CONTRACTS NOT TO PRACTICE MEDICINE
Authors: E. Merrick Dodd
Journal: Annals of Internal Medicine (1943)

Article1 April 1943CONTRACTS NOT TO PRACTICE MEDICINEE. MERRICK DODDE. MERRICK DODDSearch for more papers by this authorAuthor, Article, and Disclosure Informationhttps://doi.org/10.7326/0003-4819-18-4-618 SectionsAboutPDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions ShareFacebookTwitterLinkedInRedditEmail ExcerptINTRODUCTIONA physician who has been practicing successfully in a certain small city and whose patients include residents of the city and of the neighboring countryside, sells his practice to a younger man and agrees that he will not thereafter practice medicine within a 25 mile radius of his former office.A dentist with a similar established practice hires a younger dentist as his assistant and the latter agrees that if he ever leaves the former's employ he will not practice dentistry within a 10 mile radius.The doctor who sold his practice, expecting to live thereafter on the proceeds...1 American Medical Association v. United States, 63 Sup. Ct. 326 (1943). Google Scholar2 1 P. Wms. 181 (1711). Google Scholar3 1 P. Wms. 181, 190 (1711). Google Scholar4 Rogers v. Parry (1614) 2 Bulst. 136. It is not mere antiquarianism which leads lawyers to cite seventeenth century cases in twentieth century articles. The common law of today is affected by early precedents in a manner which has no parallel in medicine. Google Scholar5 The contract is, however, valid at common law even though the buyer was already engaged in the same line of business in the same locality so that the contract did in fact reduce the number of competitors. Google Scholar6 1 P. Wms. 181 (1711). Google Scholar7 See R. L. Parish v. Schwartz, 344 Ill. 563 (1931). The contract did not relate to the sale of an entire business but to the sale of a large block of shares in a corporation by two of its officers. Three judges dissented. Google Scholar8 See California Civ. Code, §§ 1673-1675; 15 Oklahoma Stat. Ann. §§ 217-218. These statutes limit the permissible area to "a specified county, city or part thereof." Google Scholar9 See 5 Williston on Contracts (Rev. Ed. 1937) § 1639 and cases cited. The problem does not seem to have arisen with respect to sales of a medical or dental practice. Google Scholar10 See 5 Williston on Contracts (Rev. Ed. 1937) § 1638 and cases cited. Google Scholar11 The cases upholding such contracts are numerous and the following list is not exhaustive. In most of them the contract was held to be not only valid in law but enforcible in equity by injunction. (a) Contracts by a physician or other medical practitioner not to compete with one who is purchasing his practice: Doty v. Martin, 32 Mich. 462 (1875) (unlimited contract not to practice in vicinity of Maple Rapids); Wilkinson v. Colley, 164 Pa. 34, 30 Atl. 286 (1894) (contract not to practice within 8 miles of Lehman Centre for 10 years); Gordon v. Mansfield, 84 Mo. App. 366 (1900) (unlimited contract not to practice in county); Wolff v. Hirschfeld, 23 Tex. Civ. App. 670, 57 S.W. 572 (1900) (contract not to practice within 10 miles of Marion for 10 years); Ryan v. Hamilton, 205 Ill. 191, 68 N.E. 781 (1903) (unlimited contract not to practice within 8 miles of Viola); Threlkeld v. Steward, 24 Okla. 403, 103 Pac. 630 (1909) (contract not to practice within 10 miles of Allen for 2 years); Mills v. Cleveland, 87 Kan. 549, 125 Pac. 58 (1912) (contract by proctologist not to practice anywhere in the United States, broken by resuming practice in the same locality; a dubious decision in view of the scope of the contract); Scott v. Asbury, 198 S.W. 1131 (Mo. App. 1917) (unlimited contract not to practice within 10 miles of Marceline); Rowe v. Toon, 185 Ia. 848, 169 N.W. 38 (1919) (contract not to practice in county for 10 years); Clabaugh v. Haebner, 236 S.W. 396 (Mo. App. 1922) (unlimited contract not to practice in Green Ridge and vicinity); Randolph v. Graham, 254 S.W. 402 (Tex. Civ. App. 1923) (unlimited contract not to practice within a 20-mile radius); Johnson v. Mclntyre, 309 Pa. 191, 163 Atl. 290 (1932) (contract not to practice within a 15-mile radius for 15 years); Johnson v. Stembo, 271 Ky. 301, 126 S.W. (2d) 165 (1938) (contract by a physician not to operate a hospital in the county in competition with a hospital which he was selling). (b) Similar contracts by dentists: Dills v. Doebler, 62 Conn. 366, 26 Atl. 398 (1892) (contract construed to permit resumption of practice on payment of a stipulated sum); Socke v. Murdock, 20 N. Mex. 522, 151 Pac. 298 (1915) (contract not to practice in Springer for five years); Wall v. Chapman, 84 Okla. 114, 202 Pac. 303 (1921) (contract not to practice in city for five years); Miller v. Eller, 192 Iowa 147, 183 N.W. 498 (1921) (contract not to practice in town for 25 years). Google Scholar12 But cf. Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 735 (1898) (partnership agreement by physician not to practice within 15-mile radius after expiration of partnership held invalid because not limited as to time); Mandeville v. Harmon, 42 N.J.Eq. 185 (V.C. 1886) (contract by physician not to practice in Newark at any time after the termination of his employment said to be of doubtful validity; injunction against breach refused. Google Scholar13 Tarry v. Johnston, 114 Neb. 496, 208 N.W. 615 (1926). Google Scholar14 Injunctions were granted in nearly all of the cases listed in footnote 10. Google Scholar15 5 Williston on Contracts (Rev. Ed. 1937) § 1640. Google Scholar16 5 Williston on Contracts (Rev. Ed. 1937) § 1640. A century or more ago Lord Eldon said that good-will "is nothing more than the probability that the old customers will resort to the old place." Cantwell v. Lye, 17 Ves. 335 (1810). But the modern decisions recognize that the old customers tend to resort to the old trade-mark or trade-name and to the old individual as well as to the old place and that these tendencies are parts of the seller's good-will. It is true that the purchaser of a business cannot take advantage of the tendency to resort to the old person, since he is a different person, but the seller can put an end to that tendency by going out of business. If he does so that good-will which results to the buyer from the customers' tendency to resort to the old place of business or to the old name of the business will not be counteracted by the customers' tendency to continue to deal with the same man. Google Scholar17 Angler v. Wakefield, 11 Allen 211 (Mass. 1867); Old Corner Bookstore v. Upham, 194 Mass. 101, 80 S.E. 228 (1907); Martino v. Pontone, 270 Mass. 158, 170 N.E. 67 (1930). Google Scholar18 For cases in which continued competition by the seller was held not to be inconsistent with his sale of his good-will see Hoxie v. Chaney, 143 Mass. 592 (1887); Fairfield v. Lowry, 207 Mass. 352, N.E. (1911). Google Scholar19 Lord Eldon, C in Cantwell v. Lye, 17 Ves. 335 (1810). Google Scholar20 Brown v. Benzinger, 118 Md. 29, 84 Atl. 79 (1912) (chiropodist); Yeakley v. Gaston, 450 Tex. Civ. App. 405, 111 S.W. 768 (1908) (physician). See also Townsend v. Hurst, 37 Miss. 679 (1859) (physician). Google Scholar21 In Dillon v. Nicodeme, 117 S.W. (2d) 668 (Tex. Civ. App. 1938), a chiropractor, who had bought the defendant's practice and good-will, was denied an injunction against the defendant, who had resumed practice in the same building. The court said that competition, without solicitation of former patients, did not violate the contract and that, furthermore, the plaintiff was not licensed to practice and could not legally do so. The court seems to have been unaware of its earlier remarks in Yeakley v. Caston, 50 Tex. Civ. App. 405, 111 S.W. 768 (1908), supra note 20. Google Scholar22 Foss v. Roby, 195 Mass. 292, 297, 81 N.E. 199 (1907). Google Scholar23 195 Mass. 292, 81 N.E. 199 (1907). Google Scholar24 Herbert Morris, Ltd. v. Saxelby [1916] A.C. 688. Google Scholar25 Clark Paper & Mfg. Co. v. Stenacher, 236 N.Y. 312, 140 N.E. 704 (1923); Club Aluminum Co. v. Young, 263 Mass. 223, 160 N.E. 804 (1928) (but cf. Becker College of Business Administration & Secretarial Science v. Gross, 281 Mass. 355, N.E. (1933); Samuel Stores v. Abrams, 94 Conn. 248, 108 Atl. 54 (1919) (but cf. Torrington Creamery Co. v. Davenport, 126 Conn. 515, Atl. (1940). Google Scholar26 See the numerous cases cited in 5 Williston on Contracts, § 1643 sustaining such contracts when made by employees. Google Scholar27 But cf. 5 Williston on Contracts (Rev. Ed. 