Графични страници
PDF файл
ePub

respect to third persons, and still it is an element with which society and the State as represented by the courts are more immediately concerned than the parties themselves. In the case of fraud the wrong is personal and may be waived by the injured party; in case of illegality the wrong is done to the public in general and the State through its judicial officers must control the penalty. In certain instances the illegality is created by statute, in all other instances by the common law independent of statute. Contracts in restraint of trade are pronounced illegal by the law, because they conflict with public policy.

The subject of this article is one involved in much doubt, which is by no means removed by the apparent conflicting decisions of eminent jurists.

Among the most ancient rules of the common law, we find it laid down that contracts which in any degree tended to restrain trade are void. In the reign of Henry V., 1415, a suit was brought on a bond given by the defendant, a dyer, not to use the art of a dyer's craft within the town where the plaintiff resided, for the space of half a year. The judge before whom the case was tried indignantly denounced the plaintiff for procuring such a contract and declared, "if the plaintiff were here he should go to prison till he paid a fine to the king."2

of

Again, in Colgate v. Bachelor, decided in the reign of Queen Elizabeth, 1601, where a bond had been given not to exercise the trade of a haberdasher within the cities of Canterbury and Rochester for the space four years, the court said: "That the condition was against law to prohibit or restrain any to use a lawful trade at any time or any place." Such contracts were held void for the reasons: First, that it was an injury to the public by being deprived of the restricted party's industry. Second, that it was an injury to the party himself by being precluded from pursuing his occupation.

trine and constructions on the subject has from time to time been much modified, as it was discovered that a doctrine so rigid must be injurious to the State itself; not, however, that such contracts are any more legal now than at a former poriod, but that the courts, taking into consideration the increase of population and trade, the customs and opportunities of the people, construe the term differently. During the reign of James I., in 1621, the principle was recognized that for a time certain, and place certain, and if reasonable a person might bind himself not to use his trade. This principle was sustained in the leading case of Mitchell v. Reynolds, decided in 1711.

6

7

In the case of Pierce v. Fuller," decided in 1811, an agreement not to run a stage between Boston nnd Providence, in opposition to plaintiff's stage, was held to be reasonaable and valid. In the case of Horner v. Graves, decided in 1831, the agreement was that the defendant, a dentist, would abstain from practicing within a radius of one hundred miles from York, and the court held the agreement void on account of its not being a reasonable restraint. In Hitchcock v. Coker, decided in 1837, the plaintiff was a druggist, and had taken the defendant into his employ as an assistant, at an annual salary, on condition that the defendant would not at any time thenceforth exercise the trade or business of a chemist or druggist in the town of T, or within three miles thereof, and if he did so exercise such business he would pay the plaintiff five hundred dollars as liquidated damages. The defendant broke the contract by exercising the business within T, and the plaintiff brought action for non assumpsit and recovered. Whitaker v. Howe, decided in 1840, an agreement by a solicitor not to practice as a solicitor for the period of twenty years within the territory of Great Britain was held to be a reasonable restriction and valid. The distinction between Horner v. Graves and

In

therefore the restraint was no larger than was necessary for the plaintiff's protection, regard being had for the public; while it is improbable that a dentist would have patients at so great a distance as one hundred miles. By using the same line of reasoning, the decision in Whitaker v. Howe can hardly be reconciled with that of Horner v. Graves.

It will be seen that from the beginning of the eighteenth century the question depended on reasonableness of the restraint, which is a question of law for the court, and the difficulty lies in determining what are and what are not reasonable restrictions in respect to the area within which the restrictions is to be confined,10 it being frequently held that if the contract be founded upon a good consideration and otherwise reasonable, the mere fact that the restraint is indefinite in point of time does not invalidate it." The question being whether or not the restraint is greater, having regard for the subject-matter of the contract, than was necessary for the protection of the legitimate interests of the party in whose favor the contract was made; if the question be decided in the affirmative the contract is of no benefit to either party, but as to the one party becomes oppressive, and, being oppressive, the law regards the restriction as unreasonable and injurious to the interests of the public.12

