Section 105 (16) provides that no retail licensee for off-premises consumption shall be interested, directly or indirectly, in any premises, other than those for which he is licensed, where liquors, wines, or beer are manufactured or sold at wholesale or retail, or in any business devoted wholly or partially to the sale of such beverages at wholesale or retail, by stock ownership, interlocking directors, mortgage or lien on any personal or real property or by any other means. Any lien, mortgage, or other interest or estate now held by such retailer on or in the personal or real property of such premises, acquired on or before December 31, 1932, shall not be included within the provisions of this subdivision. Section 106 (13) makes similar provisions concerning retail licensees for on-premises consumption.

Section 105 (17) provides that no retail licensee for off-premises consumption shall make or cause to be made any loan to any person engaged in the manufacture or sale of liquors, wines, or beer at wholesale or retail. Section 106 (14) makes similar provisions concerning retail licensees for on-premises consumption.

Section 118, as amended by L. 1938, c. 329, provides that any license or permit issued pursuant to this chapter may be revoked, cancelled, or suspended for cause, and must be revoked if, within a period of 2 years, there shall have been two convictions for any violation of this chapter by a licensee or permittee or any of their clerks, agents, employees, or servants on such licensed premises. Violation of the provisions of section 101 of this chapter shall cause a forfeiture of the license or permit of all parties participating or concerned in the violation. Section 130 (3) provides that any violation by any person of any provision of this chapter for which no punishment or penalty is otherwise provided shall be a misdemeanor. See Tying Contracts and Exclusive Dealing Arrangements, infra.

2. Public Contract Provisions

Highway Law (McKinney)

Section 39 provides that no patented article or material or any other material or article shall be specified, contracted for, or purchased in the construction of state highways, except under circumstances that there can be fair and reasonable opportunity for competition, the conditions to secure which shall be prescribed by the superintendent of public works. See projected Vol. Governmental Purchasing.

No provisions.

3. Anticoercive Financing Statutes

Judicial Decisions

Public Contract Provisions.

An arrangement whereby one bidder on a public contract pays another a consideration in exchange for the latter withdrawing or altering his bid is illegal. The State may recover the damages sustained thereby, and no recovery will be permitted between the parties to such an unlawful contract. Sharp v. Wright & McDonald, 35 Barb. 236 (1862); People v. Lord & Leahey, 6 Hun. 390 (1876), affd. 71 N. Y. 527 (1878); Baird v. Sheehan, 38 App. Div. 7, 56 N. Y. S. 228 (1899). affd. per cur. 166 N. Y. 631, 60 N. E. 1107 (1901); Woodworth v. Bennett, 43 N. Y. 273 (1870); People v. Connolly, 253 N. Y. 330, 171 N. E. 393 (1930).

Agreements between two or more bidders to share profits or work is illegal, if made for the purpose of preventing competition and affecting the price by removing bidders. Atcheson v. Mallon, 43 N. Y. 147 (1870); Kelly v. Devlin, 58 How. Pr. 487 (1879), aff'd. 15 Jones & S. 555 (1881).

However, agreements to share work, profits, or losses are valid where they do not unreasonably infringe the competition for the award involved. Briggs v. Tillotson, 8 Johns 304 (1811); Dutch v. Harrison, 5 Jones & S. 306 (1874) (where one bidder subcontracted before entering bid); Kohart v. Skou, 163 App. Div. 899, 147 N. Y. S. 509 (1914). In Marsh v. Russell, 66 N. Y. 288 (1876) an agreement by four persons to share the profits and losses of contracts with municipalities to furnish recruits for the civil war, each agreeing to make no contract for less than $500 per man, was held valid and enforceable. A lawful business can be carried on by a firm as well as by individuals, and members of a firm can regulate the price at which they will deal. The real question is whether such agreement is made for the purpose of preventing fair competition and affecting the price by removing bidders.

A contract by an asphalt company to sell exclusively to one person in New York City for the purpose of paving streets is valid in the absence of a combination to stifle bids. Stemmerman v. Kelly, 150 App. Div. 753, 135 N. Y. S. 827 (1912).

