Court Opinion

ID: 7942213
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:16:12.409293+00
Date Added: 2024-06-11T16:33:46.329436
License: Public Domain

Hooker, C. J.
The plaintiff is a Michigan corporation; the defendant, a corporation organized under the laws of New Jersey. Both are engaged in the manufacture and sale of salt. The plaintiff has a plant at Detroit. This action is brought to recover the purchase price of a quantity of salt sold by the plaintiff to the defendant. The iatter has appealed from a verdict and judgment of about $10,000. The recovery is based upon a written contract, which, though dated July 28, 1899, was executed in October of the same year. The principal defense is that the contract is in restraint of trade, and in violation of the anti-trust laws of the State and Nation, and therefore illegal and void. We insert it in full:
“This agreement, made this twenty-eighth day of July, 1899, between the Detroit Salt Company, a corporation of Michigan, its successors or assigns, party of the first part, and the National Salt Company, a corporation of New Jersey, its successors or assigns, party of the second part,
“ fVitnesseth: That for and in consideration of the sum of one dollar ($1.00) and Other valuable consideration, paid by the party of the second part to the party of the *105first part, receipt of which is hereby acknowledged, the party of the first part hereby sells to the party of the second part their production of salt made at their works, situated on the line of the Wabash Railroad, in Wayne county, State of Michigan, for the term of five (5) years, commencing on the first day of October, 1899, upon the following terms and conditions':
“ I. For the first 300,000 barrels of salt, of 280 lbs. each, delivered per annum, 33c for each and every 280 lbs. of No. 1 Medium salt, and 28c for each and every 280 lbs. of No. 2 Medium salt, delivered on warehouse floor of plant of party of first part. For any salt manufactured in •excess of 300,000 barrels, price shall be fifteen (15c) per 280 lbs. of salt, delivered as aforesaid. Any dairy or table salt which may be required by the second party will be furnished by first party, within their capacity to produce same, at 45c per 280 lbs.
“II. Invoices for shipments shall be rendered promptly, and statements shall be rendered upon the last working day of each month for shipments made during that month. Payments therefor shall be made not later than the 15th day of the next month succeeding shipment for all invoices, except such invoices concerning which there may be a dispute as to quantity or quality; such invoices to be settled when adjustment has been agreed upon.
“III. Should party of the second part fail to remove salt hereby sold, in sufficient quantities so as to enable the party of the first part to run said plant to its full capacity, thereby necessitating the suspension of manufacture in all or any part of said plant, because of lack of storage room due to failure of party of second part to remove said salt, then, five days after due notice in writing to second party of such failure, the party of the second part shall pay to the party of the first part, as liquidated damages, the sum of 16c per 280 lbs. of salt not manufactured in consequence thereof, for a period of time not exceeding six months in the aggregate in any one year; and for any time exceeding six months in any one year (dating from the date of this agreement), the sum of 32c per barrel upon estimated capacity of said plant or any portion thereof that may be closed down in consequence of the failure of said party of the second part to remove salt as heretofore agreed. The capacity of said plant to be determined by taking 150 barrels of salt, of 280 lbs. each, as an average daily pro*106duction of each pan, and multiplying the same by the number of pans idle, not exceeding six, however, that being the number in said plant.
“IV. It is distinctly understood that the party of the first part makes no obligation to deliver a specific quantity of salt, but they do agree to deliver to the party of the second part their entire production, and their failure to do so shall be settled by liquidated damages to be paid the party of the second part by the party of the first part, of thirty-five thousand ($35,000) dollars per year.
“V. And the party of the first part does hereby license the party of the second part to the exclusive name as trade-mark, and to the organization, of the Detroit Salt Company, during the period of this contract.
“VI. Party of the second part hereby agrees to ship via Wabash Railroad the entire production of salt hereby purchased, providing the facilities furnished and the rate of freight made by the Wabash Railroad Company are as advantageous as those given by competitive lines, and the prevailing freight differential between Saginaw Valley points, Cleveland, and Detroit maintained. It is understood in this connection that any favorable privileges granted by the Wabash Railroad Company, and now enjoyed by the party of the first part, shall accrue to the advantage of the party of the second part.
“VII. The party of the first part agrees to assign all contracts for cooperage, specifically described in Exhibit A hereto attached, to the party of the second part, and to sell to the party of the second part all cooper stock, bags, and pockets that said party of the first part has on hand October 1st, at cost; also to sell all salt on hand on October 1st, at the same price as stated in paragraph one.
