1879 Collins v. Locke. J.C. ships have just expressed, the decision of it is only material as regards costs. The question so raised is, whether the general arbitration clause (clause 11) affords an answer to the action, there having been no arbitration and no award under it. Since the case of Scott v. Avery, in the House of Lords ('), the contention that such a clause is bad as an attempt to oust the courts of jurisdiction may be passed by. The questions to be considered in the case of such clauses are, whether an arbitration or award is necessary before a complete cause of action arises, or is made a condition precedent to an action, or whether the agreement to refer disputes is a collateral and independent one. That question must be determined in each case by the construction of the particular contract, and the intention of the parties to be collected from its language. The provision in the second clause of this contract falls, as their Lordships have already said, within 690] *the first-mentioned category, because the equivalent to be given in lieu of the profit would not be payable until the amount of it had been ascertained in the manner prescribed. But the 11th clause, according to the intention to be collected from the whole deed, appears to them, though by no means with clearness, to be a collateral and independent agreement. It extends to all doubts, differences, and disputes which should arise touching the agreement, and stipulates that all matters in difference should be submitted to arbitrators. The learned counsel for the defendant strongly relied on the part of the clause which is in these words," And the award of the arbitrators shall be conclusive, and any of the parties shall not be entitled to commence or maintain any action at law or suit in equity in respect of the matters so submitted as aforesaid, except for the amount or amounts by the said award determined to be paid by any one or more of the said parties to the other or others of them, or otherwise in accordance with the terms and conditions of the said award, as to the acts or deeds to be made, done, executed, and performed." This passage, no doubt, contains negative words, but there is ambiguity in the words "in respect of the matters so submitted as aforesaid," as to whether they were meant to apply to all matters which were to be submitted to arbitrators under the clause, or to the matters which, after they arose, had been specifically submitted in the manner prescribed. Looking out of this clause, it is material to con(1) 5 H. L. C., 811. J.C. Collins v. Locke. 1879 sider clause 9, which is as follows,-"That in case of any breach or non-performance by any of the parties hereto of any or either of the covenants or agreements herein before contained, such party so committing such breach, or not performing such covenant or agreement, shall and will well and truly pay unto each of the other parties hereto respectively, their or his executors, administrators, or assigns, the sum of one thousand pounds, as and for liquidated damages for such breach or non-performance, but without prejudice nevertheless to the right of any of the said parties hereto to enforce the specific performance of the covenants and agreements hereinbefore contained, or any or either of them." It may be inferred from this clause that the parties *contemplated that an action might be brought for [691 these damages, and with reference to the proviso to the clause, that they intended to reserve the right to bring a suit for specific performance. Their Lordships are, therefore, disposed to think that the negative words in the arbitration clause were only intended to apply to matters actually submitted to arbitration. They will not, therefore, disturb the judgment of the court below on this point. The other points mentioned by the appellant's counsel were disposed of during the argument. In the result, their Lordships are of opinion that the rule nisi, so far as it prays to enter the verdict for the defendant on the first and second breaches, should be made absolute, and as to the rest should be discharged; that the judgment for the plaintiff on the demurrer to the third plea should be affirmed; and that the judgment for the plaintiff on the demurrer to the fourth plea should be reversed as to the 1st and 3d breaches, and judgment entered as to these breaches for the defendant, and they will humbly advise Her Majesty accordingly. The appellant having succeeded only on the point of the partial invalidity of the agreement, in respect to which both parties are equally in fault, their Lordships will make no order as to the costs of this appeal. Solicitor for the appellant: H. T. Roberts. Solicitors for the respondent: Clayton, Son & Fargus. See 20 Eng. Rep., 803 note; 11 Fed. Repr., 10 note; 3 McCrary, 143 note; Morris Run, etc., v. Barclay, etc., 68 Penn. St. R., 173, deciding many principles, and an excellent case; 26 Alb. L. J., 284. A covenant in absolute restraint of trade is not to be implied from doubtful words: Stull v. Westfall, 25 Hun, 1. When a business is sold, a stipulation is necessary to prevent the seller from carrying on the same occupation in that town; the mere purchase of the "good-will" will not compel such result: Porter v. Gorman, 65 Geo., 11. Though such good-will is in the nature of property, and transmissible by assignment or bequest: Hegeman v. Hegeman, 8 Daly, 1. On the dissolution of a partnership between J. and T., amongst other terms of arrangement J. promised T. that he would not again start in the same business in the same place, but refused to sign any writing to that effect: Held, that J. had only bound himself by honor, and that T. could not protect himself from carrying out the other terms of the agreement for dissolution, by showing that J. had not carried out his honorary engagement: Jennings v. Tivey, 6 Wyatt, Webb & A'Beckett (Eq.), 152. A restraint upon trade to be valid must be partial, the consideration adequate and not colorable, and