void. Any violation by a corporation shall be ground for forfeiture of its charter under proper proceedings.

Stat. Ann. (Baldwin's Carroll, Supp. 1939)

Liquor

Section 2554b-128 provides that the various classes of licenses authorized by this act in sections 2554b-114 and 2554b-126 shall be considered inconsistent with each other and any person holding a license of any of the kinds above referred to shall be ineligible to apply for and is hereby prohibited from holding a license of another kind, with a few exceptions specifically listed. However, any person may hold two or more licenses of the same kind. Section 2554b-130 provides that no person shall be permitted to evade the above prohibitions by applying for a second license under the cloak of separate corporate entity. The Administrator is hereby authorized to examine into the ownership and management of corporations which shall apply for licenses or which hold licenses, and shall deny the application for a license to any party substantially interested in another incompatible license.

Section 2554b-156 provides that no brewer, wholesaler, or distributor shall sell any alcoholic beverages except on a cash basis, clubs and voluntary associations exempted. No right of action shall exist to collect any claim for credit extended contrary to the provisions of this clause.

Section 2554b-161 provides that no license shall be pledged, hypothecated, or deposited as collateral security on any loan or upon any condition; and any such pledge, hypothecation, or deposit, and any contract providing therefor shall be void.

Section 2554b-163 provides that payments for licenses and license taxes shall be made only by the party applying therefor and to whom it is issued. In addition to all other penalties provided in this act, a violation of this section shall authorize and require the revocation of the license the tax for which was paid by another, and also the revocation of the license, if any, of the person so paying for the license of another.

Section 2554b-168 provides that no person holding a distiller's or rectifier's or vintner's or wholesaler's license, and no employee, servant, or agent of theirs, shall

(1) Be interested directly or indirectly in any premises where any distilled spirits or wine are sold at retail; or in any business devoted wholly or partially to such sale by stock ownership, interlocking directorates, mortgage, or lien on any personal or real property. or by any other means;

(2) Make or cause to be made any loan to any person engaged in the manufacture or sale of any distilled spirits or wine at wholesale or retail;

(3) Make any gift or render any kind of service whatsoever, directly or indirectly, to any licensee which in the sound judgment of the board may tend to influence such licensee to purchase their product.

Section 2554b-171 provides that no distiller, rectifier, vintner, or wholesaler shall furnish or cause to be furnished to any licensee any sign whatsoever, except as authorized by the rules and regulations of the board.

Section 2554b-217 provides that no manufacturer or distributor, except as hereinafter provided, shall in any wise be interested either directly or indirectly in the ownership or leasehold of any property or in any mortgage against the same for which a retail license is granted; nor directly or indirectly lend any moneys, credit or the equivalent thereto to any retailer in equipping, fitting out, or maintaining and conducting either in whole or in part an establishment or business operated under a retail license for the sale of malt beverages. However, this section shall not apply to the interest of a licensee in any mortgage or other lien taken by him to secure the payment in whole or in part of any indebtedness due him by any other licensee and incurred prior to the effective date of this act. The provisions of this article shall not prohibit a distributor from owning stock in any brewery.

Section 2554b-141 (3 and 4) provide that transferring, assigning, pledging, depositing, or hypothecating a license, or paying for the license of another or permitting another paying for one's own license shall cause the revocation of the license. Violation of the provisions of sections 2554b-163 and 2554b-168 shall cause a forfeiture of the licenses issued under section 2554b-114 to all parties participating or concerned in the violation.

Section 2554b-196 provides that any person who, by himself or acting through another, directly or indirectly, shall violate the provisions of any section of this act other than sections 2554b-205 to 2554b-218, inclusive, for which a specific penalty is not provided, shall, for the first offense be deemed guilty of a misdemeanor and upon conviction thereof be punished by a fine not to exceed $500 or by imprisonment in the county jail or workhouse for a term not to exceed six months, or by both. For a second and each subsequent violation, whether the section violated be that for which the first conviction was had or not, the offender upon conviction shall be punished by a fine not to exceed $1,000 or by imprisonment for a term not to exceed one

year, or by both. These penalties shall be in addition to the revocation of the offender's license. If the offender be a corporation, joint stock company, association, or fiduciary, then the principal officer or officers responsible for such violation may be punished by such imprisonment. Nothing in this section shall be construed as conflicting with the penal provisions of section 2554b-106 of this act dealing with members and employees employed by the State to administer these provisions.

Section 2554b-219 provides that any person who shall violate any of the provisions of sections 2554b-205 to 2554b-218, inclusive, shall be deemed guilty of a misdemeanor and upon conviction shall be punished by a fine not less than $50 nor more than $500 for each offense, and said person's license shall be subject to revocation. See Tying Contracts and Exclusive Dealing Arrangements.

