ÆäÀÌÁö À̹ÌÁö
PDF
ePub

only depends upon a recovery. In the former case, the agreement is champertous,36 but in the latter case is usually held legal, although there are decisions in some States to the contrary.37 This rule does not apply to assistance rendered by one related to the litigant or in any way interested in the suit.

§ 89. Contrary to Good Morals. Agreements which violate public policy because of being contrary to good morals, relate chiefly, but not exclusively, to sexual immorality. An agreement in a policy of life insurance permitting recovery for death from suicide while sane, has been held void under this principle,38 and the rule has been frequently applied to agreements made in consideration of illicit intercourse and to procure goods and maintain houses in connection with prostitution.

§ 90. Affecting Freedom or Security of Marriage. Under this principle it is held that the contracts of matrimonial agencies are void as promoting unhappy marriages and encouraging them for improper reasons.39 The policy of the law favors normal marriages on the strongest social and political grounds, and, therefore, agreements not to marry at all or for a certain period of time or limiting one's choice of a future husband or wife, are held void. The same policy frowns upon any agreement tending to disturb or prejudice the marriage relation after it has been entered into. Thus, an agreement to secure a divorce, or not to defend a divorce suit, or to marry as soon as a divorce is procured, is against public policy and void. Agreements of separation, without divorce, are valid "where the separation has taken place, or is to take place immediately. But where the agreement is made in contemplation of future separation, the current of authority is against its validity."'40 Some cases hold the agreement

36 Peck v. Heurich, 167 U. S. 624, 42 L. ed. 302.

37 Hadlock v. Brooks, 178 Mass. 425, 59 N. E. 1009.

38 Ritter v. Insurance Company, 169 U. S. 139, 42 L. ed. 693.

39 Morrison v. Rogers, 115 Cal. 252. 46 Pac. 1072.

40 Fox v. Davis, 113 Mass. 255.

void in any event unless one of the parties has been guilty of something which justifies a legal separation.11

§ 91. In Restraint of Trade. Under modern law, agreements in unreasonable restraint of trade are contrary to public policy and void. The reasons for this rule are stated in a Massachusetts case42 as follows:

"The unreasonableness of contracts in restraint of trade and business, is very apparent from several obvious considerations.

(1) Such contracts injure the parties making them, because they diminish their means of procuring livelihoods and a competency for their families. They tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions. And they expose such persons to imposition and oppression.

(2) They tend to deprive the public of the services of men in the employments and capacities in which they may be most useful to the community as well as themselves. (3) They discourage industry and enterprise, and diminish the products of ingenuity and skill.

(4) They prevent competition and enhance prices. (5) They expose the public to all the evils of monopoly."

At one time it was considered that all agreements in restraint of trade were void, but now such agreements will be declared void only where the court finds the restraint to be unreasonable. Whether the restraint in a particular case is unreasonable, will depend upon the extent of the trade or business, the situation of the parties, and all the other circumstances.

Where the restraint is unlimited both as to time and space, it is uniformly held that the restraint is unreasonable and the agreement, therefore, void. Thus, an agreement by A never to engage in the drug business anywhere in the world, in consideration of B's buying the drug busi

41 Baum v. Baum, 109 Wis. 47, 85 N. W. 122, 53 L. R. A. 650, 83 Am. St. Rep. 854.

42 Alger v. Thacher, 19 Pick. 51, 31 Am. Dec. 119.

ness which A at that time owned, would everywhere be held void.

Where the restraint is limited as to space but unlimited as to time, the agreement will generally be held valid, provided such limitation as to space is no more than is reasonably necessary to protect the one to whom the promise is made. Thus, an agreement never to engage in the retail hardware business in a certain town, is valid and enforcible.43 But if the agreement were never to engage in the retail hardware business in the United States, it would be held that the limitation as to space was unreasonable. It has been held in some cases that an agreement never to practice a learned profession in a particular place is void because it would prevent the promisor from practicing his profession in that place after the death of the promisee, whose heirs or personal representatives could have no interest in something which depended upon the skill and ability of the deceased, 44 but there are courts which refuse to draw such a distinction from agreements not to engage in a business.45