“ VIII. In the event of the destruction of the plant belonging to the party of the first part, as a whole or in part, by fire or other cause, they shall have the privilege of rebuilding the same to its present capacity.
“ It is understood that the price named herein is based upon the present price of fuel, which is $1.25 per ton for Pittsburg No. 8 coarse slack, and $1.10 per ton for Hocking coarse slack, f. o. b. Detroit. Any advance in same is to be borne by the party of the second part, and any decline to accrue to their benefit.
“In witness whereof, the parties hereto have caused these presents to be duly executed on their behalf, by their *107respective officers, and their respective incorporated seals hereunto affixed.
[Signed] “ Detroit Salt Co.,
[Seal.] “By J. M. Mtjlkey, Pt.
“ National Salt Co.,
[Seal.] “By A. S. White, Prest.
“Attest: Jno. Alvin Young.”
The defendant claims that the trial judge should have directed a verdict in its favor, instead of leaving to the jury the question whether the contract was illegal and void. The important questions presented by the record are:
(1) Can we say that the contract is illegal upon its face ?
(2) Can we say that it should be so construed, in the light of the undisputed circumstances attending its making, and the dealings under it ?
(3) Was there error in the exclusion of answers to questions asked upon the cross-examination of the plaintiff’s witnesses ?
(4) Should we say that the verdict was so clearly at variance with the weight of evidence as to require a reversal ?
1. Was the contract illegal upon its face ? Counsel for the plaintiff insist that, upon its face, this writing provides for a lawful sale of plaintiff’s salt, and contains no agreement that is in restraint of production or trade, or that in any way violates the provisions of the anti-trust laws. The contract provides for the sale of plaintiff’s entire output of salt. The price to be paid was 33 cents a barrel up to 300,000 barrels per annum," and 15 cents per barrel for all in excess thereof, the salt to be delivered on the floor of plaintiff’s warehouse. It was provided that, if plaintiff should sell any of its product to others, it should forfeit and pay to the defendant the sum of $35,000, and, if the defendant should interrupt the manufacture of salt by the plaintiff, it should pay to plaintiff, for its damages, 16 cents per barrel upon the average daily output for the preceding three months, for a period of not exceeding six months, and 32 cents a barrel after six months. The con*108tract contained “a license of the exclusive name of the plaintiff, as a trade mark, and the organization,” and it provided that, in case of destruction of the plant by fire, the plaintiff might rebuild to its former capacity.
We can conceive of a bona fide desire on the part of the defendant to purchase plaintiff’s salt to the extent of 300,000 barrels at 33 cents per barrel, and a willingness to take salt in excess of that amount, if it could buy such excess at a sufficiently reduced price. And we can understand how the plaintiff might be willing to make a radical reduction in price for such excess, for the sake of a satisfactory price for the first 300,000 barrels, and the assurance of a market for all that it might produce. On the other hand, we can understand that, if defendant’s object was to reduce production, a contract by which it secured the right to purchase such excess at less than cost of production, especially when fortified by the right to exact a $35,000 penalty for selling to others, would pretty effectively prevent the manufacture of any excess. It would be as efficacious as an express agreement that plaintiff should reduce its output to 300,000 barrels, or that it should not increase its capacity beyond that amount.
With nothing upon the face of the agreement to show the capacity of the plant, or the value of salt, or the cost of its production, we cannot say that the bare contract of purchase at the prices named was an illegal contract; and, if that were all that this contract attempted to provide for, it would be clear that we could not declare the contract illegal upon its face, whatever we might be justified in saying when it should be viewed in the light of attending circumstances. We might think a difference of 50 per cent, on the price of such a staple commodity a radical cut to make if the parties expected free competition in the market, and be suspicious of the purpose of the parties; but this would not justify us in holding the contract illegal upon its face. This suspicion may justly be increased when we find that the parties have anticipated a breach of the contract by defendant whereby production *109should be reduced, and made provisions under which the defendant might stop the manufacture, by allowing the floor to remain filled with its salt, for- a given price per barrel on the capacity of the mill, which stoppage could practically be continued indefinitely at that price by clearing the floor once in six months. There can be no question that the defendant could practically close up this plant under this contract. Whether it could afford to do it on ^ the basis of 16 cents a barrel we do not know, but we can conceive of a price that would be quite convincing that such action would be profitable.