Where the specifications for asphalt for a public highway contract are so framed that only one company can qualify therefor, the manufacturer of asphalt of equal quality may enjoin the letting of the contract on the ground that it cannot be let under competition as required by Laws 1913, chapter 80, sections 14 and 25. Warner-Quinlan Asphalt Co. v. Carlisle, 158 App. Div. 638, 144 N. Y. S. 70 (1913).

The choice of a patented street pavement was not unlawful when authorized by the city charter, where patentees offered to sell at a stipulated price to the successful bidder, although patentees were unsuccessful in bidding on the same contract. Adams v. Van Zandt, 199 N. Y. S. 225 (1923).

II. CONTRACTS NOT TO COMPETE

No statutory provisions.

Judicial Decisions

Restrictive Covenants Ancillary to the Sale of a Business.

Contracts not to compete ancillary to the transfer of an interest in a business are valid when reasonable in reference to the interest protected. The reasonableness of the time and space limits of such contracts vary with the circumstances. The test has been said to be whether the restraint is such only as to afford a fair protection to the interests of the party in favor of which it is given, and not so large as to interfere with the interests of the public.

Covenants held to be valid and enforceable: Nobles v. Bates, 7 Cowan 307 (1827) (partner selling his interest in harness business agreed not to compete within 20 miles); Chappel v. Brockway, 21 Wend. 157 (1839) (covenant not to engage in packet business at any time thereafter between Rochester and Buffalo); Noah v. Webb, 1 Edw. Ch. 604 (1833) (not to engage in the newspaper business for S years in certain cities); Jarvis & Lobdell v. Peck, 1 Huff. Ch. 479 (1840), aff'd 10 Paige 118 (1843) (in dissolution of partnership, agreement by one partner not to disclose trade secrets); Dunlop v. Gregory, 10 N. Y. 241 (1851) (covenant not to run a steamboat above a point on the Hudson); Alcock v. Giberton & Binsse, 12 N. Y. Sup. Ct. (5 Duer) 76 (1855) (not to use secret mode of conducting business, nor to teach secret process to others, nor to manufacture certain porcelain teeth); Shearman v. Hart, 14 Abb. Pr. 358 (1862) (partners agreed that in the event of dissolution neither should continue lithographic business in the building used by firm, or at any place within one block, for 6 months, without the consent of the other); Muller v. Vettel, 25 How. Pr. 350 (1862) (oral agreement not to engage in butcher business for 10 years within six blocks of business sold); Ewing v. Johnson, 34 How. Pr. 202 (1864) (not to "interfere, hinder, or obstruct" tobacco business and trade routes in two cities and several villages wherein business sold was carried on); Hard v. Seeley, 47 Barb. 428 (1865) (not to engage in vending or manufac

ture of a certain medicine, nor to impart the art of making such medicine to others); Dethlefs v. Tamsen, 7 Daly 354 (1878) (partnership articles provided that on retirement from store business retiring partner would not engage in competitive business); Sander v. Hoffman, 64 N. Y. 248 (1876) (not to engage in grocery business within a portion of New York City for 5 years); MacKinnon Pen Co. v. Fountain Ink Co., 16 Jones & S. 442, appeal dismissed 93 N. Y. 658 (1882) (not to engage in pen manufacturing business as long as certain articles of trust were fulfilled by vendee); Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419 (1887) (not to engage in match business in the United States, except Nevada and Montana, for 99 years); Tode v. Gross, 127 N. Y. 480, 28 N. E. 469 (1891) (not to engage in cheese business in competition with vendee); Watertown Thermometer Co. v. Pool, 51 Hun 157, 4 N. Y. S. 861 (1889) (not to manufacture thermometers or storm. glasses in the United States for 10 years); Zimmerman v. Gerzog, 13 App. Div. 210, 43 N. Y. S. 339 (1897) (not to engage in provision business within 450 miles of New York County for 10 years); Brett v. Ebel, 29 App. Div. 256, 51 N. Y. S. 573 (1898) (not to solicit freighting business east of the Mississippi); Ru Ton v. Everitt, 35 App. Div. 412, 54 N. Y. S. 896 (1898) (not to enter produce commission business for 10 years); see also A. Booth & Co. v. Seibold, 37 Misc. 101, 74 N. Y. S. 776 (1902); American Ice Co. v. Mechel, 109 App. Div. 93, 95 N. Y. S. 1060 (1905) (copartners covenant not to engage in ice business in city for 10 years); Salzman v. Siegelman, 102 App. Div. 406, 92 N. Y. S. 844 (1905) (covenant of partner not to engage in similar business in State); Sanford Dairy Co. v. Sanford, 114 App. Div. 862, 100 N. Y. S. 270 (1906) (covenant not to compete on dissolution of partnership held so indefinite as to be enforceable only in part); Standard Slide Corporation v. Appel et al., 190 App. Div. 799, 180 N. Y. S. 431 (1920) (partner not to engage in mica slide manufacturing business for 5 years in the United States (except New Mexico), enforceable whether partner engaged in business as principal or employee); Broadbrooks v. Tolles, 114 App. Div. 646, 99 N. Y. S. 996 (1906) (not to engage in lumber, cement, sewer pipe, and wall plaster business within 25 miles of a city for 25 years); Metropolitan Opera Co. v. Hammerstein, 221 N. Y. 507, 116 N. E. 1061 (1917) (not to engage in opera in New York, Chicago, Boston, and Philadelphia for 10 years); Comerma Co. v. Comerma, 182 App. Div. 576, 169 N. Y. S. 884 (1918), affd. mem. op., Id. 225 N. Y. 676, 122 N. E. 878 (1919) (covenant not to bid in on tile structures for

