Cowan v. Fairbrother Et Ux

• Decision Date: 24 March 1896
• Citation: 118 N.C. 406,24 S.E. 212
• Court: North Carolina Supreme Court
• Parties: COWAN. v. FAIRBROTHER et ux.

24 S.E. 212

118 N.C. 406

COWAN.

v.FAIRBROTHER et ux.

Supreme Court of North Carolina.

March 24, 1896.

Contracts—Unreasonable Restraint of Trade —Sale of Good Will of Newspaper Business —Validity—Injunction Against Violation— Fraud.

1. P. and his wife sold a newspaper owned by them in D. county, and agreed that P. "would not edit, print, or conduct a newspaper, nor be in anywise connected with one, printed anywhere in the state of North Carolina, and that, for a like period, Mrs. F. shall not edit, print, or conduct a newspaper or magazine, nor be in anywise connected with one, anywhere in the county of D., said state, without the consent of such purchaser or his assignees." Held, that such contract was not void as an unreasonable restraint of trade.

2. Nor does such contract contravene Const, art. 1, § 20, which guaranties the freedom of the press.

3. The lessee of the purchaser's assignees of such contract may maintain an action to enjoin the sellers from violating it, defendants being insolvent.

4. The fact that a purchaser of property purchases it for another, and not for himself, without disclosing the fact to the seller, does not constitute a fraud, or render the contract of sale illegal.

Appeal from superior court, Durham county; Graham, Judge.

Action by R. H. Cowan against Al, Fair-brother and M. H. Fairbrother, his wife, to enjoin defendants from editing, printing, or conducting a newspaper or magazine in the county of Durham, N. C. From a judgment vacating a restraining order as to defendant M. H. Fairbrother, and continuing the same until the final hearing of the case as to defendant Al. Fairbrother, the latter appeals. Affirmed.

Defendants executed and delivered to John Wllber Jenkins the following contract and bill of sale: "For value received, three thousand and five hundred dollars, this day to us in hand paid, the receipt of which is hereby fully acknowledged, we, Al. Fairbrother, and Mrs. M. H. Fairbrother, have bargained and sold, and do by these presents, bargain, sell, transfer, assign, set over, deliver, and convey unto John Wilber Jenkins, absolutely and free from all claims by us, the Durham Daily Globe and the Durham Weekly Globe, newspapers now published in said county and state; and also all type, printing presses, racks, imposing stones, subscription books, and accounts thereon, except those which have already been earned and are now due; one iron safe (Cary), one caligraph, desks, tables, chairs, inks, paper, and all material on hand January 1, 1894; the subscription list of said newspapers, and all office furniture and materials now used by us in conducting said newspapers, and all now contained in the office of said newspapers, on the northwest corner of Main and Church streets, in the town of Durham; and the good will of said newspapers, and the business of conducting the same. And we hereby agree with said purchaser and his assigns, each for himself and herself, that for a period of ten years from and after January 1st, 1894, said Al. Fairbrother shall not edit, print, or conduct a newspaper or magazine, nor be in any wise connected with one, printed anywhere in the state of North Carolina, and that for a like period Mrs. M. H. Fairbrother shall not edit, print, or conduct a newspaper or magazine, nor be in any wise connected with one, anywhere in the county of Durham, said state, without the consent of said purchaser or his assigns. And we hereby warrant that all of said above-mentioned property is free and clear from all incumbrances of any kind whatsoever, and that we have good right to convey the same as we have done. Witness our hands and seals this 29th day of December, 1893." Jenkins afterwards assigned such contract to G. W. Watts, who assigned a half interest to B. N. Duke; and Watts and Duke leased such newspaper to R. H. Cowan, the plaintiff.

Wm. A. Guthrie, for appellant.

Fuller, Winston & Fuller, Boone, Merritt & Bryant, and Shepherd, Manning & Foushee, for appellees.

AVERT, J. Where a person acquires a reputation for skill and learning in his profession as a lawyer or a physician, he often creates an intangible but valuable property, by winning the confidence of his patrons, andsecuring immunity from successful competition for their business. So, where an editor, by reason of his style, his power, his pathos, his humor, his learning, or of any gift or attainment, attracts subscribers solely by such personal qualities, he imparts a peculiar value to the good will and property of a newspaper, which goes with him, to its injury, when he leaves it and lends the talent and accomplishments that have given it patronage and popularity to a rival journal in the same vicinity. Where he owns the press and plant the enhanced value so imparted by him becomes an element of his property, with the same incidental power to dispose of it as attaches to any other of his acquisitions which has a market value. Beal v. Chase, 31 Mich., at page 529. But it is not like other property, which ordinarily passes by delivery or assignmeut to the purchaser. Neither an editor, a lawyer, nor a physician can transfer to another his style, his learning, or his manners. Either, however, can add to the chances of success and profit of another who embarks in the same business in the same field, by withdrawing as a competitor. So that the one sells and the other buys something valuable, and the policy of the law limits the right to enter into such contracts of sale only to the extent that they are held to injure the public by restraining trade. The one sells his prospective patronage, and the other buys the right to compete with all others for it, and to be protected against competition from his vendor. The law intends that the one shall have the lawful authority to dispose of his right to compete, but restricts his power of disposition territorially so as to make it only coextensive with the right to protection on the part of the purchaser. To the extent that the contract covers territory from which the vendor has derived, and will probably in future derive, no profit or patronage, it needlessly deprives the public of the benefit of open competition in useful business, and of the services of him who sells without any possible advantage to his successor. When the reason upon which a law is founded ceases, the rule itself ceases to operate. The older cases in which the courts attempted to fix arbitrarily geographical bounds, beyond which a contract to forbear from competition would not be enforced, have given way to the more rational idea of making every case dependent upon the surrounding circumstances, showing the extent, as to time and territory, of the protection needed. Nordenfelt v. Maxim, etc., Co. [1894] App. Cas. 535; Hitchcock v. Cocker, 6 Adol. & E. 438; Herreshoff v. Boutineau, 17 R. I. 3, 19 Atl. 712; National Benefit Co. v. Union Hospital Co. (Minn.) 47 N. W. 806; Beal v Chase, 31 Mich. 490; Tallis v. Tallis, 1 El. & Bl. 391, 18 Eng. Law & Eq. 151; Navigation Co. v. Winsor, 20 Wall. 64; 10 Am. & Eng. Enc. Law, 947, note; 3 Am. & Eng. Enc. Law, 885, note; Gibbs v. Gas Co., 130 U. S. 396, 9 Sup. Ct. 553. Where the nature of the business was such that complete protection could not be otherwise afforded, the restraint upon the right to compete has been held good in one or more instances where it extended throughout the world, and in other cases where it applied to a state, or to a boundary including several states. In Nordenfelt v. Maxim, etc., Co., supra, the plaintiff had covenanted with the respondent company "not to engage, except on behalf of such company, either directly or indirectly, in the trade or business of a manufacturer of guns or ammunition, or in any business competing, or liable to compete, in any way with that carried on by such company." On appeal to the house of lords the case of Horner v. Graves, 7 Bing. 743, was cited, and the validity of such contracts was declared to depend upon the question "whether the restraint is such only as to afford a fair protection to the interest of the party in favor of whom it is given, and not so large as to interfere with the...