New York Bank Note Co. v. Kidder Press Mfg. Co.

• Decision Date: 20 June 1906
• Citation: 78 N.E. 463,192 Mass. 391
• Parties: NEW YORK BANK NOTE CO. v. KIDDER PRESS MFG. CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

192 Mass. 391

78 N.E. 463

NEW YORK BANK NOTE CO. v. KIDDER PRESS MFG. CO.

Supreme Judicial Court of Massachusetts, Suffolk.

June 20, 1906

COUNSEL

Moulton, Loring & Greenhalge, for appellants.

E. P Lyon, I. R. Clark, and G. F. Ordway, for appellee New York Bank Note Co.

Victor J. Loring, for appellee Kidder Press Mfg. Co.

OPINION

BRALEY J.

The right of the plaintiff as a creditor to participate in the distribution of the assets in the possession of the receivers depends primarily upon the validity and construction of the contract made between the defendant and the New York Bank Note Company of New Jersey, and later assigned to the plaintiff. Appeals having been taken by all parties from the interlocutory decrees, the various questions of title, of liability, and of the measure of damages, if the plaintiff is entitled to prove for any amount, are open. At the outset it appears that the defendant being engaged in the manufacture and sale of an improved printing perfecting press entered into a contract with the plaintiff's assignor, a corporation which printed and sold strip tickets used by transportation companies, by the terms of which among other provisions, it agreed not to sell this type of press to other customers to be used by them for a similar purpose. While the defendant was left unrestricted to make and vend the press for other uses to which it might be adapted, yet as the principle object was to create a partial monopoly the first contention is that for this reason the contract was void. At common law a sound public policy was held to require that the individual effort and competition which furnished an opportunity for earning a livelihood, or the extension of trade; should be unrestricted, as the welfare of the community demanded that the industrial and business activity of its members should be unhampered. But a distinction was early recognized between contracts which wholly restricted trade, and those which partially limited its developement and extension either as to territory, or to persons, the first being held void, while the latter, if reasonable, has been upheld as valid. Gamewell Fire Alarm Telegraph Co. v. Crane, 160 Mass. 50, 56, 35 N.E. 98, 22 L. R. A. 673, 39 Am. St. Rep. 458; Anchor Electric Co. v Hawkes, 171 Mass. 101, 105, 50 N.E. 509, 41 L. R. A. 189, 68 Am. St. Rep. 403; Diamond Match Co. v. Roeber, 106 N.Y. 473, 13 N.E. 419, 60 Am. Rep. 464. The nature of the business in which the New Jersey Company was engaged appears to have been of such character that it was not unreasonable for its own protection that a stipulation should be inserted which left the defendant at liberty to sell this press to all the world for other purposes, but prohibited sales to those who by their competition might, and probably would ruin its business, and this restriction, therefore, did not render the contract invalid. Morse Twist Drill & Machine Co. v. Morse, 103 Mass. 73, 4 Am. Rep. 513; Gibbs v. Consolidated Gas Co. of Baltimore, 130 U.S. 396, 9 S.Ct. 553, 32 L.Ed. 979; 2 Kent, Com. (14th Ed.) note 10, 'Restraint of Trade,' and cases there collected; New York Bank Note Co. v. Hamilton Bank Note Engraving & Printing Co., 180 N.Y. 280, 73 N.E. 48. The defendant further claims that the contract was in violation of the act of Congress of July 2, 1890 (26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]) commonly known as the 'Anti-Trust Law,' but if applicable neither in its answer, nor by its cross-bill is this ground for relief directly or inferentially stated. If at inception the contract was void as being prohibited by this statute, then to be available such a defense must be specially pleaded. Rev. Laws, c. 173, § 27; Granger v. Ilsley, 2 Gray, 521; Bradford v. Tinkham, 6 Gray, 494; Rice v. Enwright, 119 Mass. 187; Hunting v. Downer, 151 Mass. 275, 278, 23 N.E. 832.