Tobacco

Sections 4811 to 4814 provide that all sales of leaf tobacco at public auction shall be free and open to all responsible bidders. Warehousemen combining for the purpose of restricting the bidding or organizations prohibiting their members from bidding, at any warehouse, are guilty of a misdemeanor and, in addition to a fine, shall forfeit their corporate rights and privileges.

In sustaining an injunction to prevent a Kentucky railroad corporation which had lines in two States from acquiring parallel lines of a competing company within the State, the court held that Const. 1891, sec. 201 is not in conflict with "interstate commerce" clause of the Federal Constitution. Louisville & N. R. R. Co. v. Commonwealth, 97 Ky. 675, 31 S. W. 476 (1895); aff'd 161 U. S. 677, 16 Sup. Ct. 714, 40 L. Ed. 849 (1896). Nor does section 201 impair the obligation of a contract right by affecting a revocation of the unexecuted provisions of a prior charter, which gave the railroad power to acquire lines of any company. Ibid.

210235°-40-vol. 1-21

Two railroads serving three important points in common, and at an average distance of 8 miles from each other, are parallel and within the prohibitions of Const. (1891), sec. 201. Commonwealth v. Louisville & N. R. R. Co., 144 Ky. 324, 138 S. W. 291 (1911).

Const. (1891) sec. 201 is inapplicable in a penal action against a railroad for owning and operating two bridges across a boundary river more than 200 miles apart, one bridge running east and west and the other north and south, and each serving a population having no community of interest with that served by the other. Commonwealth v. L. & N. R. R. Co., 148 Ky. 94, 146 S. W. 767 (1912).

Const. (1891) sec. 210 does not prevent a railroad from owning a hotel or park operated as a nonprofit venture, used principally for the accommodation of its passengers and employees. Louisville Property Co. v. Commonwealth, 146 Ky. 827, 143 S. W. 412 (1912). Telephone Company.

A contract between a municipality and a telephone company, authorizing the company to consolidate with a competitor and giving the city power to fix rates for a certain period of time was held a valid exercise of the city's authority, and not in violation of Const. (1891) sec. 201. Southern Bell Telephone & Telegraph Co. v. Louisville, 265 Ky. 286, 96 S. W. (2d) 695 (1936).

Transfer Companies.

The two competing transfer companies in a city contracted that one engage exclusively as the carrier of passengers and that the other engage exclusively as a carrier of freight. In dismissing an action for specific performance of this contract, the court held that such companies were "common carriers," that their lines were "parallel lines" within the meaning of Const. 1891, sec. 201, and that such a contract. was void. Fields & Son v. Holland & Son, 158 Ky. 544, 165 S. W. 699 (1914).

II. CONTRACTS NOT TO COMPETE

No statutory provisions.

Judicial Decisions

Restrictive Covenants Ancillary to the Sale of a Business.

A covenant by the seller of a tobacco warehouse and its good will not to engage in the said business for a period of 10 years in the same city was upheld as a reasonable restraint and necessary to protect the interest of the vendee. Western District Warehouse Co. v. Hobson, 96 Ky. 550, 29 S. W. 308 (1895). See also Royer Wheel Co. v. Miller, 20 Ky. L. R. 1831, 50 S. W. 62 (1899).

The covenant of a seller of marble and tombstones not to reengage in the business for 3 years at the place of sale was held valid. Skaggs v. Simpson, 33 Ky. L. R. 410, 110 S. W. 251 (1908).

The seller of a livery business agreed not to engage in the same business within 50 miles of the place where the business was located, for a period of 10 years. The contract was held to be a reasonable restraint and valid. Linneman & Moore v. Allison & Yates, 142 Ky. 309, 134 S. W. 134 (1911).

A contract whereby the seller of a livery business agreed not to reengage in the same business in the same town so long as the buyer was engaged in such business in that town was upheld. Breeding v. Tandy, 148 Ky. 345, 146 S. W. 742 (1912).

An undertaker sold his equipment to a member of a competing firm and agreed not to reengage in the business in that county so long as the buyer was engaged therein. The covenant was held valid. Elkins v. Barclay, 243 Ky. 144, 47 S. W. (2d) 945 (1932).

A covenant by a seller of a tan-yard not to erect or carry on a tanyard in the city or county was held valid. Grundy v. Edwards, 7 J. J. M. 368 (1832).

That the seller of a buggy business will not sell buggies in a particular county was upheld. Davis v. Brown, 98 Ky. 475, 32 S. W. 614 (1895) aff'd on rehearing, 98 Ky. 475, 36 S. W. 534 (1896).

The seller of a grocery business agreed not to reengage in the grocery business in a specified town in competition with the buyer. The covenant was held valid even though unlimited in time. Long v. O'Bryan, 28 Ky. L. R. 1062, 91 S. W. 659 (1906).