of this provision constitutes a misdemeanor and the Railroad and Warehouse Commission may, after proper hearing, revoke the license of any person operating such a warehouse. Livestock Exchanges Sections 5237 and 5238 provide that rules or regulations of livestock exchanges restricting their business to members are null and void, and any dealings of members with nonmembers shall not be a cause for cancellation or forfeiture of membership. Upon violation of these provisions the attorney general may proceed to dissolve the organization or restrain any continued violation. Boards of Trade, Chambers of Commerce Sections 7905 to 7908 provide that every chamber of commerce or board of trade in which members buy grain, livestock, or other farm products for themselves or others is a public market; that every such market shall be open to membership to any person, firm, or corporation who makes application and whose method of business operation does not conflict with any reasonable rule, regulation, or bylaw of such market; that any such exchange adopting a rule to avoid the provisions of this act or to delay membership is declared a monopoly in restraint of trade and guilty of a felony, and further trading therein by any member shall be unlawful; and finally, that the attorney general may prosecute such organization for any violation thereof and institute quo warranto proceedings to dissolve the exchange and prevent its further operation. Insurance Companies-Funeral Supplies Section 3315 provides that an insurance company shall not operate. directly or indirectly, in affiliation with or connection with a funeral director or undertaking establishment in any manner so as to deprive deceased's representatives of the opportunity to obtain funeral and burial supplies in the open market, but that this shall not apply to cooperative burial associations. Cold Storage Section 6215 provides that if market conditions of food articles, resulting from hoarding or deterioration, are such as to require the release for immediate sale of foodstuffs held in cold storage, so that there will be an immediate market at fair and reasonable prices, the Commissioner of Agriculture may shorten the period food products may remain in cold storage, from twelve months to a shorter period. Petroleum-Discrimination Sections 10474 to 10481 provide that it shall be unlawful for any person or corporation doing business in the State and engaged in the production of petroleum to discriminate as to price between localities, for the purpose of destroying the business of a competitor or creating a monopoly in any locality. See Vol. State Price Control Legislation: Antidiscrimination Legislation. Grain-Discrimination Sections 5096 to 5097 provide that it shall be unlawful for any person or corporation buying grain to discriminate as to price. between localities for the purpose of creating a monopoly or destroying the business of a competitor. See Vol. State Price Control Legislation: Antidiscrimination Legislation. Stat. (Mason, 1927) as amended by Stat. (Mason, Supp. 1938) Sections 6248-1 to 6248-9 provide that it shall be unlawful for any person engaged in the business of buying or selling farm products to discriminate as to price between different localities. See Vol. State Price Control Legislation: Antidiscrimination Legislation. Stat. (Mason, Supp. 1940) Section 3200-27 provides that no manufacturer or wholesaler shall either directly or indirectly own or control or have any financial interest in any retail business selling intoxicating liquor, but this restriction shall not be construed to deny such person the right to use or have his property rented for such purpose in any case where the manufacturer or wholesaler was the bona fide owner of the premises prior to November 1, 1933. No retailer's "on-sale" or "off-sale" license shall be directly or indirectly issued to any person or for any place for which a license for another class has been granted. Section 3200-33 provides that when any licensee shall wilfully violate the provisions of this Act, his license shall immediately be revoked and his bond forfeited, and no license of any class shall for a term of 5 years thereafter be issued to the same person or to any person who at the time of the violation owns any interest, whether as holder of more than 5% of the capital stock of a corporation licensee, as partner, or otherwise, in the premises or in the business conducted thereon, or to any corporation, partnership, association, enterprise, business, or firm in which any such person is in any manner interested. See Tying Contracts and Exclusive Dealing Arrangements. 210235°-40-vol. 1-28 2. Public Contract Provisions Stat. (Mason, Supp. 1938) County and Municipal Supplies Section 1933-77 provides that specifications for purchases of supplies for counties, townships, cities, boroughs, or school districts shall not be so prepared as to exclude all but one type or kind, but shall include competitive supplies and equipment. See projected Vol. Governmental Purchasing. Stat. (Mason, 1927) Section 3054 provides that if any publisher enters into any agreement or understanding to control the price of school books, or restrict competition in the adoption or sale thereof, the attorney general shall institute proceedings for the forfeiture of the publisher's bond and revocation of his license, and every contract made by the publisher contrary to the provisions of this section shall become null and void at the option of the other parties thereto. See Vol. Governmental Purchasing, a projected study. 