Court Opinion

ID: 5003280
Source: CourtListenerOpinion
Date Created: 2021-10-01 01:39:02.720783+00
Date Added: 2024-06-11T08:17:10.691803
License: Public Domain

On Appellees’ Motion for Rehearing.
Appellees have filed an elaborate motion for rehearing, some of the points urged in which we deem it necessary to discuss:
1. It is urged that the contract of April 14, 1927, was severable as to Rau and Schneeman, and that the consideration received by Schneeman could not support the contract in so far as Rau is concerned. This proposition is correct. The contract itself provides that the undertakings of Rau and Schneeman are several.
2. It is insisted that the jury finding that Rau received no consideration for the April 14, 1927,' contract is supported by the evidence of Rau to the effect that when he purchased from Joe Amberson the Buick bus in June, 1925, it was only worth about $1,200, and that the $2,000 he paid included the right to use the Union Bus stations and the Union Bus flag. Rap so testified. However, the record shows without contradiction that this right was terminated on October 20,1926, and Rau ceased to use the Union Bus flag or stations from that time until after he signed the contract of April 14, 1927. His rights under the June, 1925, contract were, in dispute, and the settlement of that dispute was a sufficient consideration for the April 14, 1927, contract.
The following points were not urged in the brief, but are presented for the first time on appeal in the motion.
3. That the contract of April 14, 1927, was void at common law as being in restraint of trade.
The contention is that no physical property passed by the contract; that Joe Amberson had no intention of using, and did not use, the “S. A. Flag” (a registered trade-mark); and that the only real purpose and effect of the contract was to eliminate Rau as a competitor. The principle contended for is well established and was recently applied in this court in Potomac Fire Ins. Co. v. State, 18 S.W.(2d) 929 (error ref.).
What the instrument attempted to transfer is set out in quotation in our original opinion. There can be no question'but that .this *418language passed every right to the operation of motor busses between the two points which Rau' possessed, and which he had a legal right to dispose of, unless the contract was void, as being in restraint of trade.
Appellee contends that Rau had no such right (eliminating the “S. A. Flag” upon the above grounds), since the motorbus law was not then in effect, and his right to run a bus line was derived from the general right to engage in a business that was not inhibited, and was a right common to all.
The motorbus law was approved April 1, 1927 (thirteen days before the contract was executed), but did not become effective until June 14, 1927 (Vernon’s Ann. Civ. St. art. 911a; Vernon’s Ann. P. C. art. 1690a). It was originally passed in the House February 15, 1927, and after a number of amendments in both Houses was finally passed upon adoption of free conference committees’ report March 14, 1927. Section 5 of the law provides: “Any right, privilege, permit, or certificate held, owned or obtained by any motor-bus company under the provisions of this Act * * * may be sold, assigned, leased or transferred, or inherited,” with the proviso that such sale, etc., have the approval of the railroad commission. At the time of the transfer, Rau had an established business; he had operated continuously.from January 11, 1927, with the then inchoate right, which would become absolute upon the taking effect of the act, to obtain an assignable certificate, provided he continued to operate the line. We think this inchoate right was more than the general right, inherent in every one, to engage in the motorbus business: It was exclusive in Rau alone; as such it was a valuable right, and in the absence of some inhibition imposed by statute or rule of public policy, it was, we believe, under the generally announced policy of this state, the subject of sale. Graham v. Henry, 17 Tex. 164; Manchaca v. Field, 62 Tex. 136; Stiles v. Hawkins (Tex. Com. App.) 207 S. W. 89; Perry v. Smith (Tex. Com. App.) 231 S. W. 340; Caruthers v. Leonard (Tex. Com. App.) 254 S. W. 779.
While not expressly so stating, the contract was manifestly made in contemplation of the motorbus law, which had been pending before the legislature for several months, and had already been passed and approved by the Governor.
The following rule is laid down in 13 C. J. p. 424: “A contract for an act prohibited by the existing’law, but which is shown to have been made with reference to the contemplated procuring of a special statute making the act valid, the enactment of which was actually procured before the contract was performed, is not to be regarded as illegal.” The authorities cited support the text.
But aside from this, and whatever character may be ascribed to the right at the date of the transfer, it unquestionably ripened into full fruition upon the effective date of the act. As we have already seen, the consideration moving to Rau was the use for one year from April 14, 1927, of the Union Bus terminals, terminal service, and flag. Rau continued'to operate under the contract, accepting all the benefits thereof, and even invoking the aid of the motorbus division of the commission to enforce his rights, during the remainder of the year after the act became effective, June 14,1927.
Clearly, we think, these acts constituted a ratification and confirmation of the contract after the act became effective and his rights in the certificate became fixed and absolute. The legality of the contract must, therefore, in any event, be tested by the rights of the parties after the act became effective.
This view we think brings the contract .within the purview of the general common-law rule to the effect that an ancillary contract in reasonable restraint of trade is valid.
The pertinent rule is thus stated in 13 C. J. p. 475: “A restraint to be reasonable must be such only as to afford a fair protection to the interests of the party in favor of whom it is given and not so large as to interfere with the interests of the public. Subject to this qualification it may extend to all the territory in which the business has been carried on or wherein the covenantee’s trade is likely to go.”
The agreement was limited to operating a bus line between the two points covered by the business which was assigned.
There is still another view under which Rau may be precluded from setting up illegality of the contract. The latter was entirely executed on the part of Amberson, and Rau had received the full consideration for his bargain. Amberson was not seeking to enforce the provision against competition, but was merely asserting title to the certificate. If, as we think, the title to the certificate passed in any event when the act became effective, then under elementary principles Rau could not recover the title upon the ground that the contract was illegal. 13 C. J. p. 496. It is unnecessary, however, to pass upon this question, and we therefore do not rest our decision upon it.
4. The further point is made that the contract is in violation of our anti-trust laws. If we are correct in holding that it is mot void under the common law, then it does not come within the inhibition of our anti-tfust laws under the holdings in Gates v. Hooper, 90 Tex. 563, 39 S. W. 1079, and Malakoff Gin Co. v. Riddlesperger, 108 Tex. 273, 192 S. W. 530.
The motion is overruled.
Overruled.