C.K. & J.K., Inc. v. Fairview Shopping Center Corp.

407 N.E.2d 507, 63 Ohio St. 2d 201, 17 Ohio Op. 3d 124, 1980 Ohio LEXIS 809
CourtOhio Supreme Court
DecidedJuly 23, 1980
DocketNo. 79-944
StatusPublished
Cited by27 cases

This text of 407 N.E.2d 507 (C.K. & J.K., Inc. v. Fairview Shopping Center Corp.) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
C.K. & J.K., Inc. v. Fairview Shopping Center Corp., 407 N.E.2d 507, 63 Ohio St. 2d 201, 17 Ohio Op. 3d 124, 1980 Ohio LEXIS 809 (Ohio 1980).

Opinion

Celebrezze, C. J.

The basis of appellant’s claim that [204]*204the lease between the lounge and the shopping center constitutes an unfair arrangement is R. C. Chapter 1331.

R. C. 1331.01 states in relevant part:

“(B) ‘Trust’ is a combination of capital, skill, or acts by two or more persons for any of the following purposes:

“(1) To create or carry out restrictions in trade or commerce;

“(2) To limit or reduce the production, or increase or reduce the price of merchandise or a commodity;

“(3) To prevent competition in manufacturing, making, transportation, sale, or purchase of merchandise, produce, or a commodity;

“(4) To fix at a standard or figure, whereby its price to the public or consumer is in any manner controlled or established, an article or commodity of merchandise, produce, or commerce intended for sale, barter, use, or consumption in this state;

“(5) To make, enter into, execute, or carry out contracts, obligations, or agreements of any kind by which they bind or have bound themselves not to sell, dispose of, or transport an article or commodity, or an article of trade, use, merchandise, commerce, or consumption below a common standard figure or fixed value* * *

U * * *

“A trust as defined in division (B) of this section is unlawful and void.”

R. C. 1331.06 states:

“A contract or agreement in violation of sections 1331.01 to 1331.14, inclusive, of the Revised Code, is void.”

Under R. C. 1331.08, a party may bring an action for double the amount of damages sustained by him as a result of unlawful conduct under R. C. 1331.01 to .1331.14.

These statutes, known as the Valentine Act, were patterned after the Sherman Antitrust Act, and as a consequence this court has interpreted the statutory language in light of federal judicial construction of the Sherman Act—most significantly, Standard Oil Co. v. United States (1911), 221 U.S. 1. List v. Burley Tobacco Growers’ Co-op Assn. (1926), 114 Ohio St. 361.

In Standard Oil, the United States Supreme Court stated, at page 62, that in construing the Sherman Act, “the criteria [205]*205to be resorted to in any given case for the purpose of ascertaining whether violations* * *have been committed, is the rule of reason guided by the established law and by the plain duty to enforce the prohibitions of the act and thus the public policy which its restrictions were obviously enacted to subserve. And it is worthy of observation***that although the statute* * * makes it certain that its purpose was to prevent undue restraints of every kind or nature, nevertheless by the omission of any direct prohibition against monopoly in the concrete, it indicates a consciousness that the freedom of the individual right to contract, when not unduly or improperly exercised was the most efficient means for the prevention of monopoly***.”

This court adopted this rule of reason in paragraph four of the syllabus in List, supra, which states:

“Contracts in restraint of trade are not illegal except when unreasonable in character. When such contracts are incident and ancillary to some lawful business and are not unreasonable in their scope and operation they are not illegal.”

Although this court has not been faced before with the issue of whether restrictions in a shopping center lease are reasonable restraints on trade, a number of courts have addressed the issue under similar statutes and found such clauses to be valid. Under federal law, for example, in Savon Gas Stations v. Shell Oil Co. (C.A. 4, 1962), 309 F. 2d 306, the court allowed a clause in a shopping center lease with an on-premises gas station under which the owner could not allow another gas station to use the tract of land upon which the shopping center was located. The court determined, at page 309, that the restriction could not be characterized as imposing an “unreasonable or undue restraint upon***commerce” because the legitimate needs of a shopping center often required that such restrictions be available.

A number of other courts have recognized that restrictions in shopping center leases do not violate statutes prohibiting restraints of trade as long as they are reasonable in scope. Goldberg v. Tri-States Theatre Corp. (C.A. 8, 1942), 126 F. 2d 26; Marvin County Bd. of Realtors v. Palsson (1976), 16 Cal. 3d 920, 130 Cal. Rptr. 1; Pensacola Associates v. Biggs Sporting Goods (Fla. App. 1978), 353 So. 2d 944; Mendell v. [206]*206Golden-Farley of Hopkinsville, Inc. (Ky. App. 1978), 573 S.W. 2d 346; Grempler v. Multiple Listing Bureau of Hartford County, Inc. (1970), 258 Md. 419, 266 A. 2d 1; Utica Square, Inc., v. Renberg’s Inc. (Okla. 1964), 390 P. 2d 876; Karam v. H. E. Butt Grocery Co. (Tex. Civ. App. 1975), 527 S.W. 2d 481.

We join these courts in finding that, ordinarily, a provision in a shopping center lease granting a lessee the exclusive right to carry on a certain line of business in the shopping center does not constitute an illegal restraint of trade under R. C. Chapter 1331, as long as the scope and effect of the restriction is not unreasonably broad. We do so out of a recognition of the fact that lease restrictions are often necessary in order for a shopping center to obtain a desirable tenant.

The restriction in the case at bar is not unreasonably broad in scope or effect. The restriction does not affect the entire community, only the shopping center (a restaurant with a full liquor permit operates across the street). In addition appellant is permitted to sell beer. As a consequence, appellees have not violated R. C. Chapter 1331.

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Bluebook (online)
407 N.E.2d 507, 63 Ohio St. 2d 201, 17 Ohio Op. 3d 124, 1980 Ohio LEXIS 809, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ck-jk-inc-v-fairview-shopping-center-corp-ohio-1980.