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Code Ann. (Michie, Supp. 1936)

Sec. 6827. Exception in favor of purchaser and employers.— One who sells the good will of a business may agree with the buyer, and one who hires as an agent, servant, or employee may agree with his employer, to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city, or part thereof, so long as the buyer or any person deriving title to the good will from him, and so long as such employer carries on a like business therein. (1931, p. 647.)

Code Ann. (Michie, 1928)

Sec. 6828. Exceptions in favor of partnership arrangements.— Partners may, upon or in anticipation of a dissolution of the partnership, agree that none of them will carry on a similar business within the same county, city or town where the partnership business has been transacted, or within a specified part thereof.

Judicial Decisions

Restrictive Covenants Ancillary to the Sale of a Business. A covenant by the seller of an ice-cream business not to engage in a similar business in the same county for 5 years as owner or as agent or employee of another is valid. Crossfield v. Lokey, 212 Ala. 560, 103 So. 649 (1925).

A covenant by the seller of an insurance business not to engage in a similar business for a certain period, but in an undefined territory, is not in violation of section 6827. The territorial limitations intended by parties will be construed from the attendant circumstances of the contract. J. L. Davis, Inc. v. Christopher, 219 Ala. 346, 122 So. 406 (1929).

A covenant by the seller of a cotton-gin business not to compete with the purchaser within definite boundaries for such time as will materially depreciate the value of the property sold is valid and enforceable, even though vague and indefinite as to time. The court takes judicial notice of the nature of the business, and in applying the rule of reason finds the restriction a reasonable one. Maddox v. Fuller, 233 Ala. 662, 173 So. 12 (1937).

A contract for the sale of pine-land leases containing a provision that the seller will not engage in the turpentine business within 10 miles of a certain town so long as the buyer is engaged in that busi

ness in the same town is valid. Harris v. Theus, 149 Ala. 133, 43 So. 131 (1907).

An agreement by a vendor of a livery business not to engage in a similar business in competition with the vendee in a certain city, although unlimited as to time, is not in restraint of trade and is enforceable. Smith v. Webb, 176 Ala. 596, 58 So. 913 (1912).

The seller of a barber shop who agreed not to engage in the same business in a certain town, was enjoined from doing so. The contract was reasonably restrictive even without a time limitation. Fambrough v. Townson, 204 Ala. 251, 85 So. 476 (1920).

A contract for the sale of a fruit business, under which the seller agrees not to grow, import, or sell fruit in competition with the purchasers, is unenforceable if it is shown that the contract aids in the creation of a monopoly in violation of the Sherman Antitrust Act. McConnell v. Camors-McConnell Co., 152 Fed. 321 (C. C. A. 5th, 1907) (1907), reversing Camors-McConnell v. McConnell, 140 Fed. 412 (1905).

Restrictive Covenants Ancillary to the Sale of a Practice.

An agreement by a physician in connection with the sale of his practice not to engage in the practice in the city is not against public policy and is valid although unlimited in duration. The test of the validity of such contract is whether or not it affords only a fair protection to the interest of the party in whose favor it is made, without being so broad as to interfere with the public's interest. McCurry v. Gibson, 108 Ala. 451, 18 So. 806 (1895).

Restrictive Covenants Ancillary to Employment.

A contract was upheld under which an insurance agent forfeited his rights to commissions on renewals if, within 2 years after termination of his contract, he accepts work of another company granting similar benefits. Himes v. Masonic Mutual Life Ass'n of District of Columbia, 215 Ala. 183, 110 So. 133 (1926).

Laundry-route driver covenanted not to compete for 3 years in the same county after the termination of his employment. The contract is a reasonable restraint of trade, expressly sanctioned by Ala. Code Ann. (Michie, Supp. 1936), sec. 6287. The contract was none the less covered by the statute because it failed to expressly mention "the soliciting of old customers" in the language of the Act. Shelton v. Shelton, 192 So. 55 (1939).

Restrictive Covenants not Ancillary to the Sale of a Business.

In pursuance of a plan to eliminate competition, two lumber companies, ancillary to conveyances of land made to each other, agreed to restrict the operations of each to a territory within 20 miles on

either side of a county line. The agreement is an unreasonable restraint injurious to the public interest. Flowers & Peagler v. W. T. Smith Lumber Co., 157 Ala. 505, 47 So. 1022 (1908).

