Court Opinion

ID: 3963274
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:23:19.581266+00
Date Added: 2024-06-11T14:17:37.561781
License: Public Domain

On Motions for Rehearing.
The appellant contends that this court erred in the interpretation of the jury's finding upon issue No. 1, for the reason that the record shows that such finding, when taken in connection with the finding upon issue No. 2, was an interpretation of the contract upon its face, outside the jury's province, and in further holding that the second issue was immaterial. The first issue asked the jury to find what is meant by the contract, meaning of course, the writing considered in connection with the verbal testimony introduced by both sides and throwing light upon it. The meaning of the contract, of course, is the kernel. The second issue, inquiring as to the intention of D. S. Kritser and M. C. Nobles relative to burdening the property of appellee, might be material if they had a common purpose, but the evidence shows that Kritser intended one thing and Nobles another. Since their minds did not meet upon that proposition, the intent of either opposed to the other never became a part of the contract, and the issue is wholly immaterial. If the jury had answered issue No. 2 in the affirmative, their finding would have been in the face of all the evidence, which showed that both O'Brien and Kritser always refused to burden appellee's land. The manner in which the issue was framed could not, under the evidence, have been answered otherwise than in the negative.
Appellee insists that under Vernon's Sayles' Ann.Civ.St. 1914, art. 1985, we should presume that the court found that the contract was not contrary to public policy. In addition to what has been said in the original opinion upon this contention, we cite the following cases in which the Supreme Court, the Commission of Appeals, and various Courts of Civil Appeal have modified the rule contended for, and which sustain the holding of this court that the statutory presumption should not be indulged in this case: Texas City Transportation Co. v. Winters (Tex.Com.App.) 222 S.W. 541; Railway Co. v. Price (Tex.Com.App.) 240 S.W. 528; Boatner v. Insurance Co. (Tex.Com.App.) 241 S.W. 136; Kistler v. Latham (Tex.Com.App.) 255 S.W. 984; San Antonio Public Service Co. v. Tracy (Tex.Civ.App.) 221 S.W. 638; Texas Drug Co. v. Caldwell (Tex.Civ.App.) 237 S.W. 976; Railway Co. v. Wagner (Tex.Civ.App.)262 S.W. 917.
Appellee sets out several allegations found in appellant's pleadings, to the general effect that there was an agreement between them that appellee should withdraw its opposition to the effort of appellant and the Amarillo Gas Company and the Pipe Line Company, which were also interested, to procure a favorable market price for the sale of their gas and the approval of a franchise at the city election, and insists because of the presence of these allegations and the introduction of some testimony tending to show an illegal contract, that the statutory presumption must obtain. We do not assent to this. When the court subsequently sustained an exception to the trial amendment, filed for the sole purpose of setting up the illegality of the agreement as a defense, and thereafter neither side tendered any issue upon it, we cannot, under the above authorities presume that the court found against appellant under the above-named statute. The presumption, according to the above cited authorities, must be that the issue was waived by both sides and disregarded by the court. The record shows that J. J. Currie, a Ranch Creek stockholder, who was present at one of the joint meetings, had stated that the consideration for the written contract was that the Ranch Creek people were to help appellant get the franchise. The fact that appellant did not call Currie as a witness and did not stress the question of the illegality of the contract, either in the examination or cross-examination of any witness is to our minds conclusive that the point was not urged and presumably because of the court's action in striking the trial amendment upon exception. The appellant insists in its motion that the contract in question is void for the further reason that its performance would be in aid of the contract previously made between the appellant and the Pipe Line Company, and that the pipe line contract violates the provisions of the antitrust statute of this state. The record shows clearly that the Ranch Creek people were familiar with the provisions of the previously existing contract between appellant and the Pipe Line Company. That contract *Page 154 
contained, amongst others, the following provisions:
"(8) That the Pipe Line Company — for whose benefit this contract is made — is to have the first or prior right to take, at the price and upon the terms herein stipulated, all gas produced from the lands owned or leased and all that may be acquired by deed or lease and controlled by first party or its assigns and located in said fields in Potter county and adjoining counties sufficient to supply Amarillo and vicinity, and first party is to have first and prior right to furnish gas to such pipe line, and the Pipe Line Company is bound to take it at said rate from the first party to the exclusion of all others, gas produced by first party's wells, up to the capacity of the pipe line or the consumption in the city of Amarillo and vicinity. The party of the first part reserves the right to sell all gas produced above the requirements of the party of the second part as stated in this contract, conditioned that the wells shall not be drawn upon to an amount such as to impair the production of said wells as applied to this contract and its obligations, the object being the proper conservation of the gas. * * * In the event the assignee develops gas in paying quantities, the Pipe Line Company shall have the prior right to connect its pipe line with said well or wells, paying therefor the rate stipulated herein, and such assignee or assignees will not have the right to sell the gas from the wells so developed by him until said Pipe Line Company has refused and failed to exercise its preference to take the gas from said well according to the terms of this contract."
We strongly incline to the opinion that this contract violates the spirit and the letter of the Anti-Trust Statutes of this state. Said statutes are in part, as follows: Complete Tex.St. 1920, pp. 1340, 1341, or Vernon's Sayles' Ann.Civ.St. 1914, art. 7796, subd. 1:
"To create, or which may tend to create, or carry out restrictions in trade or commerce or aids to commerce or in the preparation of any product for market or transportation, or to create or carry out restrictions in the free pursuit of any business authorized or permitted by the laws of this state." Id. art. 7796, subd. 3.
