§ 74. Agreement not to Buy or to Sell.-Contracts under which one of the parties is bound not to buy or to sell a particular article, if there is a valid consideration and the restraint is not unreasonable, will be upheld. In a recent case it was held that a contract between an ice manufacturer and a brewer, whereby the former agreed to sell the latter all the ice he needed, the brewer not to retail nor to sell to retailers, is not invalid, there being nothing in the contract to show that the brewer either did, or intended to, make and sell ice. In a recent case in New York, defend

property, with the same incidental power to dispose of it as attaches to any other of his acquisitions which has a market value. Beal v. Chase, 31 Mich. 529. But it is not like other property which ordinarily passes by delivery or assignment to the purchaser. Neither an editor, a lawyer nor a physician can transfer to another his style, his learning or his manners. Either, however, can add to the chances of success and profits of another who embarks in the same business in the same field, by withdrawing as a competitor. So that the one sells and the other buys something valuable, and the policy of the law limits the right to enter into such contract of sale only to the extent that they are held to injure the public by restraining trade. The one sells his prospective patronage and the other buys the right to compete with all others for it, and to be protected against competition from his vendor. The law intends that the one shall have the lawful authority to dispose of his right to compete, but restricts bis power of disposition territorially so as to make it only co-extensive with the right of protection on the part of the purchaser. To the extent that the

contract covers territory from which the vendor has derived, and will probably in future derive, no profit or patronage, it needlessly deprives the public of the benefit of open competition in useful business, and of the services of him who sells without any possible advantage to his successor. When the reason upon which a law is founded ceases, the rule itself ceases to operate. The older cases in which the courts attempted fix arbitrarily geographical bounds, beyond which a contract to forbear competition would not be enforced, have given away to the more rational idea of making every case dependent upon the surrounding circumstances, showing the extent as to time and territory of the protection needed." Ibid. 411.

to

1 Crystal Ice Mfg. Co. v. San Antonio Brewing Ass'n, 8 Tex. Civ. App. 1; s. c., 27 S. W. Rep. 210. An agreement made by a traveling man with a purchaser not to sell a certain kind of goods to any one else in the same town is not contrary to public policy. Keith v. Herschberg Optical Co., 48 Ark. 138; s. c., 2 S. W. Rep. 777. As to exclusive telegraph grants by railroad companies there is a

ant, a corporation organized under the act "to incorporate the Associated Press of the State of New York," adopted a by-law prohibiting its members from receiving or publishing "the regular news dispatches of any other news association covering a like territory and organized for a like purpose. A suspension of all the rights and privileges of the association was provided as a penalty for a violation of said provision. In an action to restrain defendant from enforcing this penalty, it was held that the association had power to enact the by-law; that it was not objectionable either as unreasonable and oppressive, as fending to restrain trade and competition and to create a monopoly, or as an unlawful interference with vested property rights, at least in the absence of evidence that the alleged violation for which the penalty was sought to be enforced grew out of acts in the performance of a contract entered into before the passage of the by-law, nor did it create a restriction upon the liberty of the press. A contract of this character will be enforced only as there is a valuable consideration and as there is no unreasonable restraint of trade. In a certain town in Iowa, the grocers agreed with a firm, which was about to open a butter store, that they would not buy any butter for the term of two years. The firm did not purchase any established business, and paid nothing to the grocers as a consideration for their agreement not to purchase butter for the time specified. It was held that the contract was void for

general holding that they tend to monopoly, and are, therefore, void. See Western Union Tel. Co. v. American Union Tel. Co., 65 Ga. 160; Western Union Tel. Co. v. B. & S. W. R. Co., 3 McCrary, 130; Western Union Tel. Co. v. American Union Tel. Co., 9 Biss. 72; Western Union Tel. Co. v. Balto., etc. Tel. Co., 23 Fed. Rep. 12; Western Union Tel. Co. v. Nat. Tel. Co., 19 Fed. Rep. 660. See further West Virginia Transp. Co. v. Pipe Line Co., 22 W. Va. 600; Balto. & Ohio Tel. Co. v. Western

lack of a consideration, and that it was also void as being in restraint of trade.1

$ 75. Contract to Maintain Prices.-An agreement between two or more individuals to maintain prices, where there is no transfer of property and no valid consideration, will not be sustained. It is in restraint of trade in such a sense as to be invalid. It is not necessary that the contract should amount to a conspiracy or that there should be any attempt to create anything more than a very limited monopoly. Such contract must attempt something that is of the nature of a monopoly in order to accomplish the end sought. It must be an actual restraint of trade. In a recent English case, it was held that a contract by which the members of a mineral water association bound themselves not to sell mineral waters at a less price than 9d. per dozen, or such other price, not being less than 9d. per dozen, as the committee might from time to time direct, is a contract in restraint of trade for which there is no consideration, and which cannot, therefore, be enforced in a court of law.2 In a recent case in Kentucky this rule was upheld.