1937) § 1643. "The ultimate question should be the same in both cases,—what is necessary for the protection of the promisee's rights and is not injurious to the public." To state the "ultimate question" that way is to treat the inequality of bargaining power between employer and employee and the hardship which such contracts impose on employees as legally irrelevant considerations. It is true that our nineteenth century common law of contracts tended in general to ignore such factors, and that twentieth century limitations on the legal power of employers to exact unfair agreements from their employees have come about mainly through legislation. But in this particular subject—contracts in restraint of trade—the older common law tradition recognized the danger that "masters" would "give their apprentices much vexation" if the latters' agreements not to compete were held valid, and in general condemned such agreements. See Mitchel v. Reynolds, 1 P. Wms. 181 (1711). The English courts have wisely adhered to the older view. Google Scholar28 Agreements not to compete made by one who is neither the seller of a business nor an employee or partner are ordinarily invalid as being in restraint of trade. Google Scholar29 See Herbert Morris, Ltd. v. Saxelby [1916] A.C. 688, 715. Google Scholar30 There are no recent English cases dealing with restrictive contracts between doctors, dentists or other professional men and their employers, but the language in the leading case of Herbert Morris, Ltd. v. Saxelby [1916] A.C. 688 indicates that such contracts, reasonably limited as to space, would ordinarily be held valid. The earlier cases so held. Davis v. Mason, 5 Term. Rep. 118 (1793) (contract by assistant surgeon not to practice within 10 miles of his former employer's residence for 14 years held valid); Mallon v. May, 11 M. & W. 653 (1843) (contract by dentist's assistant not to practice in London or certain other towns held valid as to London); Dendy v. Henderson, 11 Exch. 194 (1855) (contract by solicitor's clerk not to act as such in the vicinity for 21 years held valid); Lewis & Lewis v. Dunford, 24 T. L. R. 64 (Ch. D. 1907) (contract by a solicitor's clerk not to "act for any person who is or has within the previous 5 years been a client of the firm" held valid). Google Scholar31 No doubt an employer's list of customers is his property but the question is whether the employee can serve his former employer's customers, not whether he can legally copy his employer's list of customers. Google Scholar32 The cases upholding such contracts are numerous and the following list is not exhaustive. In most of them the contract was held not only valid at law but enforcible in equity by injunction. (a) Contracts by a physician or other medical practitioner with an assistant by which the latter agrees not to practice for a certain time after the termination of the employment. Styles v. Lyon, 87 Conn. 23, 86 Atl. 564 (1913) (unlimited contract by doctor's assistant not to practice in same town; injunction held properly limited to time during which former employer should continue to practice); Freudenthal v. Espey, 45 Colo. 488, 102 Pac. 280 (1909) (contract by doctor's assistant not to practice in same city for 5 years); Granger v. Craven, 159 Minn. 296, 199 N.W. 10 (1924) (contract by doctor's assistant not to practice within 20 miles of Rochester for 3 years); Foster v. White, 248 N.Y. App. Div. 451, 290 N.Y. Supp. (2d) 394 (1936) (unlimited contract by doctor's assistant not to practice in county). But see the same case on a subsequent appeal, Foster v. White, 253 N.Y. App. Div. 448, 3 N.Y. Supp. (2d) 456 (1938). It appeared that the plaintiff had improperly terminated the defendant's employment and he was accordingly denied an injunction against the defendant's practicing); Wilson v. Gamble, 177 Miss., 363, 177 So. 363 (1937) (contract by two doctor's assistants not to practice within 5 mile radius for 5 years); McMurray v. Faust, 224 Ia. 50, 276 N.W. 95 (1937) (contract by doctor's assistant not to practice in county for 5 years); Larsen v. Burroughs, 224 Ia. 740, 277 N.W. 403 (1938) (contract by doctor's assistant not to practice in same town for 10 years). (b) Similar contracts by dentists. Tillinghast v. Boothby, 