Court Opinion

ID: 8806672
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:49:59.440394+00
Date Added: 2024-06-11T17:04:07.667796
License: Public Domain

ROSS, Circuit Judge
(after stating the facts as above). The record shows that in the trial court a jury was waived and the case tried and submitted to the court upon evidence without substantial conflict, resulting in a judgmeht in favor of the defendants — that court holding that by the agreement of November 27, 1905, the notes constituting the basis of the plaintiff’s claim were extinguished, and their legal obligation thereafter forever ended. Upon appeal from that judgment., the Supreme Court of the territory unanimously agreed that the trial court was in error in that regard, and that the legal effect of the agreement referred to was but to suspend the payment of the notes during the observance of the obligations thereby imposed upon' Eliza Roy; but a majority of the court, from whose judgment the present writ of error comes, held that the obligations so imposed on Mrs. Roy were in restraint of trade and against public policy, and therefore void, for which reason the judgment of the trial court was affirmed, the Chief Justice dissenting.
Counsel for the defendants in error do not here contest the finding of the trial court (affirmed on appeal) to the effect that Mrs. Roy did incur indebtedness beyond the amount prohibited in and by the agreement in question, and their contention that the' plaintiff in the action was estopped from complaining thereof by reason of having led Mrs. Roy to believe that the restraint imposed upon her by the provisions of the agreement had been removed by her consent to the conveyance by her mother of certain of her land (if otherwise meritorious) is rendered without force by the undisputed evidence contained in the record as to the circumstances attending those conveyances. The only question, therefore, -with which we have to deal, is whether or not the prohibition against the incurring of indebtedness by Mrs. Roy to the amount of $1,000 was contrary to public policy as being in restraint of trade, and therefore void, unless it can be successfully maintained that the release of the indebtedness contained in the agreement was absolute. We do not so regard it, nor did the Supreme Court of Hawaii.
The agreement expressly recited that Mrs. Robinson had “agreed to cancel and release the said indebtedness and the said notes and mortgages,” and to release her mother therefrom on “the terms and conditions” thereinafter stated; wherefore, proceeded the agreement, in consideration of the $10 payment, and in further consideration of the expressed covenants and agreements of her mother, Mrs. Robinson acknowledged full payment of the indebtedness and thereby released and discharged the same: Provided, however, that should Mrs. Roy at any time thereafter mortgage or sell any of her real estate, or incur indebtedness in the prohibited amount, such acknowledgment of payment and discharge of the notes should thereupon become void and of no effect, and the “said enumerated indebtedness and interest thereon shall immediately become due and payable by the said Eliza Roy, her heirs, executors, administrators, and assigns, to the said Caroline J. Robinson, her heirs, executors, administrators, and assigns, with interest thereon at the several rates aforesaid, in the same manner as though this acknowledgment of payment and release *423of said notes and mortgages had not been made.” In other words, as we construe the agreement, the release by the creditor of the indebtedness was not absolute, but made dependent — 'contingent—upon the will of Mrs. Roy, who might or might not, as she chose, incur indebtedness to and over the prohibited extent, with the consequence in the one case that the indebtedness would remain suspended, and in the other that the operation of the release would thereby end, and the obligations theretofore suspended at once become again binding. That was, in effect, the express contract of the parties to the agreement, and we see no sound reason why it should not be enforced. In Mosler Safe Co. v. Maiden Lane S. D. Co., 199 N. Y. 479, 485, 93 N. E. 81, 83 (37 L. R. A. [N. S.] 363), the court said:
“Parties to contracts have the right to insert any stipulations that may be agreed to, provided that they be neither unconscionable, nor contrary to public policy.”
In Brooks v. Cooper, 50 N. J. Eq. 761, 767, 26 Atl. 978, 980 (21 L. R. A. 617, 35 Am. St. Rep. 793) the court said:
“The contract not being fulfilled between the parties, the question arises: Can it be enforced, or is it so manifestly contrary to public policy, in contravention of tlie statute, and so injurious to t.he public good, that it defeats itself? In determining this there must be kept in view the general rule of law that, where there is no statutory prohibition, the court will not readily pronounce an agreement invalid on the ground of policy or convenience, but is, on tlie contrary, inclined to leave men free to regulate their affairs as they think proper. Where, however, a contract is of such a nature that it cannot be carried into execution without reaching beyond the parties and exercising an injurious influence over the community at large, every one has an interest in its suppression, and it will be pronounced void from a due regard to the public welfare.”
Tn Daley v. People’s Building, etc., Association, 178 Mass. 13, 19, 59 N. E. 452, 453, the court said:
“Courts are less and less disposed to interfere with parties making such contracts as they choose, so long as they interfere with no one’s welfare but their own.”
In 9 Cyc. 542, it is said:
“One may agree not to do what he has a legal right to do, even though the promise may be restrictive of his personal rights” — citing Waite v. Merrill, 1 Me. (Greenl.) 102, 16 Am. Dec. 238; Com. v. Schultz, Brightly, N. P. (Fa.) 29.
And in the case of Baltimore & Ohio, etc., Ry. Co. v. Voigt, 176 U. S. 498, 505, 20 Sup. Ct. 385, 387 (44 L. Ed. 560) the Supreme Court said :
“It must not be forgotten that the right of private contract is no small part of the liberty of the citizen, and that the usual and most important function of courts of justice is rather to maintain and enforce contracts than to enable parlies thereto to escape from their obligation on the pretext of public policy, unless it clearly appear that they contravene public right or the public welfare. It was well said by Sir George Jessel, M. R., In Printing, etc., Co. v. Sampson, L. R. 19 Eq. 465: ‘It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because, if there is one thing which more than another public policy requires, it. is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when *424entered into freely and voluntarily, shall be held sacred, and shall be enforced by courts of justice. Therefore you have this paramount, public policy to consider — that you are not lightly to interfere with this freedom of contract.’ ”
The record shows that Mrs. Roy was at the time of entering into the agreement with her daughter, an elderly woman living upon her own premises in a country district, upon her own (but obviously, from the evidence, very moderate) means, and was not, so far as appears, engaged in any business, trade, or profession. Assuming that to one so circumstanced the doctrine of the courts holding, in the interest of the public welfare, contracts void that are in restraint of trade, has any application, we agree with the Chief Justice of the court below that the contract here involved was not, in view of the evidence, "un- ' reasonable, oppressive, immoral, or detrimental to the public interest or welfare.”
Accordingly, the judgment must be and is reversed, and the cause remanded to the trial court, with directions to enter judgment for the plaintiff in the action.