Stewart v. Stearns & Culver Lumber Co.

• Decision Date: 08 December 1908
• Citation: 48 So. 19,56 Fla. 570
• Court: Florida Supreme Court
• Parties: STEWART et al. v. STEARNS & CULVER LUMBER CO.

48 So. 19

56 Fla. 570

STEWART et al. v. STEARNS & CULVER LUMBER CO.

Florida Supreme Court, Division A.

December 8, 1908

Error to Circuit Court, Santa Rosa County; J. Emmet Wolfe, Judge.

Action by Samuel J. Stewart and another, copartners, against the Stearns & Culver Lumber Company. Judgment for defendant, and plaintiffs bring error. Affirmed.

Syllabus by the Court

SYLLABUS

The principles of the common law, when not modified by express enactments or rules or by the requirements of governmental conditions, are in force as a part of the system of laws and rules of judicial procedure in this state.

The statutes of the state indicate a policy to extend and confirm rather than to restrict the common-law principles relating to restraint of trade and monopolies.

At common law any contract or agreement that in its operation has or may have a tendency to restrain trade, to stifle competiton in trade, to create or maintain a monopoly, or to unnaturally control the supply of or to increase the price of or to curtail the opportunity of obtaining useful commodities, to the injury of the public or any considerable portion of the population of any locality, is regarded as contrary to just governmental principles and inimical to the public welfare, and therefore against public policy.

Contracts or agreements that violate the principles designed for the public welfare are illegal and will not in general be enforced by the courts, in consideration of the principle expressed in the maxim, 'In pari delicto potior est conditio defendentis.' The courts will not in general aid either party to enforce an illegal agreement, but will leave the parties where they place themselves with reference to such illegal agreement, except where the law or public policy requires action by the courts, or where the parties are not in pari delicto, and other exceptional cases.

All the provisions of a contract should be considered and construed with reference to controlling provisions and principles of law. Until the contrary appears from a contract and the circumstances and object of its making, the assumption is that the contract was made for and will accomplish only a lawful purpose; and no strained or unusual construction should be given to a contract so as to render it unlawful.

When it appears from a contract or from its operation or results that in its terms or in its full operation it is unlawful, or its operation accomplishes or in reality tends to accomplish an unlawful purpose, whether so intended by the parties thereto or not, the contract will not in general be enforced by the courts.

Public policy favors competition in trade, and opposes monopolies and restraints upon trade in useful commodities where the public welfare is injuriously affected. Agreements that in their operation and effect tend to facilitate, stimulate, or promote trade are regarded with favor, where they do not directly or indirectly injure the public.

Where an agreement is lawful in itself and is so limited as to time, place, subject-matter, and purpose as that its operation will afford only necessary and proper protection to the parties in the enjoyment of their rights, and will not materially or really injure the public, the agreement may be enforced, even though it relates to and operates upon trade in useful commodities.

Whether a contract, in effect, unlawfully tends to restrain trade or to a monopoly cannot be ascertained by any accurately defined rules, but must be ascertained from a practical consideration of the circumstances of the case in connection with provisions and principles of law and construction. The validity or invalidity of the contract should be determined by its real tendency with reference to trade and monopoly when in full operation.

Where a contract transfers a lawful business, trade, or occupation actually engaged in, or a lawful exclusive right, and, as an incident thereto, it is agreed that the vendor will not for a reasonable time engage in the same or a similar business within a reasonable territory covered by the business, and such agreement does not tend to restrain trade or to a monopoly to the public injury, it may not be contrary to public policy, and may be enforced if otherwise legal and binding.

A contract not transferring a lawful business, trade profession, or occupation actually engaged in, or a lawful exclusive right, but containing an agreement to relinquish to another a common right not lawfully exclusive, or to refrain from the exercise of a right commmon to all to engage in a lawful business or occupation, and also containing other agreements that enable the parties, under the circumstances in which the contract will operate, to control or unduly and injuriously influence the trade relations of a considerable portion of a small community as to useful commodities, may be contrary to public and unenforceable. Such agreements are not relieved of illegality even if they are ancillary to a lease of a storehouse, if their tendency is to restraint of trade or monopoly to the injury of the public.

