Sorenson v. Chevrolet Motor Company
| Decision Date | 13 May 1927 |
| Docket Number | 25,901 |
| Citation | 214 N.W. 754,171 Minn. 260 |
| Parties | BEN SORENSON v. CHEVROLET MOTOR COMPANY AND ANOTHER |
| Court | Minnesota Supreme Court |
Plaintiff appealed from an order of the district court for Steele county, Senn, J., sustaining defendants' separate demurrers to the complaint. Reversed.
When causing breach of contract is not legitimate competition.
1. When a person has knowledge of the contract rights of another his wrongful inducement of a breach thereof is a wilful destruction of the property of another and cannot be justified as legitimate competition.
When participation in such act by third party is actionable.
2. The wilful and successful participation therein by a third party for the purpose of destroying the business and property rights of the person having the contract, is actionable when followed by damage.
Torts, 38 Cyc. p. 485 n. 98; p. 503 n. 11; p. 504 n. 13; p. 507 n. 23, 24; p. 509 n. 29, 36; p. 510 n. 37, 39; p. 511 n. 42.
See note in 21 L.R.A. 233; 16 L.R.A.(N.S.) 746; 28 L.R.A.(N.S.) 615; L.R.A. 1915F, 1076; 15 R.C.L. 56; 4 R.C.L. Supp. 978; 5 R.C.L. 827.
Leach & Leach, for appellant.
S. R. Child, Sherman Child, Lewis Child, and Sawyer, Gausewitz & Lord, for respondents.
Plaintiff appealed from an order sustaining separate demurrers of the defendants on the ground that the complaint does not state a cause of action.
The complaint alleges: A subsisting agency contract between plaintiff and defendant corporation which, in the event of any question arising threatening to interfere with their mutually satisfactory business relationship, could be terminated only by notice of 60 or 10 days depending on whether plaintiff was an exclusive Chevrolet dealer. The business relations between plaintiff and defendant corporation were mutually satisfactory. The contract required the corporation to furnish cars and parts which plaintiff agreed to advertise and sell. Plaintiff purchased special tools and equipment for repairing Chevrolet cars. He advertised extensively and had a valuable business. Defendant Sander was plaintiff's competitor. Defendants conspired and agreed to destroy and take away plaintiff's business. Sander knew of plaintiff's contract with the corporation, and defendants agreed to acquire plaintiff's business for Sander. Pursuant to this plan and the agreement between defendants, the corporation wrongfully repudiated its contract with plaintiff without giving the notice therein required for cancelation. Plaintiff's business was thereby destroyed by the wrongful acts of defendants. This was done with actual malice toward plaintiff and such malice of the two defendants was well known to each and adopted by both of them.
Every act done by a business man in diverting trade from a competitor to himself is an act intentionally done, and when successful is an injury to the competitor because to that extent it lessens his profits. But it is not wrongful. Trade must be free and unrestricted, but the competitor should operate within the zone of fair dealing. Competition justifies the use of all lawful and fair means to gain the trade that would otherwise go to a competitor in business.
The mere fact that plaintiff suffered a loss does not render defendants' acts unlawful or actionable. That depends upon whether the acts in and of themselves are unlawful. There is no injury in law resulting in damages except that which flows from an unlawful act. Bohn Mfg. Co. v. Hollis, 54 Minn. 223, 55 N.W. 1119, 21 L.R.A. 337, 40 Am. St. 319.
Ertz v. Produce Exch. of Minneapolis, 79 Minn. 140, 31 N.W. 737, 48 L.R.A. 90, 79 Am. St. 433, holds that a person having no legitimate interests to protect may not lawfully ruin the business of another by maliciously inducing his patrons and third persons not to deal with him.
