shall then take appropriate court action, and the court may enforce the order by injunction. See Cooperatives in projected study. Musical Compositions Sections 7912 (1) to 7912 (11) provide that it shall be unlawful for any person without the consent of the owner to perform for profit any copyrighted work or to sell knowingly a substantial copy of such copyrighted work. Two or more persons holding separate copyrighted works are forbidden to combine for the purpose of fixing the prices for the use of their works or for the purpose of collecting fees or issuing blanket licenses for the right to perform their works. Any two or more holders of separate copyrighted musical works combining in any way must file once a year with the Secretary of State a complete list of their copyrighted works together with a list of prices to be charged. Individual owners of copyrighted works not connected with any combination are exempted from filing such lists. In case a defendant persists in defying court orders, the court shall appoint a receiver for the copyrighted works and property of defendants. The court shall determine a fair and just rate that the receiver should charge for the public performance of each copyrighted work. If after one year defendants still continue to disobey the orders of the court, then the property shall escheat to the state. In addition to other penalties, violation of the Act shall be deemed a gross misdemeanor, punishable by fine, or imprisonment in the county jail for not more than six months, or both. Coal Section 5888 provides that it shall be a misdemeanor punishable by fine of not less than $1,000 to enter into any agreement for the purpose of raising the price of coal by limiting the output of coal, or by some other means. Liquor Section 5735 (1) provides that no brewer or wholesaler of beer of alcoholic content of not more than five percent by weight or any other beverage of like alcoholic content, or their agents, shall be permitted to make any loan or furnish any fixtures or have any interest, direct or indirect, in the business of any retailer of such beverages, or in the premises occupied by such retailers. Section 5735 (21) provides that any violation of this act, or any rule or regulation pursuant thereto, shall be a misdemeanor, and where the punishment is not otherwise fixed, the offender shall be punished by a fine of not more than $500 and imprisonment for not more than six months in the discretion of the Court. No provisions. 2. Public Contract Provisions 3. Anticoercive Financing Statutes Code Ann. (Michie, 1938) Sections 6553 (1) to 6553 (7) are identical in text with the Louisiana statute except that: (1) Sections 6553 (2) to 6553 (5) add "or class of persons" to those that may not be designated (cf. La., secs. 1 to 4). (2) Section 6553 (5) substitutes "chancery" court for "district" court (cf. La., sec. 4). (3) Section 7 of the Louisiana act is omitted. See La. Gen. Stat. Ann. (Dart, 1939), secs. 5332.1 to 5332.8, set forth in full at p. 272, supra. II. CONTRACTS NOT TO COMPETE No statutory provisions. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. The vendor of a mercantile business after having conveyed the "goodwill" and assigned his lease to the premises was under an implied obligation not to interfere with the purchaser in his use of the business premises and control of the lease assigned. It was a breach of good faith on his part, during the existence of the lease, to obtain a new lease running to him to commence on expiration of the one assigned. But the seller is not precluded from setting up a precisely similar business at another stand in the same locality. If the purchaser of the business desired to forestall such step, he should have expressly stipulated against it in the contract of sale. Fine v. Lawless, 139 Tenn. 160, 201 S. W. 160 (1918). A contract, conveying a "Piggly-Wiggly" self-serving grocery store business, with patents, copyrights, trade-marks, and inventions made or to be made for the purpose of such business, precludes the vendor from using any future inventions in competition with those conveyed. The contract does not, however, preclude the vendor from using methods, practices, and store arrangements which were in common use in self-serving stores at the time of the conveyance and which were not covered by patents, trade-marks, trade names, etc., conveyed thereby. Piggly Wiggly Corp. v. Saunders, 1 Fed. (2d), 572, 582 (1924). An agreement not to compete in a certain town for 5 years ancillary to the sale of the stock of goods and fixtures of a mercantile business does not violate section 5881 (Acts 1903, c. 140, sec. 1). Baird v. Smith, 128 Tenn. 410, 161 S. W. 492 (1913). One partner in an auto-wrecking and metal business sold his interest. to the other partner and agreed in the contract of sale not to compete in same business in the same county for a period of 2 years. There was a liquidated damages clause setting damages for breach as $2,000. Defendant started to operate a competing business and upon representations by plaintiff that he would seek to enjoin operation of the business, defendant abandoned the enterprise. Plaintiff sued for the liquidated damages. It was held that the conduct of the plaintiff in threatening to obtain an injunction amounted to an election of the remedy of specific performance and precluded an action for damages for breach of contract. Frumin v. Chazen, 153 Tenn. (26 Thomp.) 