Home Telephone Company v. Granby & Neosho Telephone Company

• Citation: 126 S.W. 773,147 Mo.App. 216
• Parties: HOME TELEPHONE COMPANY, Appellant, v. GRANBY & NEOSHO TELEPHONE COMPANY, Respondent
• Decision Date: 08 March 1910
• Court: Missouri Court of Appeals

126 S.W. 773

147 Mo.App. 216

HOME TELEPHONE COMPANY, Appellant, v. GRANBY & NEOSHO TELEPHONE COMPANY, Respondent

Court of Appeals of Missouri, St. Louis

March 8, 1910

Appeal from Newton Circuit Court.--Hon. F. C. Johnston, Judge.

AFFIRMED.

Judgment affirmed.

McReynolds & Halliburton for appellant.

(1) The contract between plaintiff and defendant is specially authorized by the Statutes of Missouri. R. S. 1899, sec 1254. (2) The contract between plaintiff and defendant is not invalid as being in restraint of trade, monopolistic or in violation of chapter 143, Revised Statutes of Missouri, 1899. The restraint (if any) is partial and the restriction reasonable, and such as affords a fair protection to the parties and is not so large as to interfere with the general public. Skrainks v. Scharringhauser, 8 Mo.App. 522; Long v. Toll, 42 Mo. 545; Wiggins Ferry Co. v Railroad Co., 73 Mo. 389; Wiggins Ferry Co. v Railroad, 116 U.S. 615; Finck v. Granite Co., 187 Mo. 269. (3) A contract limited as to time and space is valid, and a contract unlimited as to time but limited as to space is valid, and not so in restraint of trade as to mark it void. 9 Cyc., p. 525, par. C and pp. 527, 529, 530, 531; Telegraph Co. v. Tel. Co., 5 Ohio Dec. (Reprint) 407; affirmed 7 Birs. (U.S.) 367; 29 F. Cas. No. 17445; Richmond v. Railroad, 33 Iowa 422; Conn. v. Delaware, etc., Canal Co., 43 Pa. 295; Brown v. Railroad, 75 Hun (N.Y.) 355; 27 N.Y.S. 69, 56 N.Y. St. 748. (4) The finding of the court that defendant had not violated the contract is in the teeth of the evidence. A cursory glance at the evidence will satisfy this court that defendant had violated the contract. (5) An examination of the evidence will show the court that instead of the contract being in restraint of trade, so far as defendant is concerned, that it doubled defendant's capacity, give it double the number of phone subscribers in the territory reached by the wires of plaintiff and Bell companies, and give defendant additional territory not reached by the Bell company. (6) The court has the right and power to specifically enforce the contract between plaintiff and defendant. Railroad v. Railroad, 144 N.Y. 152, 26 L.R.A. 610; Telegraph Co. v. Harrison, 145 U.S. 549, 36 L.Ed. 776; Telegraph Co. v. Pennsylvania Co., 129 F. 849, 68 L.R.A. 968; Standard Fashion Co. v. Siegel-Cooper Co., 157 N.Y. 60, 68 Am. St. 749; Joy v. Railroad, 138 U.S. 1, 34 L.Ed. 843. (7) A court of equity will grant injunction to protect contract right, and it is not necessary that injury should be irreparable and defendant insolvent. Brewing Co. v. Waterworks Co., 34 Mo.App. 49; Gordon v. Mayfield, 84 Mo.App. 367; Musser v. Brink, 80 Mo. 350; Jones v. Williams, 139 Mo. 1; Tool Co. v. Spring Co., 93 Mo.App. 530.

