Court Opinion

ID: 7006309
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:51:03.986981+00
Date Added: 2024-06-11T16:10:02.980183
License: Public Domain

Mr. Justice Freeman delivered" the opinion of the court. The first question presented is whether the contract of September 10, 1901, is valid. The master finds that its manifest purpose and intent were to limit the production of fire clay regardless of the public market, that it was entered into by the complainants for the purpose of preventing the mining and manufacture of fire clay from any fire clay lands in the State of Indiana, and was therefore a contract in restraint of trade and commerce among the several states. We find no support for this finding in the contract itself nor in the evidence. On its face the contract provides that Lanyon shall erect a fire clay grinding plant upon certain described lands of his own containing in the neighborhood of 160 acres, so far as appears the only land he owned in Indiana, to be operated in mining and producing fire clay to be sold to complainants at an agreed rate per ton, in such quantities and at such times as complainants shall order, and that he will increase the capacity of said plant as fast as the demands of the business require. He agrees not to work, lease or operate during the period of the contract any other fire clay grinding plant for the purpose of selling fire clay on any land he owns or controls in Indiana and that he will not during that period sell fire clay to anyone except complainants. The latter on their part agree that as soon as Lanyon gets his new plant in readiness they will cease to operate a plant from which they were then obtaining clay, unless such operation should be made necessary by increase of business beyond the capacity of Lanyon’s new plant, and will buy no fire clay produced in Indiana except what- is produced at one or the other of said plants; that they will endeavor to sell all the fire clay produced by Lanyon and will jointly, order and pay for not less than 40 tons per day at the agreed price per ton, if Lanyon’s plant is able to produce and deliver so much. There is in this so far as we can discover nothing in the nature of a contract in restraint of trade. It is in substance and effect an agreement by parties on one hand to give their whole time and effort exclusively to produce from a specified portion of land a supply of fire clay sufficient to fill the wants of other contracting parties and to increase capacity for such production as fast as the business demands. In return the second parties agree to buy fire clay from no one else in that locality, to fl make the greatest possible endeavor to sell all the fire clay ” that the first parties can produce, and to take and pay for at a fixed price not less than 40 tons per day in any event. If this is a contract in restraint of trade, the same objection would lie to a contract by a farmer to sell all the milk he could produce on his farm to a single purchaser' in consideration that the purchaser would take at least 40 cans per day and huy milk of no other producer, so long as the farmer could supply his needs. Appellees'claim that the fact the land in question may have contained clay enough so that it could be made to produce more than 40 tons of fire clay per day during the term of the contract with a sufficient investment of capital, a sufficiently large plant and a sufficiently large number of men employed, malees the contract obnoxious to the federal statutes declaring illegal every combination in the form of trust or otherwise or conspiracy in restraint of trade or commerce among the several states. We discover no such elements in this contract. Nor does the evidence sustain appellees’ contention. "It appears that the land described in the contract is within the area of a territory underlaid with a stratum of fire clay, extending about seven miles north and south and about a mile in width. It is said to be the only bed of the kind discovered in Indiana, but beds exist in other states, at Ottawa, Illinois, in Missouri, Ohio, "Kentucky and Pennsylvania. Lanyon owned none of the land except what is described in the contract. Several plants were in operation upon other lands, overlying the same bed of clay worked by independent operators. Lanyon was not working the clay upon his land. The contract gave him a sure and steady market and seems to have been the inducement for him to go into the business. Nor did the contract limit production, except incidentally to the capacity of the plant and the demands of the business. The complainants agreed to use their best endeavor to sell all Lanyon could produce. In Whitwell v. Continental Tobacco Co., 125 Federal Rep., 454, the Federal anti-trust law of 1890, which appellant invokes, is considered and it is said that if the direct and necessary effect of a contract or combination upon competition in commerce among the states “ is to stifle or to directly and substantially restrict free competition, it is a contract, combination or conspiracy in restraint of trade ” (citing authorities). “If on the other hand, it promotes or but incidentally or indirectly restriets competition, while its main purpose and chief effect are to foster the trade and to increase the business of those who make