localities with the intention of creating a monopoly or destroying the business of a competitor. See vol. State Price Control Legislation: Antidiscrimination Legislation. Petroleum Products-Discrimination Section 28.823 provides that it shall be unlawful for any person engaged in the production, manufacture, or distribution of petroleum products to discriminate as to price between different localities with the intention and for the purpose of destroying the business of a competitor. See vol. State Price Control Legislation: Antidiscrimination Legislation. Stat. Ann. (Henderson, Supp., 1939) Bakery, Petroleum-Discrimination Sections 28.78 (1) to 28.78 (14) provides that it shall be unlawful for any person engaged in the production, manufacture, distribution, or sale of bakery products or petroleum products to discriminatɔ as to price between different localities with the intention to injure or destroy the business of a competitor. See vol. State Price Control Legislation: Antidiscrimination Legislation. Stat. Ann. (Henderson, 1936) Section 18.1001 provides that no manufacturer, warehouseman, or wholesaler shall aid or assist any other vendor by gift or loan of money or property of any description or other valuable thing, or by the giving of premiums or rebates, and it shall be unlawful for any vendor to accept the same. Section 18.1002 provides that no manufacturer, warehouseman, or wholesaler shall have any financial interest, directly or indirectly, nor shall the above or any stockholder thereof have any interest by ownership in fee, leasehold, mortgage, or otherwise, nor shall they have any interest directly or indirectly by interlocking directors or stock ownership in a corporation, all the above prohibitions having reference to and being concerned with the establishment, maintenance, operation, or promotion of the business of any other vendor. Section 18.1021 provides that any licensee who shall violate any of the provisions of this act, or any rule or regulation pursuant thereto, shall be guilty of a misdemeanor punishable by imprisonment in the county jail for not more than six months or by a fine of not more than $500, or both, in the discretion of the court. Any person, other than persons required to be licensed under this act, who shall violate any of the provisions of this act shall be guilty of a misdemeanor. Section 18.1022 provides that where a license for any premises has been revoked for any violation of this act, no license shall be thereafter issued for such premises for a period of one year, and no license shall be issued to the person so violating this act for a period of two years after such revocation. 2. Public Contract Provisions Stat. Ann. (Henderson, 1936) Section 15.716 provides that the publisher of school textbooks must enter into a contract with the Superintendent of Schools, that he shall not enter into any understanding or combination to control the prices of school textbooks, or to restrict competition in the sale thereof in the Sate. See projected vol. Governmental Purchasing. No provisions. Railroads. 3. Anticoercive Financing Statutes Judicial Decisions Where there is only a common junction point and there are other railroads in the area, the purchase of the stock of one railroad by another is not void under section 22.651 (L. 1901, act 30) on the ground that they have common terminals or are competing roads. Lisman v. Knickerbocker Trust Co., 211 Fed. 413 (C. C. A. 6th, 1914). Other Utilities. Street Railways. Section 22.481 (L. 1901, act 143) refers to the consolidation of companies in the State with companies organized in neighboring States, and does not apply to the consolidation of street and electric railways organized under the laws of Michigan and lying within its territorial limits. Green v. Michigan United Rys. Co., 159 Mich. 58, 123 N. W. 607 (1909). Where the question is whether an amalgamation of street railways is the result of purchases or of consolidation, the legality of the organization may be attacked only by the State in a direct proceeding for that purpose, and not collaterally in suits by and against the corporation based on dealings with it. Shadford v. Detroit Y. & A. A. Ry., 130 Mich. 300, 89 N. W. 960 (1902). Telephone Companies. A bill to set aside an order issued by the commission permitting the consolidation of two telephone companies on the ground it would create a monopoly may not be maintained by another telephone company. The question involves a public grievance which must be redressed by those in whom the law has entrusted such authority. Home Tel. Co. v. Michigan R. R. Comm., 174 Mich. 219, 140 N. W. 496 (1913). The phrase "telephone company" includes any person, copartnership or corporation doing