Henderson Tire & Rubber Co. v. Roberts

• Decision Date: 09 January 1929
• Docket Number: (No. 1142-5093.)
• Citation: 12 S.W.2d 154
• Parties: HENDERSON TIRE & RUBBER CO., Inc., v. ROBERTS et al.
• Court: Texas Supreme Court

12 S.W.2d 154

HENDERSON TIRE & RUBBER CO., Inc., v. ROBERTS et al.

(No. 1142-5093.)

Commission of Appeals of Texas, Section A.

January 9, 1929.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by the Henderson Tire & Rubber Company, Incorporated, against L. E. Roberts and others. Judgment for defendants was affirmed by the Court of Civil Appeals [1 S. W.(2d) 510], and plaintiff brings error. Affirmed.

John Davis, of Dallas, for plaintiff in error.

Nathaniel Jacks and J. H. Synnott, both of Dallas, for defendants in error.

CRITZ, J.

This suit was originally instituted in the district court of Dallas county by Henderson Tire & Rubber Company, a foreign corporation, engaged in the manufacture and sale of automobile tires and tubes, against L. E. Roberts & Co., a trust estate, and undoubtedly a partnership, which was engaged in the business of buying and selling automobile tires and tubes. Henderson Tire & Rubber Company also sued L. E. Roberts, A. J. Roberts, J. A. Watson, and D. C. Walling, individually, and Weldon Rubber Company, alleging said L. E. Roberts & Co. to be a partnership, and also sued these individuals as guarantors of a certain contract, and acceptors of certain trade acceptances. The suit as brought is based on the certain trade acceptances and a certain written guaranty, which was a part of a certain contract of date November 7, 1921. The defendants in the trial court answered and, among other things, pleaded that Henderson Tire & Rubber Company could not recover on its alleged course of action because the same violated articles 7426, 7427, 7428, 7429, and 7437, Revised Civil Statutes of Texas 1925, known as the "Anti-Trust Statutes of Texas." At the close of the testimony the trial court directed a verdict for defendants in the trial court. This verdict was returned by the jury and judgment entered accordingly. The case was duly appealed to the Court of Civil Appeals for the Eighth District, at Dallas, which court affirmed the judgment of the trial court. 1 S.W.(2d) 510. The case is now before this court on writ of error granted on application of Henderson Tire & Rubber Company. Such further statement of the case as is necessary will appear in the course of this opinion.

We hereafter refer to Henderson Tire & Rubber Company, plaintiff in error, as plaintiff, and to the other parties as defendants.

By its first assignment of error, plaintiff contends in effect that since the contract in question is a consignment contract and not a sales contract, it is entitled to recover the price of the tires in question. In other words, plaintiff contends that the contract, being a pure consignment contract, is valid, legal, and enforceable, because it concerns interstate commerce, and therefore does not come under the provisions of the Texas Anti-Trust Act; and, further, plaintiff contends that the tires sued on herein were sold on October 24, 1924, prior to the making of the contract of November 7, 1921, and were not sold under or affected by the contract of November 7, 1921.

We agree with the contention of plaintiff that, so far as interstate shipments are concerned, "it is well settled that obligations arising out of agency contracts between consignors and consignees, giving the consignee exclusive right of sale within a designated territory, and the consignee agreeing to carry no stock, and not to advertise, and not to sell the goods of any other manufacturer, are enforceable under the laws of this State." Stein Double Cushion Tire Co. v. Fulton et al. (Tex. Civ. App.) 159 S. W. 1013 (writ of error refused); Falls Rubber Co. v. La Fon et al. (Tex. Com. App.) 256 S. W. 577; Milburn Manufacturing Co. v. Peak, 89 Tex. 209, 34 S. W. 102.

