Court Opinion

ID: 8851151
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:13:36.063213+00
Date Added: 2024-06-11T17:05:30.178468
License: Public Domain

PRIEST, District Judge
(after stating the facts). The question of moment in this case is whether the seventh covenant óf the lessor, not to manufacture or sell any bone tartar during the period the lease may be in force, is in restraint of trade, and for that reason void. The transaction in which this restiiction appears Is the leasing of premises and equipment especially devoted to the manufacture of bone tartar. The rental value of the real estate and buildings was between $2,000 and $2,500. The profits derived by the plaintiff from making and sale of bone tartar were from $10,000 to $12,000 per annum at the time the lease was made. It is manifest that the inducement moving the plaintiff to lease the premises was to obtain a fixed and certain sum, rather than a contingent and uncertain one; and the motive of the defendant was to get rid of a dangerous and aggressive competitor in the trade of the article of which it was in practical control, and to the manufacture of which it was exclusively devoted. The plaintiff sought a trade for this article throughout 'the United States, — ah achievement which the *949defendant bad already accomplished, being earlier in the held. In view of these conditions, is the covenant condemned by public policy?
The restraint extends literally everywhere, but a fair construction would limit it to the Fniied States. If valid to that extent, we hare no concern with the broader boundary. It is commonly and casually said that contracts in general restraint of trade are void. This rule, whatever may have been its earlier character, is now neither arbitrary nor inflexible. The sense of the modern decisions is that, if "the restraint is only commensurate with the fair protection of the business sold, the contract is reasonable, valid, and enforceable. It is only where the restriction can be of no avail to the vendee, and unnecessarily hampera the vendor, that it becomes oppressive and void. Fowle v. Park, 131 U. S. 88, 9 Sup. Ct. 658; Ellerman v. Stock Yards Co. (N. J. Ch.) 23 Atl. 287; Long v. Towl, 42 Mo. 545; Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419; Lawson, Cont. § 327.
Among the potent reasons first assigned against such contracts was.that the person restrained by thus surrendering his chosen occupation — one for which he had been especially prepared — might become a public charge, and the public be injured in being deprived of his personal skill in the avocation to which he had been brought up. Such reasons cannot he applied to artificial persons without absurdity. The substantial ground in all cases, especially where corporations are concerned, is that such contracts tend to create monopolies. In discussing this phase of the subject, we must not-lose sight of some other principles, the disregard of which would bo more harmful to public interest than monopolies. The right to contract is a cardinal element of constitutional liberty, and, as such, should he jealously guarded. In one of the cases supra it is said:
“It. is clear that public policy and the interest of society favor the utmost freedom of contract within the law, and require that business transactions should not be trammeled by unnecessary restrictions. ‘If,’ said Sir George Jessell-, in Printing Co. v. Sampson, L. R. 19 Eq. 462, ‘there is one thing more than any other which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that contracts, when entered into freely and voluntarily, shall be held good, and shall be enforced by courts of justice.’ ” Match Co. v. Roeber (N. Y. App.) 13 N. E. 422.
Private corporations are subject to the control of the states from which they derive their charters. From an abuse or misuse or excess of their powers, they can be called to an account by the state. It is better such control and regulation should be had by that ample authority than, indirectly, by a foreign forum, upon collateral questions of public expediency. The facts of this case disclose no tendency to monopoly. Monopoly implies an exclusive right, from which all others are debarred, and to which, they are subservient. Greene's Case, 52 Fed. 104. In Match Co. v. Roeber, supra (a cast? very similar in facts to this), the court observed:
“To the extent that tbe control prevents the vendor from carrying on the particular trade, it deprives the community of any benefit it might derive from his entering into competition. But the business is open to all •others, and there is little danger that the public will suffer harm from *950lack of persons to engage in a profitable industry. Sucli contracts do not create monopolies. They confer no special or exclusive privilege.”-
That tbe contract in this case was ineffectual to create a monopoly, or even to confer a dominating control over tbe trade in bone tartar, is confessed to some extent by tbe answer, wherein it assumes, as a just reason for repudiating tbe contract, competition subsequently-started. Acid pbospbate of balcium is made by several processes. Tbe plaintiff employed two, — one from rock, and tbe other from bone. It leased tbe plant for making bone tartar only* reserving tbe other. Tbe process was not discernible in tbe finished product. There is nothing in tbe contract from which we can reasonably infer a tendency to create a monopoly such as tbe law condemns. Even if an article be of prime necessity, tbe public is not concerned with who makes, but only with the reasonableness of, tbe price. But it is said that tbe defendant bad, by its part in tbe transaction, such a purpose in view. This may be. Tbe intent is only condemned as it is manifested in an unlawful act. If a person does a lawful act with a vicious intent, be is without tbe pale of legal punishment. Whatever may have been tbe defendant’s motive, and even if reprehensible, there is no rule'by which we may reprimand the plaintiff for tbe defendant’s evil or wrongful intentions or acts. Whether tbe defendant’s purpose is condemned by law or not does not affect tbe validity of tbe contract, unless plaintiff contributed something more to tbe accomplishment of tbe unlawful design than the mere leasing of its property. Labbe v. Corbett, 69 Tex. 503, 6 S. W. 808; Tied. Sales, § 294. But we are of tbe opinion that defendant has been hastily and unnecessarily self-accusing. The plaintiff was making inroads upon tbe defendant’s business, and greatly cutting tbe Drices of its sole manufactured product, while with tbe plaintiff this product was but a single feature of its manufacturing plant. The defendant bad a perfect right to buy off tbe competition of a dangerous, powerful, and aggressive rival. Tbe law of self-defense and protection applies to one’s business, as well as to bis person. But, if another springs up in tbe stead of tbe one silenced, tbe courts cannot, under tbe guise of public expedience, relieve him from tbe improvidence of bis first contract.
Our attention has been called to many cases which condemn, in perhaps not too severe terms, combinations and trusts. It is a nervous and alarmed imagination which sees in every transaction involving large exchange of properties a monster threatening- public interests. Combinations in tbe nature of modern trusts, so soundly condemned, are those which aim at a union of energy, capital, and interest to stifle competition, and enhance tbe price of articles of prime necessity and staples of commerce. In such cases there is absent tbe element of exchange of one valuable right or thing for another. In tbe contract here we find none of tbe elements of a combination or trust. It is a simple lease and sale for a fair and reasonable compensation, with stipulations only commensurate with a reasonable, necessary protection. Tbe effect of tbe transaction, while not so literally expressed, was to convey with tbe premises tbe good will of tbe plaintiff in its bone tartar product and trade. *951ft is both unnecessary and unprofitable to discuss the many cases cited in the briefs. Upon a topic of public expedience, adjudications are, seemingly, necessarily inharmonious.
Judgment for the plaintiff for the rent, sued for, and 6 per cent, interest upon each installment from the date it. became due.