Oliver v. Gilmore

• Decision Date: 14 September 1892
• Docket Number: 3,387.
• Citation: 52 F. 562
• Parties: OLIVER et al. v. GILMORE.
• Court: U.S. District Court — District of Massachusetts

52 F. 562

OLIVER et al. v. GILMORE.

No. 3,387.

United States Circuit Court, D. Massachusetts.

September 14, 1892

The contract in question, marked 'Exhibit A,' was as follows:

'Memorandum of agreement made and concluded this fifteenth day of February, (1883,) eighteen hundred and eighty-three, by and between Oliver Bros. & Phillips, party of the first part and the Stanley Works, a corporation of the state of Connecticut, Roy & Co., a corporation of the state of New York, E. W. Gilmore & Co., of North Easton, Mass., C. Hager & Son, of St. Louis, Mo., McKinney Manufacturing Company of Allegheny, Pa., the Peck, Stowe & Wilcox Company, a corporation of Cleveland, Ohio, and elsewhere, the Aetna Nut Company, a corporation of the state of Connecticut, and Sargent & Co., a corporation of the state of Connecticut and of New York, parties of the second part, witnesseth That the said party of the first part agrees that the works, factory, and machinery owned, leased, and controlled by them, situate in Pittsburgh or elsewhere, shall not be operated or used by any person whatever for the manufacture of strap and T hinges (it being understood that the said Oliver Bros. & Phillips may use any machinery other than their regular strap and T hinge machinery for the manufacture of wrought-iron butts) for and during the period of five (5) years from and after the first day of March, (1883,) eighteen hundred and eighty-three. In consideration whereof, the said parties of the second part severally agree to pay to the said party of the first part, from and after the first day of March, 1883, a sum of money equal to three and one half per centum of the net sales of strap and T hinges, sold by the several parties of the second part during the month of March, 1883, and for each succeeding month during the period of this agreement, which said sales shall be ascertained and reported to said first party as follows: On or before the fifteenth day of each month after March, 1883, each individual, firm, or corporation composing said second parties, forming or operating a separate establishment for the manufacture of strap and T hinges, shall make a report under oath, to be signed by some member of the firm or officer of the corporation, as the case may be, and by a bookkeeper or other person, a member of, or in the employ of, said firm or corporation, who shall be best acquainted with the data from which sales are made up, or by the person making up said sales, attested to before a notary public or justice of the peace, of the net amount of the sales for the calendar month preceding, which said report shall be accompanied by a check or draft for the per centum, as before provided. The reports and drafts herein provided for shall be made to the Wheeling Hinge Company, of Wheeling, West Va. It is further agreed that, should either of said second parties fail to make report of sales and pay over the per centum thereon contemplated by the terms of this agreement at the times herein designated, to said first party, notice of such failure shall be forthwith mailed to each of said second parties, and if within thirty days after the mailing of such notice the terms of this agreement are not complied with by the corporation or firm so in default, or in case of failure by the defaulting party, then, by the association of strap and T hinge manufacturers, this agreement shall, at the option of said first party, be no longer in force, and the first parties shall be at liberty to resume the manufacture of hinges the same as if this agreement had not been made. It is also agreed that if any one of the parties of the second part should build, buy, or place in their works any additional machinery, which will in any way increase their present facilities for the manufacture of strap and T hinges, this agreement shall thenceforth be null and void. In witness whereof the said Stanley Works, the said Roy & Co., the said E. W. Gilmore & Co., the said C. Hager & Son, the said McKinney Manufacturing Company, the said Peck, Stowe & Wilcox Company, the said Aetna Nut Company, and the said Sargent & Co., have affixed their names and official signatures. This agreement to be void and of no effect unless signed and agreed to by all the parties named in the body of this agreement; but, if so signed by all, to remain in force until the expiration of the time specified in this agreement.

'OLIVER BROS. & PHILLIPS.

'THE STANLEY WORKS,

'WM. H. HART, Treasurer.

'ROY & COMPANY.

'E. W. GILMORE & CO.

'C. HAGER & SON.

'McKINNEY MFG. CO.,

'WM. S. McKINNEY, President.

'PECK, STOWE & WILCOX CO.,

By R. A. NEAL, President.

AETNA NUT CO.,

By R. A. NEAL, President.

