Court Opinion

ID: 9770666
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:18:48.235685+00
Date Added: 2024-06-11T07:31:19.728877
License: Public Domain

On Motion for Rehearing
Appellee has very forcefully urged that the restrictions agreement incorporated into the lease, if in violation of the anti-trust laws of Texas, may be stricken from the combined agreement in order to keep the entire lease from being void, and that the remainder of the contract can then be enforced since the portion of the contract violating the anti-trust laws is severable under the facts of this case. Appellee has cited many authorities, mostly out of state, in support of its contention. It has also undertaken to distinguish this case from the case of Patrizi v. McAninch, 153 Tex. 389, 269 S.W.2d 343, cited in the above opinion. *154Judge Wilson, in his concurring opinion in the Patrizi case, indicates that the court in the majority opinion holds that a contract containing some clauses violating the antitrust laws and also containing a “saving clause” that the parties do not intend to violate the anti-trust laws is not “absolutely void” and therefore “not enforceable, either in law or equity”, but on the contrary the portions violating the anti-trust laws may be stricken and the remainder of the contract enforced if severable. We have reexamined the Patrizi case and are unable to find in the majority opinion any holding to such effect. The court arrived at the conclusion that the contract relied upon by plaintiff was in violation of Article 7426, V.A.T.S., and that the provision for royalty payments and the illegal provisions were indivisible and inseparable. The majority opinion makes no express mention of Article 7437, V.A.T.S., but it does refer to “Art. 7426 et seq.” Article 7437 reads as follows :
“Any contract or agreement in violation of any provision of this subdivision shall be absolutely void and not enforceable either in law or equity.”
We are of the opinion that Article 7437, V.A.T.S., means exactly what it says, and that this Court must recognize such provision. In 12 Am.Jur., p. 738, Sec. 220, it is stated:
“The rule with respect to agreements in violation of statute has been declared to be that if any part of an agreement is valid, it will avail pro tanto, though another part of it may be prohibited by statute, provided the statute does not, either expressly or by necessary implication, render the whole void and provided the sound part can be separated from the unsound and enforced without injustice to the defendant.” (emphasis supplied)
The combined agreement, which is the agreement sued upon by appellee, is in violation of the anti-trust laws of this State, and such contract is expressly rendered void and unenforceable by Article 7437, V.A. T.S.
We note also that in the Patrizi case the Supreme Court quoted with approval the following language in Wegner Bros. v. Biering & Co., 65 Tex. 506, 509, 510, 512:
“ ‘It is obvious that there is ample valid consideration to support the promise sued on; yet, if, to the abundance of valid consideration, there has been added a leaven of what is illegal, the whole contract is tainted.
“ ‘ * * * The whole cannot be enforced, because the law will not compel what it prohibits, and the parts can not be separated. Illegality thus vitiates the entire instrument.
“ ‘ * * * The purpose of the law is to discountenance and discourage improper contracts; not to enforce them is adopted as the best means to this end, and is adopted in total disregard of the effect upon the parties to the prohibited transaction.’ ”
It is undisputed in this case that the restrictions agreement was one of the chief inducements that persuaded appellee to enter into the lease. The record clearly shows that but for the execution of the restrictions agreement, appellee would not have entered into the lease agreement. Appellee agreed to pay rents, not only in consideration of Center Corporation conveying to it an interest or estate in realty for a term of years, but also in consideration of the promise on the part of Center Corporation, Sharp and Realty Corporation to restrict not only the property belonging to Center Corporation but also the property belonging to Sharp and Realty Corporation for the entire period of the lease. It is clear that the restrictions agreement was a vital part of the consideration for the execution by Weingarten of the lease in question. Where a contract sued upon is invalid under our anti-trust statutes, recovery by either party as against the other will be denied. Vann v. Toby, Tex.Civ.App., 260 S.W.2d 114, writ *155ref., n. r. e. See also Fred Miller Brewing Co. v. Coonrod, Tex.Civ.App., 230 S.W. 1099, error ref.; Gray v. Kaliski, Tex.Com.App., 45 S.W.2d 157; Morrison v. City of Ft. Worth, 138 Tex. 10, 155 S.W.2d 908; Continental Fire & Cas. Ins. Corp. v. American Mfg. Co., Tex.Civ.App., 221 S.W.2d 1006, writ ref.; Mercury Life & Health Co. v. Hughes, 271 S.W.2d 842, writ ref.; Loggins v. Stewart, Tex.Civ.App., 218 S.W.2d 1011, writ ref.
In our original opinion we concluded that there was no evidence that Realty Corporation was the alter-ego of Sharp or that it was controlled by him. On reviewing the record we have concluded that the trial court’s finding that Realty Corporation was Sharp’s alter-ego and that he had absolute control over such corporation, finds support in the testimony and legitimate inferences therefrom. This, however, does not result in any change in our opinion since we are still of the view that Center Corporation as a matter of law was not the alter-ego of Sharp. Thus there were at least two parties capable of executing an agreement that would prevent competition in violation of Article 7426, V.A.T.S.
Although Sharp was interested in the success and welfare of Center Corporation because of his affection for his daughters and also because of the money that he had lent it, and further by reason of his guarantee of the large note executed by Center Corporation, he had no legal control over such corporation or property interest therein. He acted for the corporation in various business matters and the corporation usually stamped its approval on what he did. In one sense he acted as an agent of the corporation in various transactions having to do with the property belonging to the corporation. He did not, however, act as an agent of the corporation with respect to his own property or that of Realty Corporation, nor did he act as an agent for Center Corporation when it executed by its vice president, Mr. Weintraub, the lease and the restrictions agreement. These facts distinguish the present case from those cases cited by appellee in its brief in support of its motion for rehearing, in effect holding that where an agent represents two or more corporations, there can be no illegal trust or conspiracy because of lack of parties.
Motion for rehearing overruled.