30 years in the United States, except six Western States, Canada, and Mexico); Hackenheimer v. Kurtzmann, 235 N. Y. 57, 138 N. E. 735 (1923) (not to compete in piano business for 10 years); Lappono v. Marmone, 204 App. Div. 496, 198 N. Y. S. 433 (1923); Jochum Bros. v. Ridgewood Pie Baking Co., 210 App. Div. 428, 206 N. Y. S. 252 (1924); Bernfeld v. Freedenberg, 125 Misc. 645, 211 N. Y. S. 692 (1925); McCarty v. Constable, 221 App. Div. 307, 223 N. Y. S. 484 (1927) (covenant "not to engage in the electrical business in the village of Sidney" construed as preventing engaging in such business in the village at any time thereafter, but vendor was not restrained from selling to the residents of Sidney at his new store in another village, who came there unsolicited); Gru Corporation v. Right-inGarage, Inc., 137 Misc. 139, 244 N. Y. S. 484 (1930) (not to reopen garage within 10 blocks for 5 years); Shangold v. Berson, 125 Misc. 646, 211 N. Y. S. 695 (1925) (covenant by partner not to compete in shoe business not violated by partner opening store outside of area restricted and using mailing list of customers of old firm).

Covenants held to be invalid and unenforceable: Ross v. Sadgbeer, 21 Wend. 166 (1839) (not to engage in the occupation or business of manufacturing that required the consumption of ashes, for 10 years, within 40 miles of a certain village); Lawrence et al. v. Kidder et al., 10 Barb. 641 (1851) (not to engage in manufacture of palm leaf beds for 5 years in the State of New York west of Albany and in Columbus, Ohio); Stephens v. Aulis, 3 Thomp. & Co. 781 (1874) (oral covenant not to engage in business of making iron castings at a certain village or within 10 miles); U. S. Cordage Co. v. William Walls' Son's Rope Co., 90 Hun 429, 35 N. Y. S. 978 (1895) (nominal partners are not bound by covenant of general partner not to compete in firm's cordage business); People v. American Ice Co., 120 N. Y. S. 443 (1909) aff'd mem. op. 125 N. Y. S. 1136 (1910) (contract whereby vendor agreed not to compete in ice business in a definite area for a fixed term was found to be part of a scheme on the part of the purchaser to create a monopoly and control prices); Mahler v. Mahler, 160 App. Div. 548, 145 N. Y. S. 764 (1914) (vendor of candy importing business agreed not to compete in such business, no time or space limitation).

Restrictive Covenants Ancillary to the Sale of a Professional Practice.

Covenants ancillary to the sale of a professional practice are valid and enforceable if reasonably restrictive as to time and place. J. W. Smith v. A. Smith, 4 Wend. 468 (1830) (not to compete in medical