Graphilter Corporation v. Vinson

518 S.W.2d 952, 1975 Tex. App. LEXIS 2317
Court of Appeals of Texas·Decided January 16, 1975·No. 18394·Published·Cited by 13 cases

Opinion

GUITTARD, Justice.

Graphilter Corporation sued Joan W. Vinson for payments due for certain quantities of graphite rock particles. Plaintiff alleged that these materials were sold to defendant or to her designated representatives on defendant’s authorization. Defendant Vinson answered that she was not a party to the transactions in question and that she received no benefit from them. She also pleaded that the original contract between the parties was illegal because it was in restraint of trade. On trial to a jury, all special issues were answered in plaintiff’s favor, but the trial court rendered judgment for defendant notwithstanding the verdict. We affirm the judgment on the ground that the transaction was illegal.

We take the evidence in the light most favorable to plaintiff. Graphilter Corporation was in the business of mining, processing, and selling graphite rock particles for use in filtration systems. This material was sold in various grades according to the size of the particles. The smallest particles, known as “fines,” had little commercial value. By a written “Mineral Sales Contract” dated March 4, 1970, Graphilter agreed to sell to defendant Joan Vinson and her former husband Jack Vinson, who were described as “partners,” one hundred thousand tons of “fines” at a price of two dollars per ton, and an additional consideration of a five-per-cent royalty on all income from subsequent dealings in the materials by the partners. This material was sold in its existing condition and location without further expense to Graphilter for packing and shipping, and the agreed purchase price was payable on removal of each shipment from Graphilter’s stockpile at Llano, Texas.

Defendant’s claim of illegality arises from the following provision of the contract :

As a further consideration to Graphil-ter, Partners agree not to enter into the business of manufacturing or selling graphite ore as a filter media.

After this contract was signed, Mrs. Vinson made various contractual arrange- *954 merits concerning' disposition of the material to other persons. The first of these transactions involved Frank Marshall and Associates. According to the testimony of Graphilter’s president, James Rindfuss, Mrs. Vinson telephoned him and requested Graphilter to sack a certain quantity of the material and load it on railroad cars consigned to Marshall at Waco, Texas. Rind-fuss agreed, provided that Mrs. Vinson would be responsible for the charges. Since the original contract did not provide for sacking, loading, and shipping, Graphil-ter made a charge of thirty dollars per ton, which included the two dollars specified in the original contract. Rindfuss testified that Mrs. Vinson agreed to be responsible for these charges, and, although she denied any such agreement, the jury apparently accepted Rindfuss’s testimony on this point. Other similar transactions followed, in which various charges were made, according to the services performed by Gra-philter. After both Mrs. Vinson and her designees failed to pay these charges, Gra-philter filed this suit for charges totaling $16,608.70. Among other defenses, Mrs. Vinson pleaded that the written contract of March 4, 1970, was “an illegal contract which attempts to restrict competition.”

Defendant’s plea of illegality was urged in the trial court in an oral “motion for judgment on the pleadings” presented before the selection of a jury, in which she urged that the contract was void as a matter of law in that it was in restraint of trade because of the restrictive language above quoted. This motion was overruled. After a verdict favorable to plaintiff, defendant filed a motion, on other grounds, for judgment notwithstanding the verdict, which the trial court sustained. On this appeal by plaintiff, defendant contends in one of her “cross points” that the trial court erred in not holding that the contract was void as a matter of law because it was in restraint of trade. We agree with this contention, and, since such illegality requires a judgment for defendant, we need not discuss any of the other contentions in the briefs.

The agreement by the Vinsons in the mineral sales contract “not to enter into the business of manufacturing or selling graphite ore as a filter media” restricts them from engaging in a lawful business. Consequently, it is illegal under the Texas Antitrust Act, Tex.Bus. & Comm.Code Ann. §§ 15.02, 15.04 (Vernon 1968. 1 It is also void under the common-law rule against contracts in restraint of trade. Wissman v. Boucher, 150 Tex. 326, 240 S.W.2d 278, 280 (1951); Restatement of Contracts §§ 513, 514, 515 (1932). No question arises here as to whether the restraint is reasonable, since it is not ancillary to a contract of employment or to a contract for sale of the goodwill of a busi ness, and even if it were considered ancillary to a legitimate contract, it is not limited to a reasonable time and territory. Cf. Justin Belt Co. v. Yost, 502 S.W.2d 681, 684 (Tex.1973). It is simply an agreement by the buyers of personal property not to compete with the seller. Such a contract is an illegal restraint of trade, and no recovery on it is permitted. See Vann v. Toby, 260 S.W.2d 114, 118 (Tex.Civ.App.—Dallas 1953, writ ref’d n. r. e.); Cunningham v. Frito Co., 198 S.W.2d 772, 774 (Tex.Civ.App.—San Antonio 1946, no writ); and cf. Climatic Air Distributors v. Climatic Air Sales, Inc., 162 Tex. 237, 345 S.W.2d 702, 704 (1961).

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Graphilter Corporation v. Vinson, 518 S.W.2d 952, 1975 Tex. App. LEXIS 2317 (Tex. Ct. App. 1975).

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