When we take these provisions into consideration, with the somewhat peculiar agreement about the use of plaintiff’s name and organization, the $35,000 penalty for selling to others, and the limitation on the capacity in case plaintiff should have occasion to rebuild, we think there is much upon the face of the contract to indicate that the-parties had in contemplation the control of plaintiff’s production. But, conceding, though not deciding, that we should not hold this contract to be illegal upon its face, we will next consider the circumstances under which it was made, and see whether they throw such light upon the intention of the parties as to conclusively establish the illegality of this sale of salt.
2. Were the surrounding circumstances such as to conclusively establish the illegality of the contract ? The testimony of Mr. Mulkey shows that, about the time of their negotiations, the National Salt Company controlled some plants in the Saginaw Yalley and Manistee, and he knew that they were trying to get others, though he says that White “was pretty careful not to tell him what other contracts he had made.” He admitted that the purpose of making this contract was, in its inception, to lower the price of salt, because the Michigan Salt Association had sent salt into the territory of the National Salt Company and depressed its trade, and that company wanted to lease plaintiff’s works, with a view to throwing salt on the market to injure the Michigan Salt Association, and *110threatened to build large works and injure the plaintiff’s business, unless it acceded to its proposal. He stated that, before the contract sued upon was made, he was willing to contract, for his company, that it* should not sell any salt east of the Mississippi river, though he knew that the. freight rates beyond that-boundary were prohibitive, and he also knew that the National Salt Company controlled the market in New York and the Eastern States. He testified that he did not recollect any conversation to the effect that other plants were to be closed, to limit the production of salt, but that, this talk having covered a period of three months, there might have been, and probably was, conversation of that kind. Shall we believe this ? Mulkey also testified that, for a period previous to the making of this contract, men engaged in the salt trade were in and out of his office, discussing the matter, and he knew that they were negotiating with the National Salt Company, and that Mr. White was the man who got the salt manufacturers together. He also knew by report what the National Salt Company was doing in the way of making other contracts; that it controlled the markets in New York and the Eastern States. On September 20, 1899, he wrote White that some Bay City men — McEwan and Rouse — wanted some information regarding arrangements he (White) had made with salt companies outside of the association, and would like to arrange matters with him, giving the amount of their production, and stating that he would probably hear from them. Letters between the parties show that Mulkey was getting options for the National Salt Company. This related to some plants west of the Mississippi river. As bearing upon the relations of the parties, we insert some of the correspondence:
Letter of January 6, 1900, Mulkey to White:
“I saw Mr. Mulvane in Chicago last week. He says they are going to build in Michigan. Better settle with them, if you can, on reasonable terms.”
Letter of January 7, 1900, Mulkey to White:
*111“While we very much prefer running, we believe, under the circumstances, it would be well to close; but this, of course, is a matter for you to determine.”
Letter of January 18, 1900, Mulkey to White:
“We were in hopes, when we became identified with your company in the purchase of stock, that we should be considered one of your company, and not some one who was trying to take advantage of you; but every point seems to be fought out as though we were simply pirates in the field. We have had repeated propositions made to us to start people going in the salt business, and propositions which would undoubtedly have made us good money; but we have discouraged everything all we could, as letters in our possession will show. In other words, we are doing our very best to live up to the spirit of our agreement, and we regret very much that these misunderstandings are coming up all of the time, and we feel that the matter must be settled now once for all, and we want them settled before this contract is ratified.”
Letter of February 9, 1900, Mulkey to White:
“ It seems to the writer that an effort should be made to stop the building of the plant at Port Huron. I understand that it is backed by Griggs and Cooper, of Duluth, and this might be on account of their not being able to get association salt to sell. This is a very strong concern, and has always been a menace to the business, and once they are in they will be in to stay. I am very much afraid that the policy being followed out here is going to build up several different manufacturers, which in the end will be worse for us than we will gain by our deal, as the fight will be all the longer when it does commence. We feel that every effort ought to be made to prevent the building of every plant possible. I should like to talk this matter over with you fully when you come out.”
Letter of October 11, 1900, Mulkey to White:
“ I had a long talk with Irvine & Wise today, and they were very much surprised to learn that our plant was shut down. I gave them a few facts, and I am satisfied it has put them to thinking; and, unless they are getting somebody to put up all the money, it may deter them from building. On this account, we think the closing might be of benefit in two ways.”