Where the restraint is limited as to time but unlimited as to space, it is again a question whether the restraint agreed upon "is such only as to afford a protection to the interests of the party in favor of whom it is given, and not so large as to interfere with the interests of the public."46 Thus, an agreement by a retail merchant or a mechanic or a professional man not to engage in the same business or profession anywhere for a certain length of time, would be void as unnecessary to protect the interests of the other party. But an agreement by a wholesale dealer or manufacturer whose business extends over the whole United States and possibly to foreign countries, not to engage in the same business anywhere for a limited period of time, might be valid, and this has been held in a leading English

43 Stewart v. Challacombe, 11 Ill. App. 379.

44 Mandeville v. Harman, 42 N. J. Eq. 185, 7 Atl. 37.

45 French v.

Parker, 16 R. I. 219, 14 Atl. 870, 27 Am. St. Rep. 733. 46 Horner v. Graves, 7 Bing. 735, 743.

[ocr errors]

case where a patentee and manufacturer of guns and ammunition which had been sold by him throughout the world, covenanted with his transferee not to engage in that business anywhere for twenty-five years.47

Exceptions to Rule Against Contracts in Restraint of Trade. The rule of public policy against agreements in restraint of trade does not apply to the sale of patent rights, for these are monopolies created by the government in furtherance of the public interest in encouraging invention. The same is also true of contracts of exclusive employment, even though the term of employment be for life and the agreement be to refrain from performing similar services for any one else during that time.

Combinations in Restraint of Trade. Although a dealer or manufacturer of any commodity, whether a necessary of life or a luxury, may fix its price to suit himself or suspend sales or manufacture in order to enhance the price and his profits, yet any such agreement between different dealers or manufacturers is void if it concern a necessary or useful article or commodity. Thus, an agreement among coal companies to govern the supply and price of coal is void,48 because contrary to public policy. By an Act of Congress, commonly known as the Sherman Act, every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal; and every person who shall make any such contract or engage in any such combination or conspiracy, or who monopolizes, or attempts, or combines, or conspires with another to monopolize, any part of such trade or commerce, is made guilty of a misdemeanor. Under this act a combination imposing unreasonable restraint is unlawful, and whether or not it actually raises prices.49 Many States have also enacted statutes declar47 Nordenfelt v. Maxim-Nordenfelt Co., (1894) App. Cas. 535. See also, Diamond Match Co. v. Roeber, 106 N. Y. 473, 13 N. E. 419, 60 Am. Rep. 464. 48 Morris Run Coal Co. v. Coal Co., 68 Pa. 173, 8 Am. Rep. 159.

49 Act of Congress, July 2, 1890, ch. 647; 26 Stat. 209; U. S. Comp. Stat. 1901. p. 3200.

ing contracts and combinations in restraint of trade unlawful.50 Agreements to create what are known as "corners" in the market and thus force a fictitious or unnatural rise in the value of a commodity, by buying more of it than there is in the market, are clearly void as contrary to the public interest.

Agreements and combinations among employes fixing rates of wages below which they will not accept employment are generally held valid, provided there is no interference with the right of others to contract to work at whatever wage they may see fit, although in an Illinois case51 it was held that an agreement among a large number of court reporters in Chicago, fixing a schedule of prices to be binding on them, was contrary to public policy in stifling competition among its members.

§ 92. Affecting Duties to the Public and Third Persons. An agreement by which a person releases his employer from liability for injuries caused by the negligence of the employer, is against public policy because of its tendency to promote negligence. This is particularly true where such negligence would also endanger the public. Agreements which involve the violation of a legal or moral duty to a third person or tend to promote fraud, are contrary to public policy as well as contrary to positive law in many cases.

EFFECT OF ILLEGALITY

The effect of illegality upon the validity of contracts depends upon a variety of circumstances. Chief among these circumstances are:

(1) Whether the illegality affects the whole or only a part of the agreement.

(2) If the illegality affects only part of the agreement, whether the illegal part is capable of separation. (3) Whether the direct object of the contract is the doing

50 See note in 64 L. R. A. 689.

51 More v. Bennett, 140 Ill. 69, 29 N. E. 888, 15 L. R. A. 361, 33 Am. St. Rep. 216.

« ÀÌÀü°è¼Ó »