C. SPECIAL ANTITRUST LAWS 1. Special Industry Antitrust Laws CONSTITUTIONAL PROVISIONS Railroads Const. art. XVII, sec. 14, provides that no railroad corporation shall consolidate its stock, property, or franchises with any other railroad corporation owning a parallel or competing line, and penalty for any attempt to evade this provision shall work a forfeiture of its charter. STATUTORY PROVISIONS Comp. Laws (1939) Common Carriers Section 52.0211 provides that no common carrier shall enter into any contract, agreement, or combination with any other common carrier for the pooling of freight, express, or messages by telegraph or telephone of different and competing lines, or divide between them the aggregate or net proceeds of earnings of such lines. A common carrier shall be liable to person injured for amount of damages sustained, if received without suit; if received by suit, common carrier shall be liable for not to exceed twice the amount of damages sustained. Sec. 52.0214. Violation shall be deemed a misdemeanor punishable by fine or imprisonment in the state penitentiary not exceeding two years, or both. Sec. 9516. Telephone and Telegraph Section 52.1312 provides that no association, corporation, or individual organized for purpose of owning, maintaining, or operating lines or telephone or telegraph shall consolidate with or hold a controlling interest in the stock or bonds of any telephone or telegraph company owning a competing line, or acquire by purchase or otherwise any competing line of telegraph without the consent of the Board of Railroad Commissioners. Chamber of Commerce, Exchanges Section 54.0803 provides that every Chamber of Commerce, Board of Trade or Exchange operating a trading place in which members buy, sell, or exchange livestock, grain, or other farm products, which shall adopt any rule, or refuse or delay any applicant membership, or refuse to trade with any member or permit any member to deal with any other member is declared to be a monopoly in restraint of trade and guilty of a misdemeanor, and further trading by the organization or any member thereof shall be unlawful. Gasoline-Discrimination Section 54.0901 provides that anyone engaged in business of selling gasoline or kerosene and shall intentionally for purpose of creating a monopoly, or of destroying the business of a regularly established competitor in any locality discriminate by selling above commodities at a lower rate in one community than in another after making due allowance, if any, in the grade or quality, and the cost of transportation from the refinery shall be guilty of unfair discrimination. Fire Insurance Sections 31.2310 and 31.9919 provide that any combination between fire-insurance companies relating to rates to be charged, fixing the minimum premium, the amount of commission to be paid agents, or manner of transacting business of fire insurance within the state is unlawful and any company, officer, or agent violating this section is guilty of a misdemeanor, and subject to a fine of not less than $100 or more than $500 for each offense. Every fire-insurance company must file annual affidavit stating it has not violated provisions of the statute. The Commissioner of Insurance has authority to examine officers and employees of fire-insurance companies suspected of violation of the statute, and, if upon examination, the Insurance Commissioner shall determine that such company is guilty he shall issue an order revoking its authority to do business in the state and company shall not be permitted to transact business at any time within one year from date of revocation. Warehouses Section 60.0313 provides that it shall be unlawful for any proprietor, lessee, or manager of any public warehouse to enter into any agreement or combination with any railroad or other corporation or with any individual by which the property of any person is to be delivered to any public warehouse for storage contrary to the direction of owner, his agent or consignee. Violation of the Act constitutes a misdemeanor punishable by fine or imprisonment for not exceeding 30 days, or both. Sec. 60.9906. Milk, Cream, and Butter-Discrimination Section 4.1801 provides that it shall be unlawful for any person engaged in the business of buying milk, cream, butter, or other dairy products to discriminate as to price between different localities with the intention and for the purpose of injuring or destroying the business or trade of a competitor. See Vol. State Price Control Legislation: Antidiscrimination Legislation. Grains-Discrimination Section 4.1701 provides that it shall be unlawful for any person engaged in the purchasing of grain or flaxseed to discriminate as to price between different localities, with the intention and for the purpose of destroying competition. See Vol. State Price Control Legislation: Antidiscrimination Legislation. of Liquor Section 5.0118 provides that no manufacturer or wholesaler shall, directly