O. L. Cravens for respondent.

(1) This contract is void at common law governing monopolies in restraint of trade. Slaughter v. Thacker C. C. Co., 55 W.Va. 642; 2 Am. and Eng. Ann. Cas., 335, and note, 336; Fox Co. v. Scoen, 77 F. 29; Harrow Co. v. Quick, 67 F. 130. (2) A contract between two public service corporations, supplying the same community with a public commodity and service, cannot legally contract to give each the exclusive right to sell such commodity and service in a specified portion of the territory, and binding one of the corporations to use no other of such commodity and service for its patrons than that produced by the other corporation, and to refrain from producing that commodity in the producing territory of such other corporation, was held totally void and unenforcible, as it tends to create a monopoly and is therefore contrary to public policy. Nat. Gas Co. v. Nat. Gas & Fuel Co., 58 W.Va. 22, 6 Am. and Eng. Cas., 154, and note 157; Gas. Co. v. Gas. Co., 121 Ill. 530; State ex rel. v. Portland Gas Co., 153 Ind. 483; Railroad v. Closser, 126 Ind. 348. (3) Similar in principle to the case we have here is that line of decisions holding void as against public policy contracts of railroads and telegraph companies, giving the latter the exclusive right to use and occupy the right of way of the former for telegraph purposes. Western Union v. Am. Union, 65 Ga. 160; Tel. Co. v. Western Union, 23 F. 319; Western Union v. Railroad, 11 F. 7; Pullman Co. v. Railroad, 11 F. 625. (4) There being a penalty provided by sections 1255 and 1256 for violation of their requirements, and this contract being contrary thereto in its letter and spirit, renders it void as though expressly prohibited and thereby declared void. 15 Am. and Eng. Ency. Law (2 Ed.), 939; Tri-State A. Co. v. Amusement Co., 192 Mo. 423; Friend v. Porter, 50 Mo.App. 89. (5) This contract is also illegal because it violates the antitrust laws, chapter 143, R. S. Section 8966 prohibits the making of a contract made with a view to lessen or which tends to lessen, full and free competition in the sale of any article or commodity in this State, and declares such contracts void. A commodity has been defined as meaning "privilege, profit, gains." Bank v. Apthrop, 12 Mass. 252; Minot v. Winthrop, 162 Mass. 113; Anderson's Law Dic., 211; 8 Cyc. 338; 6 Am. and Eng. Ency. Law (2 Ed.), 230.

NORTONI, J. Goode, J., concurs. Reynolds, P. J., dissents.

OPINION

NORTONI, J.

This is a suit in equity. Plaintiff seeks to enjoin further breaches of a contract between it and the defendant. Upon a hearing, the court dismissed the bill and plaintiff prosecutes the appeal. There is no question presented as to the form of the remedy pursued and that matter will remain unnoticed. Both plaintiff and defendant are telephone companies incorporated and existing under the laws of this State. The plaintiff, Home Telephone Company, maintains offices and telephone exchanges at Joplin, Carthage, Carterville and other points in southwest Missouri and southeast Kansas. The defendant, Granby & Neosho Telephone Company, owns and operates a telephone line from Granby to Neosho and maintains its offices and an exchange in each of those cities. Both companies, desiring to extend their business, entered into an arrangement in writing whereby they agreed to transmit messages over their lines destined to points in the territory occupied by the other company. Among other things therein stipulated, this contract required the plaintiff company to construct a connecting line from the city of Carthage to the city of Granby, a distance of about twenty miles, and connect the same with the defendant's exchange at the latter point. Partly in consideration of this contemplated connection by the extension of plaintiff's lines from Carthage to Granby, it was further provided in section four of the contract that each of the telephone companies agreed to transmit all messages destined to points in the territory of the other company, not reached by its own system of wires, to and over the lines of the other party. It was also stipulated that neither party would enter into any contract with any other person, firm or corporation whereby any of the rights, privileges or advantages therein assured should be impaired. By its terms the contract was to continue for a period of twenty-five years. It assured to each company an exclusive privilege of physical connection with the exchange of the other and assured as well an exclusive privilege to each company to transmit over its lines all messages originating or passing over the lines of the other destined to points not reached by the initial carrier and which were reached by the lines of the connecting company. The companies assumed mutual obligations with respect to transmitting the messages of the other and each agreed to at all times keep the lines and connections in proper repair for the use of the other. A further provision is made in subsequent portions of the instrument with respect to the division of the compensation received for transmitting the messages over the respective lines therein contemplated. The two sections of the contract which are relevant to this controversy are as follows:

"Second: Each party hereto grants a license to the other party to connect with the telephone exchange or system of the other party, through its switchboard at Carthage and Joplin and Granby, so that an interchange of business may at all times be carried on between said parties. Said connections to be made as soon as the lines are completed, it being understood and agreed that the line of both parties hereto shall be so operated that service may be given from all lines owned, controlled or connected with the line or lines of either of the parties hereto over the lines of the other and its connections. And each party hereto agrees not to enter into any contract with any other person, firm or corporation whereby any of the rights, privileges or advantages herein acquired by either party may be impaired.

"Fourth: Each party agrees to transmit all messages destined to points on the lines of the other party hereto not reached by its own system of wires, to and over the lines owned and controlled by the other party. In consideration of the benefits to be derived by each of the parties hereto from the toll service herein provided to be furnished by each, each party agrees to transmit all business to points reached by its own line or lines, and those to be constructed or acquired over the lines of the parties hereto."

It appears the plaintiff constructed the telephone line from Carthage to Granby, as required, and that the two systems were connected thereby. A physical connection of the lines was established under the contract by means of a switchboard in the defendant's exchange at Granby with the new line constructed thereto from Carthage by the plaintiff. For a considerable period the parties operated under this contract without any disagreement whatever, and...