*112Letter of November 12, 1900, White to Mulkey:
‘ ‘ I have no doubt these repairs were necessary, but I see no reason why you should consume the time in making repairs which we pay you for to curtail the production of salt.”
Letter of December 22, 1900, Mulkey to White:
“We have been repeatedly solicited to enter combinations which were very alluring, but have stood aloof, as we felt that we wanted to do everything that we could to treat you fairly.”
Letter of February 6, 1901, Mulkey to White:
“If this is closed up, we will then take up the mine matter, and, if Fuller and his crowd do not care to purchase it, we will be glad to join with you in an effort to purchase the other Kansas rock-salt mines, and amalgamate the three. It is simply a .matter of a little work, and I believe something very nice could be brought out of it for a side issue in salt. I believe this is a wise thing for all of us, in view of the fact that our evaporated interests and rock-salt interests are likely to clash, and bring about an ill feeling, which we hope to avoid.”
Letter of March 8, 1901, White to Mulkey:
“So far as your plant is concerned, I understand that it is your desire that we pay the dead rental, as provided in the contract, while it is closed, which, of course, we will do.”"
Letter of March 11, 1901, Mulkey to White:
“You have a contract by which you can close us down for a certain sum of money.”
Letter of March 13, 1901, White to Mulkey:
“If wa cannot continue to do so, then there is but one course to pursue, and that is to ask you to shut down, and we will pay the dead rental provided for in the contract. ”
Letter of May 10, 1901, Mulkey to White:
“ Your letter of the 8th inst. received. I have arranged to have the matter of selling salt taken up with Swift, and will advise you later of the result of my efforts.
“I should be glad if you could give me some informa*113tion as to what you think is the prospect for the National; I understand the United Railway are now running under a receiver. Of course, I do not know to what extent they are going to be in competition with you. I shall be glad if you can give me the situation in general, and, if you can, I will treat it confidentially. I presume I see more of the prospective competition here in Detroit than anywhere else, but, with the little plants that have been built, together with the Underwood and Swift, it would seem to me that competition is coming to life rather lively. As far as our company is concerned, we wish' you to understand that we desire to stand squarely with the National Salt Company, and, at any time we can be of service to you, we stand ready to do what we can.”
Letter of June 15, 1901, Mulkey to White:
‘ ‘ I met Swift’s confidential man, Mr. Gardner, today. I learned that they have material on the ground for building derricks for their wells at Detroit. I suggested to him the advisability of making some kind of a deal for their salt for five years. He said they had not gone so far but that they could stop, and wanted me to name him an f. o. b. price, Detroit. I am inclined to think a deal could be made with them, but it would necessarily be at a low price, they having gone so far as they have; but the question is, Would it hot be better to sell them salt at cost rather than have them enter the field as a competitor? They would undoubtedly manufacture more than their requirements, and would market the surplus. Think this over, and, if T can do you any good in any way, I shall be glad to do so.”
There was convincing evidence that Mulkey knew that the National Salt Company controlled the products of several, if not many, other salt producers, at Saginaw, Manistee, Ludington, and other places. This testimony seems to show that the National Salt Company was engaged in an attempt to get control of the salt market through contracts with producers, that it contemplated a limitation of production, and that the plaintiff not only knew it, but was willing to enter into contract relations to that end, at least so far as other plants were concerned. It knew of defendant’s illegal methods, and it contracted to *114sell its salt to it, and consented to provisions which plainly made it possible for defendant to curtail plaintiff’s production upon terms provided by the contract, which were, presumably, mutually satisfactory. But there is still further evidence.
Plaintiff’s brief admits (page 4) that about this time the National Salt Company began negotiating for the purchase of the Detroit Salt Company’s plant, because the Michigan Salt Association had been invading its territory; so it proposed to injure the Michigan Association by selling salt in competition. We do not find anything in the nature of a contract to sell the plant, but a contract was drawn and dated July 28, 1899, and executed by both companies. It provided: First. That the National Salt Company should buy the salt produced by the Detroit Salt Company for five years, and pay, for the first 300,000 barrels, 33 cents for No. 1 and 28 cents for No. 2; any excess over 300,000 barrels should be 15 cents; all to be delivered on floor of Detroit Salt Company’s warehouse. Second. Upon 60 days’ notice in writing, the Detroit Salt Company should suspend manufacture for the period stated in the notice, not exceeding six months in any one year, and during such suspension it should receive, as rental, a sum equal to 16 cents a barrel on its previous average daily production for three months. Third. If the National Salt Company failed to remove the salt, it was to pay 16 cents per barrel on the preceding average daily production as compensation for salt not manufactured. Fourth. The Detroit Salt Company agreed not to increase the capacity of its plant. Fifth. It contained a provision for a penalty for failure to deliver to defendant all salt manufactured. Sixth. It licensed “exclusive name as trade mark and organization,” etc. Seventh. It was further agreed that no stockholder should operate a factory or sell salt. It was executed by both companies, and ratified and assented to by the stockholders. Plaintiff admits that this contract was illegal, but only in two particulars: (1) The agreement to shut down; (2) the agreement of stockholders. *115Being advised by counsel that this was illegal, the parties made further efforts to agree upon a contract.
