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respect to third persons, and still it is antrine and constructions on the subject has element with which society and the State as from time to time been much modified, as it represented by the courts are more immedi was discovered that a doctrine so rigid must ately concerned than the parties themselves. be injurious to the State itself; not, howIn the case of fraud the wrong is personal ever, that such contracts are any more legal and may be waived by the injured party; in now than at a former poriod, but that the case of illegality the wrong is done to the courts, taking into consideration the increase public in general and the State tbrough its of population and trade, the customs and opjudicial officers must control the penalty. In portunities of the people, construe the term certain instances the illegality is created by differently. During the reign of James I., statute, in all other instances by the common in 1621, the principle was recognized that law independent of statute. Contracts in for a time certain, and place certain, and if restraint of trade are pronounced illegal by | reasonable a person might bind himself not the law, because they conflict with public to use his trade. This principle was suspolicy.
tained in the leading case of Mitchell v. The subject of this article is one involved Reynolds, decided in 1711. in much doubt, wbich is by no means re In the case of Pierce v. Fuller, decided in moved by the apparent conflicting decisions 1811, an agreement, not to run a stage beof eminent jurists.
tween Boston and Providence, in opposition Among the most ancient rules of the com to plaintiff's stage, was held to be reasonamon law, we find it laid down that contracts able and valid. In the case of Horner v. which in any degree tended to restrain trade Graves, decided in 1831, the agreement was are void. In the reign of Henry V., 1415, a that the defendant, a dentist, would abstain suit was brought on a bond given by the de. from practicing within a radius of one hunfendant, a dyer, not to use the art of a dred miles from York, and the court held dyer's craft within the town where the plaint the agreement void on account of its not iff resided, for the space of half a year. being a reasonable restraint. In Hitchcock The judge before whom the case was tried v. Coker, decided in 1837, the plaintiff was indignantly denounced the plaintiff for pro a druggist, and had taken the defendant into curing such a contract and declared, “if the his employ as an assistant, at an annual salplaintiff were here he should go to prison ary, on condition that the defendant would till he paid a fine to the king."'2
not at any time thenceforth exercise the Again, in Colgate v. Bachelor, decided in trade or business of a chemist or drug. the reign of Queen Elizabeth, 1601, where a gist in the town of T, or within three miles bond had been given not to exercise the thereof, and if he did so exercise such busitrade of a haberdasher within the cities of ness he would pay the plaintiff five hundred Canterbury and Rochester for the space of dollars as liquidated damages. The defour years, the court said: “That the con fendant broke the contract by exercising the dition was against law to prohibit or restrain business within T, and the plaintiff brought any to use a lawful trade at any time or action for non assumpsit and recovered. In any place."3 Such contracts were held void Whitaker v. Howe, decided in 1840, an . for the reasons: First, that it was an in agreement by a solicitor not to practice as a jury to the public by being deprived of the solicitor for the period of twenty years within restricted party's industry. Second, that it the territory of Great Britain was held to was an injury to the party himself by being | be a reasonable restriction and valid. The precluded from pursuing his occupation. distinction between Horner v. Graves and
For a period of two hundred years the Hitchcock v. Coker, would seem to be that rule, above quoted, continued unchanged, it is possible for a druggist to have customand through a succession of varying de- ers within three miles of a certain town, and cisions the principle that contracts in restraint of trade are void has been handed 41Smith's Lead. Cas. 756. down to us, although the early English doc
58 Mass. 223.
6 7 Biny. 735. 2 Matter of John Dier, Year Book 2, Henry V., pl. 26. 76 A. & E. 454. 8 Colgate v, Bachelor, Crown Elizabeth, 872.
* 3 Beav. 383.
therefore the restraint was no larger than trine was that of Chappel v. Brockway, cited was necessary for the plaintiff's protection, above and decided in 1839, in which the regard being had for the public; while it is court said: “Such contracts must be injuimprobable that a dentist would have pa rious to the public, and no good reason can tients at so great a distance as one hundred be shown why one individual should thus miles. By using the same line of reasoning, fetter himself or another individual should the decision in Whitaker v. Howe can contract for the restraint The obligation is hardly be reconciled with that of Horner v. injurious to one party without being beneGraves.