It was at one time considered that contracts that totally prohibited the pursuit of an occupation, or the carrying on of a particular business, at any placé within the State were void. 13 The first case supporting this doc

9 Nobles v. Bates, 7 Cowen (N. Y.), 306; Duffy v. Shockey, 11 Ind. 78; Hubbard v. Miller, 27 Mich. 15; Whitney v. Slayton, 40 Me. 224; Holmes v. Martin, 10 Ga. 503; Gill v. Ferris, 82 Mo. 156; Arnold v. Kreutzer, 67 Iowa, 214; Washburn v. Dosch, 68 Wis. 436; Herreshoff v. Boutineau, 17 R. I. 3; Long v. Towl, 42 Mo. 545.

10 Warfield v. Booth, 33 Md. 63; Linn v. Sigsbee, 67 Ill. 75; Smith's Appeal, 113 Pa. St. 579; Gamewell Fire Alarm Tel. Co. v. Crane, 160 Mass. 50.

11 Kelso v. Reid, 145 Pa. St. 606; Bowser v. Bliss, 7

trine was that of Chappel v. Brockway, cited above and decided in 1839, in which the court said: "Such contracts must be injurious to the public, and no good reason can be shown why one individual should thus fetter himself or another individual should contract for the restraint The obligation is injurious to one party without being beneficial to the other." The doctrine of this case was substantially followed by that of Lawrence v. Kidder, cited above, in which Judge Selden, who wrote the opinion, says: "That contracts in restraint of trade, which embrace the entire kingdom or state, are void, is a doctrine coeval with the common law." In other words, it was deemed to be impossible for a restraint extending throughout the whole state, to be necessary for the protection of the coventor and without being of an injurious nature to the pubiic. The States of Ohio and Illinois1 quite recently adhered to this rule. The Supreme Court of Ohio stated such to be the settled law in that state. In Lufkin Rule Co. v. Tringeli, above cited, the defendants were engaged in the city of Cleveland, in the business of manufacturing and dealing in wood, iron, steel and copper rules, gauges for measuring timber, etc., and they sold said business with the good will thereof to the plaintiff, and bound themselves not to engage in the manufacture and sale of said articles within the State of Ohio or elsewhere in the United States for the period of twenty-five years. The defendant violated the agreement and an action was brought for an injunction and damages for a breach of the contract. was admitted that the demand for said goods was restricted chiefly to the sections of the United States where lumber is manufactured and handled, yet the plaintiff failed to recover. In the opinion the court says: "And it will be observed that the restraint at the least is to the State of Ohio, and hence the agreement is not capable of such a division as under any circumstances would make it a

It

do arise, in which it may cause injustice rather than justice to condemn as invalid a contract not to carry on a particular business within a particular state. The modern agencies of commerce, coupled with the art of invention, have enlarged the field for the manufacture and sale of articles, not only in different states, but to and even beyond the limits of the United States. Business and commercial transactions have been widely extended of recent years, due largely to the modern use of the railway, steam navigation, etc., so that the nature and character of the business may be such that its supporters and patrons may be limited in number or may extend over a broad territory, and enlarged restrictions may become necessary for the reasonable protection of the contractee and even without interfering with the interests of the public.

The doctrine that a restraint co-extensive with the state is void was repudiated in the year 1873, when the Supreme Court of the United States decided that a restraint not to carry on a particular trade within a certain state was not necessarily void. 15

The doctrine holding contracts of this character unlimited as to space unreasonaand void as against the policy of the law has been repudiated in England and several of the American States,17 which on the contrary hold that when the restraint is partial, that is, subject to some qualification, either as to the time18 or space, 19 and if deemed necessarily reasonable for the protection of the parties the contract is valid.

The case of the Diamond Match Co. v.

15 Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64; Herreshoff v. Boutineau, 17 R. I. 3; Beal v. Chase, 81 Mich. 490; Diamond Match Co. v. Roeber, 106 N. Y. 478.

