Hooker & Woodward v. Vandewater

4 Denio 349

• Court: New York Supreme Court
• Decided: May 15, 1847
• Status: Published

Opinion

By the Court, Jewett, J.

It is a general proposition that an agreement to do an unlawful act cannot be supported at law—that no right of action can spring out of an illegal contract ; and this rule applies not only when the contract is expressly illegal, but whenever it is opposed to public policy, or founded on an immoral consideration-—-the maxim being ex turpi causa non oritur actio. (1 Sel. N. P. 63, 10th ed. Chit. on Cont. 657, ed. 1842.) A court of law will not lend its aid to enforce the performance of a contract which appears to have been entered into by the contracting parties for the express purpose of carrying into effect that which is prohibited by the law of the land. (Holman v. Johnson, Cowp. 341; Jackson v. Duchaise, 3 Tenn. R. 551; Duvergier v. Fellows, 5 Bing. 248.)

The revised statutes provide, that “If two or more persons shall conspire, to commit any act injurious to trade or commerce, they shall be deemed guilty of a misdemeanor.” (2 R. S. 691, § 8.) The object of the agreement made between the parties to the contract, upon which the action in this case is founded, as expressed upon its face, was to establish and maintain fair and uniform rates of freight, and to equalize the business of forwarding on the Erie and Oswego canals, among themselves, and to avoid all unnecessary expenses in doing the same, for a limited period. The parties respectively owned and were then using distinct lines fitted up for carrying on that business, independently of and disconnected with eacf. other. To accomplish their object , they agreed, in effect, that each party should run his line of boats upon these canals during the period of canal navigation in 1842, at rates of freight fixed by themselves, from which neither should deviate; and to indicate the interest of each, the respective lines were converted into stock, in all amounting to sixty-nine shares. They were to share equally in the net earnings of all the lines in proportion to the number of shares of such stock ; and to enforce a due performance of the contract a common agent was constituted, to whom each was to advance and keep good $35 on each share of such stock, and who was, from time to time, to receive from each returns of the business done by each line, and adjust the proportions from the earnings due to each, and out of this common fund to pay and liquidate all such sums as should appear from time to time to be due from one to the other.

The object of this combination was obviously to destroy competition between the several lines in the business engaged in. It was a conspiracy between the individuals contracting, to prevent a free competition among themselves in the business of transporting merchandize, property and passengers upon the public canals. The question arises, is such a conspiracy to commit such an act “ injurious to trade or commerce,” within the meaning of the statute, and therefore illegal 1 The words trade and commerce are said by Jacobs, in his Law Dictionary, not to be synonymous; that commerce relates to dealings with foreign nations; trade, on the contrary, means mutual traffic among ourselves, or the buying, selling or exchanging of articles between members of the same community. That the raising of the price of freights for the transportation of merchandize or passengers upon our canals is a matter of public concern, and in which the public have a deep interest, does not admit of doubt. It is a familiar maxim, that competition is the life of trade. It follows, that whatever destroys, or even relaxes, competition in trade, is injurious, if not fatal to it. (The People v. Fisher, 14 Wend. 9.) The object of the agreement, as expressed in the written contract, was plausible enough ; but it i.« impossible to conceal the real intention. It is evident that the parties were the owners of five separate and powerful lines of boats, provided for the transportation of property, merchandize and passengers on the canals, then in use and in active rivalry in the business, affecting more or less the price of freights; to destroy which rivalry and keep up the price to certain rates fixed by themselves, was the great, if not the sole object of that agreement. The transaction amounted, as I think, to a conspiracy to commit an act “ injurious to trade,” within the legal meaning of the statute denouncing it as a crime, and was therefore illegal and void. The report of the referee cannot be allowed to stand.

Report set aside.