a telephone business. Op. Atty. Gen., 1916, p. 362. Fire and Marine Insurance. A bureau of inspection and rating which inspected risks, made rates for member insurers, and stamped rates on reports submitted by company agents daily, the agents being bound to conform to the ratings and rules made by the bureau, was considered a plan to suppress competition and in violation of section 24.100 (L. 1887, act 285, sec. 2). Hartford Fire Insurance Co. v. Raymond, 70 Mich. 485, 38 N. W. 474 (1888). Members of underwriters clubs, consisting of special and State agents of foreign insurance companies, who enter into an agreement, arrangement, or understanding of any kind, the object of which is to restrain open and free competition between the representatives of such companies in business done in the State, are amenable to the penalities of the statute. The visiting of local agents to warn them that rate cutting would result in reductions of rates for the locality by a specified percentage, the object or effect of the plan being to prevent free competition, would be a violation of sections 24.99 to 24.101 (L. 1887, act 285). Op. Atty. Gen., 1905, p. 100. A reinsurance agreement which provides that one of the fireinsurance companies party thereto shall cease doing fire-insurance business under an agency system, except in New Hampshire and in the territory controlled by a New York agency, for a period of 3 years was held to be a violation of section 24.100 (L. 1887, act 285, sec. 2) prohibiting entrance into an agreement to suppress competition. Op. Atty. Gen., 1912, p. 190. Liquor. The term "vendor" as used in sections 18.1001, 18.1002, and 18.1021 (Act 8 of 1st Ex. 1933) includes distillers, brewers, and wholesalers. Op. Atty. Gen., 1935-36, p. 13. In an opinion of the attorney general, the provisions in sections 18.1001 and 18.1002 were designed to eliminate monopolies from arising within any one group of breweries or distilleries by prohibiting stockholders of a brewery to purchase stock in another brewery or distillery, interlocking directorates between several breweries or distilleries or between a brewery and a distillery, and the purchase of stock by a holding company in several breweries or distilleries. Op. Atty. Gen., 1935–36, p. 13. Recovery against a brewing company for materials and labor furnished by contractor to one of the brewing company's retailers was refused because the contract was in violation of sections 18.1001, 18.1002, and 18.1021. The court held that the brewing company was both "wholesaler" and "vendor" within the express terms of these provisions. Turner v. Schmidt Brewing Co., 278 Mich. 464, 270 N. W. 750 (1936). II. CONTRACTS NOT TO COMPETE Stat. Ann. (Henderson, 1936) Section 28.348, prohibiting contracts and combinations to restrict production, control prices, or in any manner restrict free competition in the production or sale of any commodity, provides that such provisions shall in no way invalidate contracts known at common law and in equity as contracts for the "goodwill of a trade or business," which contracts shall be left upon the same terms and subject to the same limitations as at common law and in equity. See General Antitrust Laws, supra. Sections 28.61 to 28.67 provide that all contracts by which anyone agrees not to engage in a trade, profession, or business, whether the restraint is partial or general, limited or unlimited, reasonable or unreasonable, are void, but that the act shall not apply to any contract in restraint of trade where the object of the restraint is to protect the transferee or goodwill of a trade, profession, or business without intent to create a monopoly; nor to employment contracts where the employer furnishes a route list within a certain territory and the employee agrees not to engage in a competing business for a period of 90 days after termination of his contract. See General Antitrust Laws, supra. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. Contracts not to compete, ancillary to the sale of a business, if reasonable in their restraint, are valid at common law. Jaquith v. Hudson, 5 Mich. 123 (1858); Hubbard v. Miller, 27 Mich. 14 (1873); Beal v. Chase, 31 Mich. 490 (1875); Grow v. Seligman, 47 Mich. 607, 11 N. W. 404 (1882); Thompson v. Andrus, 73 Mich. 551, 41 N. W. 683 (1889); Barrett Co. v. Ainsworth, 156 Mich. 351, 120 N. W. 797 (1909); Bottomley v. Brown, 188 Mich. 134, 154 N. W. 37 (1915). The basis for the validity of these contracts is the mutual advantage to seller and buyer: The former can get a good price when the latter can be reasonably protected in the enjoyment of the goodwill of the business. Beal v. Chase, supra. Cf. Thum Co. v. Tloczynski, 114 Mich. 149, 72 N. W. 140 (1897). |