Berlin Mach. Works v. Perry

• Decision Date: 17 April 1888
• Citation: 38 N.W. 82,71 Wis. 495
• Parties: BERLIN MACHINE WORKS v. PERRY.
• Court: Wisconsin Supreme Court

71 Wis. 495

38 N.W. 82

BERLIN MACHINE WORKS

v.PERRY.

Supreme Court of Wisconsin.

April 17, 1888.

Appeal from circuit court, Jefferson county.

This appeal is by the plaintiff from an order sustaining a general demurrer to the complaint. The case stated in the complaint is substantially as follows: In February, 1884, and previously, the defendant, James L. Perry, and one Charles A. Mather were engaged, at Berlin, Wis., as partners, in the manufacture and sale of wood-polishing and sand-papering machines of which Perry, either solely or jointly with others, was the inventor, and upon which he then held and owned five letters patent issued to such inventors by the United States. These machines were bulky and expensive, a large capital was required to carry on the successful manufacture and sale of them, and they were only sold and used in large cities. It is not alleged that the business extends beyond the United States. In February, 1884, Perry sold his interest in such business, with the good-will thereof; also in all the property of the firm, in the letters patent before mentioned, and in an application for another patent then pending before the United States commissioner of patents, for the sum of $20,000. The contract of sale contained a stipulation by Perry to apply for letters patent on another invention of his, being “improvements in sandpaper machines and planer combined, for cleaning sashes, doors, and blinds,” and, when obtained, to assign such letters patent to Mather. This stipulation is of no importance on this appeal. The material stipulation in the contract of sale is to the effect that Perry “will not hereafter manufacture, sell, or cause to be sold any sand-papering machines of any description” unless with the consent of Mather. The plaintiff corporation has acquired, by mesne assignments and transfers, the whole interest in the business, including the interest thus sold by Perry to Mather, and the benefit of the stipulation last above mentioned, and is now carrying on the business under the same letters patent, at Berlin aforesaid. Perry is a carpenter and joiner by education and trade, and formerly carried on a certain business in that line. He is the inventor, solely in some cases, and jointly with another person, in others, of the devices and machines covered by the letters patent above mentioned. He resides in Watertown, Wis., 60 miles distant from Berlin aforesaid. The cause of action alleged in the complaint, and the prayer for relief, are that “Notwithstanding said promise and agreement on the part of the defendant, as aforesaid, whereby, for the consideration aforesaid, he promised and agreed not to manufacture, or sell, or cause to be sold, any sand-papering machines of any description, without the written consent of said Mather, the defendant, without the consent in writing or otherwise of said Mather, his heirs, or representatives, or any of the assigns of said agreement, (including this plaintiff,) wrongfully and unjustly, and contrary to his said undertaking, promise, and agreement, and to the great past, present, and prospective injury and damage of this plaintiff, has since several weeks before the commencement of the suit been, now is, and threatens to continue to be, engaged, at Watertown aforesaid, in the manufacture and sale of sand-papering machines of the same general character and for the same purpose as the sand-papering machines now and heretofore manufactured by plaintiff under said patents in the carrying on of said business as aforesaid, but which machines so manufactured by defendant are constructed so slightly different from the devices described and claimed in said patents as to evade liability under the laws of the United States enacted to protect patentees, their heirs, and assigns from infringements of their patents; which machines so manufactured and being manufactured by defendant, defendant has been and is still wrongfully and unjustly offering for sale, and, as plaintiff is informed and believes, has at Watertown aforesaid, sold several of said machines, among others to Nonnast & Co., of Chicago, Ill., and to Meyers & Co., also of Chicago, Ill., and to other persons, resident in Wisconsin and elsewhere, whose names are unknown to the plaintiff; all of which has been and is of great pecuniary injury and damage to the plaintiff, in the sum of several thousands of dollars, and the manufacture and sale of such machines by defendant, if continued, will be of great and irreparable injury to the plaintiff, in and by taking away and depriving him of his trade, lessening his business, reducing his profits, and increasing his expenses, and otherwise damaging his said business and interests. Wherefore plaintiff prays that defendant be enjoined from manufacturing, selling, or causing to be sold, by himself, his servants, or agents, any sand-papering machines of any description whatever, and the plaintiff have judgment for his damages, and costs and disbursements herein, and for such relief as appears just and proper.”Erwin & Benedict, ( Joshua Stark, of counsel,) for appellants.

