Shute v. Shute
| Decision Date | 20 November 1918 |
| Docket Number | 427. |
| Citation | 97 S.E. 392,176 N.C. 462 |
| Parties | SHUTE v. SHUTE ET AL. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Union County; Adams, Judge.
Action by J. R. Shute against J. T. Shute and another. Judgment for defendants, and plaintiff appeals. Affirmed.
In action to enjoin erection of cotton gin as in violation of contract, defendant was not estopped from claiming contract not to erect gin was illegal by reason of judgment in prior action by plaintiff enjoining him from erecting gin on different site.
This was an action to enjoin the erection of a cotton gin in Monroe upon the ground that it was in violation of a contract between the plaintiff and the defendant J. T. Shute.
In May 1916, J. R. Shute, the plaintiff, entered into a contract with J. T. Shute, his brother, who with his son, J. E. Shute are the defendants. The contract in question specified that J. R. Shute sold to said J. T. Shute for $4,000 the cotton gin plant in Monroe, specifying the location and its contents, i. e. four 70 brush saw gins and fixtures, one 60 horse power electric motor and fixtures, and other appurtenances, with a provision that said J. T. Shute should have "the exclusive privilege of buying and selling seed cotton and cotton seed so far as the said J. R. Shute is concerned, on the south side of Bear Skin creek for a period of ten years from September 1, 1916." Said J. R. Shute bound himself:
"Neither to build nor cause to be built any ginning plant in Union county on the south side of Bear Skin creek for a period of ten years after September 1, 1916, and not to operate or cause to be operated or be interested in any way with any person, firm, or corporation, in operating any ginning plant in Union county on south side of Bear Skin creek for said period of ten years."
And there was a further provision that the defendant J. T. Shute should not engage or be interested in ginning cotton or buying cotton seed or seed cotton, cotton seed meal, or hulls for the said period of ten years on the north side of Bear Skin creek in said county nor on the site of the gin plant which he was then operating near the railroad depot in Monroe, which he agreed to remove and did remove.
From the judgment dissolving a temporary restraining order and refusing to continue the injunction to the hearing, the plaintiff appealed.
W. B Love and Stack & Parker, all of Monroe, for appellant.
Frank Armfield, of Concord, and J. C. M. Vann, of Monroe, for appellees.
Bear Skin creek is practically the nothern boundary of Monroe. The contract which the plaintiff, J. R. Shute, is asking the court to enforce, does not contain a provision for the sale of the good will of the gin plant, and besides this action is not brought by the vendee to protect the conveyance of the good will as an exception to the rule against contracts in restraint of trade, but singularly enough it is brought by the vendor to enforce a division of territory by which the vendee was not to engage in the business north of Bear Skin creek nor at the location near railroad depot in Monroe for 10 years, in consideration of the agreement that the plaintiff was not to engage in the same business of ginning or buying cotton seed and seed cotton south of Bear Skin creek.
The agreement sought to be enforced is clearly a division of the territory named, with the creek for a boundary. The sole object is to eliminate competition between the the parties. This is an illegal purpose, and the judge properly refused an injunction to the hearing. It is to the interest of the public that there should be the freest competition in a matter of this kind, and a contract to suppress it cannot invoke the aid of the equitable jurisdiction of the court.
One of the oldest and best-settled principles of the common law was that bonds in restraint of trade were illegal. This was held as early as 2 Henry V. (A. D. 1415), and it was then stated in the Year Books to be old and settled law. There was a modification of this rule (Broad v. Jolyffe, Cro. Jac. 506), that a contract not to use a certain trade in a particular place was a reasonable restriction and did not come under the general rule.
In Kramer v. Old, 119 N.C. 1, 25 S.E. 813, 34 L. R. A. 389, 56 Am. St. Rep. 650, it was held that the sale of the vendor's milling business in Elizabeth City with stipulation against his remaining in the business was not invalid. The court said:
"The test of the reasonableness of the territorial limit covered by such contracts is involved in the question whether the area described in the contract is greater than it is necessary to make it in order to protect the purchaser from competition in his efforts to hold and get the full benefit of the business or right of competition bought by him."
In Shute v. Heath, 131 N.C. 281, 42 S.E. 704, the court held:
"A provision, in a contract of sale of a business of manufacturing lumber and ginning cotton, that the seller would not engage in the same business in any territory in which the seller had secured patronage, is void for indefiniteness as to territory."
The present contract is not void upon that ground but, because it appears upon the face of it that the division of the territory is not for the purpose of conveying to the defendant the right to obtain all the patronage of the establishment which the plaintiff sold to the defendants, but for the purpose of shutting off competition by preventing the defendant from putting up any other plant or being interested in the establishment of any other plant within all that part of the county of Union north of Bear Skin creek. This is clearly against public...
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Shute v. Shute
...the erection of a gin stand by reason of a written agreement which the court held invalid because in restraint of trade. Shute v. Shute, 176 N.C. 462, 97 S.E. 392. restraining order was dissolved. In that case this plaintiff, who was then defendant, set up by way of counterclaim his demand ......
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...equity, for what substantially would be a specific enforcement of the contract and restraining any further violation of it. Shute v. Shute, 176 N.C. 462, 97 S.E. 392, in wise militates against what is said in this case. That was not an association authorized by statute for the purpose of en......