or indirectly, supply, furnish, lease, give, or pay for any furniture, fixtures, fittings, or equipment of any kind or description, directly or indirectly, on or about or in connection with the premises any retailer of high point or nonintoxicating beer, in the handling, sale, or distribution of such beer; nor take any chattel mortgage or conditional sales contract as to any such property; nor pay or furnish money for any license fees or taxes payable by any such retailer; nor be otherwise financially interested in the business of any such retailer other than by reason of sales to such retailer. No such retailer shall be a party to any violation of the provisions of this section. Section 5.9907 provides that whoever shall violate any of the provisions of this title for which a specific penalty is not provided in this chapter, shall be guilty of a misdemeanor and punished by a fine not exceeding $300, or by imprisonment in the county jail not exceeding sixty days, or by both. 2. Public Contract Provisions Comp. Laws (1939) Section 13.0301 provides (in part) that if two or more persons conspire to prevent competitive bidding upon any contract proposed to be let by the State or any subdivision thereof they shall be deemed guilty of a felony. 3. Anticoercive Financing Statutes No provisions. II. CONTRACTS NOT TO COMPETE Comp. Laws (1939) Section 10.0706 provides that every contract restraining exercise of a lawful profession, trade, or business is void to that extent, except (a) one selling the good-will of a business may agree to refrain from carrying on a similar business in same city or town, (b) partners upon dissolution of a partnership may agree that none of them will carry on a similar business in same city or town, and (c) employee may agree with employer not to engage in same business as that of employer for a period not to exceed 10 years and within a specified territory not exceeding 25 miles from principal place of business of the employer. Such contracts between employee and employer shall apply only to those engaged in some profession the practitioners of which must be duly licensed in South Dakota. Judicial Decisions Restrictive Covenants Ancillary to the Sale of a Business. Restrictive covenants in this State are closely controlled by sections 898 to 900 (Comp. Laws (1939) sec. 10.0706). Such contracts are valid when ancillary to the sale of the goodwill of a business, but are limited in geographical extent by section 899 to a specified county or city and in time to the continuance of the business by the vendee or his successor. Section 900 controls such contracts when ancillary to the dissolution of a partnership or to employment. A real estate partnership was dissolved, one partner selling to the other his entire interest in the business and its goodwill. A week later they entered into another agreement whereby the retiring partner sold to the other the abstract books, iron safe, and letterpress and agreed not to engage in the abstract business in the county. In an action upon the contract not to compete it was held to be in violation of section 898 and void. Since the parties were not partners at the time of its execution, it was not within the scope of section 900, and since no sale of goodwill was included, it was not permitted by section 899. Prescott v. Bidwell, 18 S. D. 64, 99 N. W. 93 (1904). However, where a sale was made of the stock of drugs of a pharmacy business, together with the building in which it was carried on, and the seller contracted not to practice pharmacy or medicine in the town for 5 years, and distributed public notices advising his patients that the purchaser was to be his successor and that he was retiring, the court stated that there was ample evidence to show a sale of goodwill, although it was not specifically mentioned in the bill of sale, and that the restrictive covenant was valid under section 899. Brown v. Edsall, 23 S. D. 610, 122 N. W. 658 (1909). The defendant and another actively managed and owned the majority of the stock of a publishing company. They sold to the plaintiff all the assets and goodwill of the company and agreed not to engage in the publishing business in the county for 10 years. The restrictive covenant was held valid under section 899, even though the actual transfer of goodwill was made by the corporation. The defendant was a real party in interest to the transaction. Public Opinion Pub. Co. v. Ransom, 34 S. D. 381, 148 N. W. 838 (1914). Assignability. A valid restrictive covenant is enforceable by the assignee of the vendee. Public Opinion Pub. Co. v. Ransom, supra. Remedy. Although a contract not to compete provides liquidated damages for its breach, they will not be awarded unless the breach is substantial. Where the promissor agreed not to practice medicine or pharmacy in competition with the promise, the treatment of one former patient at his request is not a substantial breach. Brown v. Edsall, supra. |