The effect of the opinion of the Court of Civil Appeals in the case at bar is to hold that the provisions of the contract of November 7, 1921, apply, as an outright sale, and not as a consignment, of the tires, the consideration for which is sued on herein, and such holding is certainly amply and conclusively shown by the uncontradicted pleadings and evidence of the plaintiff itself. The effect of the opinion of the Court of Civil Appeals is further to hold that the provisions of said contract of November 7, 1921, as applied to an outright sale, is in violation of the laws of this state against monopolies. We think the Court of Civil Appeals was correct in this holding.

The salient features of the contract of date November 7, 1921, are set out in the opinion of the Court of Civil Appeals and will not be repeated here, but we call attention to the fact that said contract grants to L. E. Roberts & Co. the exclusive right to sell, during the term of the contract, Eclipse cord and fabric tires in certain defined and restricted territory in this state, and in consideration of the granting of the exclusive territory by the plaintiff, Roberts Company agreed to sell said Eclipse tires exclusively in said defined and restricted territory during the continuance of the contract, and said Roberts Company further agreed during the continuance of said contract not to sell, carry in stock, or advertise tires of any other manufacturer. As applied to an outright sale, such an agreement is a trust, and a conspiracy in restraint of trade, under the laws of this state. Rev. Civ. Stat. Texas, arts. 7426 and 7428; American Brewing Ass'n v. Woods (Tex. Com. App.) 215 S. W. 448; Fred Miller Brewing Co. v. Coonrod (Tex. Civ. App.) 230 S. W. 1099 (writ refused); Fuqua v. Pabst Brewing Co., 90 Tex. 298, 38 S. W. 29, 750, 35 L. R. A. 241; Columbia Carriage Co. v. Hatch, 19 Tex. Civ. App. 120, 47 S. W. 288 (writ refused). Any contract or agreement in violation of the provisions of the Anti-Trust statutes of this state are absolutely void and unenforceable in the courts of this state. Rev. Civ. Stat. Texas 1925, art. 7437.

The contract of date November 7, 1921, might be legal as a pure agency contract if carried out as such, because, in such event, it would solely have affected interstate commerce, but if the intent, and purpose of the contract, as evidenced by the record and testimony, shows that it was to effect a direct outright sale to defendants, wherein the property sold, and now sued upon, became a part of the common mass of property in this state, and subject to its laws, the fact that the contract might have been legal on its face, as an agency contract, does not relieve it of its illegality as actually operated under and carried out. W. T. Rawleigh Co. v. Land (Tex. Civ. App.) 261 S. W. 186; Id., 115 Tex. 319, 279 S. W. 810. In other words, if the tires in question were sold outright to defendants, and after they arrived in Texas, being the property of defendants, were subject to the illegal provisions of said contract, as a condition precedent to such sale, then the transaction taken as a whole was rendered illegal and unenforceable.

Now let us examine the record and see if any other reasonable conclusion can be drawn than that reached by the Court of Civil Appeals. The pleadings of the plaintiff in the trial court aver that on November 22, 1921, plaintiff shipped the appellees the goods, wares, and merchandise for which the trade acceptances sued on were given; that said contract was entered into of date of November 7, 1921, and was entered into in further reference to the goods, wares, and merchandise sued upon; and further alleges said contract contained, among other things, the following obligations, and then sets out the absolute sale of the tires under the conditions and terms of the contract, and alleges that plaintiff received in payment thereof trade acceptances which trade acceptances are alleged to be guaranteed by individual indorsements of the following (naming some of the defendants), payable one-half of the total amount in 30 days and one-half in 60 days from date of shipment of car. The contract, of November 7th, is pleaded in full and fully sets out that the amount of such trade acceptances on such outright sale was to become part of the $40,000 stipulated in the contract as the maximum credit to be allowed the consignee under the contract. The outright sale, and the consignment contract, are by such allegations linked inseparably and show the appellant to be using the contract of November 7th as a direct sales contract. The appellant further goes on to plead the guaranty which was a part of the contract; and further pleads that a rider was attached to the contract changing the terms of the sale and the terms of credit to 60 and 90 days in place of 30 and 60 days. Said petition then...