Tuscaloosa Ice Mfg. Co. v. Williams

• Decision Date: 14 June 1900
• Citation: 28 So. 669,127 Ala. 110
• Parties: TUSCALOOSA ICE MFG. CO. v. WILLIAMS.
• Court: Alabama Supreme Court

28 So. 669

127 Ala. 110

TUSCALOOSA ICE MFG. CO. v. WILLIAMS.

Supreme Court of Alabama

June 14, 1900

Appeal from law and equity court, Tuscaloosa county; J. J. Mayfield Judge.

Action by B. H. Williams against the Tuscaloosa Ice Manufacturing Company. From a judgment in favor of plaintiff, defendant appeals. Reversed.

The question presented on the present appeal arose upon the rulings of the trial court in sustaining a demurrer to a plea filed by the defendant. The complaint, and the plea interposed thereto by the defendant, are set forth at length in the opinion. To this plea the defendant demurred upon the following grounds: "(1) For that said plea sets up no facts in bar of plaintiff's recovery, but is a conclusion of the pleader, in that it states the effect of the contract sued on; (2) for that said plea sets up no facts showing that the contract sued on is one in unlawful restraint of trade (3) for that said plea does not show that said contract was not a legitimate one for the prevention of ruinous competition between the parties thereto; (4) for that said plea does not show that there were not sources of supply to the inhabitants of Tuscaloosa from neighboring cities which would prevent defendant from having a monopoly by reason of said contract, and from charging unreasonable prices for its product; (5) for that said contract does not show that said contract was an unreasonable one; (6) for that said plea shows that, if said contract is in unlawful restraint of trade, the defendant is in equal wrong, and cannot set such illegality up as defense to this action; (7) for that said plea shows that the article manufactured by defendant is ice not an article of necessity; (8) for that said plea does not show that said contract was purely and simply in restraint of trade, or that plaintiff was to share in any increased profit of defendant arising by reason of such contract; (9) for that said plea sets up no facts in bar of plaintiff's recovery." The court sustained this demurrer, and, the defendant declining to plead further, judgment was rendered for the plaintiff. The defendant appeals, and assigns as error the sustaining of the demurrer to the plea interposed by it.

Fitts &amp Fitts, for appellant.

Foster & Oliver, for appellee.

McCLELLAN C.J.

B. H. Williams is plaintiff, and the Tuscaloosa Ice Manufacturing Company is defendant, in this action. The complaint is as follows: "The plaintiff claims of the defendant the sum of three hundred and twenty-five dollars, with interest from the 1st day of September, 1898, as damages for the breach of a contract or agreement entered into between the plaintiff and defendant on, to wit, the 1st day of January, 1898, in substance as follows: This agreement, made and entered into between the Tuscaloosa Ice Mfg. Co., of which Henry B. Gray is president, of the first part, and B. H. Williams, sole owner of an ice machine located near the Alabama Great Southern Railroad depot, at Tuscaloosa, Ala., of the second part, witnesseth that the party of the first part, for and in consideration of the covenants of the party of the second part hereinafter mentioned, agrees to pay the party of the second part the sum of eight hundred and seventy-five dollars ($875.00), in five equal payments, of one hundred and seventy-five dollars each (175.00), the first payment to be made this day, and the other four payments on the 1st day of June, 1898, 1899, 1900, 1901, respectively. In consideration of the promise of the foregoing payments, the party of the second part hereby agrees not to run his ice machine as described above, nor suffer it to be run, for the term of five years, at Tuscaloosa, Ala., unless the party of the second part shall make a sale of the same to be run at Tuscaloosa, Ala., in which event he releases the party of the first part from making all subsequent payments to him, and also agrees to refund on any payment made by [to] him during the year such sale is made such a part of said payment as the remainder of that year bears to the entire year. It is further agreed that, if the said party of the second part shall sell his ice plant between January 1st and June 1st of any year, he shall be entitled to his proportional payment for that year. It is further agreed that in case some unknown party should erect or operate an ice machine in the city of Tuscaloosa, Ala., or in the vicinity of said city of Tuscaloosa, that the party of the second part, known in contract as B. H. Williams, shall release all subsequent payments to the party of the first part at the time of the erection of an ice plant to compete with said first party, provided that the sum of $500 shall have been paid to the party of the second part. It is further agreed that, if said plant or opposition should disturb the party of the first part before the amount of five hundred dollars is paid to the party of the second part, that the party of the first part shall only pay to the party of the second part the difference between the total payments made and the $500.00, and, should said ice plant be erected after $500.00 had been paid to the party of the second part, no other payments will be required. And plaintiff says that although he has complied with all its provisions on his part, and has not sold his said ice machine to be operated at or in the vicinity of Tuscaloosa, the defendant has failed to comply with its provisions on its part in the particulars following, viz.: Some time during the summer of 1898, to wit, in July or August, the Tuscaloosa Gas, Electric Light & Power Co., a corporation having its office and principal place of business at Tuscaloosa, Ala., amended its corporate charter, changing its name to the 'Tuscaloosa Light & Ice Company,' and having conferred upon it the power to manufacture and sell ice at Tuscaloosa, Ala., and erected an ice plant and began the manufacture of ice at Tuscaloosa; and although the defendant had, at the time of the establishment of said Tuscaloosa Light & Ice Co.'s ice plant at Tuscaloosa, only paid to plaintiff the first payment of $175.00 mentioned in said contract as paid on the day of its execution, it has wholly failed and refused to pay plaintiff the difference between said payment of $175 and $500.00, as it agreed in said contract to do in the event of the erection of an opposition ice plant; hence this suit."

To this complaint the defendant interposed the following plea: "At the time said contract was entered into the plaintiff owned and operated the only ice factory in Tuscaloosa or its vicinity, and the only factory which was then selling ice to the people of Tuscaloosa and immediately surrounding territory, other than defendant's factory. Said population, consisting of, to wit, seven thousand people, was drawing its whole supply from, and was dependent upon, said two ice factories for the same, and the demand for ice in said community was sufficient to consume and render marketable the output of both of said factories. Prior to said contract the price of this article of necessity and comfort was lessened to said community of consumers by competition between these two said ice factories. The object and effect of said contract was to wholly discontinue the manufacture of ice by plaintiff, to close down plaintiff's factory, to end all competition with defendant's ice trade, to leave defendant's plant the sole source of ice supply for said community, and to give to defendant the complete control and monopoly of said ice market, enabling it to increase the price thereof regardless of the cost of its manufacture; wherefore said contract was one cornering said ice market, stifling competition, creating monopoly, closing down heretofore active manufacture, and hence the same is void as in restraint of trade and against public policy." The trial court sustained a demurrer to the plea, defendant declined to plead over, and judgment was entered for plaintiff. The present appeal from that judgment presents the question of whether the contract sued on, considered in connection with the facts averred in the plea, involves a vicious restraint of trade, and is therefore violative of the public policy of the state and void.

The argument in support of the contract is largely based upon the considerations that the restraint it imposes is limited both as to time and to territory,-to five years at the most, and to the town of Tuscaloosa and its vicinity,-and many cases have been determined upon these considerations alone. But they were so determined, or at least at the present day they could be so determined, only because the contracts involved in them were unobjectionable upon other grounds. As the principles obtaining here are understood in their application to existing conditions of traffic and commerce, we apprehend that circumstances in respect of a particular business might exist under which a covenant against engaging in it covering all time and the whole country would be upheld by the courts. All such covenants are for the protection of the business of the covenantee, and the logical rule would seem to be that their scope may be as broad as to time and territory as the business...