ficial to the other.” The doctrine of this It will be seen that from the beginning of case was substantially followed by that of the eighteenth century the question depended Lawrence v. Kidder, cited above, in which on reasonableness of the restraint, which is Judge Selden, who wrote the opinion, says: a question of law for the court, and the dif. “That contracts in restraint of trade, wbich ficulty lies in determining what are and what embrace the entire kingdom or state, `are are not reasonable restrictions in respect to void, is a doctrine coeval with the common the area within which the restrictions is to law.” In other words, it was deemed to be be confined, 10 it being frequently held that impossible for a restraint extending throughif the contract be founded upon a good con out the whole state, to be necessary for the sideration and otherwise reasonable, the mere protection of the coventor and without being fact that the restraint is indefinite in point of an injurious nature to the pubiic. The of time does not invalidate it.11 The question States of Obio and Illinois14 quite recently being whether or not the restraint is greater, adhered to this rule. The Supreme Court of having regard for the subject matter of the Ohio stated such to be the settled law in that contract, than was necessary for the protec state. In Lufkin Rule Co. v. Tringeli, tion of the legitimate interests of the party above cited, the defendants were engaged in in whose favor the contract was made ; if the the city of Cleveland, in the business of manquestion be decided in the affirmative the ufacturing and dealing in wood, iron, steel contract is of no benefit to either party, but and copper rules, gauges for measuring timas to the one party becomes oppressive, and, ber, etc., and they sold said business with being oppressive, the law regards the re the good will thereof to the plaintiff, and striction as unreasonable and injurious to bound themselves not to engage in the manuthe interests of the public. 12
facture and sale of said articles within the It was at one time considered that con State of Ohio or elsewhere in the United tracts that totally prohibited the pursuit of States for the period of twenty-five years. an occupation, or the carrying on of a partic The defendant violated the agreement and ular business, at any place within the State an action was brought for an injunction and were void. 13 The first case supporting this doc damages for a breach of the contract. It 9 Nobles v. Bates, 7 Cowen (N. Y.), 306; Duffy v.
was admitted that the demand for said goods Sbockey, 1! Ind. 73; Hubbard v. Miller, 27 Mich. 15; was restricted chiefly to the sections of the Whitney v. Slayton, 40 Me. 224; Holmes v. Martin, 10 United States where lumber is manufactured Ga. 503; Gill v. Ferris, 82 Mo. 156; Arnold v. Kreut.
and handled, yet the plaintiff failed to rezer, 67 Iowa, 214; Washburn v. Dosch, 68 Wis. 436; Herreshoff v. Boutineau, 17 R. I. 3; Long v. Towl, 42 cover. In the opinion the court says: “And Mo. 545.
it will be observed that the restraint at the 19 Warfield v. Booth, 33 Md. 63; Linn v. Sigsbee, 67
least is to the State of Ohio, and hence the Ill. 75; Smith's Appeal, 113 Pa. St. 579; Gamewell Fire Alarm Tel. Co. v. Crane, 160 Mass. 50.
agreement is not capable of such a division 11 Kelso v. Reid, 145 Pa. St. 606; Bowser v. Bliss, 7 as under any circumstances would make it a Blackt. (Ind.) 344; Guerand v. Dandelet, 32 Md. 561;
valid one.” Cook v. Johnson, 47 Conu. 175; Handforth v. Jack. son, 150 Mass. 149; Martin y. Murphy, 120 Ind. 464.
This mode of applying the rule must be Contra: Mandeville v. Harman, 42 N. J. Eq. 185. received with some caution as cases may and Contra: Rakestraw v. Lanier, 104 Ga. 188. See Carll v. Snyder (N. J. Ch.), 26 Atl. Rep. 977.
Lawrence v. Kidder, 10 Barb. (N. Y.) 641; Taylor v. 12 Horner v. Graves, 7 Bing. 735; Herreshoff v. Blanchard, 13 Allen (Mass.), 370; Wright v. Ryder, 36 Boutineau, 17 R. I. 3; Consumers' Oil Co. v. Nunne. Cal. 342. maker, 142 Ind. 560; The Berlin Machine Co. v. 14 Lufkin Rule Co. v. Tringeli, 57 Ohio St. 596; LanPerry, 71 Wis. 495.
zit y. Sefton Mfg. Co., 184 Ill. 326. See Gamewell 13 Chappel v. Brockway, 21 Wend. (N. Y.) 157; | Fire Alarm Tel. Co. v. Crane, 160 Mass. 50.