Mr. Gray, plaintiff’s -counsel, prepared the contract upon which this action is based, but at what juncture does not clearly appear, as it was not executed until October, although dated July 28, 1899. Meantime, other contracts were made and executed. Exhibit 18, dated July 29th, was a lease of the plant for $35,000 rent. This also contained a promise binding the stockholders as before. It was signed by the parties. A supplemental contract, dated August 15th, was made and signed by the parties, referring to that of July 29th, which provided for many important modifications of said lease, which we need not discuss. But, as stated, in October the contract ■dated July 28th, drawn by counsel, was executed, upon the advice of counsel that it was a valid instrument. It is now treated by plaintiff as the contract, though there is reason to believe that the parties began business at once after the first contract was signed, under the oral, or preceding written, agreements, or both; viz., on or soon after July 28th. No reference is made to these other contracts in the new one, but it is inferable that they were superseded by the contract in suit, and they clearly show what the parties had in mind, and it is proper to inquire whether this last contract was not an attempt to put in legal form the provisions they had agreed upon, so far as possible, without showing their illegal design, leaving the illegal agreements to an oral understanding, or whether, on the other hand, these parties, on being informed that their proposed contract was illegal, abandoned an illegal and criminal enterprise altogether, and embarked upon a new and different and legal one, which contemplated no restraint of trade, or control of manufacture or price of product. These circumstances and contracts justify the inference that the National Salt Company undertook to get control of the sale of the plaintiff’s output of salt, with such restriction upon such output as would prevent an excess of over 300,000 barrels. All of the contracts are *116consistent with this theory, and it requires a degree of credulity that we do not possess to believe that the National Salt Company abandoned its cherished purpose, for which, we doubt not, it was organized, or that the plaintiff’ believed it did.
It is contended that the evidence shows that the plaintiff’s president was innocent of any knowledge of an intent to control production or prices of salt. He testified repeatedly that all he wanted to do was to sell plaintiff’s salt, and some hearsay evidence was given that he so protested at the time of the transaction, and the jury has been induced to so find, notwithstanding the overwhelming evidence that, to accomplish the sale of his salt, he was willing to make these contracts, to write the letters, to counsel the shutting down of existing plants, and to aid in preventing the starting of new ones. No one would doubt for a moment that the pursuit of gain through the manufacture and sale of salt is the ulterior object of all these parties, and has been in all that they have done; but that fact is entirely consistent with their intentional combination to accomplish it by unlawful means and through illegal contracts. All of these things are consistent with defendant’s claim. They are not consistent with a simple contract for the legitimate purchase and sale of salt. They indicate a strenuous effort to accomplish something out of the ordinary; and a business man who should act in relation to this matter upon any other assumption than that these parties had combined to control the price and production of salt would, in our opinion, be wanting in business prudence and sagacity. It is clear that this was accomplished so far as it could be, and at the same time protect the respective parties from one another, which both parties seem to have deemed necessary.