16 Lufkin Rule Co. v. Tringeli, 57 Ohio St, 596; Smith's Appeal, 113 Pa. St. 579; Sutton v. Head, 86 Ky. 156; Bishop v. Palmer, 146 Mass. 469; Wiley v. Baumgardner, 97 Ind. 66; Lanzit v. Sefton Mfg. Co., 184 Ill. 326; Trenton Potteries Co. v. Olyphant, 58 N. J. Eq.507.

17 Badische Anilin and Soda Fabrick v. Schort Seg. ner & Co., L. R. 3 Ch. Div. 351; Rousillon v. Rousillon, 14 Ch. Div. 351; Nordenfelt v. Maxim-Nordenfelt Co., App. Cas. (1894) 335; National Thermometer Co. v. Pool, 51 Hun, 157; Oakdale Mfg. Co. v. Garst, 18 R. I. 484; Buck v. Coward (Mich. 1899), 81 N. W. Rep. 328.

18 See cases cited above note 17.

19 National Benefit Co. v. Union Hospital Co., 45 Minn. 272; The Diamond Match Co. v. Roeber, 106 N. Y. 473; Leslie v. Lorillard, 110 N. Y. 519.

Roeber, supra, is considered one of the leading American cases on this point. The defendant was engaged in the manufacture in New York State, and sale throughout the states and territories of friction matches, and sold his manufactory trade, good will, etc.,of the business to the plaintiff, and covenanted that he would not at any time within ninety-nine years engage in such manufacture or sale, except in the service of the purchaser, within any of the states and territories, except Montana and Nevada, and the contract was held valid. Judge Andrews delivered the opinion of the court, and in the course thereof says: "The tendency of recent adjudications is marked in the direction of relaxing the rigor of the doctrine that all contracts in general restraint of trade are void irrespective of special circumstances." When the restraint is general, but at the same time is co-extensive only with the interest to be protected, and with the benefit meant to be conferred, there seems to be no good reason why, as between the parties and even as to third persons, the contract is not as reasonable as when the interest is partial and there is a corresponding partial restraint. In this case the business in question extended over the entire territory of the United States. The covenant of the contract prevented the covenantor from engaging in the business which he sells so as to protect the purchaser in the fruits and benefits to be derived from the

purchase. This seems to be an encouragement to productive activity and an inducement whereby a man uses his money, talents and labors in building up an enterprise.

In the case of Leslie v. Lorillard, supra, Judge Gray, in writing the opinion says: "Under the authority of that case (referring to Diamond Match Co. v. Roeber, supra,) it may be said that no contracts are void as being in general restraint of trade, when they operate simply to prevent a party from engaging or competing in the same business." This statement was undoubtedly obiter dictum to a direct decision of the question before the court; yet in view of these recent decisions, the question arises, will the American courts, when the opportunity offers itself, uphold a contract in general restraint of trade unlimited as to time 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."1

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 contracts 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 a 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

20 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.

Leavitt v. Palmer, 3 N. Y. 19; Hynds v. Hays, 25

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." 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 extent 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

[blocks in formation]

navigation of a part of Currituck Sound known as "North Sand Cove." One Hampton, a witness for the state, testified as follows: "I know North Sand Cove, which begins on the eastern side of Currituck Sound, and runs through the marsh for about one-half to one mile, and runs into the sound again. It has four mouths or openings into said sound. I have measured the water at the western mouth, and at high tide it is two to two and a half feet, and at low tide about one and a half feet in depth. Imeasured it at middle tide, and it was two feet, and about the same at its other openings into said sound. The mouths are from 140 to 230 feet wide, but it is wider after you get in, and in some places 200 to 300 yards, and about the same depth all through as at the mouths. North Sand Cove, before it was stopped up, was used by citizens of Currituck county for passing and repassing in their boats, when boating, fishing, and hunting, from one part of the sound to the other. The distance was shortened, and in rough weather was easier to navigate. Boats from 18 to 20 feet long passed through this cove frequently, and I have carried myself on one of them, my nets, and 700 to 800 pounds of fish. It was used by all the people. The mouths were stopped by posts put across them, driven securely down, 18 inches apart, and measuring from 4 to 5 inches in diameter,-97 of these in one place and 152 in another,-and stopped all use of this water course by boats. I have heard defendant say he put them there." Another witness for the state testified to the same effect. The defendant introduced no testimony. The defendant asked the court to direct a verdict of not guilty. This the court refused and charged as follows: "That if they believed all evidence in this case, and find rom the evidence, beyond a reasonable doubt, hat the North Sand Cove is a navigable stream, and further find that the defendant obstructed the stream by willfully placing posts in same as testified, then the defendant is guilty, and you should so find." There was a verdict of guilty, and from the judgment pronounced thereon the defendant appealed.