do arise, in which it may cause injustice Roeber, supra, is considered one of the rather than justice to condemn as invalid a leading American cases on this point. The contract not to carry on a particular busi- | defendant was engaged in the manufacture ness within a particular state. The modern in New York State, and sale throughout the agencies of commerce, coupled with the art states and territories of friction matches, of invention, have enlarged the field for the and sold his manufactory trade, good will, manufacture and sale of articles, not only in etc.,of the business to the plaintiff, and covdifferent states, but to and even beyond the enanted that he would not at any time limits of the United States. Business and within ninety-nine years engage in such commercial transactions have been widely manufacture or sale, except in the service of extended of recent years, due largely to the the purchaser, within any of the states and modern use of the railway, steam navigation, territories, except Montana and Nevada, and etc., so that the nature and character of the the contract was held valid. Judge Anbusiness may be such that its supporters and drews delivered the opinion of the court, patrons may be ! limited in number or may and in the course thereof says: “The tendextend over a broad territory, and enlarged ency of recent adjudications is marked in restrictions may become necessary for the the direction of relaxing the rigor of the reasonable protection of the contractee and doctrine that all contracts in general reeven without interfering with the interests of straint of trade are void irrespective of spethe public.
cial circumstances.” When the restraint is The doctrine that a restraint co-extensive general, but at the same time is co-extenswith the state is void was repudiated in the ive only with the interest to be protected, year 1873, when the Supreme Court of the and with the benefit meant to be conferred, United States decided that a restraint not to | there seems to be no good reason why, as carry on a particular trade within a certain between the parties and even as to third state was not necessarily void. 15
persons, the contract is not as reasonable as The doctrine holding contracts of this when the interest is partial and there is a character unlimited as to space unreasona corresponding partial restraint. In this case and voidlo as against the policy of the law the business in question extended over the has been repudiated in England and several entire territory of the United States. The of the American States, 17 which on the con covenant of the contract prevented the cortrary hold that when the restraint is partial, enantor from engaging in the business which that is, subject to some qualification, either he sells so as to protect the purchaser in the as to the time18 or space,19 and if deemed fruits and benefits to be derived from the necessarily reasonable for the protection of purchase. This seems to be an encouragethe parties the contract is valid.
ment to productive activity and an induceThe case of the Diamond Match Co. v. ment whereby a man uses his money, talents
and labors in building up an enterprise. 15 Oregon Steam Navigation Co. v. Winsor, 20 Wall. In the case of Leslie v. Lorillard, 64; Herreshoff v. Boutineau, 17 R. I. 3; Beal v. Chase,
supra, Judge Gray, in writing the opinion 31 Mich. 490; Diamond Match Co. v. Roeber, 106 N.
says: “Under the authority of that case Y. 478,
16 Lufkin Rule Co. v. Tringeli, 57 Ohio St, 596; (referring to Diamond Match Co. v. Roeber, Smith's Appeal, 113 Pa. St. 579; Sutton v. Head, 86
supra,) it may be said that no contracts are Ky. 156; Bishop v. Palmer, 146 Mass. 469; Wiley v. Baumgardner, 97 Ind. 66; Lanzit v. Sefton Mfg. Co.,
void as being in general restraint of trade, 184 Ill. 326; Trenton Potteries Co. v. Olyphant, 58 N. when they operate simply to prevent a party J. Eq.507.
from engaging or competing in the same 17 Badische Anilin and Soda Fabrick v. Schort Seg.
business.” This statement was undoubtedly ner & Co., L. R. 3 Cb. Div. 351; Rousillon v. Rousil. lon, 14 Ch. Div. 351; Nordenfelt v. Maxim-Nordenfelt obiter dictum to a direct decision of the Co., App. Cas. (1894) 335; National Thermometer Co.
question before the court; yet in view of v. Pool, 51 Hun, 157; Oakdale Mfg. Co. v. Garst, 18 R.
these recent decisions, the question arises, I. 484; Buck v. Coward (Mich. 1899), 81 N. W. Rep. 328.
will the American courts, when the opportu18 See cases cited above note 17.
nity offers itself, uphold a contract in gen19 National Benefit Co. v. Union Hospital Co., 45
eral restraint of trade unlimited as to time Minn. 272; The Diamond Match Co. v, Roeber, 106 N. Y. 473; Leslie v. Lorillard, 110 N. Y. 519.
and space if the circumstances show that it
was not unreasonable for the protection of the interested parties?
