Case Name: Sylvanus Judd, Treas'r, App'lt, v. Dennis Harrington, Resp't
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1892-06-06
Citations: 46 N.Y. St. Rep. 925
Docket Number: 
Parties: Sylvanus Judd, Treas’r, App’lt, v. Dennis Harrington, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 46
Pages: 925–928

Head Matter:
Sylvanus Judd, Treas’r, App’lt, v. Dennis Harrington, Resp’t.
(New York Common Pleas, General Term,
Filed June 6, 1892.)
1. Contract—Restraint or trade.
A contract between an association of wholesale lamb brokers and a similar association of lamb butchers whereby the former agrees not to slaughter any lambs or sell any except to the latter, and the latter to make all their purchases from the former, such stipulations being secured by penalties, is void as being in restraint of competition, and an agreement of the brokers among themselves based on such contract and providing for the distribution of the moneys to be received under it is tainted with its invalidity and likewise invalid.
2. Same—Evidence.
In an action upon the latter agreement where its invalidity is alleged in the answer, the contract is admissible.
Appeal from judgment in favor of defendant, entered upon verdict, and from order denying motion for a new trial.
Action to recover $10,000 as liquidated damages for the breach of an agreement.
A. Prentice, for app’lt; Edw. C. Boardman, for resp’t.

Opinion:
Pryor, J.
For answer to the action, defendant alleges that the contract sued on is void, because made in pursuance and furtherance of a combination to prevent competition in the supply of sheep meat in the market of New York.
The real plaintiff is the "New York & New Jersey Sheep , Brokers Association," suing in the name of its treasurer.
On the 20th December, 1886, this association entered into an agreement with " The Sheep & Lamb Butchers' Mutual Benefit Association," which reciting that the parties of the first part are engaged in business as wholesale brokers in sheep and lambs, and the'parties of the second part are engaged in the business of buying sheep and lambs for slaughter, and sale, proceeds to stipulate in substance, among other things, that the parties of the first part should not slaughter any sheep or lambs, except for export only, or sell any sheep or lambs except to the parties of the second part, which stipulation is secured by a penalty, and that the parties of the second part should make all their purchases of sheep and lambs from the parties of the first part, which stipulation also is secured by a penalty.
Seeing that the brokers who sell and the butchers who buy in combination control the supply of sheep meat, it is clear beyond question that the intent and effect of the agreement is to prevent competition with the brokers in selling, and with the butchers in furnishing the meat to the market. And, such being the evident purpose and tendency of the agreement, the law adjudges it void without proof of its actual operation. "It is not necessary to inquire whether the effect of the agreement was in fact detrimental. The true inquiry is, is it the natural tendency of such an agreement to injuriously influence the public interests. The rule is, that agreements which, in their necessary operation, tend to restrain natural rivalry and competition, and thus result in disadvantage to. the public, are against the principles of sound policy, and void." Folger, J., in Atcheson v. Mallon, 43 N. Y., 147; Salt Co. v. Guthrie, 35 Ohio St., 672; Richardson v. Buhl,7 Railway & Corp. Journal, 97; Anderson v. Jett, 41 Alb. L. J., 104; Hilton v. Eckersley, 6 Ellis & Bl., 47, 65; Clancey v. Salt Co., 62 Barb., 406; People v. Chicago Gas Co., 41 Alb. L. J., 68; Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 id., 434; Wire Cloth case, N. Y. L. J., 26th February, 1891, aff'd at general term, 38 St. Rep., 1023.
If, then, the particular agreement on which the action proceeds was connected with and auxiliary to this unlawful combination between the brokers and butchers, it is necessarily infected with the vice of its principal, and is equally and alike invalid. That it was so connected, and so auxiliary, is clear to demonstration. The agreement between the brokers and butchers was made 20th December, 1886; the agreement sued on was made 11th April, 1887. The latter refers in terms to the former; and makes provision for the distributioil of money to be received from the Butchers Association pursuant to the combination contract. Indeed, it is impossible not to perceive that the organization of brokers effected by the agreement sued on was for the very purpose of carrying out the provisions and policy of the combination.
It results, therefore, that whether the agreement sued on be not of itself and alone void, because suppressing competition—to restrict competition is the object .avowed in its preamble—still, by reason of its implication and co-operation with the unlawful principle and provisions of the combination contract, it is poisoned with the same illegality, and is equally incapable of sustaining an action..
But appellant objects that the agreement between the brokers and butchers is not lawfully in evidence, because "two legal rights," the agreements under consideration, " cannot make one' legal wrong; " i. e., produce the illegality of the contract in suit The argument begs the question in assuming the validity of the brokers' and butchers' agreement, which, as already seen, is illegal and void. The invalidity of the contract in suit was pleaded in defense to the action; and it is always competent to show by proof aliunde that an apparently valid contract is vitiated by illegality. Mor does partial performance by a party of an illegal contract avail to estop him to assert its illegality at any stage of the controversy.
The combination agreement then, being properly in evidence, and established by uncontroverted proof, and its necessary effect being to invalidate the contract sued on, it was at once manifest that in no event could the action be maintained; and the learned trial judge might, without more, have dismissed the complaint. But he allowed the litigation to proceed, and left it to the jury to-say whether the combination between the brokers and butchers was unlawful.
The construction and legal effect of the contract in suit was, under the circumstances, the function of the court; and had the verdict upheld the contract, the submission of the question to the jury would have been fatal error. But since by their finding they construed the contract correctly, the error in referring its validity to their decision is of no prejudice to the plaintiff.
From the fact that the moment the agreement between the brokers and butchers was in the case the action was irretrievably lost to the plaintiff, it follows that no error, if any, in the admission or exclusion of evidence, is of effect upon the validity of the-judgment.
We are not satisfied, however, of any error in the rulings on evidence.
Appellant objects to a certain class of evidence, because it was admissible only after a confederacy had been shown; but a conspiracy was conclusively established by the agreement between the brokers and butchers; and then everything said or done by the parties to the combination in furtherance of its design was competent evidence against the plaintiff.
It was a favorite maxim with Chief Justice Marshall that the law regards with more favor him who would avoid a loss than him who would acquire a gain. Short v. Skipwith, 1 Brock, 103; Blane v. Drummond,, id., 62. If this action be sustained, the defendant, for a mere technical default, will suffer a forfeiture of $10,000.
Our conclusion is, that the judgment and order be affirmed, with costs.
Daly, Ch. J., and Bischoff, J., concur.