Cowan v. . Fairbrother

24 S.E. 212, 118 N.C. 406

• Court: Supreme Court of North Carolina
• Decided: February 5, 1896
• Status: Published

Opinion

Avery, J.:

Where a person acquires a reputation for-sliill and learning iii his profession as a lawyer or a physician, he often creates an intangible but valuable property by winning the confidence of his patrons and securing immunity from successful competition for their business.. So, where an editor, by reason of his style, his power, his. pathos, his humor, his learning or of any gift or attainment, attracts subscribers solely by such personal qualities, he imparts a peculiar value to the good will and property of a newspaper which goes with him, to its injury, when he leaves it and lends the talent and accomplishments that have given it patronage and popularity to a rival journal in the same vicinity. Where he owns the press and plant the enhanced value so imparted by him becomes an element of his property with the same incidental power to, dispose of it as attaches to any other of his acquisitions, which has a market value. Beal v. Chase, 31 Mich., at p. 529. But it is not like other property which ordinarily passes by delivery or assignment to the purchaser. Neither an editor, a lawyer or a physician can transfer to another his style, his learning or his manners. Either, however, can add to the chances of success and profit of' another who embarks in the same business in the same field by withdrawing as a competitor. - So that the one sells and the other buys something valuable, and the policy of the-law limits the right to enter into such contracts of sale. only to the extent that they are held to injure the public by restraining trade. The one sells his prospective patronage and the other buys the right to compete with all others for it and to be protected against competition from his vendor. The law intends that the one shall have the lawful authority to dispose of his right to compete, but restricts his power of disposition territorially so as to make it only -co-extensive with the right to protection on the part of the purchaser. To the extent that the contract covers territory from which the vendor has derived and will probably in future derive no profit or patronage, it needlessly deprives the public of the benefit of open competition in useful business and of the services of him who sells without any possible advantage to his successor. When the reason upon which a law is founded ceases, the rule itself ■ceases to operate. The older cases in which the courts ■attempted to fix arbitrarily geographical bounds beyond which a contract to forbear from competition would not be •enforced, have given way to the more rational idea of making every case dependent upon the surrounding circumstances, showing the extent, as to time and territory, of ■the protection needed. Nordenfelt v. The Maxim, &c., Co., appeal cases, 1894, (L. R.,) 535; Hitchcock v. Cocken, 6 Ad. & E., (En. C. L. R.,) at p. 106; Hernshoff v. Bontenean, 17 R. I. Rep., 3; Benefit Co. v. Hospital Co., 11 L. R. A., 437; Beal v. Chase, 31 Mich., 490; Tallis v. Tallis, 1 El. & Bl., 391, (18 E. L. & E., 151); Oregon, &c., Co. v. Minsor, 20 Wallace, 64; 10 Am. & Eng. Enc., 947, note; 3 Am. & Eng. Enc., 885, note; Gibbs v. Gas Co., 130 U. S., 396.

Where the nature of th'e business was such that complete protection could not be otherwise afforded, the restraint upon the right to compete has been held good in one or more instances where it extended throughout the world,, and in other cases where it applied to a state or to a boundary including several states.

In Nordenfelt v. Maxim, &c., supra, the plaintiff had1 covenanted with the respondent company “not to engage,, except on behalf of such company, either directly • or indirectly, in the trade or business of a manufacturer of guns or ammunition, or in any business competing or liable-to compete in any way with that carried on by such company.” On appeal to the House of Lords the case of Horner v. Graves, 7 Bing., 743, was cited and the validity of such contracts was declared to depend upon the question “ whether the restraint is such only as to afford a fair-protection to the interest of the party in favor of whom it is given, and not so large as to interfere with the interests, of the public.” Lord Herschell, L. 0., said further-:. “ Whatever restraint is larger than the necessary protection of the party can be of no benefit to .either. It can-only be oppressive, and if oppressive it is in the eye of the law unreasonable. The tendency in later cases has certainly been to allow a restriction in point of space, which formerly would have been thought unreasonable, manifestly because of the improved means of communication.. A radius of 150 or even 200 miles has not been held to be-too much in some cases. For the same reason I think a restriction applying to the entire kingdom may in some cases be requisite and justifiable.”

In Beal v. Chase, supra, at p. 530, Judge Campbell quotes, with approval the language of Chief Justice ChapmaN in Morse v. Morse, 103 Mass., 77, where he said : “ In this country there are periodical publications that have a very 'wide circulation, and it is obvious that a purchaser of the proprietorship cannot afford to pay the full value unless he can obtain from the vendor a valid restriction against competition, which restriction shall be as extensive as the interest requiies, though it may cover the whole of a State or the whole of a country. The same would be true as to seme books. For example, the author of a popular school book could not sell its proprietorship for its full value unless he could bind himself not to prepare another book which should be used in competition with it.”

The rule which concedes the right to make the area in which the vendor is to be restricted from .competition as broad as is necessary to afford ample protection to the purchaser, is subject to the qualification that no agreement will be upheld which is injurious to the public interest. Nordenfelt case, supra, at p. 549. There are two familiar classes of contracts, that will in no event be enforced because contrary to public policy, and these constitute exceptions to the general rule governing sales of the right of competition : 1. A quasi public corporation cannot disable itself by contract from performing the public duties which it has undertaken to discharge in consideration of the privileges granted to it. Logan v. Railroad, 116 N. C., 940; Gibbs v. Gas Co., 130 U. S., 410. 2. Any agreement in contravention of the common or statute law generally, or any.combination “ among those engaged in a business impressed with a public or quasi public character which is manifestly prejudicial to the public interest, is void as against public policy, and upon the same principle no agreement tending to create a monopoly or designed to utterly destroy fair competition amongst public carriers will be enforced.” State v. Oil Co., 34 Am. St. Report, 541 (49 Ohio St., 137); Emery v. Candle Co., 21 Am. St. Rep., 819, and note (47 Ohio St., 320); Hooker v. Vandewater, 47 Am. Dec., 258 (4 Denio, 349).