the restriction reasonable: Morris Run, etc., v. Barclay, etc., 68 Penn. St. R., 173. A restraint upon trade or employment which is general, is void: Morris Run, etc., v. Barclay, etc., 68 Penn. St. R., 173. A good test is whether the restraint is such as only to afford a fair protection to the party in whose favor it is, and not so large as to interfere with the interests of the public: Morris Run, etc., v. Barclay, etc., 68 Penn. St. R., 173. An agreement not to exercise a trade or carry on business at a particular place, or within certain limits, made upon good consideration, is valid, if shown to be reasonble, and if the restraint upon the covenantor be not greater than is proper for the covenantee in the enjoyment of his trade or business. Canada, Lower: Findlay v. McWilliam, 23 L. C. Jur., 148. Connecticut Cook v. Johnson, 47 Conn., 175. Georgia: Ellis v. Jones, 56 Geo., 504. Illinois Stewart v. Challecombe, 11 Bradw., 379. Iowa Hedge v. Lowe, 47 Iowa, 137. Massachusetts: Roper v. Upton, 125 Mass., 258. Missouri: Skrainka v. Scharringhausen, 8 Mo. App. R., 522. New Jersey: Richardson v. Peacock, 33 N. J. Eq., 597. J.C. New York: MacKinnon Pen Co. v. Fountain, etc., 48 N. Y. Super. Ct. R., 442; Dethtlefs v. Tamsen, 7 Daly, 354. Ohio: Buckhart . Buckhart, 36 Ohio St., 261; Morgan . Perhamus, Id., 517. Pennsylvania: Carroll v. Hickes, 10 Phila. R., 308. Victoria: Robertson v. English, 4 Wyatt, Webb & A'Beckett (Law), 238; McLeod v. Roberts, 3 Vict. Rep. (Law), 145. An ageement whereby one partner sells his interest in the business to his copartner and agrees to "retire altogether from business," should be construed so as to bind the party selling from engaging in business only so far as such business, or place of business, would injure the business of the party purchasing; and is not therefore void as being in restraint of trade: Boardman v. Wheeler, 15 N. Y. Weekly Dig., 325, mem. 27 Hun, 616. S. and B., the owners of the entire capital stock of a certain manufactur ing corporation and its patents, agreed to sell the business and patents to F., C. and C., and accept as part of the purchase price notes of the company, with an agreement by said purchasers that they would remain trustees of the company for a definite period of time, and would maintain in the company assets equal to all its liabilities, including said notes. As an inducement to this guaranty, the vendors covenanted that neither of them would engage in business in opposition to the company to which the patents were conveyed, so long as said purchasers should remain such trustees : Held, that the covenant of the vendors was not against public policy and void, as being in undue restraint of trade. Where one of said covenantors becomes the owner of most of all of the stock of another company, of which he is the manager and only acting officer, an injunction will go against said company in a proper case to restrain it from acts constituting a breach of said covenant. It is a breach of said covenant for such last named company, in pursuance of a fraudulent advertising scheme, to give away with the goods sold by it an article similar, and by such company J.C. Collins v. Locke. advertised to be equal to that manufactured and sold by said first named company under its patents: MacKinnon Pen Co. v. Fountain Ink Co., 48 N. Y. Supr. Ct. R., 442, 16 W. Dig., 422. Where a contract in restraint of trade embraces several distinct promises and is divisible in its nature, the illegality of one provision which is capable of being construed divisibly, will not necessarily make the entire contract null and void: Western Union . Burlington, etc., 11 Fed. Repr., 1. A contract is wholly void if covenants in restraint of trade, which are illegal as against public policy, enter into and form a part of the entire consideration, and both parties are in fault as to those Covenants. A separation of the good consideration from that which is illegal will be attempted in those cases, only when the party seeking to enforce the contract is not the wrongdoer, or the denial of relief would benefit the guilty party at the expense of the innocent. It is an inflexible rule, that no remedy can be had in a court of justice on an illegal contract, where both parties are in pari delicto: Saratoga County Bank . King, 44 N. Y., 87. Before a covenant not to practice medicine "in the neighborhood" can be enforced in equity, evidence must be given to show the extent of the practice sold to plaintiff McNutt v. McEwen, 10 Phila., 112. : A contract not to carry on a business within a radius of ten miles of "a village, means within a radius of ten miles of the centre of such village: Cook v. Johnson, 47 Conn., 175. It is not competent for a railroad company to grant to a telegraph company the exclusive right to establish lines of telegraphic communication along its right of way, such contracts being in restraint of trade and contrary to public policy: Western, etc., v. Burlington, etc., 11 Fed. Repr., 1, 3 McCrary, 130, 2 Col. Law Repr., 307. What is not a violation of an agreement not to solicit customers on a certain milk route, to buy milk, or to injure a certain business: Stull v. Westfall, 25 Hun, 1. Where by a written contract the defendant, a physician, sold his medical practice to the plaintiff and agreed not to "resettle" in the same town: Held, he was bound thereby not to again take 33 ENG. REP. 30 1879 up his residence in such town for the practice of his profession, but that he might practice in that locality while residing elsewhere: Haldeman v. Simonton, 55 Iowa, 144. An agreement not to sell milk in the town of C. is not violated by selling to another residing outside of C., at the farm of the first party outside of the town, merely with knowledge that the purchaser intends to retail the milk within the town: Smith v. Martin, 80 Ind., 260. Where a land agent sold his business and the good-will thereof to another, with an agreement not to re engage in the business in the same