Nester v. Continental Brewing Co.

161 Pa. 473 | Pa. | 1894

Opinion by

Mr. Chief Justice Sterrett,

The conclusions of fact found by the learned court below were amply justified by the record. “It cannot be gainsaid that the object of this combination is to enable the forty-five brewers of Philadelphia, individuals, firms and corporations, who have entered into it, to regulate and control the sale and price of beer within the city of Philadelphia and the county of Camden, N. J. It certainly is a combination in restraint of trade, tending to destroy competition and create a monopoly in an article of daily consumption.”

The appellants, however, conceding these to be the facts, insist that the contract was not within the prohibition of public policy because the restraint was but partial. “ Contracts in partial restraint of trade which the law sustains are those which are entered into, by a vendor of a business and its good will, with his vendee, by which the vendor agrees not to engage in the same business within a limited territory, and the restraint, to be valid, must be no more extensive than is reasonably necessary for the protection of the vendee in the enjoyment of the business purchased. But, in the present case, there is no purchase or sale of any business, nor any other analogous circumstances giving to one party a just right to be protected against competition from the other. All the members of the association are engaged in the same business within the same territory, and the object of the association is purely and simply to silence and stifle all competition as between its members. No equitable reason for such restraint exists: ” More v. Bennett, 140 Ill. 69.

The test question, in every case like the present, is whether or not a contract in restraint of trade exists which is injurious to the public interests. If injurious, it is void as against public polic}^. Courts will not stop to inquire as to the degree of injury inflicted. It is enough to know that the natural tendel^' of such contracts is injurious.

So, it is obviously immaterial whether the restraint be general or partial. The application of the rule does not depend upon the number of those who may be implicated, nor the extent of space included, in the combination; but upon the existence of injury to the public. One combination, consisting of but part of those engaged in a given branch of trade, may amount to a practical monopoly; while another, less extensive in its scope, may, as well, bring disaster in its train. The difference lies onty in degree, but equally forbids the aid of courts. In More v. Bennett, 140 Ill. 69, where a combination had been formed among some of the stenographers in the city of Chicago, Mr. Justice Baily said: “True, the restraint is not so far-reaching as it would have been if all the stenographers in the city had joined the association; but, so far as it goes, it is of precisely the same character, produces the same results, and is subject to the same legal objection. ... We can see no legal difference between the restraint on competition which it now exercises, and that which it will exercise when it is in a position to dictate terms to all who are engaged in the business, and to all who may wish to obtain the services of stenographic reporters.” So, no one can for a moment doubt that more serious injury would result to densely settled, than to a much larger district with scattered population. Thus a combination to raise the price of bread-stuffs would cause serious loss in a city, while it would be comparatively harmless in an agricultural state. “We can scarcely conceive,” said Mr. Justice Marr, in Standard Cotton Oil Co. v. Adoue, 19 S. W. Rep. 274, “ how mere territorial limits can be the controlling test in all instances of the legality of the restraints imposed upon the ordinary course of trade. The criterion may do very well when applied to the occupation or profession of one man or even a few individuals; for neither their labor, industry, business nor services may be so necessary to the public as not to be dispensed with without inconvenience or injmy. It appears to us, however, that the case is very different in regard to trade in articles of prime necessity, or even of very frequent use, among a large number of persons in a given locality: ” Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 Id. 434; More v. Bennett, 140 Ill. 69, 29 N. E. Rep. 888; Hilton v. Eckerley, 6 El. & Bl. 66 ; India Rubber Co. v. Koch, 14 La. Ann. 168 ; Salt Co. v. Guthrie, 35 Ohio, 666, and Coal Co. v. Coal Co., 68 Pa. 173, were all cases — and they show the trend of decisions in this country — in which combinations in restraint of trade were partial in respect of the number of persons implicated and territorial limits, and were yet held injurious to the public interests and therefore void as against public policy. The true test was the effect upon public interests.

So, if the natural tendency of such contracts is to injuriously affect public interests, the form and declared purpose are immaterial. Courts will not lend their aid in illegal transactions no matter how disguised. Thus where a contract, entered into by the grain dealers of a town, which on its face indicated that they had formed a partnership for the purpose of dealing in grain, but the true object of which was to form a secret combination which should stifle all competition and enable the parties to control prices, was held void on the ground of public policy: Crafts v. McConoughy, 79 Ill. 346; India Rubber Company v. Koch, supra, is to the same effect.

The appellants insist that restraint of trade in the necessaries of life only is within the prohibition of public policy. No standard has been furnished by which to ascertain what constitute these with reference to the general public. But, assuming that beer is not among them, it is equally within the reach of the rule. The law recognizes it as a commodity, regulates its sale, it is “ an article of daily consumption,” and the court should refuse to aid in any attempted imposition upon the public by means of illegal combinations. The fact that coal was “an article of prime necessity” was not mentioned as essential to the illegality of the combination which was involved in Coal Co. v. Coal Co., 68 Pa. 173, but was suggested, arguendo, as an aggravation of the injury done the public. The whole course of discussion there shows that injury to the public was regarded as the true test of illegality.

Appellants also insist that “ equity will not permit the fund accumulated here to be locked up forever, or dishonestly appropriated by defendants,” but will compel a settlement, according to good conscience, even with a partner in an illegal transaction, a fortiori with an assignee wholly innocent of participation in or knowledge of the alleged illegalities.

“ The test, however,” as was well said by the learned judge below, “ is whether the plaintiff requires the aid of the illegal transaction to establish his case; if the plaintiff cannot open his case without showing that he has broken the law, a court will not assist him: Swan v. Scott, 11 S. & R. 164; Coal Co. v. Coal Co., supra.” “ The objection,” said Lord Mansfield in Holman v. Johnson, Cowp. 343, “ that a contract is immoral or illegal, as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed, but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff — by accident, if I may so say. The principle of public policy is this: Ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If from the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of the law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes, not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So, if the plaintiff and defendant were to change sides, and the defendant were to bring his action against the plaintiff, the latter would have the advantage of it, for where both are equally at fault, potior est conditio defendentis.” As the bill here bears upon its face the evidence of the turpitude of the transaction out of which the plaintiffs’ demand arises, it is plain upon this principle that the court must have refused its aid had the Enterprise Brewing Company itself been the beneficial claimant; and its assignees stand in no higher right. Notice of the character of the combination was in the channel of the assignees’ title, and hence they are not “innocent of participation in, or knowledge of, the illegality ” of the combination, and must be treated as having taken subject to the disabilities of their assignor : Chamberlain v. Barnes, 26 Barb. 160; Riddle v. Hall, 99 Pa. 116. It follows that there is no error in the decree, and it should be affirmed.

Decree affirmed and appeal dismissed with costs to be paid by appellants.