Court Opinion

ID: 9648532
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:25:28.849687+00
Date Added: 2024-06-11T18:12:02.558023
License: Public Domain

Mr. Justice Griffin,
joined by Justice Garwood, dissenting.
*399I find myself unable to agree with the majority opinion wherein it holds (1) the provisions of the sale contract which violate the antitrust statutes are not severable and divisible from the legal provisions so as to leave a legal and valid obligation to pay the royalties sued for, and (2) the royalties provided are not a part of the purchase price to be paid for the machine.
The provision of Paragraph 4 for the payment of $3,000.00 cash “and in addition thereto” the royalties provided for, does not prevent the royalties being a part of the purchase price. It is no more than a deed to a tract of land which says the consideration for the sale is $3,000.00 cash, and in addition thereto certain vendor’s lien notes. The words “said sum to be paid as follows” in no manner limit the consideration to be paid to the amount of cash. “Said sum” clearly means only the amount of cash to be paid, not the total consideration. The fact that a period follows the words “the sum of $3,000.00” could have no more effect in determining the consideration than if it had been a comma, semicolon or other punctuation mark. 10 Tex. Jur. 300, Contractsi, Sec. 174. When the whole of the paragraph is considered it is very apparent to me that it states consideration to be paid for the machine. Assuming, without deciding the same, that other provisions of the contract violate the antitrust statutes, the question then arises as to whether the legal provisions of the contract are divisible or severable from the illegal provisions so that a valid, binding and legal contract was made by the parties which can be enforced without resort to the other provisions of the contract. 10 Tex. Jur. 246, et seq., Contracts, Sec. 141; Id., 316, Sec. 182; 27 Texas Law Rev. 254; Corbin, On Contracts, Sec. 1520.
It is elementary and requires no citation of authorities for the proposition that the contract must be construed in its entirety, and effect given to all its provisions. Paragraph 12 provides that neither party intends to violate public policy, statutory or common laws or the Texas Anti-Trust Statutes. Then there is a provision that if any part of the contract or any combination of parts is in violation of Federal law, or Texas law, including the Anti-Trust Act, such parts, or combinations of parts, shall be inoperative, and the remainder of the contract shall continue to be binding upon the parties, and states that Second Party must pay for the machine, both cash consideration and royalties as is provided in the contract. (Paragraph 4.) Does Paragraph 12 mean what it says, and is such provision unlawful and of no force and effect?
*400In the case of Wicks v. Comves, et al, 110 Texas 532, 221 S.W. 938, Comves sued Wicks, et al, for specific performance of a lease contract, or for damages for breach of such contract. The contract provided that Wicks leased space to Comves for a fruit stand on the sidewalk in the City of Houston at a specified monthly rental. The contract further provided that if the City complained of such fruit stand on the sidewalk, or if there was a city ordinance “now or hereafter in force” making a fruit stand on the sidewalk illegal, then Wicks agreed to furnish Comves the same amount of space inside Wicks.’ building, which was at the same location, for his fruit stand. Wicks, et al defended the suit upon the ground that the contract was illegal and void because of leasing space on the sidewalk, and that the provision for the inside lease was inseverable from the sidewalk lease provision. There was a city ordinance prohibiting the occupation of any city sidewalk for mercantile purposes at the time of the execution of the contract. On certified question, Judge Greenwood, speaking for this Court, held the inside lease was severable from the sidewalk lease, and stated: “* * * we think the parties have made their purpose entirely plain that the failure of the grant, if any, of the use of the stands and fixtures on the sidewalk was not to affect the grant, for the agreed rental, of the inside space. (Only one rental charge was provided in the contract, and it was stated in connection with the sidewalk lease.) How can parties, more plainly direct a severance of obligations than by stipulating that one shall be performed, for a separate consideration, upon the failure of another?” (110 Texas 535) 2nd. col., 221 S.W., p. 939. The Court discusses the law applicable to severable valid provisions contained with illegal provisions in the same contract, and holds that part of the lease contract for the inside space valid, binding and enforceable. In the contract under consideration in this cause, the parties have made a specific provision as to payment for the machine, in event any part of the contract should be held illegal and void.
In the case of Nevels, et al v. Harris, 129 Texas 190, 102 S.W. 2d 1046, 109 A.L.R. 1464, Harris sued Nevels, et al to recover on a note and to foreclose a deed of trust on real estate given as security for the note. The defense was usury, in that a part of the interest on the main debt was represented by interest coupon notes with definite due dates, and also these notes and deed of trust contained a provision to the effect that if default were made in the payment of the obligation, all notes immediately became due at the option of the holder. Also, a sum of money was deducted from the original amount of the loan and paid to a broker agent of Harris, so that the borrower, Nevels, did not re*401ceive the amount of money set out in the face of the principal note. Under certain conditions, this permitted Harris to collect more than 10% interest per annum on the amount of money actually paid over to Nevels as proceeds from the loan. The case of Shropshire v. Commerce Farm Credit Co., 120 Texas 400, 30 S.W. 2d 282, 39 S.W. 2d 11, 84 A.L.R. 1269, had held contracts of this nature in violation of the Texas statutes defining usury. However, the deed of trust in the Nevels case contained this further provision: “ ‘That the intention of the parties being to conform strictly to the Usury Laws now in force, any of said contracts for interest shall be held to be subject to reduction to the amount allowed under said Usury Laws as now or hereafter construed by the courts having jurisdiction.’ ” (129 Texas 197.) Bot. 2nd. col., 102 S.W. 2d, p. 1049. In affirming the judgments of the courts below, and discussing the clause last above quoted this Court said:
“It is the rule that all parts of a contract must be given effect if it is reasonably possible to do so. It is also the rule that men are presumed to have intended to obey the law unless the contrary appears. In the contract at bar the lender very carefully provided for the cancellation of unearned interest notes should be the default maturity provisions of the contract be exercised. The parties were not even content to rest the matter of usury there. They added the provision last above quoted. If this provision only has effect to cancel unearned interest coupons from the date the default maturity provisions of the contract are exercised by the noteholder, it is a vain and an idle stipulation, for the reason that that matter had already been carefully guarded by the other provisions of this contract which we have quoted and discussed. If this last provision can be given effect, and, as already said, it must be given some effect if it is reasonably possible to do so, it must be held to operate to deny the noteholder the right, in any event, to collect usury. In other words, it denies the noteholder the right to collect more than the principal debt and 10 per cent, interest per annum from the time the borrower had the use of the money until he should repay it. This is plain because this clause of the contract expressly states that it is the intention of the parties to conform strictly to the usury laws now in force, and that ‘any of said contracts for interest shall be held to be subject to reduction to the amount allowed under said usury laws,’ etc.”
