Court Opinion

ID: 3903642
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:33:22.404377+00
Date Added: 2024-06-11T13:52:05.987121
License: Public Domain

In the former opinion setting aside the submission and referring this cause back for argument, sufficient has been stated to indicate the nature of the contract and the issues presented in the pleadings based thereon.
The first question we will consider is whether the contract created a trust within the meaning of Ch. 117, p. 141, of the Acts of 1889, which provides "That a trust is a combination of capital, skill, or acts by two or more persons, firms, corporations, or associations of persons, or of either two or more of them for either, any, or all of the following purposes: First, to create or carry out restrictions in trade * * * Third, to prevent competition in * * * sale or purchase * * * of * * * commodities;" and declares, "That any contract or agreement in violation of the provisions of this act shall be absolutely void, and not enforceable in law or equity." The portion of the act above quoted denounces as void and prohibits the enforcement at law or equity of every contract whereby a combination of capital, skill, or acts is formed "to create or carry out restrictions in trade," or "to prevent competition in the sale or purchase of commodities." The statute ignores the common law distinction between restrictions which are reasonable and those which are not, and commodities which are of prime necessity and those *Page 401 
which are not. (Houck  Dieter v. Brewing Assn., 88 Tex. 185; Brewing Assn. v. Houck, 27 S.W. Rep., 692.) It relieves the courts of the difficulty of determining whether in a particular case any effect will be given such a contract, by declaring that it "shall be absolutely void, and not enforceable either in law or equity." (Beer v. Landman, 88 Tex. 450.) The word "combination," as used in the statute, means union or association. It is clear that the contract provided for and contemplated a union or association of capital and acts by the Coal Company and Lawson. The former furnished the place of business, agreed that during the term of the lease it would not permit any other saloon to do business at Thurber, that it would pay off its employes in checks instead of money and would redeem weekly such of said checks as Lawson might take in for liquors sold, and the latter agreed to conduct the business, to furnish monthly statements thereof and pay the former two-thirds of the profits in return for the use of the premises and the exclusive privileges guaranteed by the contract. Thus the contract provided, not only for the union or association by the parties of their capital, but also for their united and associated action, during the entire term, in furtherance of the common object, and was therefore a "combination of capital" and "acts."
In order, however, for the contract to be within the inhibition of the statute, the combination must have been formed for one of the purposes therein specified. Was its purpose either "to create or carry out restrictions in trade" or "to prevent competition in sale or purchase of commodities?" This court has held that as here used, the word "trade" means traffic, which is defined to be "the passing of goods and commodities from one person to another for an equivalent in goods or money," and the word "commodities" means "any movable or tangible thing that is ordinarily produced or used as subject of barter or sale." (Ins. Co. v. State, 86 Tex. 250.) It is clear then that the dealing in liquors contemplated by the contract is a "trading," and their purchase and sale is of "commodities" within the statute. (88 Tex. 185, 27 S.W. Rep., 692, supra.) It is apparent from the face of the contract, that the purpose of the parties in entering into the combination evidenced thereby was, as far as they might be able, (1) to restrain any other person from entering into the business of selling liquors to the people of Thurber during the lease, (2) to prevent the employes of the company from purchasing liquors from any one other than Lawson, and (3) to influence such employes to squander their earnings in the saloon, erected and maintained under the terms of the contract principally for the benefit of the employer. This is all apparent from the agreement not to permit any one else to sell liquors on the company's lands, added to the very extraordinary agreement that the company should, during the term of the lease, which might have been ten years, issue checks to its laborers, instead of paying money, and redeem weekly such of those checks as Lawson might take in for liquors sold at such saloon. This guaranteed to Lawson the cash at the end of each week on such checks as he might take in for liquors sold, and put it in the power of the company, by refusing or delaying the payment *Page 402 
of other checks, to prevent Lawson and others from readily receiving same from the employes and thus force their negotiation for liquors at said saloon. Thus the scheme evidenced by the contract was not only to prevent any other person from coming into competition with Lawson, but also to invade the right of the miners to spend their wages with whomsoever and for whatsoever they might choose, and to practically place it in the power of the company to direct its expenditure for liquors at a saloon conducted for its own benefit.
We are of opinion that the purpose of the combination was to create and carry out a restriction in the sale of liquors at Thurber, and also to prevent competition in the sale and purchase thereof.
