delivered the opinion of the court:
Thе first question discussed in| the argument of counsel is whether the agreement of Septémber io, 1901, is a valid contract, as was held by the Appellate Court, or is in restraint of trade and violative of the Anti-trust law of this State or of the United States, as found by the superior court, and therefore void. The appellants, in support of the latter contention, insist mainly upon that part of the contract by which the first party agrees not to operate any other fire clay grinding plant on any land owned or controlled by him in the State of Indiana or to sell to any other person during the time of the contract, and in which the third, fourth and fifth parties agree not to buy fire clay produced in that State other than' from the first and sеcond parties.
The Federal statute which, it is claimed, prohibits such a contract, provides that “every contract or 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 hereby declared to be illegal.” The statute of this State providеs: “If any corporation organized under the laws of this or any other State or country for transacting or conducting any kind of business in this State, or any partnership or individual or other association of persons whosoever, * * * shall enter into, become a member of or party to any pool, agreement, contract, combination or cоnfederation to fix or limit the amount or quantity of any article, commodity or merchandise to be manufactured, mined, produced or sold in this State, such corporation, partnership, or individual or other association of persons shall be deemed and adjudged guilty of a conspiracy to defraud, and be subject to indictment and punishment, as prоvided in this act.” (Hurd’s Stat. 1905, par. 269a, p. 725.)
The object of these statutes is to prohibit the formation of trusts and combinations and remove all obstructions in restraint of trade and free competition. It was not the purpose of either law to hinder or prohibit contracts on the part of corporations or individuals made to foster or increase trade or business. But a contract may incidentally restrain competition or trade without violating the statutes if its chief purpose is to promote and increase the business of those who enter into it. “Agreements in general restraint of trade are void, but those in reasonable partial restraint, founded upon a valid consideration, may be sustained. But this rulе does not apply to corporations ¡engaged in a public business. A contract embracing parts of several States, and contracts to sell the goods of a certain manufacturer, not to lease a certain store for a particular business, not to transact a particular business in a certain town, particularly if the period is limited, agreements that pertain land shall not be used for ferry purposes, and an agreement by a physician not to practice within a six-mile¡ territory,, have been held valid. Agreements not to do business in a certain State or elsewhere where it would cpmpete with a certain person, agreements embracing an entire State and аgreements confined to a certain territory, Where such territory is the only one in which the business m.áy be carried on, have been held invalid.” (2 Ill. Cyc. Dig. 658, sec. C, and cases cited in notes.) The authorities agree that contracts in partial restraint of trade, in order to be; valid, must be reasonable as to time, place, terms, etc., manifesting an intention to simply protect the party relying upon the covenant in the reasonable restraint of unjust discrimination against him. Such contracts usually grow out of sales of property with the good will of a business, profession, partnership, etc.,.but they are not confined to such contracts. Speaking of the Federal statute in the well considered case of Whitwell v. Continental Tobacco Co. 125 Fed. Rep. 454, it is said: “If it [the contract] promotes or accidentally restrains competition while its main purpose and ¡chief effect are to foster the trade and increase the business of those who made and operated it, then it is not a contract, combination or conspiracy in restraint of trade within the true meaning of this act, and is not subject to its denunciation.”
Are the foregoing terms of the contract of September 10, 1901, violative of the law under the rules of construction above set forth ?—that is, are the -restrictions partial, reasonable, and calculated to foster the business rather than to destroy competition? Looking into the fаcts and circumstances surrounding the parties at the time the contract was entered into, we find that Lanyon, the first party, possessed a large tract of land containing fire clay in the State of Indiana which was undeveloped and produced no adequate income as compared with its capabilities. He had the money to develоp it and make it productive, but was without experience in the business of dealing in the product and without means, within himself, of obtaining a market for the same. Heber and Bonebrake were experienced miners of fire clay and in a small way engaged in the business, which, if properly extended, would make Lanyon’s property valuable. The appellеe corporations had for many years been engaged in selling the product and were looking for opportunities to increase their business. Naturally the several interests of these parties drew them together and prompted them to make the contract in question. It was of mutual benefit and advantage to each of them. Without it eaсh party would labor at a disadvantage and”fail to realize the full limit of his or its resources and opportunities. The contract seems just and reasonable in the light of these facts. The corporations might reasonably refuse, to enter into the contract or purchase the forty tons of fire clay daily unless they could be protected аgainst the selling of the same product by Lanyon in competition with them. The contract was to run for eight years,—a time not unreasonable for the development of the business entered upon. The limitation applied to only about 180 acres of land in a territory of many hundreds of acres underlaid with the same fire clay deposits. The contract in no way sought to control the labor or experience of all or any considerable number of experienced fire clay workers. The evidence also shows that large deposits of this same fire clay are found in localities outside of the State of Indiana,—i. e., in Illinois, Ohio, Pennsylvania, and perhaps other States. Considering the contract as a whole, in the light of the facts surrounding the parties, we are of the opinion that it is not invalid; that the object of it was to foster and establish a legitimate business, aiid although to a limited extent it may have restrained competition', there was not such a limitation or restriction as should defeat its validity under the law. |
It needs little argument to show that the cаse is clearly distinguishable from that of Arnot v. Pittston and Elmira Coal Co.