I can see no distinction in principle between the so-called “saving clause” in the usury case and in the case at bar, except *402the clause in the case at bar specifically reiterates the liability of petitioner for the cash consideration and royalties to be paid for the Zest-O-Mat machine, in the event any part of the purchase contract should violate the Anti-Trust or other laws.
In the case of Ford Motor Co. v. State, 142 Texas 5, 175 S.W. 2d 231, the State sued Ford for violation of the Anti-Trust laws of Texas on allegations that the contract which Ford had with its dealers in Texas was illegal and void. The trial court sustained Ford’s exceptions to the State’s petition, and the cause was dismissed. On appeal, the Court of Civil Appeals reversed and remanded for a trial upon the merits. In affirming the judgment of the Court of Civil Appeals, this Court said: (142 Texas 8, 175 S.W. 2d 233)
“A contract which merely agrees to do a certain thing ‘in so far as it is lawful for the dealer to so agree * * *’ on its face constitutes no agreement to do the thing mentioned, if it is unlawful to do so. Nevels v. Harris, 129 Texas 190, 102 S.W. 2d 1046, 109 A.L.R. 1464.”
As pertinent to this cause the Court further says:
“The State contends that Section 9 (b) of this alleged contract on its face violates our anti-trust laws, because it obligates Ford Dealers not to sell Ford products at less than retail prices established by Ford for the dealer’s city or town from time to time. This section of the contract reads as follows: ‘(b) Insofar as it is lawful for Dealer so to agree, not to resell Company products bearing Company’s trademark or trade name at less than retail prices established for Dealer’s city or town from time to time by Company, except in cases where such goods have been damaged, or have become obsolete, or are about to become obsolete, because of change in models, or in the case of sales to Company or its nominees or to other authorized Ford Dealers, or Associate Ford Dealers, and except when a discount is warranted by quantity purchases unless such a discount is in violation of law. Dealer agrees, if requested by Company, to display prominently in Dealer’s showroom a chart showing current minimum retail prices as established by Company for Dealer’s City or Town.’
“Under the rule of law already announced in this opinion, this contract provision, on its face, does not violate our anti-trust laws. It only obligates the dealer if it is lawful for him to be obligated. If it is unlawful, no obligation is assumed. If no obligation is assumed, no violation of law is contracted for.”
*403The Court also discusses and upholds contract provisions for supervision of the place of business, accounting methods and conduct of the dealer’s business, somewhat comparably to provisions in the contract under discussion.
Respondent contends that under the provisions of Art. 7437, Vernon’s Annotated Civil Statutes, “any contract or agreement in violation of any provision of this subdivision shall be absolutely void and not enforcible either in law or equity.” This statute was the same when all three of the cases above cited were decided. Also, the wording of the Usury Statute (Art. 5071, Vernon’s Annotated Civil Statutes) which was in effect when the Nevels case, supra, was decided by this Court, is, in part: “* * * and all written contracts whatsoever, which may in any way, directly or indirectly, provide for a greater rate of interest (than legal rate of 10%) shall be void and of no effect for the amount or value of the interest only * * In the face of this statute this Court, in the Nevels case, approved the collection of all interest not above the legal rate. In the case at bar, we have a valid and legal provision as to the payment of the purchase price for the Zest-O-Mat machine contained in a separate paragraph to those violating the Anti-Trust Act, and so being severable, may be enforced.
In view of the above authorities, I believe that Paragraph 12 is a valid, binding and severable part of the contract for the purchase of the machine between the parties hereto.
Petitioner cites no case holding that a payment of a royalty as a part of the purchase price for the machine is illegal or unlawful, nor does he make any such contention. I do not believe that it is a violation of law to agree to purchase any machine by making a cash down-payment, and to pay out the balance at an agreed figure per unit produced or manufactured in such machine for a definite time. This is the effect of the consideration agreed to be paid in Paragraph 4, with the addition of a guaranteed minimum payment of $500.00 per year for a definite 8-year period. Petitioner contends that the royalty provisions violate the antitrust statute in that they are an attempt to exercise control over the machine after it has been bought and paid for, thus constituting a servitude and restraint upon the use and alienation of the machine. I do not so construe the contract. As I have said above, the provision for “royalty” payment is a part of the purchase price to be paid for the machine, and constitutes a personal obligation of the Second Party. No lien on the machine *404is reserved, nor attempted to be reserved by First Party. First Party admits that the title to the machine passed to the Second Party purchaser.
It follows that I would affirm the judgments of both courts below.
Opinion delivered June 16, 1954.
Rehearing overruled July 21, 1954.