Railroads. Judicial Decisions SPECIAL ANTITRUST ACTS A contract between a railroad and an express company giving the latter exclusive privilege over the railroad lines was held in violation of the Antitrust Acts of 1899 and 1903, even though the combination was formed prior to the enactment of the law. State v. Mo. K. & T. Ry. Co., 99 Tex. 516, 91 S. W. 214 (1906). An agreement between a number of carriers and citizen's associations of a city for reduced special trip tickets was held not to be in violation of the act. Lytle v. Galveston, H. & S. A. Ry. Co., 100 Tex. 292, 99 S. W. 396 (1907). The constitutional prohibition (Const. art. X, secs. 5 and 6) against consolidations of parallel and competing railroad lines, does not apply to street railways. Scott v. Farmers & Merchants National Bank, 97 Tex. 31, 75 S. W. 7 (1903). The plea of a railroad, in a personal injury suit, that it had sold its road and was not operating the line at the time of injury, is not available, if the railroad fails to prove that the transfer was lawful, and was not made to a parallel or competing line. East Line & R. R. Ry. Co. v. Rushing, 69 Tex. 306, 6 S. W. 834 (1887). See also Atchison, T. & S. F. Ry. v. Weeks, 248 Fed. 970 (1918); Scott v. Mo. O. & G. Ry. Co., 151 S. W. 578 (1912). Railroads, by reason of control, management, or of their relations with other lines may become competing within the constitutional prohibitions, even though the roads are not parallel and do not connect. East Line & R. R. Ry. Co. v. State, 75 Tex. 434, 12 S. W. 690 (1889). A contract between officers of a number of railroads, combined in an association, empowering its manager to fix freight rates for the alleged purpose of avoiding extreme and sudden changes in the rate structures is a violation of Const. art. X, sec. 5. Gulf C. & S. F. Ry. Co. v. State, 72 Tex. 404, 10 S. W. 81 (1888). But an arrangement between a county, three steam railroads, and an electric interurban railroad, for joint truckage, depot, or terminal use, authorized by the State legislature, for the purpose of reconstructing a causeway, was held valid. Galveston Causeway Construction Co. v. Galveston, H. & S. A. Ry. Co., 284 Fed. 137 (1922). Insurance. The original Antitrust Act of 1889 (L. 1889, c. 117) did not mention the business of insurance or of "aids to commerce," and the act, therefore, was held not applicable to the insurance business, in a case by the State against a number of insurance companies conspiring to fix insurance rates. The court held that though insurance may be an "aid" to commerce, it did not constitute "commerce" as commonly understood, and furthermore that if the act were intended to apply to insurance, it was not sufficiently definite to support a criminal prosecution. Queen Insurance Co. v. State, 86 Tex. 250, 24 S. W. 397 (1893). Following this decision, the legislature amended the Antitrust Act so as to include "aids to commerce," but not specifically mentioning the business of insurance. The act of 1903 (art. 7426, sec. 2), however, specifically prohibits combinations. to fix, maintain, or increase the cost of insurance. In a suit by plaintiff against a number of insurance companies for conspiring to refuse to sell him insurance, the court of civil appeals held this refusal did not constitute actionable damage, as the evidence failed to show that the defendants actively persuaded other companies not to write the insurance. Griffin v. Pallatine Insurance Co., 202 S. W. 1014 (1918). On rehearing of the appeal (235 S. W. 637 (1921)), the case was remanded for a new trial on the ground that there was sufficient evidence on the question of conspiracy to go to the jury and that if such conspiracy was found to exist, it was unlawful under the Antitrust Act of 1903. (Id. 238 S. W. 637 (Civ. App. 1922).) The act of 1917 (L. 1917, art. 4878, p. 136) authorizing the State insurance commissioner to fix rates for fire insurance does not empower the state to fix commissions to be paid by companies to their local agents. Commercial Standard Ins. Co. v. Board of Insurance Commissioners, 34 S. W. (2d) (Civ. App. 1931). An agreement between insurance companies fixing commissions to be paid their agents is an action in restraint of trade, and is an attempt at price fixing. Potomac Fire Ins. Co. v. State, 18 S. W. (2d) 929 (Civ. App. 1929). The validity of the law regulating rates on automobile insurance (L. 1927, art. 4682b, p. 373) was upheld in a suit to set aside the ratefixing order of the Board of Insurance Commissioners. The court held that the business of insurance was affected with a public interest. It, therefore, could be regulated by the State, and was not a violation of the Antitrust Act. Board of Insurance Commissioners v. Sproles M. Freight Lines, 94 S. W. (2d) (Civ. App. 1936). See also German Alliance Ins. Co. v. Lewis, 233 U. S. 389, 346 Sup. Ct. 612, 58 L. Ed. 1011. An insurance company selling its property to another in consideration that the latter underwrite the vendor company's policies does not, through such consolidation, violate the Antitrust Act. Patton v. American Home Life Ins. Co., 233 S. W. 293 (Civ. App. 1921). See also California State Life Ins. Co. v. Kring, 208 S. W. 372 (Civ. App. 1919). An insurance company cannot refuse payment of a policy on the ground that the insured, a manufacturer of bagging material, was a member of a trust which aimed to control the price of that commodity in the State of Texas. The court ruled that a dealer is not precluded from insuring his stock against loss by fire, even though engaged in practices to unlawfully fix prices of his product. Springfield