The contract is not invalid under the rule of the common law that contracts in restraint of trade are void; because in all cases in the last 150 years in which contracts in restrain of trade made on the sale and transfer of a business, and the good-will thereof, have been construed by the courts, the contracts have been held valid if the restraint was reasonable, and the restraint has been held to be reasonable if no greater than was for the benefit of the obligee. The rule is said to exist in England and her colonies and America. Greenh. Pub. Pol. 687. It originated when trade and mechanical arts were in their infancy, and when it was deemed a matter of the greatest public importance to encourage their growth, and to prohibit contracts that tended to abridge them. Id. 687, 688. The rule was originally made for the protection of apprentices at a time when all who followed trades were required by law to have served a regular apprenticeship under a master, to whom they were indentured for a series of years, and when a mechanic was not permitted to work at any other trade than the one he had learned. 1 Bl. Comm. 427; 4 Bl. Comm. 160; 2 Pars. Cont. 751. This law was finally embodied in a statute, (5 Eliz. c. 4, 1563,) and was in force about 250 years, being repealed in 54 Geo. III., c. 96, (1814;) 4 Bl. Comm. 160, note. The first reported case formulating the common law is said to be found in the Year Book in the 2d of Henry V., (1415;) 2 Pars. Cont. (6th Ed.) 748, note z, 751. In that case the court enunciated the broad doctrine that all contracts were void which in any degree tended to the restraint of trade, even in a particular circumscribed locality, either for a definite or unlimited period. But the absolute unqualified application of such a rule was denied in 1711 in Mitchel v. Reynolds, 1 P. Wms. 181, 1 Smith, Lead. Cas. (7th Amer. Ed.) 705. And since that case it has been unreservedly held that contracts in which the restraints are reasonable in extent, and no greater than are for the benefit of the obligee, are valid. This is the law in Wisconsin. Kellogg v. Larkin, 3 Pin. 123;Laubenheimer v. Mann, 17 Wis. 542;Costigan v. Hawkins, 22 Wis. 74;Fairbank v. Leary, 40 Wis. 637;Washburne v. Dorsch, 32 N. W. Rep. 551. The restraint in this case is reasonable, being no greater than was for the benefit of the obligee. Whittaker v. Howe, 3 Beav. 383; Tallis v. Tallis, 1 El. & Bl. 391; Harms v. Parsons, 32 Beav. 328; Leather Co. v. Lorsont, L. R. 9 Eq. 345; Rousillon v. Rousillon, 14 Ch. Div. 351, and cases cited; MachineCo. v. Morse, 103 Mass. 73;Navigation Co. v. Winsor, 20 Wall. 64;Beal v. Chase, 31 Mich. 490, and cases cited; Peltz v. Eichele, 62 Mo. 171;Match Co. v. Roeber, 35 Hun, 421, and cases cited; same case, 13 N. E. Rep. 419, and cases cited. These cases show that the early law has been modified so as to conform “to the widespread transactions of business in more modern times,” cessante ratione legis cessat et ipsa lex, (Brown, Leg. Max.) See Davies v. Davies, 56 Law J. Ch. 483; Lenz v. Brown, 41 Wis. 185;Davies v. Davies, Wkly. Notes, (Eng.) Aug. 20, 1887, p. 177. In the few cases in which the contracts have been held void, as in Horner v. Graves, 7 Bing. 735; Alger v. Thacher, 19 Pick. 51;Wiley v. Baumgardner, 97 Ind. 66, they were made in connection with business so entirely local that there could be no question of the unreasonableness of the restriction. And statements that contracts in which the restriction is unlimited as to space are void are mere obiter dicta in Navigation Co. v. Winsor, supra; Chappel v. Brockway, 21 Wend. 157;Dunlop v. Gregory, 10 N. Y. 241; and see Weller v. Hersee, 10 Hun, 431; Kellogg v. Larkin, 3 Pin. 133;Laubenheimer v. Mann, 17 Wis. 542;Washburne v. Dorsch, 32 N. W Rep. 551;Perkins v. Clay, 54 N. H. 518;Guerand v. Dandelet, 32 Md. 561;Cook v. Johnson, 47 Conn. 175; Beard v. Dennis, 6 Ind. 200;Jenkins v. Temples, 39 Ga. 655; Whitney v. Slayton, 40 Me. 224; Hedge v. Lowe, 47 Iowa, 137. As authorities on contracts in restraint, see 92 Amer. Dec. 751, and Greenh. Pub. Pol. Restraint stipulated on the sale of a business and good-will, or for its benefit, for a good consideration, is now held valid, if it be no greater than required for the protection of the purchaser, even though the restraint extends throughout the country. And no arbitrary limitation by state boundaries is deemed of importance. Rousillon v. Rousillon, Navigation Co. v. Winsor, Beal v. Chase, and Match Co. v. Roeber, supra. Restrictive contracts are no longer held bad prima facie, but the burden of showing them to be detrimental to the public rests on him who alleges their invalidity. Tallis v. Tallis, and Rousillon v. Rousillon, supra; Hubbard v. Miller, 27 Mich. 15; and see Greenh. Pub. Polrule 567, p. 721. It was at one time held that a restraint to a limited...