It results from what has been said that the contract created a trust within the meaning of the statute, and is therefore void, and no action or counterclaim can be founded thereon.
While we place our decision upon the statute we apprehend it would be difficult to sustain the contract at common law. (Crawford  Murray v. Wick, 18 Ohio St. 190; Salt Co. v. Guthrie, 35 Ohio St. 666; Craft v. McConoughy, 79 Ill. 346; Arnot v. Pittston  Elmira Coal Co., 68 N.Y. 558; Morris Run Coal Co. v. Barkley Coal Co., 68 Penn. St., 173.)
Counsel for Lawson in an able argument contends that this court has no jurisdiction to consider the illegality of the contract, since that question, as indicated in our former opinion, was not raised in the court below and not assigned as error here. The contention is based upon the ground that the statute limits the jurisdiction of this court to the consideration of the specific assignments of error upon which the writ was granted, and precludes its consideration of even a fundamental error not included in such assignments. While we are not inclined to agree with such construction of the statute, we deem it unnecessary to decide the question in this case.
The pleadings of plaintiff and defendant below cover nearly one hundred of the six hundred and fifty type-written pages of the record before us, and therefore we will not undertake to even outline the numerous issues and the evidence adduced in support thereof; but will content ourselves with the brief statement heretofore made, and the additional statement that the various claims and counterclaims of the plaintiff and defendant, as set up in the pleadings, are based upon the supposed rights of the parties growing out of and dependent upon the validity of the contract above referred to and the one preceding it which was tainted with the same vice.
There are fourteen assignments of error in this court complaining of the action of the Court of Civil Appeals in refusing to sustain assignments made in that court calling in question the correctness of the ruling of the trial court upon various questions arising during the progress of the trial had for the purpose of determining the rights of the parties growing out of said unlawful and void contracts. Some of such assignments question defendant's right to plead, and others to prove, various acts of plaintiff's officers tending to show a settled purpose on the part of the plaintiff to *Page 403 
ruin defendant's business and thereby destroy the value of his lease and force him to abandon same, all of which so reduced the receipts that the saloon was run at a loss and no rents were due, and that thereupon plaintiff attached the goods and seized the leased premises. This evidence bore upon the state of the account between the parties under the lease, the value of the lease of which defendant had been deprived, and the issue of punitory damages for its seizure, upon each of which issues the jury rendered a verdict for defendant for a large sum, based upon a violation of some supposed right growing out of the contract. Since we are of opinion that the contract itself was void, and that neither of the parties could base thereon a cause of action or counter-claim, it follows that it was error for the trial court to allow, over plaintiff's objection, the pleading or proof of any fact or facts tending to support defendant's said counter-claims based thereon.
It is wholly immaterial that the invalidity of the contract was not urged in support of such objections, for in such a case every special exception to pleading or evidence must necessarily involve the general objection to its legality or competency in any event. If the foundation of the action fails all pleadings and evidence tending to support the verdict are thereby necessarily shown to have been improperly sustained and admitted, and it would be folly for a court to thereafter undertake to determine, as we are now asked to do, whether such pleading and evidence were properly sustained and admitted upon the assumption of the legality of the cause of action. Parties litigant cannot by express waiver induce a court to pass over the illegality of a contract and administer their supposed rights thereunder based upon the assumption of its legality and certainly a mere omission to notice such vice or bring it to the attention of the court cannot have that effect.
There are other assignments, based upon the action of the court in excluding evidence, refusing to charge the jury, and refusing to set aside the verdict, which also necessarily involve the consideration of the question as to the validity of the contract under the principles above stated, and for the same reasons we think the action of the court with reference thereto erroneous, but no useful purpose would be subserved by going over them in detail, as the case must be disposed of here for the errors above noticed.
For the errors above indicated, the judgments of the Court of Civil Appeals and the trial court will be reversed and the cause remanded. It may be that upon a repleading some of the claims or counter-claims can be so far separated from the illegal contract as to permit a recovery, and for that reason we will not dismiss the entire proceeding as would otherwise be proper. On referring the cause back we requested argument and expected citation of authorities in order to enable us to determine, in view of another trial, which of the claims or counter-claims would be so far affected, in case we concluded that the contract was illegal and void, as to preclude recovery thereon, but as we have not been given the benefit of authorities thereon we do not feel called upon to go *Page 404 
into an examination of questions which would consume much time and probably be of no service in determining the issues that may be finally presented for adjudication herein.
Reversed and remanded.