and operate it, then it is not a contract, combination or conspiracy in restraint of trade within the true interpretation of this act and it is not subject to its denunciation ” (citing authorities). In the case at bar the contract, as the evidence tends to show, had no effect upon competition, nor so far as appears upon prices. Any competitor of either Lanyon or complainants could obtain all the fire clay he could sell or use from other plants operated on other lands in this same Indiana clay belt, as well as from other clay beds, provided he had the capital to invest in the business. The purpose and effect of the contract were clearly to “ foster the trade and increase the business of those who made ” it and nothing more. Ho one was or so far as appears could be injured by it. Whatever restraint- of trade is involved is only such as to “ afford a fair protection to the interests of the party to whom it is given, and not so large as to interfere with the interests of the public.” Lord Macnaghten’s judgment in Nordenfeldt v. Maxim Nordenfelt Co., cited in United States v. Addyston Pipe & Steel Co., 85 Fed. Rep., 271 p. 282. See also United States v. E. C. Knight Co., 156 U. S., 1, p. 17. The contract in controversy seems to be an ordinary business arrangement such as the parties had a right to malee, violating no statute, either in letter or spirit and not against public policy. It is urged by counsel for appellees that the bill is in reality one for specific performance of the contract. Such is not the prayer of the bill nor its direct purpose or object. An injunction is prayed restraining the defendant company, Lanyon and his agents, from mining or selling any of the fire clay claimed by appellants under the contract, except for and to appellants. Lanyon with Heber and Bonebrake who agreed to operate his plant for Lanyon expressly agreed not to sell to anyone other than complainants during the life of the contract. This is an express negative provision which has been and is being violated. The defendant company with full knowledge of the contract and its provisions and with the evident purpose of robbing appellants of the benefit of the contract, induced Lanyon to enter into an arrangement as a result of which he ceased making an effort to comply on his part with his agreement and put it out of his power to do so. The defendant Southern Fire Brick and Clay Company located its plant on the same spot and is mining clay on the same land where under the contract Lanyon was to locate the plant, the product of which he agreed to sell to complainants. Within six months after the contract of September 10, 1901, Lanyon had the plant therein provided for almost completed. Then it was that the proposition was made to him in behalf of the defendant corporation which resulted in his transfer of the nearly completed plant for its benefit and the abandonment on his part of further performance of the contract. He never did finish the plant as called for by the contract, and put it out of his power to do so by his arrangement with appellees. We perceive no equitable ground for denying appellants the relief by injunction prayed for in the bill. As said in Consolidated Coal Co. v. Schmisseur, 135 Ill., 371-378, “ it seems to be well settled that where there is an express negative covenant, courts of equity will entertain bills for injunction to prevent ” its breach even though the breach may occasion no substantial injury. The ground upon which the court proceeds is said to be in substance that a party having expressly stipulated that he will not do a particular thing is bound to refrain and the other party is not required to submit to the opinions of others as to whether he will or will not suffer substantial injury. This might result indirectly in bringing about substantially specific performance, though not necessarily. In the case last referred to (p. 377) it is said: “ It might well be that a very important element of the value of the purchase of the Schuremans consisted in the right they thereby acquired of controlling the mine and holding the coal for 'future use.” In the case at bar it may be that a very important element of the value of the contract to complainants consisted in the right to control and hold the clay for their own use. The jurisdiction of equity to interfere by injunction is considered at length in Consolidated Coal Co. v. Schmisseur, supra, and authorities there cited. That case is, we think, decisive as to the propriety of an injunction in appellants’ favor restraining violation of express negative provisions of the contract in controversy. It is urged that such injunction would inflict serious loss on the defendant company. If so it is the result of its own misconduct. It had full knowledge of the contract and deliberately proceeded to usurp rights secured by said contract to complainants, with notice that if it did so complainants would invoke the aid of the courts for their own protection. Its acquisition of the fee in the lands was subject to the contract right of complainants in the clay. See Knight v. The Indiana Coal & Iron Co., 47 Ind., 105-110. The decree of the Superior Court is reversed and the cause remanded to that court for further proceedings not inconsistent with this opinion. Reversed and remanded.