DOUGLAS, J. (after stating the facts): We find no error in his honor's refusal to charge, or in his charge, though the latter is somewhat meager. But, as there are no requests for special instructions, we presume that it was intended to present to us the simple question whether such a water course as is described in the uncontradicted testimony is a navigable stream. We are of opinion that it is, and that the defendant was properly convicted, if the jury believed the evidence, the credibility of which was left to them. This case is very similar to that of State v. Narrows Island Club, 100 N. Car. 477, 5 S. E. Rep. 411, except that the defendant does claim any individual ownership in the bed of the cove. For the reasons stated in that opinion, we do not think that this action can be maintained under section 1123 of a common-law offense. That case comes nearer

not

settling the case at the bar than any other we can find in the books, and we think is controlling. There is a vast amount of learning upon the subject of navigable waters, much of which is inconsistent, and the greater part of which is totally inapplicable to the physical conditions of our country. Under the common law of England, whence came the doctrine, the ebb and flow of the tide was the test of a navigable stream. Such streams were said to be publici juris, but the right of navigation might be acquired above tide water. This rule operated very well in England, whose small size and low elevation confined actual navigation, practically, to the theoretical limits fixed by law. Few, if any, of its streams are actually navigable for any practical purpose beyond the flow of the tide. For a time our courts adhered to the definition of the common law, and found little difficulty in doing so, as this country was then thinly settled, with no towns of any importance above tide water. At that time the navigability of a stream depended more upon the temper of the Indians living along its banks than upon its natural features. As, however, the settlements went inland, and important towns were built where tides were unknown, the courts soon found that it was impossible to measure rivers like the Hudson and the Mississippi by the rule of the Thames. The rule was then modified so as to include among navigable streams all rivers as far up as they afforded a free passage for seagoing vessels, and about the same time its practical application was greatly extended by the development of steam power, which enabled vessels to ascend rivers the swiftness of whose currents had hitherto been a practical bar to navigation. rule seems to have been followed for many years in determining the limits of federal jurisdiction, but it, in turn, was found insufficient to meet the demands of industrial and commerical growth. In fact, it did not reach to the Great Lakes, which have but recently become to be regarded in their true light as inland seas having a law unto themselves. In contemplation of law they are. for all practical purposes, regarded as the "high seas.” An interesting discussion of this subject is given by Chief Justice Taney in the case of The Genesee Chief, 12 How. 443, 13 L. Ed. 1058, and by Justice Bradley in Barney v. Keokuk, 94 U. S. 324, 24 L. Ed. 224. See, also, U. S. v. Rodgers, 150 U. S. 249, 14 Sup. Ct. Rep. 109, 37 L. Ed. 1071. The admiralty rule, as now generally recognized, is thus stated in Gould, Waters (3d Ed.), § 67: "The ebb and flow of the tide does not constitute the test of the navigability of American waters, and those rivers are public and navigable in law which are navigable in fact. If, in their ordinary condition, by themselves or by uniting with other waters, they form a continued highway over which commerce is or may be carried on with other states or foreign countries in the customary modes in which such commerce is conducted by water, they are navigable waters within the United States,' within the meaning of the acts of congress,

This

« ПредишнаНапред »