32

33

been raised, whether the covenant of the lessor in the lease under consideration, though, considered by itself, a legal contract in restraint of trade, was not illegal as calculated to advance the scheme of the lessee to create a monopoly. The court said: "The motive of the defendant (lessee) was to get rid of a dangerous and aggressive competitor in the trade of the article of which it was in practical control." In Continental Wall Paper Co. v. Lewis Voight & Sons Co., 148 Fed. 939; 78 C. C. A. 567 (6th C., 1906), there being invalid under the Federal anti-trust act, an agreement among manufacturers who co-operated through the plaintiff corporation organized for the purpose of selling their product, an action against jobbers for the price of goods sold was held not maintainable, the defendants and other jobbers having entered into agreements whereby they were to buy exclusively from the plaintiff or other members of the combine and sell only according to a schedule of prices and terms of credit dictated by the plaintiff. This was affirmed in 212 U. S. 227, 261; 29 Supm. 280, 292 (1909), where the question was Isaid to be whether the seller could have judgment "upon an account which, it is admitted by demurrer, was made up within the knowledge of both seller and buyer, with direct reference to and in execution

of certain agreements under which an illegal combination, represented by the seller, was organized."

32 See § 160.

33 In Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507; 43 Atl. 723; 46 L. R. A. 255; 78 Am. St. Rep. 612 (1899), an agreement by the sellers of a pottery and its good will and business, to refrain from engaging in the business of manufacturing pottery ware, having been sustained as reasonable and valid and not in contravention of the doctrine against contracts in restraint of trade (see § 159), was held enforcible against the objection that simultaneously with the purchase under consideration, the purchaser had purchased other plants used in the manufacture of pottery ware, taking from the sellers contracts substantially identical with that under consideration, all such contracts being part of a scheme to prevent competition in the manufacture and sale of pottery ware. This decision, reversing on this point 56 N. J. Eq. 680; 39 Atl. 923 (1898) seems opposed to the current of American authority. See § 172. But see to similar effect, Booth v. Seibold, 37 Misc. 101; 74 N. Y. Suppl. 776 (Supm. Ct., Sp. T., 1902); Booth v. Davis, 127 Fed. 875, 879 (C. C. Mich., 1904).

Opposed to the current of such authority seems also Camors-Mc Connell Co. v. McConnell, 140 Fed.

412 (C. C. Ala., 1905); affirmed in McConnell v. Camors-McConnell Co., 140 Fed. 987; 72 C. C. A. 681 (5th C., 1905), where relief was allowed against breach of a vendor's contract in restraint of trade, notwithstanding the assumption that the complainant corporation was "one of an association or combination of corporations, which constitutes a monopoly." Such contract was regarded as "collateral to the said unlawful agreement or combination," though made in contemplation of the formation of the complainant corporation. In overruling the objection that the contract was "part of an unlawful scheme to monopolize," it was intimated that decisions referred to "were direct proceedings against the alleged monopolies, wherein it was sought to enjoin them," it being added: "There are no provisions in the contract here sought to be enforced which refer to the restrictions of trade, or to the regulation of the importation, sale and prices

evidencing an intent to establish a monopoly in such trade." Referring to certain expressions in the opinion in Swift v. U. S., 196 U. S. 375; 25 Supm. 276; 49 L. Ed. 518 (1905), it was said that they "amount simply to a declaration that conduct agreed upon to effect an unlawful object may be unlawful, and that the court, when applied to in a direct proceeding therefor, will stop such conduct by injunction, as well as punish, in proper criminal proceedings, the unlawful act when completed, notwithstanding it may have been ac

complished by separate acts ever so innocent in themselves." The court also disallowed what was stated as the "further claim" that "the complainant has entered into a combination with various other im. porters of fruit for the purpose of acquiring a monopoly in the impor. tation and sale of the same, and that the contract in question was to aid and facilitate that purpose." In U. S. Chemical Co. v. Provident Chemical Co., 64 Fed. 946 (C. C. Mo., 1894), a covenant in a lease not to engage in the business covered by the lease, was held valid as a restraint of trade, but to contain "none of the elements of a combination or trust." Compare Mollyneaux v. Wittenberg, 39 Neb. 547; 58 N. W. 205 (1894; see under Neb., § 222). In Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596; 49 N. E. 1030; 41 L. R. A. 185; 63 Am. St. Rep. 736 (1898), a contract in restraint of trade by the seller of a business, though held invalid on a distinct ground, was condemned as tending to create a monopoly, it appearing, according to the terms of the contract, that the covenantee had ample facilities to supply the demand for the goods in question, such demand being a limited one. See also Consumers' Oil Co. v. Nunnemaker, 142 Ind. 560, 568; 41 N. E. 1048, 1051; 51 Am. St. Rep. 193 (1895); Harding v. American Glucose Co., 182 Ill. 551, 638; 55 N. E. 577, 606; 64 L. R. A. 738, 772; 74 Am. St. Rep. 189 (1899). In Wittenberg v. Mollyneaux, 60 Neb. 583; 83 N. W. 842 (1900), where was sustained an

a

agreement by the purchaser of certain property, not to use it for hotel purposes, it was said that "if it be shown that the main purpose of the agreement is to secure monopoly and that the purchase of the property was a mere incident or means to that end, it is within the rule applicable to ordinary combinations in restraint of trade and I will not be enforced.". As to lease containing covenant in restraint of trade, being invalid as in furtherance of scheme in restriction upon competition, see Shawnee Compress Co. v. Anderson, 209 U. S. 423; 28 Supm. 572; 52 L. Ed. 865 (1908); affirming Anderson v. Shawnee Compress Co., 17 Okla. 231; 87 Pac. 315; 15 L. R. A. N. S. 846 (1906). Very questionable seems Stewart v. Stearns & Culver Lumber Co., 48 So. 19 (Supm. Ct. Fla., 1908), where was held unenforcible a lease for the purpose of conducting a general store in a village, where the lessor employed a large number of persons, it agreeing to relinquish its right to establish and maintain a commissary for its employees, to use its influence to induce them and others to purchase from the lessee, and to issue to its employees checks against their wages directed exclusively to the lessee, to be redeemed by the lessor, also to pay a commission on gross sales. Compare, however, Redland Fruit Co. v. Sargent, 113 S. W. 330 (Tex. Civ. App., 1908; see § 232). See also for instances of contracts in restraint of trade, held non-enforcible as tending to create illegal restrictions upon competition, John D. Park & Sons Co. v. Hartman, 153

