65 N.J.L. 255 | N.J. | 1901
Lead Opinion
The opinion of the court was delivered by
On December 1st, 1892, the defendant, a New Jersey corporation engaged in the business of indemnifying against losses on credits, made a written contract with the plaintiff appointing him its agent-in and for the State of1 Massachusetts for the term of five years, for a percentage on the amount of business secured as his compensation. The plaintiff, on his part in said written contract, agreed to act as such agent for the term named and to procure business to an extent stated each quarter—failing which the defendant might, at its option, terminate the contract; and further agreed that should he cease to be the defendant’s agent, he would not engage in like business for three years thereafter. On September 4th, 1894, the defendant was adjudged insolvent and a receiver was appointed for its creditors and stockholders. On October 2d, 1894, its charter was forfeited, except for the purpose of collecting and distributing its assets. The plaintiff presented to the receiver a claim for damages for breach of said contract. The claim being disputed, the Chancellor authorized an issue or issues at law to determine its validity. The Supreme Court overruled a demurrer by the
The Supreme Court had also decided to overrule the plaintiff’s demurrer to a plea that the business of the defendant, was unlawful in Massachusetts: but after the announcement of the decision’that plea was withdrawn, as were also certain other pleas held to be faulty, so that the judgment reviewed went only on the plea of insolvency and forfeiture. After the reversal the pleadings were recast and the cause proceeded to issue of fact. Trial was had in the Essex Circuit, resulting in a verdict for the plaintiff, which was set aside and a new trial ordered by the Supreme Court in banc. The report of the decision is in 35 Vroom 35. Legal questions only were discussed—first, whether the plaintiff’s agreement not to engage in business like that of the defendant for three years after he should cease to be its agent invalidated the entire contract, and second, the effect of alleged unlawfulness in Massachusetts of such business, a plea of that purport having been renewed. The first question was decided in favor of the plaintiff on the authority of Fishell v. Gray, 31 Vroom 5. The second question was decided in favor of the defendant. Under the pleadings, as recited in the opinion read by Mr. Justice Yan Syckel, the unlawfulness alleged was not disputed. The court’s decision was merely that the plaintiff’s ignorance of it gave him no right of action for breach of the contract, but that concealment from him by the defendant of its knowledge of it would entitle him to damages, in tort, under pleadings to be moulded accordingly. Before the new trial, now the subject of review, I judge that new replications and subsequent pleadings were filed. In the present record the first plea is non est factum, on which issue is joined. The second plea is that the contract is void because a part of the consideration for the defendant’s agreement was an agreement, by the plaintiff, not to., engage, for three years
At the new trial the evidence at the former trial was used by consent. The plaintiff moved to mould the pleadings so as to present an issue of tort, but the learned trial judge refused to make order to that effect, and his ruling, being discretionary, is not reversible. Verdict in favor of the defendant was directed on the third plea, and the bill of exceptions of the plaintiff presents this direction, for our review, under the present writ of error brought on the consequent judgment against him.
On the first plea a case was made by the plaintiff that the defendant did not attempt to confute, and no support for the direction of a verdict is claimed under that plea.
The issue raised on the second plea was ignored by the trial judge, but the plea is now pressed, and must be considered. IIow far the ancient doctrine that contracts in general restraint of trade are void has been, modified need not be discussed. The modern doctrine seems to be that the restraint may properly be made as extensive as the reasonable need of
The case in hand stands thus: The defendant, desiring the service of the plaintiff as its agent, agreed, in consideration of his covenant to serve it for five years, to employ him for that period, exacting from him also a covenant not to engage in like business for three years after his service should end. It was not wrong or illegal for the plaintiff to perform this covenant. If he could not be compelled to perform it, the defendant must be presumed to have known that this was so, and to have taken the chance that he would act honorably. To deprive the plaintiff of his contract of emplojunent because of the possibility that he might repudiate his collateral engagement would be neither sound law nor good morals. In Fishell v. Gray, ubi supra, the Supreme Court held that the receiver of the present defendant must perform its agreement to purchase a business, although the contract contained an agreement that the vendor would not engage in a like business. We approve that decision and the reasoning of Beasley, Chief Justice, on which it is based In most of the cases in which it has been held that if a promise forming part of the consideration of a contract is illegal, the whole consideration is void, it will be found that to do the thing promised was illegal or immoral. A failure to perceive the
Nor do I think such direction can stand on the case made under the third plea, which alone moved the learned trial judge to give it.
