Appeal from supreme court, appellate division, Second department.
Action by Charles J. Cohen against the Berlin & Jones Envelope Company, impleaded with others. From a judgment of the appellate division (56 N. Y. Supp. 588) affirming a judgment in favor of plaintiff and an order denying a new trial, defendant envelope company appeals. Reversed.
This appeal was taken from an affirmance by the appellate division in the Second department on a judgment for $16,153.86 entered upon the verdict of a jury in favor of plaintiff, and also from the affirmance of an order denying defendants' motion for a new trial. The contract under which plaintiff recovered his judgment the defendants claim to be null and void, because in restraint of trade, and it reads as follows: ‘This agreement, made this eighth day of August, by and between Charles J. Cohen, manufacturers, of the city of Philadelphia, of the first part, and the Morgan Env. Co., of Springfield, Mass.; the White Corbin & Company, or Rockville, Conn.; the Holyoke Env. Co., of Holyoke, Mass.; the Whitcomb Env. Co., of Worcester, Mass.; the Plimpton Manufacturing Company, of Hartford, Conn.; Powers Paper Company, of Springfield, Mass.; Samuel Raynor & Co., of New York City; J. Q. Preble & Co., of New York City; the Berlin and Jones Env. Co., of New York City,-parties of the second part,-witnesseth: Whereas, the Standard Envelope Company, which is under the control of the parties of the second part, will issue from time to time a schedule or schedules containing a list of prices of envelopes sold in the market as staple goods, for printing and tinting the same, et cetera, as hereinafter more particularly set forth: Now, therefore, the parties hereto mutually covenant and agree with each other, their and each of their executors, administrators, successors, and assigns, as follows, it wit: (1) The said party of the first part agrees to sell to the said parties of the second part, and the said parties of the second part agree to buy and pay for, so much of the production of envelopes of the said party of the first part as shall not exceed in the whole two hundred and fifty thousand envelopes daily for the period of five years from the date hereof, counting three hundred days to the year; the prices and terms for such envelopes to be in conformity to the schedules from time to time in force, issued by the Standard Envelope Company. Should the parties of the second part fail to take the said envelopes, or any part thereof, then they shall pay to the said party of the first part damages for such nontaking, which damages are hereby mutually liquidated and agreed upon to be (10) ten cents per thousand. The party of the first part, however, agrees that he will use his best endeavors to sell to the trade in the usual course of business any of the said envelopes not taken by the said parties of the second part at the prices hereinbefore provided, and as to such goods so sold the liquidated damages of (10) ten cents shall not be paid; the intent of this contract being that, if the party of the first part shall sell to the trade two hundred and fifty thousand envelopes daily, then he shall not be entitled to any damages in respect of such day's production. (2) The said party of the first part agrees to pay to the said parties of the second part the sum of (10) ten cents per thousand for each thousand of envelopes sold per day to the trade beyond the two hundred and fifty thousand above provided for. (3) The intent of the contract is to cover total annual sales of seventy-five millions of envelopes, and the word ‘daily’ is not intended to refer to the production of any particular day, but to the average production. Settlements between the parties are to be made on the first of each month, or twenty days thereafter. (4) The parties of the second part hereby constitute and appoint the Standard Envelope Company, of Springfield, Mass., as their attorney and agent for notices, settlements, and dealings provided for in this contract with the party of the first part. (5) Tender of the goods by the party of the first part is hereby waived by the parties of the second part, unless an express demand for the delivery of the same be made by the parties of the second part in writing. Deliveries of goods by the party of the first part shall be f. o. b. in Philadelphia. (6) The party of the first part shall not be required to furnish goods in any event for less than their cost of manufacturing. (8) The parties of the second part agree to sell to the party of the first part all envelopes they may order at schedule prices on the same terms as other buyers not parties hereto. Envelopes bought by the said party of the first part from any person whomsoever, and by them sold, not to be computed in the two hundred and fifty thousand above mentioned. (9) The said party of the first part agrees that he will not, during the term of this contract, directly or indirectly, sell to any one, or manufacture for any one furnishing his own paper therefor, envelopes below the schedule prices which may be issued from time to time by the Standard Envelope Company, as hereinbefore provided for regular goods; that he will not vary in any way from the provisions of such schedule; that he will not make any rebate or gift to any purchaser or any party furnishing his own paper to be manufactured, and that he will not do or omit anything the doing or omission of which will in any manner enable any one to buy envelopes or get envelopes manufactured below said schedule prices; that he will employ salesmen on salary only, and bill all envelopes direct to the purchaser; that he will not allow his salesmen to offer any pecuniary inducement to any purchaser of envelopes, nor place any envelopes on sale on consignment, nor employ as salesman any person having a store for the sale of paper and envelopes or stationery goods or notions, or be carrying any line of envelopes in stock, or any person connected with such store, or employed therein or thereby. In case of any intentional violation of this ninth clause by the party of the first part or his salesmen, the party of the first part will pay to the parties of the second part, as agreed and liquidated damages, twenty-five cents per thousand for each thousand sold in such violation, and also a sum equal to the value of the goods sold in such violation. (10) The party of the first part agrees that during the term hereof he will not sell, pledge, transfer, lease, or give possession of his manufacturing plant or envelope machinery, or any part thereof, to any other party than a party to this agreement, except upon condition that such party shall thereupon immediately become substituted for the party of the first part in this agreement; and, should any such sale, pledge, transfer, lease, or possession be made or given, the party of the first part agrees that he will not thereafter, during the period of this contract, engage in the manufacture or sale of envelopes, except west of the one hundredth degree of longitude, and south of the thirtieth parallel of latitude. The penalty for any violation of this tenth clause shall be fifty thousand dollars agreed and liquidated damages. (11) The party of the first part agrees that he will not in any way, directly or indirectly, interest himself, by the advancement of capital or otherwise, with any person, firm, or corporation engaged, or intending to engage, in the manufacture or sale of envelopes or envelope machinery, other than with the parties hereto; but nothing herein shall be construed as restricting the rights of the party of the first part to deal in envelopes or envelope machinery in any foreign country. The penalty for violation of this eleventh clause shall be fifty thousand dollars agreed and liquidated damages. (12) All orders for envelopes on the books of the party of the first part, and all contracts made by him for the sale or manufacture of envelopes, or for which he may be held, previous to the signing of this document, shall be exempt from the provisions of this contract. Such orders and contract on regular goods are not to exceed one million envelopes, and a list of the same to be sent to the parties of the second part. (13) None of the provisions hereof shall apply to contracts with the government of the United States, or any department thereof, or any telegraph company, or to the street-car change envelopes, manilla, printed or plain (No. 1 drug size), or to papeteries, nor for sales for exportation,...