An agreement between the owners of the only two ice plants in a city that one cease operating for a period of 5 years is unenforceable as an attempt to stifle competition for the purpose of creating a monopoly. Tuscaloosa Ice Manufacturing Co. v. Williams, 127 Ala. 110, 28 So. 669 (1900). See also Pearson v. Duncan & Son, 198 Ala. 25, 73 So. 406 (1916).

Two competing hardware companies entered into an agreement whereby one sold its entire stock of a certain type of plow shares to the other and promised not to handle a similar type thereafter in competition with the other in "the part of Alabama north of Birmingham." The contract was upheld as reasonably restrictive although unlimited in time. Moore & Handley Hardware Co. v. Towers Hardware Co., 87 Ala. 206, 6 So. 41 (1889).

Parol Evidence.

In a written contract for the sale of the goodwill of a business, the court did not admit parol evidence to establish, by implication, an agreement not to compete. Collas v. Brown, 211 Ala. 443, 100 So. 769 (1924).

Assignees Rights.

Assignees of a vendee's interest in a business and covenant not to compete may enforce the vendor's obligation on the covenant. Knowles v. Jones, 182 Ala. 187, 62 So. 514 (1913).

Remedies.

In a suit to restrain the breach of a contract between operators of a group of laundries and dry cleaning plants that each will not engage in the other's business in the county for a period of 10 years, the court held that the contract "if not wholly void" was unenforceable in equity. The remedy, if any, was at law for damages. American Laundry Co. v. E. & W. Dry Cleaning Co., 199 Ala. 154, 74 So. 58 (1917).

III. TYING CONTRACTS AND EXCLUSIVE DEALING ARRANGEMENTS

Code Ann. (Michie, 1928)
Cooperatives

Sections 7142 and 7152 provide that an agricultural cooperative marketing association organized under sections 7127 to 7155 may enter

into contracts with its members requiring them to sell, for any period of time not over ten years, all or any specified part of their products to or through the association and that such contracts shall not be considered illegal or in restraint of trade. See Exceptions to General Anti-Trust Laws, supra. See also Cooperatives in projected study.

Tying Contracts.

Judicial Decisions

See, Tallassee Oil & Fertilizer Co. et al. v. H. S. & J. L. Holloway, 200 Ala. 492, 76 So. 434 (1917); General Antitrust Laws, supra. Exclusive Dealing Arrangements.

A contract whereby a retailer agreed to buy from one source all the beer required in his business for a certain period is not void as it in no way tends to create a monopoly or trust. Terre Haute Brewing Co. v. McGeever, 198 Ala. 474, 73 So. 889 (1916).

For cases on arrangements entered into with cooperatives, see Warren v. Alabama Farm Bureau Cotton Assn., 213 Ala. 61, 104, So. 269 (1925); General Anti-Trust Laws; Exceptions, supra. See also Bishop v. Alabama Farm Bureau Cotton Assn., 215 Ala. 388, 110 So. 711 (1926) and Ex parte Baldwin County Producers' Corporation, 203 Ala. 345, 83 So. 69 (1919).

ARIZONA

I. TRUSTS, COMBINATIONS, AND MONOPOLIES

A. GENERAL ANTITRUST LAWS

CONSTITUTIONAL PROVISIONS

Rev. Code Ann. (Struckmeyer, 1928)

Const. art. XIV, sec. 15. Monopolies and trusts shall never be allowed in this State, and no incorporated company, co-partnership, or association of persons in this State shall directly or indirectly combine or make any contract, with any incorporated company, foreign or domestic, through their stockholders or the trustees or assigns of such stockholders or with any co-partnership or association of persons, or, in any manner whatever, to fix the prices, limit the production, or regulate the transportation of any product or commodity. The legislature shall enact laws for the enforcement of this section by adequate penalties, and in the case of incorporated companies, if necessary for that purpose, may, as a penalty declare a forfeiture of their franchises.

STATUTORY PROVISIONS

Rev. Code Ann. (Struckmeyer, 1928)

Sec. 3212. Trust defined; declared void; prohibited; monopoly. A trust is a combination of capital, skill, or acts, by two or more persons for any of the following purposes: To create or carry out restrictions in trade or commerce or aids to commerce, or to carry out restrictions in the full and free pursuit of any business authorized or permitted by law; to increase or reduce the price of merchandise, products, or commodities, or limit the production thereof, or to control the cost or rates of insurance; to prevent any competition in the manufacture, making, transportation, sale or purchase of merchandise, products, or commodities, or to prevent competition in aids to commerce; to fix any standard or figure, for any article or commodity of merchandise, or product of commerce, intended for sale,

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