The covenant of the defendant was not broken because of any supposed unlawfulness of the business contracted for, but because of the defendant’s insolvency. Nor was it proved that the business was in fact unlawful. Of course it was not immoral, or, in the broad sense, illegal, but it is claimed that in Massachusetts it was prohibited by the statute pleaded. That statute defines a contract of insurance as “an agreement by which one party, for a consideration, promises to pay money or its equivalent, or to do some act of value to the assured upon the destruction of something of which the other party has an interest,” and provides that it shall be unlawful for any company to make, or any agent to solicit “any contract of insurance upon or concerning any property or interest, or lives in this commonwealth, or with any resident thereof * * * unless and except as authorized” under the provisions of the act, which then proceeds to authorize the formation of insurance companies for various purposes named. Foreign companies and their agents are put on the same footing as domestic companies and their agents, upon compliance with certain requirements; certificates of authority to transact business being then issuable by the insurance commissioner. The proof at the trial was that before the defendant began'its operations in Massachusetts, the insurance commissioner had ruled that its business was not insurance within the definition of the statute, and that no certificate of authority to transact
For all practical purposes the defendant’s business was lawful in Massachusetts. Nor can I see that it was theoretically unlawful. One of the purposes for which the formation of insurance companies is authorized by the statute pleaded is “to guarantee the fidelitjr of persons in positions of trust, private or public, and to act as surety on official bonds, and for the performance of other obligations.” It seems to me that the acting as surety for the performance of obligations is exactly the defendant’s business which is therefore within both Ihe definition and the permission of the statute. If this view be correct, certificates of authority for the company and its agent to transact it were necessary. Those it behooved the defendant to procure, and it cannot set up its failure to do so as an excuse for the breach of its contract with the plaintiff. But we are referred to the reported case of Claflin v. United States Credit System Co , 165 Mass. 501, decided April 1st, 1896, in which, it is alleged, the Supreme Court of Massachusetts has interpreted the statute in question, and has held that the business of defendant is in that state unlawful. If this be so, the plaintiff’s suit is not thereby defeated. No doubt, after such a decision, the business could no longer bo transacted in Massachusetts, and the plaintiff’s profits would-cease, but the only effect in the present suit would be on the extent of his recoverjc
It is not needful to go farther for the purposes of this
Of course, a plain decision of the Supreme Court of a state, interpreting one of its statutes, should, after its rendition, control judicial interpretation elsewhere, but I think the decision cited leaves the matter in hand still unsettled. The question involved was not argued, and no reference is made in the opinion to the authority to form an insurance company to act as surety for the performance of obligations. It is possible that that provision, of the statute, blended as it is with another subject, was overlooked.
If, before the retrial of this action, an authoritative judgment of the Supreme Court of Massachusetts that .credit insurance is in that state unlawful shall be pronounced, its effect on the plaintiff’s recovery must then be considered.
I shall vote to reverse the present judgment, and award a venire de novo.
Dissenting Opinion
(dissenting). I am constrained to dissent from the opinion of the majority of the court in this case.
The ground of my dissent is this: Rosenbaum, by this action,
As it appears that the defendant company was not thus admitted to transact business in that state, its contracts were properly held to be unlawful. Damages for being prevented by the insolvency of the company from procuring contracts, which the company had no lawful authority to make, cannot, in my judgment, be recoverable.
It is proper to add that the question before us was not involved in the previous decisions reported in 31 Vroom 294, or 32'Id. 543.
I therefore vote to affirm the judgment.
For affirmance—Ti-ie Chancellor, Van Syckel,- Hendrickson. 3
For reversal—Dixon, Garrison, Gummere, Collins, Fort, Bogert, Adams, Vredenburgi-i, Voori-iees. 9.