3. Anticoercive Financing Statutes Stat. (Mason, Supp. 1938) Sections 3976-71 to 3976-85 are identical in text with the California statute except that: (1) Section 3976-74 adds the paying or giving of "anything of value." (Cf. Cal., sec. 4.) (2) Sections 3976–75, 3976–76 add the receiving of "anything of value." (Cf. Cal., secs. 5, 6.) (3) Section 3976-79 provides that a violation of the act shall be a gross misdemeanor, and exempts retail sellers or their employees. (Cf. Cal., sec. 9.) (4) Section 3976-83. omits subsection (c) of the California act. (Cf. Cal., sec. 13.) See Cal. Gen. Laws (Deering, 1937) Act 5137, secs. 1 to 15 set forth in full at pages 50-54. Railroads. Judicial Decisions The enactment of a legislative restriction revokes an unexecuted power inconsistent thereto, granted in a corporate charter by a prior legislative act. The statute (L. 1874, c. 29; L. 1881; c. 94; sec. 7506) prohibiting the consolidation, merger, or purchase of competing railroads limits a prior grant of power to the defendant to merge and consolidate with other railroads generally, when this power has not theretofore been exercised. While the agreement between the defendant, Great Northern Railroad and the Northern Pacific Railroad provided for an interchange of traffic upon fixed tariffs, the purchase by the defendant of a controlling interest in the latter prevented unrestricted competition between the two parallel railroads and was therefore in violation of section 7506 and invalid. Pearsall v. Great Northern Railway Co., 161 U. S. 646, 16 Sup. Ct. 705, 40 L. Ed. 838 (1896). II. CONTRACTS NOT TO COMPETE No statutory provisions. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. A contract, in connection with the sale of a lumber business, contained a provision not to engage in the same business at the same place for 5 years. Such a contract is not to be extended beyond its fair and natural import. It cannot be extended to subsequent isolated acts or occasional services in good faith, nor employment in some subordinate capacity not affecting the management of the business. Nelson v. Johnson, 38 Minn. 255, 36 N. W. 868 (1888). A contract providing that the seller of a benefit certificate business refrain from selling benefit certificates for a period of 3 years in the three States in which he had established a lucrative business was held to be a valid covenant. The question of reasonableness depends upon whether it goes far enough to afford only a fair protection to the party in whose favor it is made. This depends upon the kind of trade or business which is the subject of the contract. National Benefit Co. v. Union Hospital Co., 45 Minn. 272, 47 N. W. 806 (1891). A contract for the sale of the controlling stock of a mercantile business which provided that the seller would not engage in the mercantile business in the same village so long as the buyer continued in trade was held valid. Kronschnabel-Smith Co. v. C. Kronschnabel, 87 Minn. 230, 91 N. W. 892 (1902). In connection with the sale of a retail mercantile business a contract that the seller, also the lessor, would not rent the building to any other party for the purpose of a general merchandise business for the term of one year was held valid. Berghuis v. Schultz, 119 Minn. 87, 137 N. W. 201 (1912). An agreement for the sale of a hog and cattle shipping business with a provision not to engage in such business for 5 years within an area of 10 miles is valid. Espenson v. Koepke, 93 Minn. 278, 101 N. W. 168 (1904). A contract for the sale of a laundry business providing that the vendors agreed not to engage in such business within a radius of 5 miles of a city is not void because unlimited as to time. Southworth v. Davison, 106 Minn. 119, 118 N. W. 363 (1908). See also Holliston v. Ernston, 124 Minn. 49, 144 N. W. 415 (1913). A contract for the sale of a garage and automobile sales business is valid even though it provides that the seller will not engage in such business in the county for a period of 10 years, except that after 2 years. seller may locate at the largest city in the county to sell automobiles, provided that he does no repairing or garage work on any automobile sold by him. Williams v. Thomson, 143 Minn. 454, 174 N. W. 307 (1919). In a suit on a contract not to engage in the meat business in the city of Duluth for a period of 2 years from the date the business is sold, the evidence was sufficient to sustain a verdict for breach of contract where the facts showed that defendant became interested in the same kind of business and interfered with plaintiff's sales to a certain hotel. Persha v. Zabukover, 180 Minn. 95, 230 N. W. 268 (1930). Assignee's Rights. A valid covenant not to compete may be assigned unless by its peculiar nature it cannot be. Such a covenant adds to the goodwill of the business and may be transferred with the goodwill as a part thereof. Peterson v. Johnson Nut Co., 204 Minn. 300, 283 N. W. 561 (1939). Implied Contracts Not to Compete. A contract not to reengage in the auto livery business in Minneapolis for a period of 3 years was not waived or abrogated by failure to incorporate it in the instruments evidencing the transfer of the property on a showing that such instruments were not intended to include the entire contract. It was held that seller violated the agreement by becoming the manager of another livery business. Bradley v. Paul, 153 Minn. 441, 190 N. W. 789 (1922). |