Bartholomae & Roesing Brewing & Malting Co. v. Modzelewski

Mb. Justice Brown delivered the opinion of the court. If our disposition of this appeal rested upon the contested matter brought into the case on the motion to dissolve the injunction, namely, whether the complainant had been shown to have been gnilty of a breach of the contract of May 1, 1912, prior to May 2, 1913, when it is admitted the defendants broke it and refused to purchase further beer from the complainant, we should have no hesitation in affirming, on the ground that at least this question was left so much in doubt by the affidavits and counter-affidavits, that the decision of the chancellor as to the continuance as well as to the allowance of the injunction was correct, and that until a full and fair hearing of the case on proofs other than affidavits could be had, the preliminary injunction ought to stand. But our view of the matter is one that differs from that of the master, who recommended the injunction and whose report is found in the record, from that of the chancellor below, who granted it, and from that of the counsel for the complainants, who have ably and elaborately argued in its support on this appeal. It involves the fundamental and important question whether the express negative covenant in the contract in this case should be enforced by an injunction. This question is not complicated in this case with any of the various additional elements or collateral factors, some one at least of which has usually been present where equity has intervened in this manner to prevent the breaking of a contract. Indeed the negative answer which we think it necessary to make receives support by considerations additional to the general one we deem to be the law in the absence of special circumstances, namely, that a contract which equity will not interfere directly to enforce by a decree for specific performance, it will not interfere to enforce by the coercion of an injunction against its violation. Welty v. Jacobs, 171 Ill. 624. The express negative covenant is that defendants during a prescribed time “will not purchase any draught beer for sale, use or consumption on said premises from any other person, firm or corporation than the party of the first part.” The additional considerations which we have noted are that there is in the contract an express stipulation for damages liquidated at a certain amount in case default shall be made in its observance, and that an injunction against the breach of the negative covenant would afford, as we said in a somewhat analogous case (Bour v. Illinois Cent. R. Co., 176 Ill. App. 185) “no damages or compensation at all” (for the breach), “but only a morally coercive pressure which may lead to juster dealing.” Counsel for complainant, however, make first the distinction (which whether material or not is obvious) between cases like the Bour case of implied negative covenants and express negative covenants, and rest their case chiefly on the position thus expressed in their brief: * ‘ Where a bill seeks by injunction to restrain the violation of an express negative covenant it is not necessary to the relief sought that the complainant have no adequate remedy at law. Nor is the right to such injection affected by the fact that the contract contains a provision for liquidated damages To this proposition they cite many cases. But of these citations those which are really of authority for us, cases in the Supreme Court of this State, are comparatively few, and we think may be distinguished from the case at bar by facts to which the language used must be applied. "Where the remedy at law for a breach of a contract is plainly inadequate because of the insolvency of the defendant or because no suit at - law could be maintained against the defaulting party because he is but an assignee of the contract, where such a remedy is inadequate or impossible because there are personal services involved which are unprocurable from persons other than the defendant, and are therefore incommensurable in money damages; or where, after a sale of business good-will a valid negative covenant in restraint of trade can be specifically enforced by an injunction and the damages are presumed to be irreparable and practically nnascertainable; or where the covenant broken is one connected with the conveyance in fee, for life or for years, of real estate, which is a peculiar kind of property affected by particular doctrines of the law, there is no doubt that express negative covenants have been enforced by injunction in Illinois as in other States and in Great Britain. The case of Southern Fire Brick & Clay Co. v. Garden City Sand Co., 223 Ill. 616, strongly relied on by complainant, actually falls within the class where, as the Court says in its opinion, the complainant could not maintain an action at law against the defendant because it was not a party to the original contract, and the Court in a portion of its opinion not only notes but places the decision upon this ground. The case of Lumley v. Wagner, 1 De Gex, McN. & G. 604, and many cases which have followed it in this country, fall within the class where the damages are incommensurable with money values because the contract is for services that are unique. As often as this case has been followed, however, it has not, as Mr. Justice Ball in this court noted in Rabinovich v. Reith, 120 Ill. App. 409, escaped criticism; e. g. in Whitewood v. Hardman, L. R. 2 Ch. Div. 42S. Limited, however, to the class of cases within which Lumley v. Wagner and Montague v. Flockton, L. R. 16 Eq. 189, fall, the doctrine may be considered established. The line of cases in Great Britain known as the “Tied House Gases” begins more than a hundred years ago. In 1792 a covenant in an assignment of a lease to take beer from a particular brewery was under discussion (Hartley v. Pehall, 1 Peake N. P. 178) and in Holcombe v. Hewson, 2 Campbell 391 (1810) and Cooper v. Twihill (1808), reported in a note to Jones v. Edney, 3 Campbell 285, Lord Ellenborough tried in an assumpsit suit and in a replevin suit,, questions arising from the breach of such covenants in leases. He took occasion to say in the last case that “The whole of these leases by which the people of the description of the plaintiff are prevented from having the article they deal in from those who will serve them best are extremely injurious to the public interest and welfare, ’ ’ and that he hoped it was the last time he should see such a provision in any lease. But his hope was certainly not fulfilled nor his opinion received with favor, for in 1869 Lord Justice Selwyn in the Court of Appeals in Chancery, rendering the judgment in Catt v. Tourle, L. R. 4 Ch. App. 654, said: “With respect to this particular covenant, it seems to me that the court cannot but take judicial notice of its being extremely common. Every court of justice has had occasion to consider these brewers covenants and must be taken to be cognizant of the distinction between what are called free public houses and brewers public houses, which are subject to this very covenant. We should be introducing very great uncertainty and confusion to a very large and important trade if we were now to suggest any doubt as to the validity of a covenant so extremely common as this is.” The case was a bill in .equity for an injunction to restrain a defendant who had with notice acquired the land, from persons who had taken a deed from the plaintiff with an affirmative covenant therein for his benefit that all beer consumed thereon should be bought from him. The right in a court of equity to an injunction was sustained on a demurrer to the bill, and the case is cited in some of the cases relied on by the complainant and may be considered a strong authority in favor of the jurisdiction of equity in England in like cases to enforce such a covenant. The Supreme Judicial Court of Massachusetts in Butterick Pub. Co. v. Fisher, 203 Mass. 122, speaks of the covenant in Catt v. Tourle, supra, as in a lease, but says that makes no difference in principle. The covenant was not in a lease, but in a deed of the fee, practically, however, the same thing, but we think the language and reasoning of the Lord Justices Selwyn and Griff ard hardly bear out the inference that the fact that the covenant was connected with the conveyance made no difference to the decision. Lord Justice Selwyn quotes approvingly from other cases as a basis of his opinion: “That the question does not depend upon whether the covenant runs with the land is evident from this, that if there was a mere agreement and no covenant this court would enforce it against a party purchasing with notice of it, for if an equity is attached to the property by the owner no one purchasing with notice of that equity can stand in a different position from the party from whom he purchased.” And: “Reason and justice seem to prescribe that at least as a general rule where a man by gift or purchase acquires property from another with knowledge of a previous contract lawfully and for valuable consideration made by him with a third person to use and employ the property for a particular purpose in a specitied manner, the acquirer shall not to the material damage of the third person in opposition to the contract and inconsistently with it, use and employ the property in a manner not allowable to the giver and seller. ’ ’ Lord Justice Griff ard put his opinion on the ground that “One thing at least is certain, viz.: that if the plaintiff cannot sustain a bill in this court, he is without remedy altogether, it being plain that this is a covenant which does not run with the land. ’ ’ Catt v. Tourle, supra, therefore falls within the class where covenants of this kind, express and implied, have been enforced when connected with the conveyance and use of real property and also within the class where the contract was unenforceable at law against the person sought to be coerced. Lukes v. Dennis, L. R. 7 Ch. Div. 227 (1877-1878), also is a case where a covenant was contained in a lease, although not the lease of the particular property where the violation of the covenant was involved. The same covenant was, however, contained in a mortgage assignment of the second lease to the brewers. An injunction (although not granted because of a compromise) was held by the court proper under condition that the brewer performed the implied agreement on his part. The defendant was, however, not the original covenanter, but his assignee with notice. Clegg v. Hands, L. B. 44 Ch. Div. 503 (1889) is a leading case, giving fully the reasoning of the Vice Chancellor of the County Palatine Court of Lancaster and of the Lords Justices of the Court of Appeal on covenants tying public houses to brewers and the right to enjoin on a negative covenant like-the one at bar when they occur in leases, but in that case the respective judges held that the covenant in question was a covenant relating to the way in which the business at a particular house was to be carried on, and accordingly a covenant running with the land. Also that whether it rah with the land or not it was enforceable in equity in favor of the assignee of the reversion, on the ground that the defendant having presumably obtained a lease of the house at a lower rent by reason of the restrictive covenant ought to be restrained from dealing with the house in a way inconsistent with the covenant. These cases and many others in Great Britain recognizing in the given cases the validity of a negative “tied-house” covenant, express or implied, and the jurisdiction of equity to enforce it, however.they may reinforce the complainant’s argument would not seem to us, even if they were binding authority, to go to the extent of rendering it conclusive. There is no case that we can find in which the use of an injunction to enforce a negative contract for thus “tying” a public house to the manufacturer, unconnected with the conveyance of land, and where the controversy was between the original parties to the contract (to say nothing of the provision for liquidated damages) has been sustained, nor even one in which it seems to have been asked. If the contention of the complainant is correct in its full extent, nothing more is necessary to turn over to courts of equity and to their summary processes for the enforcement of their orders, the practical supervision of the specific performance of any personal contract for the future purchase or sale of commodities or the rendition of services in the future, than to add to the affirmative agreement a supplementary negative one that the intending purchaser will not buy the commodity from, or the intending employe will not perform the service for, any other person than the contraetee. We understand the general rule to be very distinctly against this theory, and that it would be inconsistent with the whole spirit of our jurisprudence. The reasoning of the Supreme Court of Michigan in Hardy v. Allegan Circuit Judge, 147 Mich. 594, seems to us sound on this subject. We are not convinced that the Supreme Court of Illinois are committed by the general language of Mr. Justice Wilkin in Southern Fire Brick & Clay Co. v. Garden City Sand Co., supra, to the doctrine, insisted on by complainant for the decision is distinctly put on the fact that no action could be maintained at law in that case for an unjustifiable breach of faith. For such a breach of faith in the case at bar, if it exists, the remedy at law is open and distinctly provided for. Nor do we think any other opinion of the Supreme Court of Illinois goes farther than that in the Southern Fire Brick <p Clay Co. case. Mr. Justice Shope in Consolidated Coal Co. of St. Louis v. Schmisseur, 135 Ill. 371, says: “It seems to be well settled that where there is an express negative covenant courts of equity will entertain bills for injunction to prevent their breach, although the same will occasion no substantial injury or though the damages, if any, be recoverable at law.” But he adds: “This is upon the principle that the owner of land selling or leasing it may insert in his deed or contract just such conditions and covenants as he pleases touching the mode of enjoyment and use of the land. ’ ’ It does not seem necessary to extend this opinion by a discussion of whether all the opinions in the Appellate Courts of this State or the .opinions of courts in all other States are consistent herewith or with each other. For the considerations that are above given and which are to a large extent identical with those advanced by the Supreme Court of Michigan in Hardy v. Allegan Circuit Judge, supra, and by this court in Rabinovich v. Reith, 120 Ill. App. 409, and in Bour v. Illinois Cent. R. Co., 176 Ill. App. 185, we think the injunction order should not have" been granted,, and, having been granted, should have been dissolved. The order appealed from is therefore reversed. Reversed.