20 R.I. 59, 37 Atl. 344 (1897) (contract by dentist's assistant not to practice in county); Turner v. Abbott, 116 Tenn. 718, 94 S.W. 64 (1906) (unlimited contract by dentist's assistant not to practice in vicinity); Erickson v. Hawley, 12 F. (2d) 491 (D.C. Ct. App. 1926) (contract by orthodontist's assistant not to practice in District of Columbia for 10 years). In Olsen v. Swendiman, 62 N.D. 649, 244 N.W. 870 (1932) a contract by a dentist's assistant not to practice in the same or a neighboring city for two years was held invalid because in violation of a North Dakota statute. In Farr v. Stearman, 264 Ill. 110, 105 N.E. 957 (1914) a contract by a dentist with his employer, who was not a dentist, that the former would not practice within a 25-mile radius was construed to deny him the right to practice even if he carried out the terms of an agreement which entitled him to buy the business. It was held unreasonable and invalid. Google Scholar33 In Osius v. Hinchman, 150 Mich. 603, 114 N.W. 402 (1908) the court recognized the validity of a contract by a dentist's assistant not to practice in Muskegon for five years, but refused to enforce it by an injunction. Cf. Schneller v. Hayes, 176 Wash., 115, 28 Pac. (2d) 273 (1934) in which an optician's employee had agreed never to do business as an optician in the city. His employment was an employment at will and the court said that the agreement was too one-sided to be enforced in equity. Google Scholar34 The following cases involve contracts of this type: Latham v. Butler, 17 S.W. (2d) 1083 (Tex. Civ. App. 1929). Two physicians had been co-owners of a hospital and had operated it as partners. Defendant sold out to plaintiff who agreed to pay all the partnership debts and to employ defendant for one year, defendant agreeing not to practice in the county thereafter. The agreement was enforced by injunction. Sover v. Buck, 351 Ill. 643, 184 N.E. 860 (1933). A retiring member of a medical partnership agreed for consideration not to practice in the same city. The agreement was held valid. Google Scholar35 The following cases involve contracts of these types: Glover v. Shirley, 169 Mo. App. 637, 155 S.W. 878 (1913) (agreement made by a junior partner on being admitted to a firm that he would not after leaving it practice within a 10-mile radius for 10 years, enforced by injunction); Marvel v. Jonah, 83 N.J.Eq. 295, Atl. (Ct. Err. & App. 1914) (agreement by a junior partner that, if the partnership were ever dissolved by reason of his violation of the partnership agreement, he would not practice in the city for three years, enforced by injunction); Proctor v. Hansel, 205 Ia. 542, 218 N.W. 255 (1928) (promise by young osteopath, as part of an agreement by which he was associated with an older man, that after the termination of the arrangement he would not practice osteopathy in the city for three years, enforced by injunction); Shaken v. Strattle, 188 Minn. 219, 246 N.W. 744 (1933) (provision of partnership agreement that on the termination of the partnership one partner would not practice medicine in either of two counties for five years, enforced by injunction); Herrington v. Hackler, 181 Okla. 396, 74 Pac. (2d) 388 (1937) (provision in partnership agreement between two doctors who owned a hospital that if the partnership proved unsatisfactory, defendant would either buy out the plaintiff or turn the hospital over to him and refrain from practicing for five years within a radius of 100 miles; stipulation against practicing enforced by injunction). But cf. Rakestraw v. Lanier, 104 Ga. 188, 30 S.E. 175 (1898) in which a provision in a partnership agreement that at its expiration one of the partners would not practice medicine within a 15-mile radius was held invalid because unlimited as to time. Google Scholar This content is PDF only. To continue reading please click on the PDF icon. Author, Article, and Disclosure InformationAffiliations: Cambridge, Massachusetts*Received for publication January 25, 1943.†Professor of Law, Harvard Law School. PreviousarticleNextarticle Advertisement FiguresReferencesRelatedDetails Metrics 1 April 1943Volume 18, Issue 4Page: 618-629KeywordsDentistry ePublished: 1 December 2008 Issue Published: 1 April 1943 PDF downloadLoading ...