Joyce v. G.N. Ry. Co. 100 Minn. 225, 110 N.W. 975, 8 L.R.A.(N.S.) 756, holds that wrong and malicious interference by a stranger with contract relations existing between others, causing one to commit a breach thereof, amounts to an actionable tort, and that an action against the party to the contract for a breach thereof is not the exclusive remedy but the wrongdoer may be pursued. We previously held that it was equally unlawful to so prevent the making of a contract. Gray v. Building Trades Council, 91 Minn. 171, 97 N.W. 663, 63 L.R.A. 753, 103 Am. St. 477, 1 Ann. Cas. 172. The Joyce case was followed in Mealey v. Bemidji Lbr. Co. 118 Minn. 427, 136 N.W. 1090; Twitchell v. Nelson, 126 Minn. 423, 148 N.W. 451, 601. In the latter case it is held that the wrongful interference with the contract relations of others causing a breach is a tort. It does not use the word "malice" but Faunce v. Searles, 122 Minn. 343, 142 N.W. 816 is cited as authority. The act is termed wrongful and being the wilful violation of a known right is, in law, the equivalent of being done maliciously. In the Faunce case we said if two defendants, by concert of action and with malice, procure a party to breach his contract, they are liable to the injured party as joint tort-feasors.
In Victor Talking Machine Co. v. Lucker, 128 Minn. 171, 150 N.W. 790, we quoted from the Joyce case: "To justify an act of interference of this sort, it must be founded upon some lawful object." The court then also followed the Ertz case and extended the rule by saying:
In Boasberg v. Walker, 111 Minn. 445, 127 N.W. 467, we held that in an action based on conspiracy the plaintiff must show that the purpose of the conspiracy was unlawful or, if lawful, that the means adopted for its accomplishment were unlawful. If the result to be obtained be lawful and lawful means be adopted for its accomplishment, it is immaterial what motive prompted those engaged therein.
In Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946, 22 L.R.A.(N.S.) 599, 131 Am. St. 446, 16 Ann. Cas. 807, it was held that where a man starts an opposition place of business, not for the sake of profit to himself, but regardless of loss to himself, and for the sole purpose of driving his competitor out of business, he is guilty of a wanton wrong and actionable tort. In such a case he would be doing an act which cannot be judged separately from the motive which actuated him.
In Roraback v. Motion Picture Mach. Op. Union, 140 Minn. 481, 483, 168 N.W. 766, 169 N.W. 529, 3 A.L.R. 1290, we said:
"No person or combination of persons has the right maliciously to injure or destroy the business of another by acts which serve no legitimate purpose of his own."
A person may use any lawful means to accomplish a lawful purpose, although the means adopted may incidentally cause injury to another, but he may not intentionally injure or destroy the other's business to accomplish an unlawful purpose. Canellos v. Zotalis, 145 Minn. 292, 177 N.W. 133. The absence of conspiracy, malice or ulterior motive is emphasized in Scott-Stafford Op. H. Co. v. Minneapolis M. Assn. 118 Minn. 410, 136 N.W. 1092. The wrongful interference with the contract relations of others causing a breach is a tort. Bacon v. St. Paul Union Stockyards Co. 161 Minn. 522, 201 N.W. 326; Minnesota W.G. Co-Op. M. Assn. v. Radke, 163 Minn. 403, 204 N.W. 314; Carnes v. St. Paul Union Stockyards Co. 164 Minn. 457, 205 N.W. 630, 206 N.W. 396.
In the Carnes case it is said:
Where a person does an act solely to impose civil liability, which otherwise would not exist, upon another, such conduct is wrong and, being followed by damages, is actionable in tort. Silliman v. Dobner, 165 Minn. 87, 205 N.W. 696.
In Minnesota W.G. Co-Op. M. Assn. v. Radke, 163 Minn. 403, 204 N.W. 314, we held that it was not a tort to buy a staple wholesome commodity simply because the buyer knew the owner was under contract to sell to another -- the buyer not having held out any questionable inducement.
Where a party does a wrongful act resulting in damages to another there is liability. The damage alone does not establish liability. If the act is rightful there is no liability. If a person adopts lawful means to accomplish a lawful result the motive is immaterial. It is also immaterial, if while so acting, another is incidentally injured. Liability may rest upon an unlawful use of a legal right.
Defendant Sander had a perfect right to negotiate and make an agency contract with defendant corporation. If he did this for his own welfare and resorted to no wrongful means to accomplish the purpose he has not subjected himself to liability and the situation is not changed by the fact that, as an incident thereto, plaintiff was damaged. But did he so act?
Likewise, the defendant corporation had a legal right to breach its contract with plaintiff and pay the resulting damages. It also had the legal right to make an agency contract with Sander for the purpose of advancing its own interests. But did it so act?
The allegations of the complaint are in effect that defendants' purpose was solely to...
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