The general rule that contracts in restraint of trade are void does not in any manner apply to the sale of a patent right,20 as this is a monopoly authorized by the government itself for the encouragement of science and ingenuity, and therefore a covenant by the vendor on the sale of a patent right, that he will not at any time aid or assist in any manner any competition against the vendor is undoubtedly valid. A secret process or art is a legal subject of property, and as the public is not in any way prejudiced by the transfer of such a process, one may sell the same and restrain himself generally from using or divulging it. 21
As to the divisibility of contracts, the general rule is, that when you cannot sever the illegal from the legal part, the contract is altogether void,22 but when you can sever them, whether the illegality is created by statute or the common law, you may reject the bad and retain the good.23 The rule seems to have extended to its farthest limit in respect to con. tracts in restraint of trade. Whenever the covenant in restraint of trade, taken as a whole, is greater than the law will permit, yet if the covenant is worded in such a manner that that part which is å valid restraint can be separated from the whole which would render it illegal and void, the court will separate the part which imposes a valid restraint from the whole, and enforce such contracts as far as it is good. 24 This principle is well illustrated in the case of Lange v. Werke, supra, where L for a valuable consideration covenanted with W that he would not, for a specified time, engage in the business of manufacturing stearin or star candles in the county of Hamilton, or at any other place in the United States. He subsequently
went into the business within said county of Hamilton. The court held that it was divisible as to place, that while it was void outside of Hamilton county, it was good within the county. Again, in the case of Trenton Potteries Co. v. Olyphant, supra, the principle is further extended, where upon the sale of a business the vendors bound themselves not to engage in the same business within any State in the United States of America, or within the District of Columbia, except in the State of Nevada and the Territory of Arizona for the period of fifty years.” The court held that the description of the places within which the contract restrained the vendor is a divisible description embracing not one whole area but several are as disjunctively described and that the contract to the extert of New Jersey was valid and enforceable. It has even been decided in Kentucky that a contract by a vendor not to re-engage in said business for the term of ten years was valid, upon the ground that the words were implied to mean in thesame city, taken in connection with the subject-matter. 25
The above article points out the meaning and application of the pbrase, “contracts in restraint of trade,” as ordinarily used in American jurisprudence, and is not intended to touch upon the subject of trusts.
ERNEST T. Dixon.
25 Western District Warehouse Co. v. Hobson, 96 Ky. 550.
WATER AND WATER COURSES-UNLAWFUL
STATE V. BAUM.
%0 Good v. Tucker & Carter Cordage Co., 121 N. Y. 1; Morse Twist Drill & Machine Co. v. Morse, 103 Mass. 173.
21 Tode v. Gross, 127 N. Y. 480. See Fowle v. Park, 131 U. S. 88.
22 Leavitt v. Palmer, 3 N. Y. 19; Hynds v. Hays, 25 Ind. 31; United States v. Bradley, 10 Pet. 343.
23 Pickering v. Railway Co., L. R. 3 C. P. 250; Ohio V. Board of Education, 35 Ohio St. 519.
24 Lange v. Werke, 2 Obio St. 519; Hubbard v. Mil. ler, 27 Mich. 15; Smith's Appeal, 113 Pa. St. 579; Peltz v. Eichele, 62 Mo. 171; Wiley v. Baumgardner, 97 Ind. 66; Dean v. Emmerson, 102 Mass. 480; Trenton Potteries Co. v. Olyphant, 58 N. J. Eq. 507. Contra: Moore v. Bonnet, 40 Cal. 251.
Supreme Court of North Carolina, May 23, 1901. 1 A branch of a sound, which was from 2 to 4 fee deep and from 140 to 300 yards wide, and was used by the public for passing in boats from one part of the sound to the other, which shortened the distance, and was safer in rough weather, constituted a navigable stream.
2 Where defendant drove piles 18 incbes apart across the branch of a sound which was from 2 to 4 feet deep and from 140 to 300 yards wide, and was used by the public in passing in boats from one part of the soundito another, it was proper to charge that it the jury believed beyond a reasonable doubt, that the branch was a navigable stream, and tbat defendant willfully placed posts in it, he should be found guilty of unlawfully obstructing it.