A motion for new trial was made upon the ground of newly-discovered evidence, and in support of it several important letters were produced. The failure to produce them on the trial was explained in a way, and while we cannot criticise the learned circuit judge, who refused to *117recognize this as a very strong reason for granting a new trial to defendant, whose officers must have had plenty of evidence in support of their claim at command, the letters are important, and if, as said in Richardson v. Buhl, 77 Mich. 632 (43 N. W. 1102, 6 L. R. A. 457), the courts should, of their own volition, take notice of illegal contracts, it was quite sufficient, in connection with the manifest disregard of the law by the,, jury, to warrant a new trial. These letters cannot be considered as a part of the evidence, but they still further corroborate the evidence already mentioned. On June 8, 1899, Mr. Mulkey, plaintiff’s president, wrote a letter to "White, defendant’s president, in which he refers to negotiations with the association having ceased. We understand this to allude to the Michigan Salt Association, but we have no means of knowing what the nature of the negotiations was. This letter of ■June 8th suggested to White a proposition for a strong •company to buy the coal-producing plants on the Detroit •and St. Clair rivers (of which we understand plaintiff’s plant to have been one) and at Ludington, and that this •company buy the product from the sawmill manufacturers, and that the coal manufacturers could be the safety valve, •and be shut down whenever necessary, and make their profits out of the sawmill people. His company was willing to join a company on that basis, but did not want to ■sell its plant and retire from business. He expressed a willingness to do some work in the way of securing options, .and wanted the communication treated as confidential. He admitted that the supply of salt exceeded the demand, and that he knew that at that time the National Salt Company controlled only New York and the Eastern •States. The letter is as follows:
“Detroit, Mich., 6-8-99.
“Mr. A. S. White,
“Presdt. National Salt Co.,
“New York.
_ “ Dear Sir: All negotiations with the association having ceased, what would you think of a proposition for a *118strong company to buy the coal-producing plants on the Detroit and St. Clair rivers, and probably Skinner plant at Ludington, and this company buy the product of the sawmill manufacturers, either direct from the manufacturers or from the association itself ? The coal manufacturers could be the safety valve, and be shut down whenever it was necessary, and make their profits out of the sawmill people. This might be done by organizing a new company, or the National might extend its wings this much farther. We would be willing to join a new company on this basis, or joiry with the National, if properly represented. We do not throw out the proposition with a view to sell our plant and retire from the business, as we would not want to do that.
‘ ‘ If you think anything of the proposition, I shall be-glad to meet you some place, and talk the matter over with you, and I would be willing to do some woi'k in the way of securing options on the property. The salt trade is very active here. We believe all is being sold that is being manufactured, although at ruinously low prices.
“Kindly treat my suggestions confidentially, as I do not care to have them go any further if you do not approve of the plan. Very truly yours,
“J. M. Mulkey.”
On September 13, 1899, Mulkey wrote White:
“Chicago, III., Sept. 13,’99.
“My Dear White: I had a conference with the A.,. T. & S. F. R. R. today. They are in hearty sympathy with our movement, and, if we can control the salt outside of the Gould crowd, we will have this road at our backs. You must control the Morton plant, and the balance will be easy.
“I had a conversation today with Mr. Robins of the Hutchinson Packing Company, and they are extremely anxious to do anything, but they have given Mr. Morton (I think) an option for the purchase of their product. Is this for you ? If so, advise me by wire at Hutchinson, as I do not wish to run counter to any of your agents. Mr. Robins said he would know in a week or ten days, and, if this party did not take the salt, he would figure with me. I will learn more of this in Hutchinson, probably.
“The Santa Fé people are extremely anxious for us to buy Barton out, as he has been in the way for years, and I’m satisfied we can have all the protection we heed.
“Very truly vours,
“ J.”M. Mulkey.”
*119Again, on September 20, 1899, he wrote:
“ Sterling, Kansas, Sept. 20, 1899.
“ My Dear White: As I wired you, I am up against
another Carter. When it came to the scratch, Barton brought up the fact that his brother was claiming an interest in his plant, though ’twas not of record, and in reality he was not entitled to anything. Upon investigation I find the brothers have been threatening each others’ lives, and are at swords’ points. My attorney said ’twould not do to accept title from the one without a release from the other, as the fact that both were in possession might make the title to the one hold good, notwithstanding it was not of record. So I have my attorney trying to get them together, with some show of success.
“ Had a talk with Vincent, but did not dare to talk to him of going east with me till I know what we do here. I learn that he is suspicious that I am out here to represent the National Salt Co. He went to Topeka to consult Mulvane yesterday about it. Mulvane is just back from a month’s outing in Mich., and knows of your negotiations. If Barton learns of my aims, the jig will be up.
“Truly yours, J. M. M.”