1, 282 S. W. 199 (1926). Where a partnership in the retail furniture business was sold under an unconditional agreement that the vendors should not reengage in that business in the same city for 3 years, the fact that the vendee transferred its assets to a newly formed corporation before the expiration of the period did not release the vendors from their obligation. The goodwill and the contract for its protection are assignable property rights, and the contract is not in restraint of trade. The true measure of damages for breach of the covenant not to compete is the injury the aggrieved party sustained as the natural and proximate result of the breach. If no damage is shown, only nominal damages are recoverable. Bradford & Carson v. Montgomery Furniture Co., 115 Tenn. 610, 92 S. W. 1104 (1906). A grocery-keeper sold his stock and agreed not to engage in that business in the same town for 10 months. The court upheld the contract. It allowed the full amount of damages ($500) as was stipulated in the agreement, because upon the facts of the cause it did not appear unconscionable for plaintiff to recover this sum. Muse v. Swayne, 70 Tenn. (2 Lea) 251, 31 Am. Rep. 607 (1879). In connection with the sale of a livery stable, a collateral parol agreement not to enter into competition in the same business and territory in which the defendant did business, so long as the defendant continued in business, was held valid. Jackson v. Byrnes, 103 Tenn. (19) Pick.) 698, 54 S. W. 984 (1900). By contract the city of Paris leased and agreed eventually to sell its light and power plant, including the goodwill, to private individuals. The contract provided that the city could reenter the business of generating electric current and could grant a franchise to a third party to compete with the lessee, providing such grant did not. prejudice any of the rights of lessee as prescribed in the terms of the contract. Such contract did not grant exclusive rights to lessee, and lessee's successor in interest could not enjoin the city from selling light and power through its own distribution system. Ky.-Tenn. Light & Power Co. v. City of Paris, 173 Tenn. 123, 114 S. W. 2d, 815 (1938). Restrictive Covenants Ancillary to the Sale of a Professional Practice. A practicing physician sold his medical practice to plaintiff and agreed to refrain from competing with him in the county. Defendant, resuming his practice in breach of the contract is liable for the actual amount of damages suffered by plaintiff. Johnson v. Jones, 1 Tenn. App. 24 (1925). Restrictive Covenants Ancillary to Employment. A dentist, who had practiced for 7 years, took into his employment a young dentist. There was a parol agreement, as part of the contract of employment, that defendant at the termination of such employment would not practice his profession in such town in competition with plaintiff. The contract, even though orally made, was reasonably restrictive. It is valid and enforceable. Turner v. Abbott, 116 Tenn. (8 Cates) 718, 94 S. W. 64 (1906). A contract is valid whereby an employee of a rent-a-Ford company, who had access to lists of customers and an opportunity to learn business secrets, agreed not to become an employee of any competing company within a certain county for 5 years after leaving the employment. The contract may be enforced, though no specific injury is shown. Matthews v. Barnes, 155 Tenn. 110, 293 S. W. 993 (1927). Restrictive Covenants Not Ancillary to the Sale of a Business Interest. A contract provided that a mining company should furnish a merchant the trade of its employees, and in consideration therefor the mining company should receive 8 percent on sales to its employees. Either party could terminate the contract on 6 months' notice. The mining company opened its own store without giving such notice. The contract was not in restraint of trade and since it was breached, plaintiff is entitled to damages. George & Chapman v. E. Tenn. Coal Co., 83 Tenn. (15 Lea) 454, 54 Am. Rep. 425 (1885). III. TYING CONTRACTS AND EXCLUSIVE DEALING ARRANGEMENTS Code Ann. (Michie, 1938) Section 3816 provides that a cooperative marketing association and its members may make and execute marketing contracts, requiring the members to sell all or any specified part of their products to or through the association for any period of time, not over 10 years. Such marketing contracts between the association and its members shall not be considered in unlawful restraint of trade. See Exceptions to General Antitrust Laws, supra. See also Cooperatives in projected study. Judicial Decisions Exclusive Dealing Arrangements. The Tobacco Growers' Co-operative Association was organized under the Bingham Co-operative Marketing Act (Ky. Acts 1922, c. 1). It entered into contract with its members requiring all tobacco produced or acquired by the growers during certain years to be pooled and resold through the association at best prices obtainable. The contracts for exclusive dealing conformed with the statutory enactment, and do not violate either the Federal or State Anti-Trust Acts. Dark Tobacco Growers' Co-op. Ass'n. v. Mason, VEJ Tenn. (23 Thomp.) 228, 263 S. W. 60 (1924); Same v. Dunn, 150 Tenn. (23 Thomp.) 614, 266 S. W. 308 (1924). |