1 Chapin v. Brown, 83 Iowa, 156; s. C., 32 Am. St. Rep. 297; 48 N. W. Rep. 1074.

2 Urmston v. Whitelegg, 63 L. T. 455. "The conclusions of fact found by the learned court below were amply justified by the record: 'It cannot be gainsaid that the object of this combination is to enable the forty-five brewers of Philadelphia, individuals firms and corporations, who have entered into it, to regulate and control the sale and price of beer within the city of Philadelphia, and the county of Camden, N. J. It certainly is a combination, in restraint of trade, tending to destroy competition and create a monopoly in an article of daily consumption.'

The appellants, however, conceding these to be the facts, insist that the contract was not within the prohibition of public policy, because the restraint was but partial. Contracts in partial restraint of trade, which the law sustains, are those which are entered into, by a vendor of a business and its good will, with his vendee, by which the vendor agrees not to engage in the same business within a limited territory; and the restraint to be valid must be no more extensive than is reasonably necessary for the protection of the vendee in the enjoyment of the business purchased. But, in the present case, there is no purchase or sale of any business, nor any other analogous

It was held that an agreement between owners of two rival steamboats on the Kentucky river, that, in order to prevent rivalry and consequent reduction of charges, the net profits of each should be shared in a certain proportion, each bearing its own expenses, and that, if the owners of either boat should sell with a view of going out of the trade, notice should be given to the owners of the other boat, and the owners so selling should not enter the trade again within one year, is void as against public policy, and the owner so selling may start a new boat within the year.1

§ 76. Statutory Regulations.-In some of the States the common law doctrine has been materially modified by statute. In California it has been held that a contract in restraint of trade, otherwise than as expressly excepted in the Civil Code, is against public policy and void by the terms of the same code. A contract for a term of three years

court should refuse to aid in any attempted imposition upon the public by means of illegal combinations. The fact that coal was an article of prime necessity,' was not mentioned as an essential to the illegality of the combination which was involved in Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, but was suggested, arguendo, as an aggravation of the injury done the public. The whole course of discussion there shows that injury to the public was regarded as the true test of illegality." Sterrett, C. J., in Nester v. Continental Brewing Co., 161 Pa. St. 473; s. C., 41 Am. St. Rep. 894; 29 Atl. Rep. 102; 34 W. N. C. 387. See also More v. Bennett, 140 Ill. 69; s. c., 29 N. E. Rep. 888.

1 Anderson v. Jett, 89 Ky. 375; S. C., 12 S. W. Rep. 670.

between several powder companies, providing that neither of the parties thereto shall make any shipment of dynamite powder to any part of the United States, east of certain boundaries, and regulating the manufacture and sale of it by parties in the territory west of those boundaries, under certain specified restrictions, and giving power to a standing committee to fix prices, regulate the manufacturing cost, and impose fines for violations of the contract, and providing for a termination of the contract, if any other party or parties shall begin to manufacture and sell dynamite in competition with the parties to the contract, is in restraint of trade, and void as against public policy. In a recent case in the same State, it was held that where the good will of a business has accrued from customers residing in several contiguous counties, though the business was conducted in one alone, a sale of the business and good will, with a covenant restricting the vendor from engaging in business in any of such contiguous counties for a period of years, is not at common law an illegal contract, and is void under the code only as to the counties other than the one in which the business was conducted, but is valid as to that county, the covenant being divisible as regards space, and void only to the extent to which it departs from the provisions of the code.2 In a recent case in Texas, it was held that a contract of sale between a brewing company and a dealer, whereby the company grants exclusive territory to the dealer for the sale of its products, and further agrees to furnish the dealer with a delivery wagon and ice vault, which were to remain its property, and the dealer agrees not to sell the product of any other company, is a combination in restraint of trade, as prohibited by the statute.3

1 Vulcan Powder Co. v. Hercules Powder Co., 96 Cal. 510.

the purchaser shall handle only the beer named in the contract, and

2 City Carpet, etc. Co. v. Jones, that the manufacturer shall sell to 102 Cal. 506.

3 Texas Brewing Co. v. Templeman (1896) (Tex.), 38 S. W. Rep. 27. A contract for the sale of beer, which provides that

no other dealer in that town or vicinity, creates a trust and conspiracy against trade, within the prohibition of the Act of 1889. Fuqua V. Pabst Brewing Co.