It is said that the defendant chose to beep silent, and that its officers, who must have known the truth, sat in the court-room and did not testify. We have no occasion to palliate their conduct. A man who will enter upon a business of this sort in violation of law, thereby becoming a'criminal under the law, would not be likely to take the witness stand, and would be likely to claim .the benefit of his privilege if called. The defendant is entitled to no especial consideration. It has had plaintiff’s salt, and has not paid for it. Doubtless this fact made the jury unwilling to permit it to. escape payment, and led them to ignore the legal rule that the law should not aid one by enforcing an illegal contract. Doubtless they looked upon the promoter of such schemes as the more culpable, and sympathized with the manufacturer, who, perhaps under coercion, or threats, or the sense of danger of ruin, yielded and became a party to the scheme, either for profit or to avoid loss. We share this feeling, but the law recognizes no *120distinction, and will not aid one against the other in enforcing or carrying out their illegal contract. The decisions of the courts are uniform, and, in view of the increased prevalence of such contracts and combinations, both Congress and the legislatures of most of the States have made them criminal. The federal statute (26 Stat. chap. 647) punishes by fine and imprisonment those who engage in the making or carrying out of any contract in restraint of trade or commerce between the States or with foreign nations. Our own statute (3 Comp. Laws, § 11377) declares illegal all contracts, agreements, understandings, and combinations entered into, or knowingly assented to, the purpose, object, or intent of which shall be to limit, control, or in any manner to restrict or regulate the amount of production or the quantity of any article to be raised or produced, or to enhance, control, or regulate the market price thereof, or in any manner to prevent or restrict free competition in the production or sale of any such article, and it punishes by fine and imprisonment every person who is a party to such transaction. We are not called upon to close our eyes to the prevailing business methods in these affairs, or to the business conditions which have shown the inadequacy of civil remedies, and led to the enactment of penal statutes to prevent illegal business transactions. It is obvious that, so long as combinations in restraint of trade are profitable, there will be found those whose desire for gain will overcome their reverence for law, and even lead them to dare the dangers of criminal prosecution; and it is not unreasonable to suppose that in their contracts they will, endeavor to give the appearance of lawful transactions. In making this, contract before us, the parties had difficulty in avoiding illegal provisions, and, if defendant is right about the case, the safeguards of the contract are to be found in the provisions contemplating its breach. In a question of this kind it is proper to show the circumstances attending the making of the contract, the object and purpose in view, and the construction placed upon it by the parties, as evi-, *121denced by their dealings under it. Gregory v. Wendell, 39 Mich. 337 (33 Am. Rep. 390), citing Rumsey v. Berry, 65 Me. 574; Richardson v. Buhl, 77 Mich. 661 (43 N. W. 1102, 6 L. R. A. 457); Gregory v. Wendell, 40 Mich. 432.
It is contended that, when there is dispute and uncertainty as to the object, purpose, intent, and knowledge of the parties to a contract not illegal upon its face, the question must go to the jury, and this is the rule. See De Mary v. Burtenshaw’s Estate, 131 Mich. 326 (91 N. W. 647). But, where all of the evidence is consistent only with an unlawful object and purpose on the part of all parties to the transaction, it is otherwise. Such is this case, notwithstanding plaintiff’s attempt to claim innocence by saying it was only attempting to sell its product, and its denial of knowledge of defendant’s purpose. Unfortunately, its. denial is proved false by the statements of its officers concerning what they did and knew, and, as already stated, while its ulterior object was to sell its salt, it is clearly proved that it was willing to do it through unlawful means and relations.
We have, then,-a contract containing provisions uncalled for if this is a legitimate deal, but entirely consistent with the exigencies of an unlawful one. We have overwhelming and uncontradicted evidence of the character of the defendant, and its unlawful purpose and business, to which this and similar contracts were necessary, and to the furthering of which they were adapted. We think there is abundant evidence that the plaintiff’s officers understood this, and were willing to lend themselves to the furtherance of the scheme, and this is not contradicted, unless Mulkey’s denials are a contradiction, and these are so qualified and explained by the facts which he admits as to refute them.
3. Upon the cross-examination of plaintiff’s president, he was asked -if he did not know that the National Salt Company was a monopoly, and that it sought to control the market, and that it made other contracts with salt *122manufacturers, and his purpose in- making this contract. It was competent to inquire fully into interviews and knowledge of the parties, to show the nature and purpose of the arrangement, to refute plaintiff’s claim that it was unaware of defendant’s character and purpose, and to show, by their dealings, the construction that the parties themselves placed on the contract.
We think that the circuit judge should have admitted the proof tending to show plaintiff’s knowledge and participation, and that he should have directed a verdict for the defendant, upon the ground of plaintiff’s complicity in an illegal and penal transaction.
The judgment is therefore reversed, and a new trial ordered.
Moore and Montgomery, J J., concurred with Hooker, C. J.