Whitney v. Slayton

Tenney, J. The contract mentioned in the condition of the bond declared on is, that the defendant having sold out his foundry established in Calais, to the plaintiffs, had agreed not to engage in the business of iron casting, within sixty miles of Calais, for the term of ten years from the date of the bond. Eor the alleged breach of this contract, damages are claimed. Evidence was introduced, which satisfied the jury under the rulings and instructions of the Court, that the bond had been broken before the commencement of the action; and by the direction of the Court, damages to the time of the trial, as well as to the time of the institution of the suit, were severally assessed. The case is now brought before the Court on exceptions to the ruling and the instructions of the presiding Judge, and the omission to instruct agreeably to the request of the defendant. The defendant offered to prove, that the bond in suit was not given, or agreed to be given, until after the completion of the trade and sale of the works, and the signing of the same. The language in the condition of the bond is, “ that whereas the above named Slaytpn has this day sold out his foundry establishment in Calais"to the parties above named, and has agreed not to engage in the business of iron casting within sixty miles of Calais, for the term of ten years from this date, now,” &c. This shows that the sale, and the agreement not to engage in the same business, were parts of the same transaction, and the evidence thereof was intended to be the written contract in the bond, which being under seal, is proof itself of a consideration. The evidence offered would alter and control, in its tendency, the effect of the written contract, and on every principle was inadmissible. The Judge instructed the jury, that the bond was valid and binding on the parties. It is insisted, that the contract covering so large an extent of territory as that within sixty [229] miles of Calais, is in restraint of trade, and therefore void. It was an ancient rule of the common law, which was regarded as entirely settled, that all bonds in restraint of trade were void. The rigor of the rule as first established, has been materially relaxed, but by no means abolished. A distinction between a general and a limited restraint of trade, was early introduced, and has continued. A contract not to use a certain trade in a particular place, was held in Broad v. Jollyfe, Cro. Jac. 596, to be an exception to the general rule. And the case of Mitchel v. Reynolds, 1 P. Wms. 181, treats the distinction between limited and general trades, as the well settled doctrine. The reasons given by Parker, C. J., in Mitchel v. Reynolds, why restraints of trade are not allowed, are the mischief which may arise to the party, by the loss of his livelihood; to the public, by depriving it of a useful member; the great abuses to which those voluntary restraints are liable; because in a great many instances, they can be of no use to the obligee, for what does it signify to a tradesman in London, what another does at Newcastle. Another reason given by the same Judge, was in favor of these contracts, that there may happen instances, wherein they may be useful and beneficial, as to prevent a town from being overstocked with a particular trade. In Homer v. Ashford, 3 Bing. 322, it is said by Best, J., “ The first object of the law is to promote the public interest; and the second to preserve the rights of individuals. The law will not permit any one to restrain himself from doing what the public welfare, and his own interest, require that he should do. Any deed, therefore, by which a person binds himself not to employ his talents, his industry or his capital, in any useful undertaking, in the kingdom, would be void, because no good reason can be imagined, for any person’s imposing such a restraint on himself. But it may often happen, that individual interest and general convenience render engagements not to carry on trade, or to act [230] in a profession,' in a particular place, proper.” And an instance is mentioned. “ Manufactures or dealings cannot be carried on to any great extent, without the assistance of agents and servants. A merchant or manufacturer would soon find a rival, in every one of his servants, if he could not prevent them from using, to his prejudice, the knowledge acquired in his employ.” In Nobles v. Bates, 7 Cowen, 307, Sutherland, J., in the opinion of the Court, where he refers to the decisions of English cases on the subject, says, “a bond or promise, upon good consideration, not to exercise a trade for a limited time, at a particular place, or within a particular parish, is good. But when it is general, not to exercise a trade throughout the kingdom, it is bad.” “Agreements to restrain trade in particular places, founded on a reasonable consideration, are valid in law, and may be enforced.” Stearns v. Barrett, 1 Pick. 443. The application of the principles of the distinction recognized between a general and a limited restraint of trade, to particular cases, may be difficult. It seems to be well established in England, that a contract, by which a person binds himself not to employ his talents, his industry, or his capital in any useful undertaking in the kingdom, would be void. And the same doctrine has been held in this country. Alger v. Thacher, 19 Pick. 51. In this case, it is said by Morton, J., in the opinion of the Court, “ as to what shall be deemed a reasonable limitation, there is, and from the nature of the case, can be, no definite rule. It must depend on the circumstances of each particular case, and the good sense and sound discretion of the tribunal which may have the case to settle. In Palmer & al. v. Stebbins, 3 Pick. 188, Wilde, J., says, “ it must, therefore, be decided on general principles, rather than by express authority. Whether competition in itrade be useful to the public or otherwise, will depend on circumstances. I am rather inclined to believe, that in this ■country at least, more evil than good is to be apprehended , from encouraging competition among rival tradesmen, or [231] men engaged in commercial concerns. There is a tendency, I think, to overdo trade, and such is the enterprise and activity of our citizens, that small discouragements will have no injurious effect, in checking in some degree, a spirit of competition.” In this country, particularly, such is the facility with which : persons are enabled, without capital, to embark in various enterprises, and such the desire to try experiments therein, that it often turns out, when these experiments have been successful, in some of these undertakings, others will enter into them in such numbers that ruin to most of them so engaged is the consequence. Hence those who retire, and for" a proper consideration contract with others not to engage in ' any particular business for a limited time, and in a particu-'; lar place, have often, if not generally, been the successful' party. This, then, is not the country, or the time, when it is expedient to enforce rigorously the ancient common law rule, and restrict the exceptions to narrow limits, but rather to give the latter a liberal construction. The plaintiffs were the purchasers from the defendant, of an iron foundry in Calais, according to the evidence in the case, of a capacity to carry on a very considerable business. The wants of that community might ordinarily be expected to be supplied by one such establishment at that place; and when the plaintiffs entered into the business undertaken, their prospects would probably be much obscured by a rival establishment, having in its service, the defendant, with his knowledge of the business, and acquaintance with those who would otherwise be patrons of the foundry which they had purchased. And when it is considered, that much of the country, within the extent of sixty miles of Calais, is not densely inhabited, and but few places of considerable business therein, the contract cannot be regarded as one, so in restraint of trade during its continuance, as to be void. The defendant agreed with the plaintiffs not to engage in the business of iron casting within sixty miles of Calais, for the term of ten years. “ The business of iron easting” [232] would embrace that which should be done, by an incorporated company, as well as by individuals; and if the defendant was interested as a stockholder in such corporation, it cannot be doubted, that he was engaged in the business of iron casting within the meaning of the contract. This would put him most emphatically in a position to carry out extensively, the very objects, which it must have been the intention of the parties to prevent; and his being in the service of the corporation, carrying on the business, was alike a violation of the contract. Other instructions were given to the jury, which do not seem to be relied upon in the argument, as being erroneous, and not being perceived to be so, have not been here discussed. The verdict- under the instructions, showing a breach of the bond, before the commencement of the suit, judgment must be rendered for the penal sum, and execution will issue for the damages sustained up to the time of the trial. This the jury have found according to the statute of 1842, c. 31, § 9. Hathaway v. Crosby, 5 Shepl. 448: Burbank v. Berry, 22 Maine, 483.. Judgment on the verdict.