227 F. 588 | 7th Cir. | 1915
This appeal is from a decree dismissing appellant’s bill on final hearing.
Facts, counted on in the bill and established by the proofs, may be summarized as follows:
Appellant, an Iowa corporation, located at Monticello, was engaged in making wire stretchers, hoisting blocks, stake irons, weed pullers, and similar farm appliances, and in selling them generally wherever there was a demand.
Appellee, Western Steel & Iron Works, a Wisconsin corporation, located at De Pere, was engaged in making farm gates, trowels, spades, etc. It was organized in 1905. Prior to November 26, 1910, it also made and sold post hole augers and diggers — diggers since 1905 and augers since the beginning of 1909.
During the summer and fall of 1910 appellee was financially embarrassed, its property was under mortgage, and it was in pressing need of ready money. It solicited appellant to buy its digger and auger business, which amounted to about half of its total business. . Officers of appellee-visited Monticello, officers of appellant examined the prop
At the time of the sale, when appellee’s business in diggers' was five years old and in augers two, it had marketed these articles in thirty-four of the United States and in two Canadian provinces. In considerable regions these articles cannot be used. Appellee’s sales were entirely to jobbing houses. In addition to seed that had already brought forth fruit, appellee through advertisements, commission men, and the outstretched hands of jobbers had sown other seed, so that we may take the fact to be in accordance with the admitted representation of appellee’s treasurer that appellee was trying to sell wherever there was a demand and that by reasonable attention the trade could be expected to extend “throughout all parts of the United States and Canada where augers and diggers can be used.” So it is evident that appellee was selling and was- covenanting to protect a national and international good will.
Appellant paid the agreed price, $13,500, less deductions, provided for in the contract, of about $3,000 for appellee’s failure to turn over the stipulated amount of orders. The evidence in the record warrants the conclusion that appellee under the contract obtained about double the fair selling value of its worn machinery, tools, etc., and that .appellant would not have purchased the physical property apart from the good will of the business and appellee’s protective covenants.
This purchase was made by appellant because diggers and augers would fit in well with the lines of farm appliances it was already making and selling. Neither before nor afterwards was appellant a party to any combination or agreement for fixing prices or restraining competition. And consumers have been able to purchase diggers and augers at prices as low as formerly, under competition of the same number of independent manufacturers doing business throughout the country. \
Appellant began promptly to manufacture, and market the same seven styles that appellee had been supplying to the trade, and under the same seven names, which, except as to “Ideal” and “Western,” for which patents were assigned to appellant, had become generic names of styles on which patents had expired.
Within a month or so appellee, with its mortgage discharged' and its financial embarrassment relieved, began to manufacture all its former open styles under the old names, and to sell them wherever it could. When appellant learned of this conduct, some six months later, it protested; and, its protest being defied, this suit was begun.
Appellee Jenny was made a defendant under allegations that patents owned by appellee company stood in his name and had not been
Appellee in its answer justified its conduct under an alleged rescission. But as the proofs showed that appellee was holding onto the purchase price and had made no offer to restore the status, the contract must be considered alive.
Is appellant remediless? The trial court so decided because the protective covenants are without limitation of either time or place.
In the first reported case, that of John Dier, decided in 1415, Year .Book 2 Hen. V, 5, covenants were held to. be unenforceable, no matter how limited in time and place. Hull, J., said;
“In my opinion you might have demurred upon him, that the obligation is void, inssmuch as the condition is against the common law; and (per Dieu) it the plaintiff were here he should go to prison till he paid a fine to the king.”
During the generations when an artisan had to pass through apprenticeship into a guild, when he was tied to his trade and place by statutes forbidding him to leave his parish under pain of pillory or prison, when if he could not stand where he was rooted he would become a public charge, it may have been right enough for the king’s courts to see no public interest but the artisan’s ability to pay taxes and serve the king. If, however, fifteenth century doctrines of absolutism were to govern in twentieth century conditions of democracy, a victim of a covenantor’s perfidy might well prefer to settle his legal rights by the fifteenth century wager of battle. But the glory of the common law is its inherent power of growth, its adaptability to new and enlarged conditions of life, its respondence to higher standards of social and business ethics. And so during the centuries naturally there were developments and departures with respect to this ancient doctrine. It took the courts a long time to get beyond testing the validity of a restrictive covenant purely by the presence or absence of limitations. If a restraint was unlimited as to both time and place, or was unlimited as to place though not as to time, it was unenforce
Tested by the rule of reason, a restrictive covenant is not necessarily '•'alid because it is limited in time and place. Logically the corollary follows'that by the same rule of reason a. restrictive covenant is not necessarily invalid because- it is unlimited in time and place. A re-"
In Prame v. Ferrell, supra, a general covenant was enforced. The court construed the covenant “as limiting the restraint to the United States.” In the present case the trial court accepted counsel’s criticism that our brethren of the Sixth circuit were violating the rule that courts cannot lawfully remake the contract of the parties. But in our judgment the same result of enforceability is reached by taking the covenant as written, without limitation of time or place. For the covenant is neither immoral nor criminal. It stands, unless it must be overthrown on account of the covenantor’s objection. His - objection is based wholly on our domestic public policy. Our domestic public policy has no extraterritorial force. And therefore the limitation of the decree, if so made, comes from the inherent limitation of the covenantor’s objection, not from constructively limiting his unlimited covenant.
If one should sell a chattel, and then retake it by stealth or force or fraud, both the criminal and the civil law would lay hold. Because the retaking of a conveyed good will has not yet been included in the penal code is no reason, in our judgment, why equity should hesitate to arrest the trespass.
As to appellee Jenny the decree is affirmed; as to appellee corporation the decree is reversed, and the cause remanded for proceedings in consonance with this opinion.
<&wkey;> For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes