76 Cal. 387, 11290, Santa Clara Valley Mill & Lumber Co. v. Hayes

Docket Nº:11290
Citation:76 Cal. 387, 18 P. 391
Opinion Judge:SEARLS, Judge
Party Name:SANTA CLARA VALLEY MILL AND LUMBER COMPANY, Appellant, v. ISAAC N. HAYES et al., Respondents
Attorney:Charles F. Wilcox, Thomas H. Laine, and Charles B. Younger, for Appellant. A. E. Bolton, and J. A. Barham, for Respondents.
Judge Panel:JUDGES: Searls, C. J. McKinstry, J., and Paterson, J., concurred.
Case Date:June 04, 1888
Court:Supreme Court of California

Page 387

76 Cal. 387

18 P. 391



ISAAC N. HAYES et al., Respondents

No. 11290

Supreme Court of California

June 4, 1888

Department One

Appeal from a judgment of the Superior Court of Santa Cruz County.


Charles F. Wilcox, Thomas H. Laine, and Charles B. Younger, for Appellant.

The contract is not in restraint of trade, and is not contrary to public policy. (Civ. Code, sec. 1667; Perkins v. Lynan , 9 Mass. 522; Addison on Contracts, secs. 273, 292; Lightner v. Menzer , 35 Cal. 452; Oliver v. Piatt, 3 How. 333; Schwalm v. Holmes , 49 Cal. 665; Van Marter v. Babcock, 23 Barb. 633; Kellogg v. Larkin, 3 Pinn. 164; 56 Am. Dec. 164; Diamond Match Co. v. Roeber , 106 N.Y. 473.) The contract is divisible, and the first part can stand although the latter be illegal. (Civ. Code, sec. 1599; Jackson v. Shawl , 29 Cal. 267; Treadwell v. Davis , 34 Cal. 601; 94 Am. Dec. 770; Granger v. Empire Co ., 59 Cal. 678; Oregon Steam Nav. Co. v. Windsor, 20 Wall. 64.)

A. E. Bolton, and J. A. Barham, for Respondents.

The contract is void because against public policy. (Spence v. Harvey , 22 Cal. 337; 83 Am. Dec. 69; Pomeroy on Contracts, sec. 283; Chitty on Contracts, sec. 987; Story on Contracts, sec. 684; India Bagging Co. v. B. Rock Co ., 14 La. Ann. 168; Salt Co. v. Guthrie, 35 Ohio St. 672; Craft v. McConough , 79 Ill. 349; 12 Am. Rep. 171; Morris's Run Coal Co. v. Barclay Coal Co ., 68 Pa. St. 182; Arnot v. Pittston etc. Co ., 68 N.Y. 559; 23 Am. Rep. 190; Clarency v. Onondaga Fine Salt Co ., 62 Barb. 395; Denver & N. O. R. Co. v. Atchison, T., & S. F. R. R. Co ., 15 F. 650; Greenhood on Public Policy, 671, and cases cited.) The contract is not divisible. (Valentine v. Stewart , 15 Cal. 404; Prost v. More , 40 Cal. 348; More v. Bonnet , 40 Cal. 251; Forbes v. McDonald , 54 Cal. 98; Norris v. Harris , 15 Cal. 256; Spence v. Harvey , 22 Cal. 337; 83 Am. Dec. 69; Beard v. Beard , 65 Cal. 354; Chitty on Contracts, sec. 594; Woodruff v. Hinman , 11 Vt. 592; 34 Am. Dec. 712; Saratoga Co. Bank v. King , 44 N.Y. 87; Pueblo & Ark. V. R. R. v. Taylor, 6 Col. 1; 45 Am. Rep. 512; Parsons on Contracts, 7th ed., 648, and notes.)

JUDGES: Searls, C. J. McKinstry, J., and Paterson, J., concurred.



Page 388

This is an action to recover ten thousand dollars for a breach of a contract entered into between plaintiff, a corporation, and defendants, who were engaged in the manufacture of lumber near Felton in the county of Santa Cruz, whereby the latter agreed to make and deliver to the former during the lumber year

Page 389

of 1881 two million feet of lumber at eleven dollars per thousand feet. Defendants agreed not to manufacture any lumber to be sold during said period, in the counties of Monterey, San Benito, Santa Cruz, or Santa Clara, except under the contract, and to pay plaintiff twenty dollars per thousand feet for any lumber manufactured and sold to parties other than plaintiffs. Defendants failed to comply with the contract; hence this action.

The court finds that plaintiff was the owner of three saw-mills near Felton, and that various other parties were likewise owners of similar mills in the same vicinity.

That for the purpose of limiting the supply of lumber and increasing the price thereof, a plan was devised by which plaintiff was to lease all the mills for the year 1881, [18 P. 392] where such leases could be obtained, and where that could not be done, to contract with the parties owning mills and not willing to lease, by contracts similar to the one entered into with defendants; that during the year 1881 plaintiff should shut down two of its own mills, and also as many of the mills by it leased as might seem necessary in order to limit the supply of lumber in the four counties hereinbefore named; that this contemplated scheme was carried out, including the contract with defendants as a part thereof.

That the sole and only object, purpose, and consideration upon the part of plaintiff in entering into these contracts was to form a combination among all the manufacturers of lumber at or near Felton, for the sole purpose of increasing the price of lumber, limiting the amount to be manufactured, and giving plaintiff the control of all lumber manufactured near Felton for the year 1881, and control of the supply of lumber for that year in the counties mentioned.

That the direct effect of this was, no wholesale market for lumber at Felton, and dealers could not purchase in any considerable quantity during 1881.

Page 390

The court further found that the contract was against public policy, and that plaintiff was not damaged, etc.

Was the contract with defendant in contravention of public policy?

The general rule is, that an illegal contract is absolutely void, and cannot form the basis of judicial proceedings.

This is equally so in law and equity. The illegality vitiates the contract between the immediate parties, as well as in respect to third parties.

A contract tainted with the vice of illegality creates no obligation, not because of the rights of the parties to it, but because the public is interested.

In case of fraud or mistake, the wrong is usually personal to the injured party, and may be waived.

In cases of illegality, the wrong is far-reaching, -- is done to society.

This illegality may be in the consideration or in the promises and stipulations of the agreement.

Among the contracts illegal under the common law, because opposed to public policy, were contracts in general restraint of trade; contracts between individuals, to prevent...

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