Where a contract places it within the power of the contracting parties to at least partially control the available supply of commodities useful if not necessary to a considerable portion of the local public, or to unreasonably limit the places where useful articles may be purchased, or to increase the price and consequently to restrain trade, it is substantially injurious to the portion of the public affected thereby, and is an unlawful restraint of trade, and tends to monopoly rendering the illegal portions, if not the entire contract unenforceable because contrary to public policy.

To be unlawful a restraint of trade or a monopoly need not be complete, and need not amount to a criminal offense. The test is whether the restraint or monopoly is injurious to the public.

If an agreement in a contract is in effect illegal, limitations as to time, place, or subjects, and expressed or implied provisions that the purpose of the contract or the agreement is lawful, are immaterial.

The inhabitants of a village have a right to protection from injurious restratint of trade and monopoly in useful commodities in the village without reference to the opportunities afforded for obtaining the commodities in a neighboring town.

Where a contract for the lease of a storehouse formerly used as a commissary by the owners of a sawmill who employed a large number of persons in a village contains agreements that the lessor, a corporation, will relinquish its right to establish and maintain a commissary for its employés, will use its influence to induce the employés, loggers, and others to purchase their supplies from the lessees, will issue to its employés merchandise checks against their wages directed exclusively to the lessees, to be redeemed by the lessor through the lessees for cash at par every 30 days if such issue is not illegal, and the lessees will establish a general store of feed, grain, dry goods, drugs, etc., and will accept as cash the merchandise coupons issued by the lessor, and will pay the lessor every thirty days a commission of 5 per cent. on gross sales, the necessary tendency of the agreements under the conditions in which the contract will operate is to restrain trade and to a monopoly to the injury of at least a considerable portion of the public affected by the agreements. The agreements are therefore contrary to public policy and invalid, and will not be enforced by the courts.

COUNSEL

Maxwell & Reeves, for plaintiff in error.

Blount & Blount & Carter, for defendant in error. The declaration in this case is as follows:

'The plaintiffs, by their attorneys, sue the defendant for that the defendant being the owner and operator of a large sawmill at and in the village of Bagdad, in said county and state, and employed a great number of employés in the conduct thereof, on the 18th day of September, A. D. 1903, entered into a contract with the plaintiffs, a copy of which is hereto attached marked 'Exhibit A' and made a part hereof, whereby in consideration of the covenants of the plaintiffs therein contained to establish, maintain, and carry on in a certain specified store building situate in said village a general mercantile business with a stock of general merchandise of the value of ten thousand ($10,000) dollars or more, and to accept as cash the merchandise checks or coupons to be issued by the defendant to its employés, and every 30 days to pay the defendant a commission of 5 per cent. upon the gross sales of said business, and to maintain a complete and comprehensive double entry set of books for the bookkeeping of said business, with permission to the defendant to audit said books, if desired, once a month, the defendant undertook and agreed that it would continuously for and agreed period of three (3) years next ensuing the 1st day of September, A. D. 1903, issue to its employés from time to time, as called for in the ordinary course of business, merchandise coupons or checks for amounts which might be due from it to its said employés, which said checks or coupons were to be directed exclusively to the plaintiff and redeemed every 30 days by the defendant from the plaintiff at par in cash, and to redeem said checks or coupons from and through the plaintiffs only; that the plaintiffs established and maintained the said merchandise business in the said store building with a general stock of merchandise of the kind and value agreed upon for a period of three (3) years next ensuing the date of said contract, and fully kept and performed all their covenants in the said contract contained according to the true intent and meaning thereof, yet the defendant, disregarding its duty in this behalf, and in

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