place for three years, held, that after the expiration of that time he was not debarred by the contract from soliciting the agency of the same lands he had in charge when the contract was made: Hanna v. Andrews, 50 Iowa, 462. Where a party, under agreement not to carry on a specified business under color of another name, engages in a business which is within the spirit of the agreement, he will be restrained from continuing it. Where the answer fails to disclose the true character of the business so engaged in, whether it was, in fact, such as the defendant might carry on without breach of his covenant, or whether it was so only colorably, the injunction will not be dissolved upon the answer, but will be retained till final hearing: Richardson v. Peacock, 26 N. J. Eq., 40. T. L. & Co., a manufacturing firm, sold to the S. M. Co. their factory and the good-will of their business, the latter being a large part of the consideration for the price paid, and gave them a bond that no member of their firm should engage in the same manufacture anywhere in this country for twentyfive years without the consent of the S. M. Co., reserving the right of being employed by other parties on a salary, provided they should not be interested nor their names used in the business. Six months afterwards a new company was organized for the purpose of carrying on the same manufacture in the same town, T., one of the firm of T. L. & Co., entering into their employment on a salary, superintending the construction of their factory, ordering their machinery, purchasing stock, and rendering various other services, in cluding the carrying on of a portion of their correspondence. The new company soon became competitors in business with the S. M. Co., who suffered damage by the loss of skilled workmen who left their employment for that of the new company, and by the loss of customers, who were induced by the new company to purchase their goods in preference to those of the S. M. Co.; but it did not appear that these results were attributable to any act of T. L. & Co. or of T., or that the S. M. Co. had suffered damage from anything that T. had done in the service of the new company Held, on a bill brought by T. L. & Co. to foreclose a mortgage given to secure the price of the factory and business sold by them, that the S. M. Co. was not entitled to an allow ance of damages for a breach of the bond Treat v. Shoninger Melodeon Co., 35 Conn., 543. The sale of the "good-will" of a school involves no personal effort on the part of the vendor to influence the attendance of pupils. In an action to recover the balance of the purchasemoney under such a sale, it was error to admit circulars of rival schools, which showed that the vendor was a principal therein, without having first shown that said circulars were issued with his knowledge: McCord v. Williams, 96 Penn. St. R., 78. "not E., carrying on the trade or calling of a dealer in pictures and photographic business, sold out such business to W., and by the agreement covenanted to open or start a retail and photographic business of a similar character" in the city of Toronto for five years. By a subsequent agreement the first was modified, so as to allow E. to sell in any manner to persons residing out of Toronto, and to sell at retail in Toronto, on allowing W. a percentage on the prices realized. J.C. the actual amount of sales, and on the motion for decree, the answer had been read as evidence by the plaintiff: Wil liamson v. Ewing, 27 Grant (U. C.), 596. In case of a breach of a contract in restraint of trade, the plaintiff is enti tled to recover the actual damages sustained from the breach, and not the consideration paid : Stewart v. Challacombe, 11 Bradw. (Ills.), 379. In an action by the purchaser of the good-will of a firm, for a breach of the contract of sale, the measure of damages is not the amount of improper solicitation of the customers of the old firm, irrespective of its effect upon the business of the purchaser. The dam. ages should be measured by the injury sustained, and not by the ineffectual attempts to injure: Burckhardt 0. Burckhardt, 36 Ohio St. R., 261. The defendant agreed to serve the plaintiffs in their business of milkmen, and in case of any breach by him of the agreement entered into between the parties, and signed by them, that he would forfeit the sum of fifty dollars, to be recovered by the plaintiffs as stipu lated damages, and not as a penalty: Held, that this did not enable the de fendant, on payment of the $50, to do the prohibited acts; and in a bill seeking to enforce the agreement, the plaintiffs prayed for payment of the amount of the liquidated damages, and for an injunction to restrain the defendant from acting in breach of his agree ment. On the motion for an injunction coming on,-held, that plaintiffs were at liberty to waive their claim for damages, and elect to have relief by injunetion: Toronto, etc., . Gowans, 26 Grant's (U. C.) Chy., 290. An injunction will be denied when it is asked not to restrain the doing of an act, but the doing of an act to the injury of the plaintiff; such injunction will be denied, because if the inconvenience of enforcing an injunction, for every alleged breach of which a trial must be had, in order to determine whether the act was or was not injuri ous to the plaintiff : Stull v. Westfall, W. filed a bill alleging that E. had, prior to such second agreement, sold goods in contravention of the first agreement, and had subsequently sold to a large amount, and prayed an account and payment of his percentage. The court being of opinion that such 25 Hun, 1. second agreement had been executed A combination is criminal when the for a valuable consideration, granted act to be done necessarily tends to prej. the decree as asked, and directed the udice the public, or to oppress indiaccount to be taken by the master, viduals by unjustly subjecting them although the answer professed to state to the power of the confederates. In 2 |