Appellate Division of the Supreme Court of New York, Fourth Department

Karpinski v. Ingrasci
34 A.D.2d 403 (N.Y. App. Div. 1970) • 312 N.Y.S.2d 473
Decided Jun 30, 1970

404 June 30, 1970. *404 from Tompkins County, including the City of
Ithaca, that he was urged, in order to
Appeal from the Supreme Court, Cayuga County,
accommodate patients in that area to set up a
ARTHUR E. BLAUVELT, J.
405 branch office in Ithaca. This he did by *405
Gabriel N. Meckenberg for appellant. entering into the subject contract with defendant,
who had just completed his residency in oral
William S. Elder, Jr., and Robert E. White for
surgery.
respondent.
Paragraph 6 of the contract contains the provisions
WITMER, J. of particular concern in this action, and it provides
in major part as follows:
Defendant appeals from a judgment in favor of the
plaintiff (1) in the sum of $44,606.87, consisting "The party of the second part [defendant-
of $40,000, the amount of a promissory note made appellant] promises and covenants that while this
by defendant to the order of plaintiff, plus agreement is in effect and forever thereafter, he
$4,291.67 interest thereon and $315.20 costs, and will never practice dentistry and/or Oral Surgery
(2) permanently enjoining defendant from in Cayuga, Cortland, Seneca, Tompkins or Ontario
practicing oral surgery or dentistry in the five Counties, except:
counties of Cayuga, Cortland, Seneca, Tompkins
"(a) In association with the party of the first part
and Ontario. The judgment was rendered
[plaintiff-respondent] * * *
following a nonjury trial of an action for breach of
an employment contract made between plaintiff "In consideration of the above terms of
and defendant for a three-year period beginning employment, and of the experience gained while
July 1, 1962. working with the party of the first part,
particularly in Oral Surgery, the party of the
The record shows that plaintiff began the practice
second part agrees to execute a promissory note in
of oral surgery in Auburn in 1953; and because
the amount of Forty Thousand Dollars
most of his work came from referrals from other
($40,000.00) payable to the party of the first part
dentists, over a period of years he deliberately and
or the survivor thereof.
at great effort and considerable expense cultivated
the acquaintanceship and confidence of the "It is understood and agreed by and between the
practicing dentists in the five-county area above parties hereto that the aforesaid note shall become
mentioned. It appears that in a rural area a due and payable if said party of the second part
combination of several counties is required to practices dentistry and/or Oral Surgery in Cayuga,
furnish a sufficient clientele to occupy the full- Cortland, Seneca, Tompkins or Ontario Counties
time services of an oral surgeon. By the early disassociated from the party of the first part. Said
1960's he had so much practice coming to him note shall be null and void if party of the second

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 Karpinski v. Ingrasci 34 A.D.2d 403 (N.Y. App. Div. 1970)

part becomes a partner with party of the first part, contract nor the promissory note in the sum of
or if he practices outside Cayuga, Cortland, $40,000, payable on defendant's breach of the
Seneca, Tompkins or Ontario Counties." contract, states that the note represents plaintiff's
liquidated damages in the event of defendant's
Defendant immediately established his residence
breach; and that the amount of the note was fixed
in Ithaca and cared for most of the patients who
by plaintiff on the basis of his investment of time
came to the Ithaca office, and also assisted
and money in developing his "business" prior to
plaintiff in his Auburn office two days per week.
the employment of defendant.
Naturally he became well acquainted with the
practicing dentists in the area. No question is There is no impropriety in the contract covenant
raised concerning the character of the services that upon breach of the contract by defendant he
rendered by defendant during the existence of the be "forever" barred from the practice of oral
contract nor concerning appropriate payment surgery within the five-county area ( Foster v.
therefor. The practice prospered. White, 248 App. Div. 451, affd. 273 N.Y. 596)
since, insofar as defendant would compete with
At the end of the three-year period of the contract
plaintiff, the covenant not to practice therein is
it was not renewed but the parties continued to
reasonable (see Purchasing Assoc. v. Weitz, 13
work under its terms, except that plaintiff paid
N.Y.2d 267, 272-273). The Trial Justice found
defendant more for his services. Defendant sought
upon sufficient evidence, however, that a
a new contract in which a partnership would be
practicing dentist is not in competition with an
established and which would modify the
oral surgeon. In light of such finding the
restrictive covenant and promissory note provision
restrictive covenant in the contract that defendant
in the event of breach, quoted above, but plaintiff
"will never practice dentistry and/or oral surgery"
rejected defendant's proposals, principally because
in the area is too broad. Restrictive employment
plaintiff insisted on a restrictive covenant and
covenants are upheld only insofar as such
promissory note provision similar to that in the
covenant in the particular case is reasonably
existing contract.
necessary for the plaintiff's protection. Clearly, the
In February, 1968 when defendant decided that provision restraining defendant from the general
406 further effort *406 to negotiate a new contract practice of dentistry as opposed to the practice of
suitable to him would be fruitless, he advised oral surgery, is not reasonably necessary for
plaintiff that he would terminate their relationship plaintiff's protection. "Where the restraint imposed
on March 15, 1968 unless plaintiff wished to end is more extensive than the legitimate interests
it sooner. Plaintiff promptly relieved defendant of sought to be protected, the restraint is invalid" (
his duties on February 19, 1968. Thereafter on Paramount Pad Co. v. Baumrind, 4 N.Y.2d 393,
February 26, 1968 defendant opened his own 396-397; and see Janitor Serv. Mgt. Co. v. Provo,
office for the practice of oral surgery in Ithaca; 34 A.D.2d 1098; De Mov v. Siodmak, 43 Misc.2d
and within two months plaintiff began this action 801, 803). The restrictive covenant and
to restrain him and to collect on the promissory promissory note, therefore, are completely void.
note.
Even if the contract and note were not void, this
The Trial Justice found that during the period of judgment could not stand. We agree that the
employer-employee relationship between the promissory note reasonably represents plaintiff's
parties the plaintiff did not impart to defendant 407 liquidated damages and is not a penalty. *407
any trade secret or special process nor disclose any Whether the plaintiff is entitled to both injunctive
confidential information relating to plaintiff's relief and monetary damages depends upon the
practice of dentistry. He also found that neither the intent of the parties and the facts ( Diamond

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 Karpinski v. Ingrasci 34 A.D.2d 403 (N.Y. App. Div. 1970)

Match Co. v. Roeber, 106 N.Y. 473, 486). Here The judgment should, therefore, be reversed and
plaintiff could not enjoin defendant from the complaint dismissed.
competing and also recover the full damages
GOLDMAN, P.J., MARSH, MOULE and
which have been agreed that plaintiff would suffer
HENRY, JJ., concur.
in the event defendant competes with him. He
could enjoin the defendant or he could collect the Judgment unanimously reversed on the law and
agreed damages, but he could not do both, facts with costs and complaint dismissed.
resulting in double recovery. Were the covenant
valid, plaintiff, having sought and obtained an
injunction restraining defendant from competing
henceforth, could only recover his actual damages
from the time of defendant's breach of February
26, 1968 to the time that he ceased to compete by
virtue of the injunction ( Wirth Hamid Fair
Booking v. Wirth, 265 N.Y. 214, 223-224).