SARGENT & CO.,

J. B. SARGENT, President.'

The declaration was in two counts, as follows:

'First Count. The plaintiffs say the defendant made a contract with them, a copy of which is hereto annexed, marked 'A,' whereby, in consideration of the agreements therein made by the plaintiff, the defendant promised to pay to the plaintiffs, on or before the fifteenth day of each month, except January, in the year 1887, a sum of money equal to three and one half per cent. of the net sales of strap and T hinges made by him during the month preceding, and the defendant further promised to make a report of said sales, signed and sworn to, as provided in said agreement, and send the same to the Wheeling Hinge Company; and the plaintiffs have done all things which they agreed to do in said contract. And the plaintiffs say that three and one half per centum of the net sales made by the defendant during the first eleven months of 1887 amounted to the sum of three thousand dollars during each of said months, but the defendant has neglected and refused to pay said sum of three thousand dollars, and has neglected and refused to make reports as aforesaid, though demand was made upon him so to do on the fifteenth day of each of said months; wherefore the defendant owes the plaintiffs said sum of three thousand dollars, and interest thereon from each of said fifteenth days.

'Second Count. And the plaintiffs say the defendant made a contract with them, a copy of which is hereto annexed, marked 'A,' whereby, in consideration of the promises therein made by the plaintiffs, the defendant promised not to build, buy, or place in his works any additional machinery which would in any way increase his facilities for the manufacture of strap and T hinges, and the plaintiffs have done all things they agreed to do in said contract; but the defendant, during the year 1887, at divers times, did build, buy, and place in his works additional machinery for the manufacture of strap and T hinges, whereby the plaintiffs are greatly damaged, to wit, in the sum of ten thousand dollars.'

M. F. Dickinson, Jr., and Samuel Williston, for plaintiffs.

Francis L. Hayes, for defendant.

PUTNAM Circuit Judge.

Plaintiffs concede that the second count is invalid. The important and difficult questions in the case turn on the first count, and the contract which is made a part of it by its tenor. We desire at the outset to dispose of two or three minor considerations. It is clear that the point of nonjoinder of other parties is not well taken, because it is plain that each subscriber to the contract is holden only for his own payment. Also, on the matter of ultra vires, inasmuch as a corporation instituted for private trading or manufacturing purposes, and owing no special duty to the public, can ordinarily limit or entirely omit the exercise of its corporate powers, and is no more holden than an individual to proceed at a pecuniary loss with its intended operations, no question of that sort can be raised on a declaration alleging unqualifiedly that a contract was made. In a declaration of this character, all questions of ultra vires, authority of officers of the corporation, and formalities of execution are covered in; and objections in reference thereto can only be made to appear by subsequent pleadings, or by the facts as developed at the trial. The proposition of the plaintiffs that, as they had fully performed, the defendant is liable, even if the contract could not be enforced while it was executory on both parts, is not sufficiently sustained by the authorities cited by them, and is controverted by Bishop v. Palmer, 146 Mass. 469, 16 N.E. 299; Arnot v. Coal Co., 68 N.Y. 558; Gibbs v. Gas Co., 130 U.S. 396, 9 S.Ct. 553; and Central Transp. Co. v. Pullman's Palace Car Co., 139 U.S. 24, 11 S.Ct. 478. Also, the plaintiffs' proposition that what is sought to be accomplished by this contract indirectly might have been, under the law, accomplished directly, by the defendant's purchasing the works and closing them, does not aid us in coming to a conclusion in this case. There are many matters which the law cannot prevent, but which it refuses to aid when in an executory form. This is singularly illustrated by many of the expressions in the house of lords in Steamship Co. v. McGregor, (1892) App. Cas. 25. Also the decisions quite uniformly recognize the distinction, in actions for the price of manufacturing plants sold, between cases where the vendor merely has knowledge of the purpose of the purchaser to create a monopoly, and those where the vendor becomes an active participant in that purpose. If we were to accept the law without modification, as one branch of it was left by the court of king's bench in Mitchel v. Reynolds, 1 P.Wms. 181, (A.D. 1711,) and as the other was stated in 4 Bl.Comm.pp. 156-159, concerning forestalling and engrossing, there would seem to be no doubt that the demurrer would necessarily be sustained. So far as the latter branch is concerned, the contract would seem to be in violation of the old rules of the common...