we find no merit in these demurrers. The trial judge did not err in overruling these special grounds of demurrer.
3. On the trial of the case, the evidence clearly showed that the defendant was continuously, from day to day, violating the covenant contained in the contract executed by him, and the trial judge did not err in granting a temporary injunction.
Judgment affirmed in case No. 16775; judgment affirmed on the main bill of exceptions in case No. 16799; cross-bill dismissed. All the Justices concur.