Georgia Fruit Exchange v. Turnipseed

• Decision Date: 13 May 1913
• Citation: 9 Ala.App. 123,62 So. 542
• Parties: GEORGIA FRUIT EXCHANGE v. TURNIPSEED.
• Court: Alabama Court of Appeals

62 So. 542

9 Ala.App. 123

GEORGIA FRUIT EXCHANGE v. TURNIPSEED.

Court of Appeals of Alabama

May 13, 1913

Appeal from Circuit Court, Bullock County; M. Sollie, Judge.

Action by the Georgia Fruit Exchange against D.C. Turnipseed for breach of contract. Judgment for defendant, and plaintiff appeals. Affirmed.

Count 5 is as follows: "The plaintiff, a foreign corporation organized under the laws of the state of Georgia, and having its principal place of business in Atlanta in said state, the business of said corporation being that of a fruit and vegetable exchange for handling, distributing, and marketing in American and foreign markets of peaches and other fruits melons, and vegetables of all descriptions for the peach fruit, melon, and vegetable growers of Georgia and other states, claims of the defendant the sum of $1,000 for the breach of an agreement entered into by him with the plaintiff at Penrode in the state of Alabama, in words and figures as follows: 'Penrode, Ala., March 10, 1909. In consideration of the benefits I expect to receive in common with all other fruit growers in Georgia by the organization of the Georgia Fruit Exchange, I hereby subscribe for membership and stock therein, and I hereby pledge to the Georgia Fruit Exchange as follows: First, I agree to make all car load shipments of peaches grown by me during 1909, through the Georgia Fruit Exchange and pay 10 per cent. of gross sales to cover all commission charges, remittance to be made by commission house direct to shipper, and the shipper reserving the right to designate by April 1 of each year the commission house in each market to which his consignments have been allotted. On orchard and other sales f.o.b. my station in consideration of a protected market and consequent enhanced price, I agree to pay the exchange 5 per cent. of such gross sales, and I further agree to abide by all the rules and regulations of the board of trustees of said exchange. Second, I hereby subscribe for and I agree to pay for on a basis of 10 per cent. Nov. 1, 1908, and 10 per cent. monthly thereafter on shares at $10 each of the stock of the Georgia Fruit Exchange aggregating $10. This agreement is not binding until $50,000 of stock is subscribed, and pledges secured covering 60 per cent. of the prospective crop for 1909, based on 1908 shipments. D.C. Turnipseed.' And plaintiff avers that prior to the breaching of the said agreement herein set out, $50,000 of stock was subscribed, and pledges secured covering 60 per cent. of the prospective crop for 1909, based on the 1908 shipments, and plaintiff avers that the said agreement was breached by the defendant in this: That he shipped, to wit, 31 car loads of peaches, grown by him in 1909, which were orchard and other sales made by him f.o.b. his station independent of the Georgia Fruit Exchange, and that 5 per cent. of the gross sales of said 31 car loads which he had agreed to pay to plaintiff amounted to $1,000, and which sum, with the interest thereon, under said contract and agreement is due to plaintiff, and that prior to the bringing of this suit the plaintiff demanded that sum from defendant, but he refused to pay the same, wherefore, this suit; and the plaintiff admits that at the time the said agreement was signed by the defendant, it had not filed an instrument in writing under the seal of said corporation and signed officially by its president and secretary designating at least one known place of business in this state, and authorized agent or agents thereat in the office of the Secretary of this State."

Norman & Son, of Union Springs, and Watkins & Latimer, of Atlanta, Ga., for appellant.

Ray Rushton and William M. Williams, both of Montgomery, and L.M. Moseley, of Union Springs, for appellee.

THOMAS J.

The reporter will set out count No. 5 of the complaint, which contains a copy of the contract sued on and a statement in full of plaintiff's case. Demurrers were interposed to the count, assigning numerous grounds, but were sustained by the trial court upon only two of such grounds, which, in substance, may be stated as follows: First. That the count shows on its face that plaintiff is a nonresident corporation, and was engaged in business in this state as to the matters upon which it predicated its right of recovery in the case; but the count fails to show or allege that, before engaging in such business, the plaintiff had complied with the Constitution (section 232) and statutes of this state in aid thereof (Code, § 3642), requiring, under penalty, the filing by such corporation, in the office of the Secretary of State, of an instrument in writing, etc. Second. That the count shows on its face that the contract sued upon and set out therein is illegal and void as in restraint of trade and against public policy. Upon the sustaining of these grounds of the demurrer it became necessary for plaintiff to take a nonsuit, which it did, bringing now here for review, under the authority of section 3017 of the Code, only the action of the trial court in the particular named.