Fed. 24; 82 C. C. A. 158; 12 L. R. A. N. S. 135 (1907); on appeal from Hartman v. John D. Park & Sons Co., 145 Fed. 358 (C. C. Ky., 1906); Flower v. Smith Lumber Co., 47 So. 1022 (Supm. Ct. Ala., 1908); Clemons v. Meadows, 123 Ky. 178; 94 S. W. 13; 6 L. R. A. N. S. 847; 124 Am. St. Rep. 339 (1906); Webb Press Co. v. Bierce, 116 La. 906; 41 So. 203 (1906). Compare American Brake & Beam Co. v. Pungs, 141 Fed. 923; 73 C. C. A. 157 (7th C., 1905). See article in 20 Harv. Law Rev. 167 (1907) by Herbert Pope.

84 See Harriman v. Northern Securities Co., 197 U. S. 244, 295; 2ɔ Supm. 493, 504; 49 L. Ed. 739 (1905). Thus, in Metcalf v. American School Furniture Co., 122 Fed. 115, 123 (C. C. N. Y., 1903), relief was denied against the executed transfer by a corporation of its property to another corporation assumed to have been organized for the purpose of creating an illegal restriction upon competition. See also Levin v. Chicago Gas Light & Coke Co., 64 Ill. App. 393 (1896). Recovery back of money deposited and forfeited under such an agreement, was not allowed in De Witt Wire-Cloth Co. v. N. J. Wire-Cloth Co., 16 Daly, 529; 14 N. Y. Suppl. 277; affirmed, it seems, in 38 N. Y. State Rep. 1023 (1891). So of money advanced in promotion of an illegal cornering transaction, in Raymond v. Leavitt, 46 Mich. 447; 41 Am. Rep. 170 (1881; where it seems that the party advancing the money was to share in the profits); Cummings v. Foss, 40 Ill. App. 523 (1891); confirmed in subsequent

decision in Foss v. Cummings, 149 Ill. 353; 36 N. E. 553 (1894; so also as to services rendered). See also Munns v. Donovan Commission Co., 117 Iowa, 516; 91 N. W. 789 (1902). So of amounts paid as membership fees in association, in Griffin v. Piper, 55 Ill. App. 213 (1894). But for provisions for recovery of amounts paid or invested under such an agreement, thus money paid for goods sold, see under anti-trust acts, c. XX. As to recovery under Illinois statute of money paid under illegal option contract, see Pearce v. Foote, 113 Ill. 228, 237; 55 Am. Rep. 414, 418 (1885).

35 See Strait v. National Harrow Co., 18 N. Y. Suppl. 224 (Supm. Ct., Sp. T., 1891); Tracy v. Talmage, 14 N. Y. 162, 181; 67 Am. Dec. 132, 144 (1856); Spring Co. v. Knowlton, 103 U. S. 49; 26 L. Ed. 347 (Oct. T., 1880). In Pittsburg Carbon Co. v. McMillin, 119 N. Y. 46; 23 N. E. 530; 7 L. R. A. 46 (1890), as against the receiver of an illegal trust combination, a party to the combination, who had assigned a contract to the combination, was held not entitled to the proceeds of the contract. This on the ground that the receiver united in himself, not only the right of the trust combination, but the right of creditors. Compare American Handle Co. v. Standard Handle Co., 59 S. W. 709 (Tenn. Ch. App., 1900; see § 167). In Merz Capsule Co. v. U. S. Capsule Co., 67 Fed. 414 (C. C. Mich., 1895), one party was held

not entitled to relief founded on the contract, but, upon the restoration by it of what it had received under the contract, it was held entitled to have such of the other parties as threatened to invade its property, restrained from interfering therewith. See also as to the duty to restore, Western Union Tel. Co. v. Burlington & S. W. Ry. Co., 11 Fed. 1 (C. C. Iowa, 1882). in Phoenix Bridge Co. v. Keystone Bridge Co., 142 N. Y. 425, 431; 37 N. E. 562, 563 (1894), relief as between parties to a combination concededly illegal as in restriction upon competition, was denied on the ground that there appeared no disaffirmance of the agreement by the plaintiff.

36 Tracy v. Talmage, supra. As to conditions under which relief may be granted as between those in pari delicto, see Dunbar v. American Telephone, etc., Co., note 37, infra.

37 See Cohen v. Berlin & Jones Envelope Co., 38 App. D. 499; 56 N. Y. Suppl. 588 (1899); Dunbar v. American Telephone, etc., Co., 87 N. E. 521, 535 (Supm. Ct. Ill., 1909). This doctrine seems to have been applied in an extreme case, in Manchester & Lawrence R. R. v. Concord R. R., 66 N. H. 100, 131; 20 Atl. 383, 386; 9 L. R. A. 689, 695; 49 Am. St. Rep. 582 (1890), where, as between railroad companies, parties to an agreement invalid as a monopoly by statute, but not at common law, relief was granted. See White Star Line v. Star Line of Steamers, 141 Mich. 604;