The next substantial ground of reversal insisted upon is, that the bill in this case is, in fact, one for jthe specific performance of the contract set up, and that the terms of that contract are such that they cannot be specifically enforced in equity; also, that complainants have a complete and adеquate remedy at law. The bill, on its face,] shows that the relief sought is an injunction restraining : the defendants from mining or selling any of the fire clay' in violation of the foregoing provisions of the contract. The agreement on the part of Lanyon not to operate any other' fire clay grinding plant on any land owned or controlledj by him in the State of Indianа or to sell to any other person during the time of the contract is a direct negative covenant, and while a court of equity might not compel him to mine and sell the product to complainants in conformity with) his agreement, yet there is equitable jurisdiction to prevent him from selling to other parties. This is not an implied negative agreement, but one сlearly and directly expressed.
In the early case of Lumley v. Wagner, 1 DeG., McN. & G. 604, a case against an opera singer, the lord chancellor said: “It is contended that the plaintiff’s remedy, if any, is at law; but it is no objection to the remedy by injunction that the plaintiff may have a legal remedy. * * * Whenever this court has not proper jurisdiction to enforce specific performances it operates to bind men’s consciences, as far as they can be bound, to a true and literal performance of their agreements, and it will not suffer them to depart from their contracts at their pleasure, leaving the party with whom they contracted to the mere chance of the damages the jury may give. * *■ * It is true, I have no means of comрelling her to sing; but she has no cause of complaint if I compel her to abstain from the commission of an act which she has bound herself not to do. The jurisdiction which 1 now exercise is wholly within the power of the court.”
In Singer Sewing Machine Co. v. Union Button-Hole and Embroidery Co.
The right to an injunction for the enforcemеnt of negative covenants in contracts is independent of I the question as to whether an action at law will lie or not. (Diamond Match Co. v. Roeber,
Nor do we understand that the remedy by injunction to prevent the violation of negative covenants depends upon the subject matter of the cоntract, but it may relate to any equitable interest in or charge upon property. See Willoughby v. Lawrence,
It is also insisted that the granting of an injunction will greatly injure the business of appellant the Southern Fire Brick and Clay Company. The evidence shows that after the making of the contract Canyon began the erection of a plant accоrding to his agreement, which he failed to complete. The contract was placed upon record, and shortly. afterwards Canyon sold a portion of the land to the Southern Fire Brick and Clay Company. At the time of the purchase it had full knowledge of the contract and of the rights of all the parties, including appellees. After its purchase it was warned by appellees that if it proceeded to erect a plant on the lands purchased, appellees would endeavor to protect their rights in the courts, notwithstanding which it proceeded to erect the plant and place the product upon the market. Lanyon afterwards erected a plant lat anоther place than the one specified in the contract and offered to furnish clay from it as he had agreed to do. No justifiable reason is offered for this breach of faith upon his jfart, and the appellant corporation is in no condition to claim that it was innocently injured by reason of the injunction. If its business has been or will be injured it can blame no one but' itself.
It is next claimed by appellants that the tjill was properly dismissed because the appellees had an adequate remedy at law. But this contention is not sustained byl the proof. .The evidence shows that the Southern Fire Brickj and Clay Company was not a party to the original contract and was not bound by it. * Appellees cоuld not maintain qn action at law against it for damages sustained. It was one of the offenders, if not the chief offender, and was' threatening to put the product of its mine on the open market in competition with appellees. If no relief could be Obtained at law by way of damages the injury could not be prevented without recourse to equity by injunction, upon the theory that the appellant corporation had full knowledge of the terms of the contract before it purchased the land. | As to Lanyon, the bill alleges that by the violation of the terms of the contract appellees have sustained and will sustain irreparable injury. The record is full of evidence as to the financial irresрonsibility of Lanyon. He claims himself that he failed to carry out his part of the contract because |Of his financial inability to do so. If this was true, he certainly was in no condition to respond in damages to appellees (in an action at law, and hence they were entitled to equitable relief against him to prevent his doing that which he had ¡solemnly covenanted not to do. ,
We find no reversible error, and the judgment of the Appellate Court will be affirmed.
Judgmjnt Mrme±