Case ID: ad_9/html/0425-01.html
Source: Caselaw Access Project
Author: {"author": "Williams, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles J. Cohen, Respondent, v. The Berlin and Jones Envelope Company, Appellant, Impleaded with Others.
    
      Contract—wJisn not in restraint of trade.
    
    A contract will not be adjudged to be illegal when it is capable of a construction which will render it valid.
    It is not enough to vitiate a contract that a suspicion or probability of an unlawful intent arises from the contract itself.
    In an action brought .to recover damages alleged to have resulted from a refusal by the defendants to take a certain number of envelopes, which were to be manufactured by the plaintiff, under a contract, which provided that the defenclants would purchase from the plaintiff a certain quantity of envelopes, at prices to be fixed by a company controlled by the defendants, and that the plaintiff should not sell to other parties at a lower price, it did not appear from the contract that the prices of any envelopes except those manufactured by the plaintiff were to be fixed or maintained under the contract, nor did the contract restrict the number of envelopes which the plaintiff should manufacture or sell, nor did it in-any way restrict the defendants from manufacturing or selling envelopes.
    . Held, that upon an examination of the contract itself, and in the absence of any proof of the circumstances surrounding its execution, or of the character and business of the parties, or of the manner in which the parties conducted business under the contract, it could not be said that the contract was illegal as being one in.restraint of trade.
    Appeal by the defendant, The Berlin and Jones Envelope Com- ' pany, from an interlocutory judgment, of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 14th day of April, 1896, upon the decision of the court rendered after a trial at the New York Special Term overruling, the said defendant’s demurrer to the plaintiff’s complaint.
    The demurrer was interposed on the ground that the facts stated did not constitute a cause of action. The only question presented upon the appeal is whether the contract, to recover damages for the breach of which the action was brought, was illegal.
    The action was brought to recover damages which ensued as alleged from a breach .by the defendants of their agreement to purchase from the plaintiff 250,000 envelopes daily, counting 300 days to the year. The prices and terms for such envelopes were to be in conformity with schedules which were to be issued from time to time by the .Standard Envelope Company, which was recited in. the agreement to be under the control of the defendants. The Contract further provided that the plaintiff should not sell envelopes at a less price than that at which the defendants had covenanted to buy. - . ■'•'■■■■
    The fifteenth clause referred to in the. opinion provided that if any of the defendants committed any of the acts forbidden to the plaintiff, then the ■ plaintiff should have the same rights, as against such defendants .as. the defendants had under the contract,, in case of its violation by the plaintiff.
    
      Robert Thorne, for the appellant.
    
      Louis Marshall, for the respondent.
   Williams, J.:

. A contract will not be adjudged to have been illegal when it is capable of a construction which will render it valid., The law will not presume that a contract was made with intent to violate the law, nor is it enough to vitiate a contract that a suspicion or probability of an. unlawful intent arises from the contract itself. (Lorillard v. Clyde, 86 N. Y. 384.)

It seems to us that it cannot be said from an examination of this contract, in the absence of evidence with reference to the circumstances surrounding its execution, the character and business of' the .parties, and the manner in which they conducted the business under the contract,:that their intent was to violate the law in any.of the respects claimed by the appellant.

It cannot be said that the -design was to restrict the -manufacture and sale of envelopes, because the plaintiff was in no way restricted as to the quantity which he should manufacture or sell. It cannot be said that the defendants were in any way restricted in the .manufacture or sale of envelopes. Indeed, it does not appear that they were engaged in the manufacture of envelopes at. all, or to what extent, before or, after the contract was made. It cannot be said that there was any. illegal combination to fix or maintain the prices of envelopes. All .agreements to' fix and maintain the prices of conn modifies are not illegal. It does not appear that the prices of any envelopes, except those manufactured by the plaintiff, were to be fixed or maintained under the contract. It was provided that the defendants would purchase a- certain quantity of the. envelopes manufactured by the plaintiff, at certain prices to be fixed by the Standard Envelope Company, which company was under the control of the defendants, and that the plaintiff should not sell to other parties for any less price, but this alone was not illegal. (Holtz v. Schmidt, 59 N. Y. 253.)

It is claimed that the fifteenth clause in the contract restrained the defendants from selling the envelopes manufactured by them at any lower price than that at which the defendants had covenanted to buy, but, as before stated, it does not appear'that the defendants manufactured any envelopes, or to what extent they so manufactured them. This clause, moreover, is vague and uncertain, and there is doubt as to the intention of the parties in the language used. •

Evidence outside the contract is needed to explain its meaning, and show what the .parties intended by it. We cannot say, from the language of the contract itself, that it contains any unlawful agreement between the parties to fix or maintain the prices at which envelopes should be bought or sold. For some years after the contract was made the parties carried on business under and pursuant to its terms. It does not appear what the character of the business so carried on was, or whether -such business indicated an unlawful intent or not. When all the facts shall have been brought out upon the trial of the case the court will be able to determine, in view of-the acts of the parties in making the contract and carrying it out, as to its legality. We do not feel at liberty, from a mere examination of the contract itself, and from a consideration of such facts as are alleged in the complaint, which are deemed established, for the purpose of this demurrer, to construe the contract, so as to hold it illegal, for any of the reasons claimed on the part of the appellant.

Our conclusion is that the judgment should be affirmed, with costs, with leave to the appellant, to answer upon the usual terms.

Van Brunt, P. J., Barrett, Rumsey and Patterson, JJ., concurred.

Judgment affirmed, with costs, with leave to the appellant to answer on the usual terms.