Since we are of the opinion that the second of the two named grounds of the demurrer is good, it becomes unnecessary to consider, and we therefore pass over, the first ground, confining our attention exclusively to the second, a decision upon which will sustain the lower court and completely dispose of the case.

Unlawful agreements--that is, those whose objects are illegal, and to which the courts refuse recognition and enforcement--may be placed in two classes, viz. (1) agreements in violation of positive law, and (2) agreements contrary to public policy. Agreements in violation of positive law are those which are expressly or impliedly prohibited, either by some rule of the common law or by some express statutory provision, and which, of course, also necessarily amount to agreements contrary to that part of the public policy expressed in the particular rule or statute violated. 9 Cyc. 466.

Public policy, however, is broader than the mere terms of the Constitution and statutes and embraces their general purpose and spirit. Constitutions are born of the people, and statutes made (including the positive rules of common law adopted) in pursuance thereof emanate, of course, from legislative sources, all designed for the public good; but, where they are silent in terms and do not of their own force vitiate contracts detrimental to the public interest or welfare, as may be outlined in, and as is to be determined alone from, a general view of such Constitution and statutes, the courts have supplied in a way the deficiencies of positive law by originating the doctrine of "public policy" and so applying it as to hold void and decline to enforce executory contracts which, though not violating the terms, yet violate the general purpose, spirit, and policy of the law as expressed in the Constitution and statutes. The latter, of course, constitute the standards, changing with the habits, customs, and ideals of the people, by which the courts are to and do determine, in the light of judicial precedents, the public policy of a state or nation. People v. Hawkins, 157 N.Y. 1, 51 N.E. 257, 42 L.R.A. 490, 68 Am.St.Rep. 736; Couch v. Hutchinson, 2 Ala.App. 447, 57 So. 75; U.S. v. Trans-Mo. Freight Ass'n, 58 F. 58, 7 C.C.A. 15, 24 L.R.A. 73; Words & Phrases, vol. 6, 5815. Combining and paraphrasing definitions given by others, it is therefore perhaps correct to say that public policy is that principle of law which holds that no person can lawfully do that which has a tendency to be injurious to the public or against the public good, as ascertained from and measured by the settled policy of the state or government to be found in its Constitution, laws, and judicial decisions. Authorities supra. Where a contract belongs to this class it will be declared void, although in the particular instance no injury to the public may have resulted, and no positive statute be violated. Fireman Char. Ass'n v. Berghaus, 13 La.Ann. 209; 2 May.Dig. 784; 6 May.Dig. 182-184; 5 May.Dig. 218.

It is settled that, while agreements in reasonable restraint of trade are valid, yet contracts or agreements in unreasonable restraint of trade are contrary to public policy and void, because they tend to the creation of a monopoly. 9 Cyc. 533; 27 Cyc. 891; Arnold v. Jones, 152 Ala. 506, 44 So. 662, 12 L.A.R. (N.S.) 150; Tuscaloosa Ice Mfg. Co. v. Williams, 127 Ala. 110, 28 So. 669, 50 L.R.A. 175, 85 Am.St.Rep. 125; Fullington v. Kyle Lumber Co., 139 Ala. 242, 35 So. 852; 2 May.Dig. 784; 5 May.Dig. 218; 6 May.Dig. 182; U.S. v. Trans-Mo. Freight Ass'n., 58 F. 58, 7 C.C.A. 15, 24 L.R.A. 73.

A monopoly, as understood at common law, was an exclusive right granted by the crown to one person, or a class of persons, of something which before was of common right, and which enabled the persons who possessed it to exclude others from the defined activities. B. Ry. Co. v. Birmingham St. Ry. Co., 79 Ala. 471, 58 Am.Rep. 615. Without such a grant even then, the obtaining by combined action or individual initiative on the part of private parties of the exclusive power to carry on a certain trade or business, etc., and all attempts to gain control of the market by forestalling, regrating, or engrossing were unlawful and punishable. 27 Cyc. 890. Ala. Political Code, p. 30, note. At a later time, during the reign of James I, there was passed an act of Parliament which by a general sweeping clause demolished all existing monopolies, with certain exceptions, which had been before created by the crown, and declared them also to be contrary to law and void. Statute of Monopolies, 21 James I.

Monopolies were deemed odious at common law, not only as being in contravention of common right, but as founded in the...