Court Opinion

ID: 6696015
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:51:05.78632+00
Date Added: 2024-06-11T16:01:14.753261
License: Public Domain

CiAEK, C. J.,
dissenting: Pi’ior to 12 March, 1914, tbe fish business at Morehead was conducted by I different firms, consisting of 11 individuals. They operated boats in all tbe waters of North Carolina and comprised all tbe fish dealers at Morehead (except two small dealers), and conducted 90 per cent or more of tbe fish business at that point, and did a large fish business, not only 'in Noxlb Carolina, but in South Carolina, Georgia, and in tbe northern and eastern markets. These dealers bought in competition with each other from tbe fishermen operating boats at various places, covering practically tbe entire fishing area of eastern Carolina, packing and shipping tbe product to various markets of tbe country.
The radius of 100 miles named in tbe contract, tbe validity of wbicb is in question, made a circumference beginning beyond Southport in *686tbs southwest to Nag’s Head to the north, and reaching inland to Rocky Mount, taking in Wilson, Goldsboro, Clinton and Wilmington, besides 100 miles out to sea, covering also Albemarle and Pamlico and other sounds and rivers flowing into them.
This contract of 12 March, 1914, created a “combine” of all the fish dealers above mentioned, each of whom entered into an agreement that they would not “directly, indirectly, solely or jointly, as principal, agent, manager or otherwise be concerned or interested in the same business heretofore carried on as aforesaid by them, within the counties of Carteret and Craven, in the State of North Carolina, and within 100 miles from the town of Morehead aforesaid, for 10 years from the date hereof, nor permit their names to be used in connection with such business.” This simply created a “Fish Trust,” and is as much a violation of the State and Federal Antitrust Law as the American Tobacco Company, the Standard Oil Trust, or any of the other great trusts which have been dissolved by the decisions of the United States Supreme Court. The object, of course, is exactly the same, i. e., to put down the price of fish when sold by the fishermen, and to put up the price when selling to the consumers, and make profits by the familiar process of destroying competition.
There is no analogy between this proceeding and the ordinary one of selling one’s good-will in a local business, as a dentist, physician, or editor, and protecting the conveyance of the good-will by agreeing not to compete for a limited time and in a limited territory — both of which limitations must be reasonable. This is not an agreement that is reasonable, either in the extent of the territory or the duration of time, nor has it the feature of such contracts, when valid, that the vendor will not enter into competition with the vendee. Here the competitors all combine and create a monopoly in the vendors.
The defendant, one of the firm of Way Bros. & Co., having no knowledge of any other business, having been engaged in the same all of his life, was forced, in order to earn a livelihood, to engage in business as a fish dealer in Morehead, and was handling from 50 to 70 boxes of fish per day, and was buying fish from fishermen in the waters of eastern Carolina and at Morehead, in competition with the plaintiff, when the latter resorted to the court of equity to restrain him. The defendant was not conducting the business in the name of Way Bros. & Co., who had entered the combine, and if he was he was not subject to an injunction in repudiating an illegal contract, whose formation was indictable under the “antitrust” statute, but was doing business under the firm name of B. C. Way & Co. As soon as he entered the business in competition with the “combine” the price of fish to the fishermen advanced at once from one to three cents per pound, while at other points within the *687100-mile radius, where tbe defendant could not compete for lack of funds, tbe price was kept down. Tbe injunction was sued out by tbe plaintiff to prevent open competition in tbe market, to preserve which tbe antitrust statute was passed.
Tbe contract under which tbe plaintiffs ask for this equitable relief is void: (1) because against public policy, (2) because tbe area attempted to be embraced therein is unreasonable, (3) because such contract creates a virtual monopoly of tbe fish business, over nearly tbe whole sea front of this State, in tbe bands of tbe plaintiff company, and prevents competition both in buying- and selling fish. It takes from tbe fishermen reasonable returns in tbe sale of their “catch” by reason of tbe lack of competition and enhances tbe price to consumers for tbe same reason.
Tbe covenant on its face shows no consideration except compensation for tbe personal property put into tbe “combine,” against which stock was issued. There was no consideration named for tbe agreement not to compete. Indeed, tbe true consideration was tbe monopoly of tbe business, which is illegal under tbe statute and makes tbe whole contract void.
Even if this combine could be likened to tbe cases where a doctor or a dentist sells bis business and good-will, and in order to guarantee such conveyance of the “good-will” stipulates that be will not practice within a certain territory within a certain time, this contract would be unreasonable by reason of tbe great space covered by a radius of 100 miles in every direction and ten years duration.
