Case Name: Dunlop and others against Gregory and others
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1851
Citations: 10 N.Y. 241
Docket Number: 
Parties: Dunlop and others against Gregory and others.
Judges: 
Reporter: New York Reports
Volume: 10
Pages: 241–245

Head Matter:
Dunlop and others against Gregory and others.
A contracthot to exercise a trade or carry on business at a particular place, made upon good consideration, may be upheld if shown to be reasonable, and if the restraint upon the covenantor be not greater than is needed for the protection of the covenantee in the enjoyment of his trade or business.
Parties owning passage boats running between New York and Albany on the Hudson river, sold one of their boats, and received back a covenant from the vendees that the boat sold should never, under any circumstances, be run as a passage boat north of Saugerties: Meld, a valid contract'.
MM, further, that the obligation of such contract continued as long as any of the covenantees retained an interest in passage boats between New York and Albany, and were therefore in a condition to be injured by a breach.
Although the interest of some of the covenantors had ceased prior to the breach, the action, before the adoption of the Code of Procedure, was necessarily brought in the name of all, for the benefit of those who tvere injured.
It being provided in such covenant that the sum of $200 should be the liquidated damages for every trip of the steamboat above Saugerties: Meld, that that sum must be so regarded, and not as a penalty.
In January, 1835, the plaintiffs, with several other individuals, all being interested in steamboats running as passage boats on the Hudson river, formed an association under the name of “The Hudson River Steamboat Association,” for the purpose of keeping up a regular line of boats in accordance with the partnership articles then entered into. This association was to continue until the 1st of January, 1843. On the 1st day of April, 1840, this association owned five boats, the Albany, Champlain, Erie, Swallow, and De Witt Clinton, and two-thirds of the steamboat Robert L. Stevens, all of which were running as passage boats between New York and Albany and T.oy. The other third of the Robert L. Stevens was owned by Samuel Rexford, one of the defendants in this suit. On the day last mentioned the several members of the association, being interested to this extent in the Robert L. Stevens, sold their interest to the defendants for $14,500, and executed bills of sale therefor. On the same day the defendants as parties of the first part, and the plaintiffs and R. P. Hart as parties of the second part, entered into an agreement under seal to the following effect:
The agreement recites that “ the parties of the second part have this day executed and delivered to the said Uriah Gregory, Samuel Rexford and John Elting, Jr., their several bills of sale of the one equal undivided third part of the steamboat or vessel called the Robert L. Stevens, to each person of the first part aforesaid, in pursuance of an agreement heretofore made for the sale thereof, in which it was understood and agreed that the said steamboat or vessel should not be permitted to run on the Hudson river as a passage boat north of Saugertiesand proceeds that “in consideration of the premises, and of one dollar to them in hand paid,” the defendants covenant “ in manner and form following, that is to say: That whereas, it is the full understanding of all the parties to this agreement, that in no event whatever, nor under any circumstances whatever, shall the said steamboat Robert L. Stevens be run as a passage boat above the village of Saugerties on the North river, by any person or persons whatever: and that in the sale of said steamboat, or the sale of the different third parts of the.said steamboat, it is distinctly understood by all the parties to the agreement, that it is an essential and important consideration, that the said steamboat shall not be run above the village of Saugerties aforesaid as a passage boat, at any time hereafter, by any person or persons whatever. Now, therefore, for the different considerations above set forth, the said Uriah Gregory, Samuel Rexford, and John Elting, Junior, parties of the first part, do hereby agree to and with Robert Dunlop, Smith Cutter, James A. Stevens, Anthony N. Hoffman, Michael Van Burén, Richard P. Hart and Jonas C. Heartt, parties of the second part, to become responsible in damages, and which they hereby agree to pay to Robert Dunlop, Smith Cutter, James A. Stevens, Anthony N. Hoffman, Michael Van Burén, Richard P. Hart and Jonas C. Heartt, parties of the second part, if the said steamboat shall or may be run above the village of Saugerties aforesaid, as a passage boat, by any person or persons whatever. And it is agreed that the said damages shall be liquidated at two hundred dollars for each and every passage made by the said steamboat above the village of Saugerties. In witness whereof, the said parties of the first and second parts, have hereunto set their hands and seals.”