"To prevent or lessen competition in the manufacture, making, transportation, sale or purchase of merchandise, produce or commodities, * * * or to prevent or lessen competition in aids to commerce, or in the preparation of any product for market or transportation." Id. art. 7798, subd. 1.
"Where any two or more persons, firms, corporations or associations of persons, who are engaged in buying or selling any article of merchandise, produce or any commodity, enter into an agreement or understanding to refuse to buy from or sell to any other person, firm, corporation or association of persons, any article of merchandise, produce or commodity."
It is true that the Pipe Line Company was not a party to this suit, but the record shows that at great expense, it was about to construct a pipe line from the gas field, more than 20 miles away, to the corporate limits of Amarillo, where it would be connected with the pipes of the company organized to distribute the gas to the consumers in said city. The making of the contract between the parties to this action, as shown by the writing itself, was based upon the existence of the contract which appellant had with the Pipe Line Company. If the latter contract violates the anti-trust statutes of this state, then, as we understand the general rule, its illegality is a defense to this suit filed by appellee based upon its contract. The rule which governs in such cases is stated in 13 C.J. 509, § 460, as follows:
"Where a contract grows immediately out of, and is connected with a prior illegal contract, the illegality of such prior contract will enter into the new contract and render it illegal, and the rule has been broadly laid down that if the connection between the original illegal contract and the new contract can be traced, and that if the latter is connected with and grows out of the former, no matter how many times and in how many different forms it may be renewed, it cannot form the basis of recovery, so if any agreement in furtherance of, or for the purpose of carrying into effect any of the unexecuted provisions of a previous illegal agreement, is likewise illegal and void, as in a contract, the performance of which depends on the performance of a prior invalid contract."
The text is supported by numerous authorities, amongst them, Shelton v. Marshall, 16 Tex. 344; Reed v. Brewer (Tex.Civ.App.) 36 S.W. 99. The rule of law under consideration was discussed in Pennsylvania Rubber Co. v. McClain (Tex.Civ.App.) 200 S.W. 586, in which the court said:
"The statute in question expressly declares that an agreement * * * between two persons that one of them will buy from the other exclusively a given commodity, or that one of them will sell exclusively to the other a given commodity, constitutes a conspiracy in restraint of trade. A, agreement to do either or both has the effect to prevent competition, and falls within the condemnation of the statute."
See, also, Columbia Carriage Co. v. Hatch, 19 Tex. Civ. App. 120,47 S.W. 288; Pasteur Vaccine Co. v. Burkey, 22 Tex. Civ. App. 233,54 S.W. 804; Star Mill  Elev. Co. v. Forth Worth Grain  Elev. Co. (Tex.Civ.App.) 146 S.W. 604; Wood v. Texas Ice  Cold Storage Co. (Tex.Civ.App.) 171 S.W. 497; Armstrong v. W. T. Rawleigh Medical Co. (Tex.Civ.App.) 178 S.W. 582; Carroll v. Evansville Brewing Association (Tex.Civ.App.) 179 S.W. 1099. A reasonable inference from the record is that at the time of the contract in question, Amarillo and vicinity was the only available market for the gas in this particular field, and the *Page 155 
existence of the pipe line contract, when supplemented by the granting of a franchise, necessarily results in a monopoly under its exclusive contract. These facts suggest the motive impelling appellee to force appellant, by competitive bidding and opposition to the franchise, to take gas from its well, and, as stated in the original opinion, the suppression of this opposition appears to be the only consideration moving appellant to enter into the contract, because the evidence shows that it had more than enough gas of its own to supply the available market. A similar situation is presented in Houck v. Anheuser Brewing Association (Tex.Civ.App.) 27 S.W. 692; Id., 88 Tex. 184, 30 S.W. 869. In that case Houck  Deiter and Schloss  Howley associated themselves together for the purpose of monopolizing the beer trade of El Paso. The Supreme Court held that such contract was in violation of the Anti-Trust Act. The Brewing Association was selling beer to said parties, and had agreed that it would not sell its beer to any other person in El Paso. This last contract was declared to be void; because it tended to aid and promote a monopoly created by the original contract between Houck and his associates.
It appears in the record that the two contracts here discussed are closely connected. Appellee was to be paid for its one-fourth of the gas out of the proceeds to be collected under the pipe line contract. If the last-named contract is void, then, under the last-mentioned case, the contract in question is also void. As heretofore stated, the validity of the contract, either as against public policy or the anti-trust statutes was only incidentally involved and disclosed during the trial. There is no evidence in the record touching the validity of the pipe line contract, except the contract itself and the reference made to it orally and in the original contract of August 28th.
There may not be sufficient evidence in the record to show that either contract is void as malum in se and malum prohibitum with such certainty as would warrant this court in reversing and rendering the Judgment, but we are convinced that the dearth of such evidence resulted from the action of the court in ruling out the trial amendment, and thereby indicating that direct evidence of such facts would not be admitted. However, the illegality of the contract in question has been pleaded and repeatedly referred to incidentally by more than one witness, and we therefore conclude that the judgment should be reversed and the cause remanded, in order that this phase of the litigation may be fully developed upon a retrial.
The motions for rehearing are overruled.
JACKSON, J., not sitting.