Herreshoff v. Boutineau

• Decision Date: 14 April 1890
• Citation: 19 A. 712,17 R.I. 3
• Parties: HERRESHOFF v. BOUTINEAU.
• Court: Rhode Island Supreme Court

19 A. 712

17 R.I. 3

HERRESHOFF

v. BOUTINEAU.

Supreme Court of Rhode Island.

April 14, 1890.

On demurrer to bill.

Bill for injunction by Julian L. Herreshoff against A. Boutineau, Defendants demurs to the bill.

Amasa M. Eaton, for complainant. Albert A. Baker, for respondent.

STINESS, J. The complainant, director of a school of languages in Providence, employed the respondent to teach French from January 7, 1889, to July 1, 1889. The contract, in writing, provided that the respondent would not, during the year after the end of his service, "teach the French or German language, or any part thereof, nor aid to teach them, nor advertise to teach them, nor be in any way connected with any person or persons or institutions that teach them, in the said state of Rhode Island." The respondent's service ended July 1, 1889, after which time he gave lessons in French, in Providence. This suit is brought to restrain him from so doing within the time covered by this contract. The respondent demurs to the bill, contending—First, that the contract is void on the ground of public policy, because it imposed a general restraint throughout the state; and, secondly, because it is unreasonable. Is the contract void? For a long time, beginning with the Year Books, contracts limiting the exercise of one's ordinary trade or calling met with much disfavor in the courts. Any limitation whatever was considered, in the first reported case. (Y. B. fol. 5, 2 Hen. V. p. 26,) so far contrary to law that a plaintiff suing thereon was sworn at by the judge, and threatened with a fine. But it was soon found that, to some extent at least, such contracts help, rather than harm, both public interests and private welfare; that they are necessary to$$$

trade itself, in order to secure the sale, at fair value, of an established business, by protecting it against the immediate competition of the seller; also to enable one to learn a trade or to get employment from another, free from the risk of having the knowledge and influence thus gained used to the employer's damage; to encourage investment in business enterprises, under reasonable safeguards; and for other equally evident reasons. Accordingly, exceptions to the early doctrine were recognized from time to time, until the leading case of Mitchel v. Reynolds, 1 P. Wms. 181, when the court established the rule that a contract in restrain of trade, upon consideration which shows it was reasonable for the parties to enter into it, is good, "that wherever a sufficient consideration appears to make it a proper and an useful contract, and such as cannot be set aside without injury to a fair contractor, it ought to be maintained; but with this constant diversity, viz., where the restraint is general not to exercise a trade throughout the kingdom, and where it is limited to a particular place; for the former of these must be void, being of no benefit to either party, and only oppressive." It is to be observed that the contract in this case was limited in time to five years, the term of the lease of a bake-house, which the plaintiff had bought of the defendant, and also limited in space to the parish of St. Andrew's, Holborn. The case, therefore, did not call for decision upon a contract running throughout the kingdom. Nevertheless it has since been commonly assumed, as the settled rule of law, that such a restraint is contrary to public policy, and void. The principle upon which this rule is put is that the public have the right to demand that every person should carry on his trade freely, both for the prevention of monopoly and of unprofitable idleness. The argument is, if the restraint is general throughout the realm, the public interest is interfered with, since the party restrained can only resort to his trade for a livelihood by expatriation. But, if the restraint be local and partial, the party and the public may still have the benefit of his services in his own land, in some other place. While this distinction has frequently been recognized, the cases in which it has had the sanction of a decision have been few. In Rousillon v. Rousillon, 14 Ch. Div. 351, FRY, J., mentions only two, and these, he says, seem to have been decided upon the ground of unreasonableness, rather than upon the ground of universality. In other words, the universality was held to be unreasonable. This case, following Whitaker v. Howe, 3 Beav. 383; Jones v. Lees, 1 Hurl. & N. 189; and Leather Cloth Co. v. Lorsont, L. R. 9 Eq. 345,—expressly holds that there is no absolute rule that a covenant in restraint of trade is void, if it is unlimited in regard to space.

The respondent urges that Rousillon v. Rousillon has been overruled by the recent case of Davies v. Davies, 36 Ch. Div. 359; but we do not think this is so. While COTTON, L. J., showing great willingness, if not anxiety, to overrule it, based his opinion upon the ground that the restriction was void, because unlimited in space, BOWEN, L. J., did not put his decision on that ground, and FRY, L. J., adhered to his opinion in Rousillon v. Rousillon. That Davies v. Davies was not received in England as overruling the last-named case, see note to this case in Law Quarterly Review, vol. 4, p. 240. In view of these cases, we do not think it is now the rule in England that restraint throughout the kingdom is absolutely void.

In this country the cases have been quite similar to those in England. In the recent case of Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. Rep. 419, ANDREWS, J., says: "It is worthy of notice that most, if not all, the English cases which assert the doctrine that all contracts in general restraint of trade are void, were cases where the contract before the court was limited or partial. The same is generally true of the American cases." In that case the defendant covenanted, for the period of 99 years, not to engage in the manufacture or sale of friction matches, within any of the states or territories of the United States, except Nevada and Montana. The complainant sought to restrain a breach of that covenant in New York, the respondent claiming that the covenant, being general as to New York, was void. But the court declared it to be valid, in a strong and thorough opinion, showing the history of litigation, and the tendency of recent judicial decisions upon this subject. Taking this case in connection with Navigation Co. v. Winsor, 20 Wall. 64, we think it cannot be said here, any more than in England, that a restraint is absolutely void, upon grounds of public policy, because it extends throughout a state. Public policy is a variable test. In the days of the early English cases, one who could not work at his trade could hardly work at all. The avenues to occupation were not as open nor as numerous as now, and one rarely got out of the path he started in. Contracting not to follow one's trade was about the same as contracting to be idle, or to go abroad for employment. But this is not so now. It is an every-day occurrence to see men busy and prosperous in other pursuits than those to which they were trained in youth, as well as to see them change places and...