This is a criminal action on indictment charging the defendant with unlawfully obstructing the
navigation of a part of Currituck Sound known settling the case at the bar than any other we can as “North Sand Cove." One Hampton, a witness find in the books, and we think is controlling. for the state, testified as follows: “I know North There is a vast amount of learning upon the subSand Cove, which begins on the eastern side of ject of navigable waters, much of which is inconCurrituck Sound, and runs through the marsh sistent, and the greater part of which is totally for about one-half to one mile, and runs into the inapplicable to the physical conditions of our sound again. It has four mouths or openings country. Under the common law of England, into said sound. I have measured the water at whence came the doctrine, the ebb and flow of the western mouth, and at high tide it is two to the tide was the test of a navigable stream. Such two and a half feet, and at low tide about one and streams were said to be publici juris, but the right a half feet in depth. I measured it at middle tide, of navigation might be acquired above tide water. and it was two feet, and about the same at This rule operated very well in England, whose its other openings into said sound. The mouth small size and low elevation confined actual navi. are from 140 to 230 feet wide, but it is wider after gation, practically, to the theoretical limits fixed you get in, and in some places 200 to 300 yards, by law. Few, if any, of its streams are actually and about the same depth all through as at the navigable for any practical purpose beyond the mouths. North Sand Cove, before it was stopped flow of the tide. For a time our courts adhered up, was used by citizens of Currituck county for to the definition of the common law, and found passing and repassing in their boats, when boat little difficulty in doing so, as this country was ing, fishing, and hunting, from one part of the then thinly settled, with no towns of any imporsound to the other. The distance was shortened, tance above tide water. At that time the naviand in rough weather was easier to navigate. gability of a stream depended more upon the Boats from 18 to 20 feet long passed through this temper of the Indians living along its banks than cove frequently, and I have carried myself on one upon its natural features. As, however, the setof them, my nets, and 700 to 800 pounds of fish. tlements went inland, and important towns were It was used by all the people. The mouths were built where tides were unknown, the courts soon stopped by posts put across them, driven se found that it was impossible to measure rivers like curely down, 18 inches apart, and measuring from the Hudson and the Mississippi by the rule of the 4 to 5 inches in diameter,-97 of these in one place Thames. The rule was then inodified so as to and 152 in another,-and stopped all use of this include among navigable streams all rivers as far water course by boats. I have heard defendant say | up as they afforded a free passage for seagoing he put them there." Another witness for the vessels, and about the same time its practical apstate testified to the same effect. The defendant plication was greatly extended by the developintroduced no testimony. The defendant asked ment of steam power, which enabled vessels to the court to direct a verdict of not guilty. This ascend rivers the swiftness of whose currents had the court refused and charged as follows: "That hitherto been a practical bar to navigation. This if they believed all evidence in this case, and find rule seems to have been followed for many years rom the evidence, beyond a reasonable doubt, in determining the limits of federal jurisdiction, bat the North Sand Cove is a navigable stream, but it, in turn, was found insufficient to meet the and further find that the defendant obstructed the demands of industrial and commerical growth. stream by willfully placing posts in same as tes In fact, it did not reach to the Great Lakes, which tified, then the defendantis guilty, and you should have but recently become to be regarded in their so find." There was a verdict of guilty, and from true light as inland seas having a law unto themthe judgment pronounced thereon the defendant selves. In contemplation of law they are, for all appealed.
practical purposes, regarded as the “high seas." DOUGLAS, J. (after stating the facts): We find An interesting discussion of this subject is given no error in his honor's refusal to charge, or in his by Chief Justice Taney in the case of The Genesee charge, though the latter is somewhat meager. Chief, 12 How. 443, 13 L. Ed. 1058, and by Justice But, as there are no requests for special in Bradley in Barney v. Keokuk, 94 U. S. 324, 24 L. structions, we presume that it was intended to Ed. 224. See, also, U. S. v. Rodgers, 150 U.S. 249, present to us the simple question whether such a 14 Sup. Ct. Rep. 109, 37 L. Ed. 1071. The admi. water course as is described in the uncontradictedralty rule, as now generally recognized, is thus testimony is a navigable stream. We are of opin stated in Gould, Waters (3d Ed.), $ 67 : “The ion that it is, and that the defendant was properly ebb and flow of the tide does not constitute the convicted, if the jury believed the evidence, the test of the navigability of American waters, and credibility of which was left to them. This case those rivers are public and navigable in law which is very similar to that of State v. Narrows are navigable in fact. If, in their ordinary conIsland Club, 100 N. Car. 477, 5 S. E. Rep. dition, by themselves or by uniting with other 411, except that the defendant does not waters, they form a continued highway over which claim any individual ownership in the bed commerce is or may be carried on with other states of the cove. For the reasons stated in or foreign countries in the customary modes in that opinion, we do not think that this which such commerce is conducted by water, they action can be maintained under section 1123 of are 'navigable waters within the United States,' a common-law offense. That case comes nearer within the meaning of the acts of congress,