Court Opinion

ID: 3491780
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:00:07.092813+00
Date Added: 2024-06-11T14:14:32.293514
License: Public Domain

These two instruments constitute but one instrument, and must be construed together. Briefly stated, the agreement is this: Plaintiffs, in consideration of $1,500, to be paid to them annually, agreed for a period of five years not to manufacture or sell chaplets, except for only one party. Plaintiffs' *Page 87 
sales were not limited to the place of manufacture, but extended into other States. The plain object of the agreement was to substantially close this part of plaintiffs' business, and to give defendants a monopoly of it. The parties evidently recognized the invalidity of such a contract, put in plain and unequivocal language, and sought to evade it by these two so-called leases. The arrangement was a bare subterfuge to evade the law. Defendants did not buy out plaintiffs' business, machinery, and plant, or lease them for the purpose of continuing their (plaintiffs') business. The result intended and accomplished was to close that part of plaintiffs' business, to throw their employés out of employment, and to deprive the public of any benefit from the continuance of their business. This is not the case of Beal v. Chase, 31 Mich. 490, where Beal purchased the entire plant, business, and good will of Chase for the purpose of continuing the same business. In that case both the employés and the public derived the same benefit as though the business were to be continued by Chase.
The learned counsel for plaintiffs concede the invalidity of those contracts which are entered into for the express purpose of, and result in, closing one's business for the benefit of a rival business, in throwing employés out of employment, and in depriving the public of the benefit of such business. Such contracts tend to destroy competition and create monopolies, and are void. Plaintiffs, however, seek to avoid the result of this contract on the ground that it is not in general restraint of trade, but is limited as to time and subject-matter. They concede that it is unlimited as to territory, and that the contract, if binding, covers the entire United States. They cite, among other cases, Maxim-Nordenfelt Guns  Ammunition Co. v. Nordenfelt, 52 Ch. Div. 630, and Mitchel v. Reynolds, 1 P. Wms. 181. Those cases are, in their facts, the parallel of those in Beal
v. Chase; and Mitchel v. Reynolds is cited in the learned opinion of Justice CHRISTIANCY in Beal v. Chase (page 519), to which we refer for a statement and analysis of that case. *Page 88 
Any such contract is invalid, whether the restraint be for one year or any number of years, or is unlimited as to time. The agreement to close one part of a business is as much against the policy of the law as a contract to close the entire. The one is as reprehensible as the other. They only differ in degree. Under this contention a party might agree with one person to close one part of his manufactory, and then agree with a second person to close the other part; the two constituting his entire business.
In United States v. E.C. Knight Co., 156 U.S. 1, 16
(15 Sup. Ct. 249), it is said:
    "All the authorities agree that, in order to vitiate a contract or combination, it is not essential that its result should be a complete monopoly. It is sufficient if it really tends to that end, and to deprive the public of the advantages which flow from free competition."
See, also, Wright v. Ryder, 36 Cal. 342 (95 Am. Dec. 186);McMullen v. Hoffman, 174 U.S. 639 (19 Sup. Ct. 839).
This contract is clearly within the inhibition of the laws of the United States (26 U.S. Stat. 209, chap. 647) and the laws of this State (3 Comp. Laws 1897, § 11377). We settled the principle governing contracts of this character in Western Wooden-WareAss'n v. Starkey, 84 Mich. 76 (47 N.W. 604, 22 Am. St. Rep. 686), and further discussion is unnecessary.
Judgment affirmed.
The other Justices concurred.
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