Western Wooden-Ware Ass'n v. Starkey
| Decision Date | 24 December 1890 |
| Parties | WESTERN WOODEN-WARE ASS'N v. STARKEY et al. |
| Court | Michigan Supreme Court |
Appeal from circuit court, Gratiot county, in chancery; S. B DABOLL, Judge.
Hatch & Cooley, for appellant.
T W. Whitney, for appellees.
The bill in this cause is filed for the purpose of having the defendants Starkey, Ferris, and Olmsted enjoined from engaging in the business of manufacturing pails, tubs, and other articles of wooden-ware during the period of five years, from the 29th day of June, A. D. 1888; to enjoin the other defendants from carrying on that business with them; to enjoin all the defendants from using certain premises in the village of St. Louis, Gratiot county, for the purpose of manufacturing tubs, pails, etc. The bill asks for an accounting touching complainant's damages, for a decree requiring the same to be paid, and there is also a prayer for general relief. The bill shows that the complainant is a corporation organized under the laws of the state of Illinois for the purpose of carrying on the business of manufacturing, buying, and selling wooden-ware, and the materials which enter into wooden-ware; that it was engaged in the business prior to June 29, 1888; that on that date the defendants Starkey, Ferris, and Olmsted were doing business at St. Louis as partners under the name of the St. Louis Wooden-Ware Company; that they were engaged in business similar to that of complainant, and owned and occupied certain premises, with a manufacturing establishment, and were possessed of a large quantity of manufactured articles materials, tools, and other chattels used in their business; that on that date the complainant and the members of said copartnership entered into a contract which is attached to the bill, the material parts of which will be referred to. By this contract, the firm, in consideration of $6,000, agree to sell to the complainant their stock on hand, materials, tools, implements, and chattels. The contract contains this clause: "And the said first parties also agree not to become engaged in the manufacture of tubs and pails during the next five years in the states of Michigan, Wisconsin, Illinois, Minnesota, Iowa, Missouri, Indiana, and Ohio, or allow their property at St. Louis, Mich., to be used for that purpose, nor to sell said property to any one for that business, except by consent of said second parties; and in case any of the parties of the first part violate this agreement, they do hereby agree to pay to said second party $2,000 for damages, for violating this contract." The contract also contains certain other provisions not necessary here to be noticed. After making the contract the complainant paid the copartnership the $6,000, and received the chattels. The defendants Starkey, Ferris, and Olmsted violated the contract in that they are now engaged in the manufacturing and selling wooden-ware in the premises in question, and, as the bill alleges, have confederated with the other defendants Palmerton, Fowler, and Newman to carry on the business with them, and, for the purpose of concealing their transactions, procured the defendants Palmerton, Fowler, and Newman to organize a corporation under the name of the F. G. Palmerton Wooden-Ware Company, Limited, with intent to engage in said business. The bill further charges that the defendant Starkey pretended to convey the lands in question to his son-in-law Palmerton; that Palmerton has conveyed them to the Palmerton Wooden-Ware Company, and that the business of manufacturing wooden-ware has been carried on in said premises by the Palmerton Wooden-Ware Company; that the defendants Starkey and Ferris have active supervision, control, and management of said corporation, and have been making sales of their pails and tubs in all the states of Michigan, Wisconsin, Illinois, Iowa, Missouri, Indiana, and Ohio. The bill charges that the corporation so organized by the defendants is a mere pretense and cover procured to be organized by the defendants Starkey and Ferris; that Starkey and Ferris furnish the capital therefor; that the stock of the corporation is held for their benefit and advantage; that the breach of the contract on the part of the defendant has greatly injured and damnified the complainant. To this bill the defendants filed a general demurrer, which the circuit judge sustained; and on the 14th day of March, 1890, entered a decree dismissing the bill. From this decree complainant appeals.
Complainant's counsel raised but three questions in this court: (1) That the clause of the contract wherein the defendants Starkey, Ferris, and Olmsted agree not to become or engage in the manufacture of tubs, etc., during the next five years, in any of the eight states named, or permit the premises in question to be used for that purpose, without the consent of the complainant, is valid; (2) that the clause of the contract which provides "in case any of the parties of the first part violate this agreement, they do hereby agree to pay to said second party $2,000 for damages for violating this contract," does not preclude the complainant seeking relief by injunction; (3) that Act No. 225 of the Public Acts of 1889, declaring certain contracts, agreements, undertakings, and combinations unlawful, and to provide punishment for those who shall enter into the same, or do any act in the furtherance thereof, has no application in this case.
Counsel for complainant contends, under his first proposition, that this covenant is limited in respect to time; that it is also limited in regard to territory,-that is, to Michigan and the seven other states named; that it is a covenant embodied in the contract, of which contract the defendants Starkey, Ferris, and Olmsted sell certain property, the price being fixed at one sum, both for the value of the property and for the covenant; that how much of this price is applicable to the property sold, and how much to the covenant not to engage in business, neither the contract nor the circumstances enable us to say; but that it would be presumed that, by reason of the covenant, a larger price was paid by the complainant than would be necessary merely to cover the value of the property sold. Counsel insists that this question has been settled decisively by this court, and, in support of that proposition, counsel cites Hubbard v. Miller, 27 Mich. 15; Beal v. Chase, 31 Mich. 490. Counsel also contends that the rule laid down in Beal v. Chase, supra, is approved; also in Doty v. Martin, 32 Mich. 462; Caswell v. Gibbs, 33 Mich. 331; Grow v. Seligman, 47 Mich. 610, 11 N.W. 404; Watrous v. Allen, 57 Mich. 366, 24 N.W. 104.
From the view we take of this case, we need discuss but one question. The contract must be declared void on the...
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