Opinion
September 28, 1970
In a suit to declare the rights of the parties under an employment contract, plaintiff appeals from a judgment of the Supreme Court, Dutchess County, dated October 14, 1969, in favor of defendants pursuant to an order of said court, dated the same day, which granted defendants' motion for summary judgment for $15,000 upon their counterclaim. Judgment and order reversed, on the law, without costs, and plaintiff's motion to vacate a preliminary injunction which had been granted to defendants (said motion resulted in the judgment and order under review) denied. This determination is without prejudice to any further application which may be made to Special Term with respect to matters necessarily affected by this determination. Plaintiff, a doctor specializing in surgery, was employed by defendants under a letter agreement which provided, among other things, that in the event the employment were terminated plaintiff would not practice medicine for three years within a radius of 25 miles from Fishkill, measured from a specified point, except upon payment of $15,000, denominated as liquidated damages. Having received notice of termination, plaintiff instituted this suit asking for a declaration of the rights of the parties under the contract. Defendants counterclaimed for an injunction enforcing the restrictive covenant or, in the alternative, for damages in the amount of $15,000. Plaintiff moved for summary judgment and defendants cross-moved for a preliminary injunction enforcing the covenant or, in the alternative, for summary judgment in their favor for $15,000. By order dated September 15, 1969, Special Term denied both motions for summary judgment and granted defendants' motion for a preliminary injunction. Upon plaintiff's motion to vacate the preliminary injunction, the court modified its prior order and granted defendants' motion for summary judgment. By the order under review, dated October 14, 1969 and made upon that decision, defendants were granted summary judgment for $15,000, plaintiff's reply was stricken, and a stay of the preliminary injunction (granted in the order to show cause which had brought on plaintiff's motion to vacate the injunction) was continued until 30 days after service of this order at which time, unless plaintiff had paid the judgment to be entered for the $15,000, plus costs and disbursements, the stay was to continue further in full force and effect. The judgment under review was entered, upon this order, in favor of defendants in the sum of $15,000 on the same day, October 14, 1969. In granting the preliminary injunction, Special Term relied upon Foster v. White ( 248 App. Div. 451), a case involving a similar restrictive covenant in a doctor's employment contract. There, the employer had brought suit to restrain the employee from violating the restrictive covenant. In reversing the Special Term's holding that the covenant was void as against public policy and, therefore, that the action would not lie, the Appellate Division, Fourth Department, held that the covenant was prima facie enforceable. In modifying its original order, the Special Term herein held that its reliance upon Foster v. White ( supra) necessarily led to the conclusion that summary judgment should have been granted to defendants. The reasoning of the court was that, if the covenant is valid as a matter of law, plaintiff had no right to violate it. However, this is not what the holding in Foster v. White ( supra) stands for. In that case, the court was faced with a motion to dismiss the complaint. While the restrictive covenant in this type of case may be presumptively valid for purposes of rejecting a demurrer to an action based thereon or for the granting of a preliminary injunction, it does not follow that it is therefore valid as a matter of law and that without more it will support a motion for summary judgment. In fact, the language of the Fourth Department in the Foster case indicates just the opposite, i.e.: "It is fundamental that the test to be applied in cases of this sort is, first, is the injunction proposed necessary and reasonable for the protection of the plaintiffs' property and good will, and second, is it unreasonable, unjust or oppressive to defendant? (p. 453). * * * On a motion like this we cannot condemn the contract upon the ground that equity should not or might not lay the injunction for the whole of the time open to it by the terms of the contract. That question should not be determined now. Here we have only the complaint. The facts and circumstances of the case and the events of the trial are uncertain and unknown. They must be consulted in the making up of the judgment which equity may see fit to render as of the day that it is moved to do so" (p. 457). Since the Foster case concerned a test of the complaint seeking injunctive relief, the decision in that case merely held that the restrictive covenant involved was enforceable in the abstract, but that whether or not it was enforceable in the particular situation depended upon a hearing of the facts to determine the necessity of the injunction with relation to the interest sought to be protected and the effect of the injunction on the one against whom it was sought. Since the $15,000 judgment represents the contract's statement of liquidation of damages in the event of violation of the covenant, and since the validity of the covenant must be tested at trial, the judgment cannot stand. Since the order of October 14, 1969 rests upon the same rationale used to support the judgment, that order must also be reversed. Although no notice of appeal from this order was filed, the appeal from the judgment necessarily brought up for review any intermediate order affected thereby. Rabin, Acting P.J., Hopkins, Munder, Martuscello and Benjamin, JJ., concur.