Fire & Marine Ins. Co. v. Cannon, 46 S. W. 375 (Civ. App. 1898); Patton v. American Home Life Ins. Co., supra. Petroleum and Gas. The validity of article 6049 (d), section 4, was raised in a suit to restrain the enforcement of an order of the railroad commission fixing and apportioning the amount of gas which may be produced from the plaintiff's wells. The plaintiff contended that the order would reduce the potential capacity of its wells from 2 to 4 percent while apportioning some 18 percent of the daily production allowances to wells without any market facilities; and that it was a violation of the "due process," "commerce," and "equal protection" clauses of the Federal Constitution. The court did not declare the statute unconstitutional, but interpreted it to mean that the commission can issue prorating orders only when waste is being or is about to be committed, and the order at issue, having been made without such finding of waste, was therefore void. Canadian River Gas Co. v. Terrell, 4 Fed. Supp. 222 (1933). Public Contracts. Several newspaper owners in a county, agreed to submit bids for publishing the delinquent tax list, at the same price. They also agreed that the successful bidder divide the proceeds of such bids with the others. This arrangement was held unlawful as against public policy and the antitrust laws. City of Wichita Falls v. Skein, 18 Civ. App. 632, 45 S. W. 1037 (1898). An agreement by a vendee to purchase a number of cords of wood in consideration that the vendor refrain from bidding for a United States Government contract was held in violation of the antitrust laws, and the vendor was denied recovery for the breach. Heid Bros. Inc. & Riesto, 281 S. W. 638 (Civ. App., 1926). In a suit by the plaintiff bank against the city that it be appointed depositary of the city's funds, on the ground that it had offered the highest rate of interest, the court upheld the city. The city properly rejected the bids as evidence was produced showing collusion between the plaintiff and other banks. City National Bank v. City of Corpus Christi, 233 S. W. 375 (Civ. App., 1921); Hall v. San Jacinto State Bank, 255 S. W. 506 (Civ. App., 1923); cf. Arroyo-Colo. Navigation District v. State National Bank of Brownsville, 90 S. W. (2d) 881 210235°-40-vol. 152 (Civ. App., 1936); cf. Flanders v. Wood, 83 Tex. 277, 18 S. W. 572 (1892). In a proceeding for the forfeiture of a gas company's charter on the ground that it conspired to unite all the electric, gas, and streetcar companies for the purpose of having only one company bid for the city's public lighting contract, and to fix prices, such an attempt was held to be in violation of the antitrust laws. San Antonio Gas Co. v. State, 27 Civ. App. 118, 54 S. W. 289 (1899). See also Empire Gas & Fuel Co. Inc. v. Lone Star Gas Co. Inc., 289 Fed. 826 (1923); Amarillo Oil Co. v. Ranch Creek Oil & Gas Co., 271 S. W. 145 (Civ. App., 1925); Fairbanks Morse Co. v. Texas Electric Service Co., 63 Fed. (2d) 702 (1933), cert. den., 290 U. S. 655. Two competitive bidders agreed on the price to be submitted for a gas plant and also agreed that the successful bidder divide its profits with the others. The agreement was held against public policy, and the Antitrust Acts. Daily v. Hollis, 27 Civ. App. 570, 66 S. W. 586 (1901). For common law application see James v. Fulcrod, 5 Tex. 258 (1851). See also Uvalde Rock Asphalt Co. v. ChapinColglazier Const. Co., 299 S. W. 710 (Civ. App., 1927). II. CONTRACTS NOT TO COMPETE Stat. (Vernon, 1936) Article 7426 provides that a "trust" is a combination of capital, skill, or acts by two or more persons, firms, corporations, or associations of persons, or either two or more of them for either, any or all of the following purposes: (7) To abstain from the purchase or sale of merchandise, produce, or commodities partially or entirely within the State of Texas, or any portion thereof. See General Antitrust Laws, supra. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. Covenants not to compete are valid at common law, if the restraint is not unreasonable. Wolff v. Hirschfeld, 23 Civ. App. 670, 57 S. W. 572 (1900); Comer v. Burton-Lingo Co., 24 Civ. App. 251, 58 S. W. 969 (1900); Crump v. Ligon, 37 Civ. App. 172, 84 S. W. 250 (1904); Langever v. United Advertising Co., 258 S. W. 856 (Civ. App., 1924); Bynum v. McFee, 70 S. W. (2d) 499 (Civ. App., 1934). Linen Service Corp. v. Myres, 128 S. W. (2d) 850 (Civ. App. 1939). Application of the Statutes. An agreement by a vendor, who sold his stock, goods, and goodwill with a promise not to reenter the mercantile business in the town of Batesville for 1 year is not void as against policy, nor in violation of the antitrust law. Gates v. Hooper, 90 Tex. 563, 39 S. W. 1079 (1897), rev'g 39 S. W. 186 (1897). (This is the leading case.) The following contracts have been upheld as not being unreasonable: Erwin v. Hayden, 43 S. W. 610 (Civ. App., 1897) (sale of a grocery business, the seller agreeing not to engage in the same business in the town for 2 years); Poon v. Miller, 234 S. W. 573 (Civ. App., 1921) (sale of a fish market, with an agreement not to engage in the business in the county, while the buyer is still so engaged); Schlag v. Johnson, 208 S. W. 368 (Civ. App., 1919) (an agreement by a retiring partner of a plumbing and windmill business not to engage in competition with the old or a new partnership in the same town); Goldberg v. Soltes, 32 S. W. (2d) 246 (Civ. App., 1930) (an agreement by a partner of a jewelry, pawnshop, and mercantile business not to engage in a similar business in a certain street for 4 years and 2 months was |