Nut the contract, of which the plaintiff claims the ben•efit as assignee through John Jenkins, is one which in no way affects the public, unless it unreasonably deprives the people of the State of the benefit of the industry of the «defendants, or unnecessarily pi eeludes them from support ing their family by pursuing their occupation. Oregon Nav. v. Windsor, 20 Wallace, at p. 68. The stipulation was that the defendant Fairbrother “ would not edit, print or conduct a newspaper, nor be in anywise connected with one printed anywhere in the State of North Carolina, and that for a like period Mrs. Fairbrother shall not edit, print or conduct a newspaper or magazine, nor be in anywise connected with one anywhere in the County of Durham, said State, without the consent of said purchaser or his assignees.” This contract was assigned to Watts and Duke by Jenkins, and the assignees who own the property have leased to the plaintiff Cowan, who is now publishing the Globe newspaper, and seeks to enjoin the defendant A1 Fairbrother and the other defendant from publishing another newspaper in Durham, as it is conceded they propose to do if the court should not interfere, Since the use of steam, space has been in a measure annihilated, and it is a fact, of which the courts may take notice, that a newspaper may be carried by mail to the most remote parts of the State within from 24 to 48 hours. So that, if there has ever been a timein the histoiy of the State when an editor could not acquire a reputation for excellence in some particular line of that business, which would enable him to give a paper, with which he might be connected, popularity throughout its limits, there is no reason to doubt now that one, who would rid himself of a competitor in that business, is not describing an unreasonable boundary when he extends the restriction against competition to the State lines. No better proof of that fact could be adduced than is set forth in the uncontradicted affidavits of the defendants themselves, that they injured their successor John Jenkins in the conduct of the Durham Globe, after the contract was enteied into, by publishing a paper in Lynchburg, Ya. If the right to compete for popularity as an editor may become valuable and pass by a contract of sale, like the good will of a newspaper, it follows necessarily as a logical sequence that the purchaser may sell and transfer to a third party the right to occupy a field vacated by a dangerous rival, and the transaction would be held valid for the same reason that renders the original sale enforcible. 3 Am. & Eng. Enc., p. 885, and note, with authorities collected; Beal v. Chase, supra.; Perkins v. Clay, 54 N. H., 518; Hedge v. Lowe, 47 Iowa, 137; Gampers v. Rochester, 56 Pa. St., 194. It is settled law that such contracts,” in restraint of trade, as are valid, may be enforced in equity, like other contracts, and that breaches of them will be restrained by injunction, on the ground that no other remedy is adequate. . 3 Am. & Eng. Enc., 885, and note ; Thompson v. Andrus, 73 Mich., 557. A covenant on the part of a publisher not to publish a paper is considered in the same light as a contract to sell a particular business, or the right to practice a profession in a given area, and courts of equity will interpose in order-to prevent a violation of the one as well as of the other. 10 Am. & Eng. Enc., 947, note.

The plaintiff’s lessors swear that they had never abandoned at any time the purpose to continue the publication of the newspaper, and that during the suspension they kept up continual negotiations with that end in view. They say further that the suspension was prolonged by giving an option to one with whom they had good reason to expect they might conclude a contract to again issue it regularly.

A review of all the cases, where it has been held that parties have abandoned rights, will furnish no analogy to support the contention that the benefit of a contract, like that which is the subject of the action, must be deemed in law abandoned for failure to find a suitable editor for so short a time, especially where it appeared that reasonably diligent efforts were being made to have the business continued. . The concealment by Jenkins of the fact that he was buying for another was not per se a fraudulent act, and there is no allegation on the part of defendants that he practiced any fraud upon them. Fraud cannot be inferred from the fact of buying property through an agent who is instructed to take title in his own name. If the defendants had set up a state of facts, which in law amounted to fraud, and had asked the court to rescind the' contract upon the principle that he who asks equity must do equity, they would have been required to offer to return the money received. In order to avail themselves of that remedy they should have brought suit to set aside the agreement upon the discovery of the fraud, if there was fraud, and should have offered to place the purchasers in statu quo. Cal., &c., Co. v. Wright, 8 Cal., 585, 592.

It is contended for defendants that the contract is illegal and void because it is in contravention of the provision of the Constitution, (Art. I., Sec. 20,) which guarantees the freedom of the press. When the framers of our Constitution declared that the freedom of the press was one of the bulwarks of liberty, and therefore ought never to' be restrained, but that every individual should be held responsible for the abuse of the same, they entertained no purpose to restrict the power of any person to dispose of anything of value, which, as the creature of his own mental or physical exertions, had become his property. This right is as much a fundamental one as is that to use the press without violation of reasonable laws intended to protect others from libel and slander. In its broadest sense, freedom of the press includes not only exemption from censorship, but security against laws enacted by the legislative department of the government, or measures resorted to by either of the other branches for the purpose of stifling just criticism or muzzling public opinion. Black Const. Law, pp. 472, 473 ; Cooley Const. Lim., pp. 517, 518 ; Ordinaux Const. Leg., p. 236 et seq.; 3 Story Const., p. 731. An indefinite number of authorities might be cited to show the universal interpretation placed upon the provision in the Constitution of the United States that the freedom of the press shall not be abridged, and upon similar clauses in state constitutions. It has never been held anywhere that these provisions could be made engines of oppression by construing them as restrictions upon the right to sell anything of value, that is the creature of one’s brain, provided society would not be made to suffer by the transaction. Upon a review of all the assignments we discover no error in the rulings below, and the judgment is therefore affirmed.

Affirmed.