It is also urged as another reason for avoidance that the contract was not within the scope of the defendant's express or implied corporate powers. But if a foreign corporation, and the terms of its charter are not shown, it is alleged in the original bill, and not denied by the answer, that it was organized for the purpose of making and dealing in printing presses, of which the manufacture and sale of the perfecting press comprised only a part. While created for the purpose of engaging in a particular kind of business, there was no prohibition upon the form of contracts it might adopt to effect a sale of its product, and it should not be permitted to repudiate a transaction if otherwise valid, and under which it received, and has retained the consideration as being in excess of its corporate powers, when such a course must result in positive injury to the plaintiff. Slater Woolen Co. v. Lamb, 143 Mass. 420, 421, 9 N.E. 823; Prescott National Bank v. Butler, 157 Mass. 548, 549, 32 n. e. 909; Nims v. Mt. Hermon Boys' School, 160 Mass. 177, 179, 35 N.E. 776, 22 L. R. A. 364, 39 Am. St. Rep. 467. The contract being neither immoral nor void for want of corporate authority, the defendant became bound to its full performance. Without reviewing the evidence there was abundant proof to support the finding that by the sale of a similar press to the Hamilton Bank Note and Engraving Company, without the assent of the New Jersey Company, there was a breach by the defendant, which entitled that company to recover damages. But although this corporation was dissolved without having brought suit, and was succeeded by the present plaintiff, to whom all of its corporate property, including choses in action were conveyed and assigned, the fiduciary relations between the parties under the term of the contract relating to the proceeds of other sales were such, that without a provision to that effect, which is not found, or without the defendant's assent, which was not given, the plaintiff was not substituted, and hence the assignment passed only the bare right of action which previously had accrued to the assignor. Boston Ice Co. v. Potter, 123 Mass. 28, 30, 25 Am. Rep. 9; New York Bank Note Co. v. Hamilton Bank Note & Engraving Co., ubi supra; Robinson v. Drummond, 2 B. & Ad. 303; Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379, 8 S.Ct. 1308, 32 L.Ed. 246; Delaware County v. Diebol Safe & Lock Company, 133 U.S. 473, 10 S.Ct. 399, 33 L.Ed. 674; Burck v. Taylor, 152 U.S. 634, 14 S.Ct. 696, 38 L.Ed. 578.

Upon the entry of an interlocutory decree which thus properly defined and limited the plaintiff's claim, the case was referred to a master for the assessment of damages. To his report numerous exceptions were taken by both parties concerning the exclusion and admission of evidence as well as to the rule adopted by him for the ascertainment of damages, but while no appeal was taken by the plaintiff from the decree overruling them, and confirming the report, the defendant having appealed its exceptions are next to be considered. These exceptions so far as they relate to the reopening of the hearing after the submission of the draft report call for no comment, as the admission of further evidence offered by either party after hearing their objections and before finally settling his report was within the master's discretion. Under the decretal order, the master was not required to report the evidence, and those exceptions which depend either upon a different view of the testimony, or that some of his findings were not supported by sufficient proof, are not tenable, and may be dismissed without further remark. O'Brien v. Murphy, 189 Mass. 353, 75 N.E. 700. And the remaining exceptions which relate to the measure of damages present the principal question.

It is evident that the plaintiff endeavored to obtain compensation based upon the difference between the cost of printing tickets, and their price which the assignor was receiving under its contracts. But this estimate not having been taken as a measure of computation either by the master, or the trial court, the defendant has not been prejudiced by evidence admitted in support of this position, and its exception to such admission becomes immaterial. The report recites that the parties agreed that the sale to the Hamilton Company was before the date of the assignment, and as this sale was the specific act of violation, whatever cause of action the New Jersey Company possessed, then accrued. At that time the assignor owned two presses which if new could have been bought in the market for much less than the sum paid for the second press, the price of which also was taken as the basis of valuation of the first press bought before the contract was made. The value of both presses when fitted for use in printing strip tickets, and protected by the restriction may be fairly said to have been equal, and besides, this value even if divided by the recitals in the contract was the total estimate fixed by the agreement. Parker v. Simonds, 8 Metc. 205, 213. To take the difference between this amount which as to one...