Consumers' Oil Co. v. Nunnemaker

• Decision Date: 21 November 1895
• Docket Number: 17,350
• Citation: 41 N.E. 1048,142 Ind. 560
• Parties: Consumers' Oil Company v. Nunnemaker
• Court: Indiana Supreme Court

41 N.E. 1048

142 Ind. 560

Consumers' Oil Company v. Nunnemaker

No. 17,350

Supreme Court of Indiana

November 21, 1895

From the Lake Circuit Court.

Judgment affirmed.

Olds & Griffin, for appellant.

OPINION

Jordan, J.

--Appellant instituted this action to enjoin appellee from pursuing the business of selling oil and gasoline, and delivering the same to consumers, in the city of Hammond, Indiana. The action was commenced upon a written contract made and entered into by and between appellee and one H. T. Benham (who is described as "trustee and manager,") on the 3d day of February, 1893. The complaint avers "that on and prior to said date the said defendant was the owner of one horse and one spring wagon and three tanks and harness, cans, and other utensils for use in his said business as hereinafter alleged, and was engaged in the business of a retail oil and gasoline merchant and in selling and delivering oil and gasoline to the citizens of the city of Hammond, in Lake county, Indiana, and in conducting his business he traveled through the streets of the said city of Hammond, calling upon residents of said city at their places of business and residences, and sold and delivered them oil at the places desired by them, for the use of said citizens; that he had at that time established a trade in business in that line; that upon said date he entered into a written agreement with one Henry T. Benham, described in said contract as H. T. Benham, 'trustee and manager,' a copy of which is attached hereto and marked 'Exhibit A' and made a part hereof, by which contract the said defendant in consideration of three hundred dollars to him in hand paid by said Benham, the receipt of which was acknowledged, the said defendant sold, transferred and conveyed to the said Benham, his successors and assigns, all his right, title, and interest in and to his oil and gasoline business and plant, including the good will and reputation of said business, and all and singular the materials, chattels and personal property of every nature and kind whatsoever belonging to or in any way pertaining or used in or about said oil and gasoline business, among other things including one (1) horse, one (1) spring wagon, three (3) tanks, harness, cans, utensils, etc., consisting of everything used by the said defendant in his said business, and the said defendant further contracted and agreed with said Benham, his successors and assigns, that he, the defendant, would not, during the period of five years then next ensuing after the 4th day of February, 1893, do anything within the State of Indiana, outside of the city of Indianapolis, in the line of selling or delivering oil or gasoline to the houses of consumers by horse and wagon or otherwise, neither in his own behalf nor in his own name nor in connection with any partnership or corporation, nor as the agent of any person, partnership or corporation, nor in anywise do anything that would interfere with or compete with or work against the profit, advantage and business of the said Benham, as trustee and manager, or in any other name or style whatever, which he might assume or by which he might be known, or his successors or assigns, during the said period of five years. Said defendant further covenanting and agreeing in said contract that he would not during said period of five years, within said territory accept any employment directly or indirectly, nor receive, solicit or fill orders in any capacity whatsoever for any oil or gasoline to be sold direct to or delivered at the houses or places of business of consumers by wagon or other conveyances after the manner of the business hereinbefore described and carried on as aforesaid by the said defendant, as oil merchant and dealer, or as commission merchant or agent, and further agreed that he would not countenance, promote or encourage the business of any competitor of the said H. T. Benham, trustee and manager, or of his successors or assigns, within the territory aforesaid, during the said five years aforesaid; and further agreeing, stipulating and authorizing any court of law or equity to interpose its authority to compel the performance of said contract and to restrain any breach of the terms thereof."

It is further alleged that before the violation of the contract in question, Benham sold, assigned and transferred all of his right, title, and interest in and to the property so purchased to plaintiff, a corporation duly organized under the laws of the State of New Jersey, and also assigned and transferred the written contract and all right, title, interest and good will of said business in the territory aforesaid, to plaintiff. It further avers that the defendant has entered into and is pursuing his said business of selling and delivering oil to the consumers of said city of Hammond, in violation of his said contract and is threatening to so continue in violation of the rights of plaintiff, inasmuch as he comes in competition with plaintiff, who is engaged in the same business. Appellee's insolvency is also alleged, and a copy of the contract is filed with the complaint. An injunction is prayed to restrain the appellee from further pursuing his business in the city of Hammond.

A demurrer for insufficiency of facts was sustained to this complaint and this ruling of the court is assigned as error.

We are not favored with a brief upon appellee's part, but infer from statements in the brief of the learned counsel for appellant that the contract in controversy was assailed by the appellee upon the ground that it sought to prohibit him from selling and delivering oil at any place in the State of Indiana outside of the city of Indianapolis, and constituted an unreasonable restraint upon trade, and was, therefore, invalid and not enforcible in any respect.

Appellant contends that notwithstanding the territory is the entire State of Indiana, with the exception mentioned, in which appellee is restricted from pursuing his business as an oil merchant, the restraint is a reasonable limitation, and that the complaint based upon the contract in question set forth a sufficient cause of action for the relief thereby sought. It is settled that a contract in general restraint of trade is invalid, but one restraining a party from trading within reasonable limits so as not to be injurious to the interest of the public, is valid and may be enforced by an injunction, upon a proper showing of facts. Beard v. Dennis, 6 Ind. 200; Duffy v. Shockey, 11 Ind. 70; Spicer v. Hoop, 51 Ind. 365; Baker v. Pottmeyer, 75 Ind. 451; Beatty v. Coble, 142 Ind. 329, 41 N.E. 590.

The settled rule as enunciated by the American and English decisions of the highest courts seems to be that where, in the particular case before the court, the restraint in controversy, as to territory, appears to be broader or larger than is necessary to the protection of the party seeking to enforce the restrictive contract, it is of no benefit to either party, but in that event becomes oppressive upon the party against whom the enforcement is sought, and being oppressive the law regards the restriction as unreasonable and injurious to the interests of the public.

It is not the interests of the parties alone, which in the eye of the law are to be considered the true test, but in each particular case, under the facts, the judicial inquiry is Will it be inimical to the public interest? If so, then, and in that event, the agreement must he held as hostile to public policy, and therefore void. Public policy is that principle of law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good. This principle owes its existence to the very sources from which...