But in truth there can be no analogy between cases where one man sells bis personal business to another with a reasonable stipulation to preserve tbe good-will of tbe business and this instance where practically all tbe dealers in a prime article of necessity, fish, oysters and tbe like, at tbe chief center of that industry enter into a combination whose evident intent and necessary effect is to create a monopoly for tbe purpose of reducing (as has been shown was the case here) tbe selling price of fish in tbe bands of those who catch them and to raise tbe selling price to tbe consumer.
There are affidavits in this record by more than 100 fishermen that tbe plaintiffs’ combination, locally known as tbe “Fish Trust,” has affected competition and tbe price. Naturally this would be so, and it is bard to realize any other motive for its formation than to make larger profits for tbe company as a middleman by reason of tbe destruction of competition. It is true that there is no express agreement to fix prices, as in S. v. Craft, 168 N. C., 208. Neither was there such express agreement 'in tbe combination and the absorption of rival companies which were held illegal and ordered to be dissolved in tbe Standard Oil case, 221 U. S., 1, and American Tobacco Co. case, ib., 106.
*688In Cowan v. Fairbrother, 118 N. C., 407, relied upon by tbe plaintiff, there was an agreement not to publish a competing paper in this State for ten years. In its very nature this could not seriously affect the public, because there is free opportunity to establish newspapers, which are largely the product of the individual ability of the editors. But the fish business is a necessity to the public and the sale by the fisherman of their product in a competitive market is the right of the more than 1,000 men whom this record shows are engaged in this State in catching fish for market.
In Wooten v. Harris, 153 N. C., 46, it was held that wh,ile a merchant could sell his good-will in that business and could protect the conveyance thereof by agreeing not to again engage in such business in that town or “near enough thereto to interfere with the vendee’s business,” yet an agreement might be invalid “if it was shown that this was one of many similar contracts tending to engross or monopolize any given business, or the sale of any article within the territory named.”
The General Assembly of 1913, ch. 41, intended to make more strenuous, and not less so, the laws against illegal trusts. The second proviso in subsection F, sec. 5, of that chapter, “Provided, further, that nothing herein shall be construed to prevent a person, firm or corporation from selling his or its business and good-will to a competitor and agreeing in ■writing not to enter business in competition with the purchaser in a limited territory as is now allowed under the common law,” applies only to a bona fide sale of the “good-will” to the competitor, when the vendor goes out of the business himself. It permits in such cases protection of the good-will by permitting the vendor to agree not to compete within reasonable limits and within reasonable time. It has no ajiplication to a “combine” like this where the vendor goes into the combination or where the extent of territory and length of time are unreasonable. The territory here covered embraces practically nearly the entire territory in which fish can be taken in the waters of this State, including Albe-marle and Pamlico sounds, the Cape Fear, Neuse and Tar rivers, and the lower part of Roanoke and Chowan rivers — in short, almost the entire water front of North Carolina and the rivers, streams and sounds that flow to the east.
Was it ever heard of that a stockholder in a railroad company, or other enterprise affecting the public generally, could contract that he would not take part in building another railroad, or sharing in the promotion of another enterprise of public interest? Aside from being in violation of the antitrust statute, such contract would be contrary to public policy, which encourages not only competition, but the promotion of public enterprises such as increasing the supply of food. Certainly a court of equity would not give its aid to the enforcement of such contracts.
*689It is not objectionable that many men sbonld join tbeir capital to create a large corporation. That may be, indeed, desirable by making possible tbe reduction of expenses and furnishing accommodation to tbe public at a lesser rate. What is objectionable is binding its members not to take any part in other similar enterprises, which will be for the public benefit, thus reducing competition, when the public interest requires the increase of facilities in furnishing food or other public benefits.
A large number of people are interested in catching fish as a livelihood, and a very much larger proportion of them are dependent, more or less, upon fish ancL oysters for food. A great combination like this, that strikes at those who catch fish and take oysters as a means of livelihood and at those who consume them, is in its nature even more deleterious, if possible, to the public interest than the great Tobacco Trust, which dealt with an article of luxury, and not of food.
The antitrust law of 1913, ch. 41, was passed to give not less, but more effective protection to the public. The proviso therein, permitting a person to sell his business and good-will to another, cannot be construed to destroy the entire act. Succeeding-the proviso to which such great effect is attributed, and in the same section, is this further proviso: "Provided, such agreement shall not violate the principles of the common law against trusts and shall not violate the provisions of this act.”
A great lawyer in England once said, as quoted by Macaulay, that he “could drive a coach and six through any act of Parliament.” Certainly the entire fishing fleet of North Carolina should not be sailed through this act because an incidental provision therein' permits a man to sell the “good-will” of his business and to secure its conveyance by agreeing to abstain from exercising that business fon a reasonable time and within rea-' sonable limits. It ought not to be construed to permit such a “combination” as is here provided for of the entire fish and oyster. industry of North Carolina by the middlemen who buy the product from the fishermen and resell it to the public.