The Hudson River Steamboat Association expired by its own limitation in 1843. Many of its members, before 1845, had sold out all their interest in any steamboats running upon the Hudson river, and in that year the only ones of the covenantees in the agreement who retained an interest in such property, were R. P. Hart and two of the plaintiffs. These individuals were still part owners of two of the five boats above named, and of other steamboats purchased since the date of the agreement, which were running as passage boats between New York and Albany and Troy. In the spring of 1845, and between February 27 and April 23, the Robert L. Stevens, then owned by vendees of the defendants, made nineteen passages between New York and Albany, carrying passengers and freight.
R. P. Hart having died before the time of these passages, this action was brought in the name of all the other covenantees in the agreement, as his survivors, against the covenantors, to recover the damages therein liquidated for the breach of it. The cause was tried before Parkek, circuit judge, and a jury, in November, 1846, and a verdict given for the plaintiffs, under the direction of the judge, for $3800. Judgment on the verdict was affirmed by the supreme court, and the defendants appealed.
John Thompson for the appellants.
D. Bud, Jr., and J. Pierson, for the respondents.

Opinion:
Paige, J.,
delivered the opinion of the court.
It is contended on the part of the appellants, that the agreement on which this suit is brought is in restraint of trade, prejudicial to the jiublic interests and against public policy; and that if valid at the time of its execution, it was invalid at the time of its breach, because the partnership for whose benefit it was made had expired without assigning it.
Contracts, upon whatever consideration made, which go to the total restraint of trade, such as obligate a mán not to pursue his occupation or exercise his trade, anywhere in the state, are void. Such contracts are injurious to the public, and operate oppressively upon one party without being beneficial to the other. But a contract not to exercise a trade or carry on business in a particular place, made upon good' consideration, may be upheld where sufficient reasons are shown for entering into it. The contract, to be upheld, must appear from special circumstances to be reasonable and useful, and the restraint of the covenantor must not be larger than is necessary for the protection of the covenantee 'in the enjoyment of his trade or business. (Chappel v. Brockway, 21 Wend., 157; Nobles v. Bates, 7 Cow., 309; 2 Saund., 156, Note 1; Hitchcock v. Coker, 6 Ad. & Ellis, 438; Mitchel v. Reynolds, 1 P. Wm., 181.) Within the principles of these cases I think the agreement in question was valid and binding on the defendants.
Because a part of the covenantees sold out their interests in the steamboats running on the Hudson river, between the making of the agreement and its breach by the defendants, the remaining covenantees, who retained their interest in such boats, ought not to be deprived of their remedy on the agreement, to recover the damages sustained by them by means of such breach. The obligation of the defendants was an obligation to all the covenantees jointly. This suit having been commenced before the adoption of the Code, it was necessarily brought in the names of all the covenantees. The action can be sustained if any one of the plaintiffs has a beneficial interest in the suit. The covenant enured to the benefit of those covenantees who retained their interest in the steamboats running on the river. The other covenantees, who had sold out and therefore could not be injured by the breach of the agreement, are merely nominal parties to the suit.
The dissolution of the Hudson River Steamboat Association is no defence to the suit. The agreement was not made with the plaintiffs as members of that association or as co-partners, but as individuals;, and was intended to protect their interest, whatever that might be, in the steamboats running between New-York and Albany and Troy. The obligation of the agreement is not at an end because the steamboat association has become dissolved, or because the partnership, of which the plaintiffs were members at the time of the making of the agreement,' has expired by the efflux of time. The agreement makes no reference to the steamboat association, or to any copartnership. Its obligation continues as long as any one of the covenantees has an interest in the steamboats running on the Hudson river between New-York and Albany and Troy; especially in any of those of which they were owners, in whole or in part, when the agreement was made.
The sums agreed upon by the parties, as the measure of damages for the violation of the agreement, must be considered as liquidated damages. How these damages are to be apportioned among the plaintiffs is not a question which arises in this suit.
The judgment of the supreme court must be affirmed.
All the judges concurring,
Judgment affirmed.