CHAPTER VI

OUTLINE STATEMENT OF THE COMMON LAW OF CORPORATIONS AND COMMERCE

$131. COMPETITION MUST BE FREE AND FAIR. All the principles of law upon the subject of corporations and commerce which it is possible to frame in statutes which will be constitutional have been expressed in the decisions of the highest courts both in England and in the United States. The reasons which would dictate the form of the statute are those which Idictated the decisions. Their statement expresses a simple yet comprehensive body of law characterized by the attributes of fairness and common sense.

As a general rule, under the common law the right to compete is free. No individual has a vested right in the permanency of conditions by which he profits. The world's work must go on, and all are entitled to take part therein. For example, a new schoolmaster may set up in a town even though the old one lose patronage; a new ferry,' another newspaper, gas company,* foot-bridge," telephone company, single-trolley street

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1 Anonymous, Common Pleas, Hilary Term, 1410, Year Book, 11 Henry IV, folio 47, placitum 21.

2 Johnson v. Hitchcock (N. Y.), 15 Johnson, 185.

3 Snowden v. Noah, Hopkins (N. Y.), 351.

167.

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Pudsey Coal Gas Co. v. Corporation of Bradford, L. R. 15 Eq.

Hopkins v. Great Northern Railway, 2 Q. B. D. 224.

• East Tennessee Telephone Co. v. Anderson County Telephone Co., 57 Southwestern Reporter, 457.

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railway,' may not be challenged by those who profit by absence of competition or permanency of unchanged conditions. Nor will a court enjoin competitive rates of a railroad at the request of the railroad whose traffic is taken thereby.' But a landowner may fix the reasonable terms upon which his land shall be held by his tenants, and the merchant guilds could enforce reasonable rules to protect rights purchased of the crown,' and an exclusive ferry right between two points may be protected from competition between those points, and so of an exclusive right to run a railroad between two cities, or an exclusive right to build and conduct a toll-bridge,' but a ferry would not be prevented from competing with the bridge; a patentee is entitled to protection against infringement, so of the holder of a copyright, but the justification of a limitation of the use of a patented or copyrighted article would not extend to a general contract the purpose of which is to maintain prices of the patented or copyrighted articles of several manufacturers or sellers after they have once been sold without restriction to the public and have become articles of trade and commerce."

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1 Railway Co. v. Telegraph Association, 48 Ohio State, 390.

2 Averill v. Southern Railway Co., 75 Fed. 736.

Sir George Fermor v. Brooke, Cro. Eliz. 203, Q. B. 1590.

• Corporation of Weavers v. Brown, Cro. Eliz. 803, Q. B. 1601. Tripp v. Frank, 4 T. R. 666, K. B. 1792.

Boston & Lowell R. R. v. Salem & Lowell R. R., 2 Gray (Mass.), 1.

'Chenango Bridge Co. v. Binghamton Bridge Co., 3 Wall. 51. Parrott v. City of Lawrence, 2 Dillon, U. S. Circuit Court Reports, 332.

Imhaeuser v. Buerk, 102 U. S. 647.

10 Edward Thompson Co. v. American Law Book Co., 122 Fed. 922. 11 Heaton Peninsular Button - Fastener Company v. Eureka Specialty Co., 77 Fed. 288; Straus v. American Publishers' Ass'n, 177 N. Y. 473; Circuit Ct. App. 2d Circ. June, 1906.

Competition may be fair or unfair. The cases define clearly what is fair competition. Advertisements, the use of descriptive names, the offering of a special price upon special conditions; arrangements which do not violate a right protected by law, break a contract, or inflict a special damage unwarrantably, are lawful.1 But a person who has been damaged through a breach of contract by his servant or his customer maliciously procured by a third person may recover against that person. Fraud and damage must concur. And where customers are not under contract, persons damaged by the assumption of their symbols, advertisements, trade-marks, trade-names by others unwarrantably and in such a way as to deceive the public, may recover against the persons committing such acts, and where necessary have the remedy of an injunction.*

Evans v. Harlow, 5 Q. B. 624; White v. Mellin, A. C. (1895) 154; Western Counties Manure Co. v. Lawes Chemical Manure Co., L. R. 9 Ex. 218; Ayer v. Rushton, 7 Daly, 9; Choynski v. Cohen, 39 Cal. 501; Parsons v. Gillespie, A. C. (1898) 239; Passaic Print Works v. Ely & Walker Dry Goods Co., 105 Fed. 163; Walsh v. Dwight, 40 App. Div. (N. Y.) 573.

' Hart v. Aldridge, Cowper, 54; Blake v. Lanyon, 5 Term Reports, 221; Lumley v. Gye, 2 Ellis & Blackburn, 216; Chambers & Marshall v. Baldwin, 91 Ky. 121; Bowen v. Hall, 6 Q. B. D. 333; Ashley v. Dixon, 48 N. Y. 430; Angle v. Chicago, St. P., M. & O. Ry. Co., 151 U. S. 1.

Croke, J., in Baily v. Merrill, 3 Bulst. 94, 95.

♦ Blofield v. Payne, 4 B. & A. 410; Stone v. Carlan, 13 Law Reporter, 360, N. Y. Superior Ct.; Croft v. Day, 7 Beavan, 84; Boulnois v. Peake, L. R. 13 Ch. D. 513, note; Reddaway v. Banham, A. C. (1896) 199; Waltham Watch Co. v. United States Watch Co., 173 Mass. 85; Medical Tea Co. v. Kirschstein, 101 Fed. 580; Wamsutta Mills v. Fox, 49 Fed. 141; Pontefact v. Isenberger, 106 Fed. 499; Singer Co. v. June Co., 163 U. S. 169; Coates v. Merrick Thread Co., 149 U. S. 562: New York & R. Cement Co. v. Coplay Cement Co., 44 Fed. 276; Globe-Wernicke Co. v. Fred Macy Co., 119 Fed. 696; Hughes v. McDonough, 43 N. J. 459.

A person disparaged in his trade by personal defamation may recover upon showing special damage;1 similarly of a slander of title or quality of or right to sell goods. If force is brought to bear in the perpetration of the fraud, an injunction may be granted to make the judgment effective. Coercion made effective without force is none the less actionable."

$132. A RESTRAINT OF TRADE MUST BE REASONABLE, FOR A JUSTIFIABLE PURPOSE, AND NOT AGAINST PUBLIC POLICY. -The common law upon the subject of restraint of trade was set forth in the leading case of Mitchell v. Reynolds. In the course of the opinion,

1 Jones v. Littler, 7 Meeson & Welsby, 423; Secor v. Harris, 18 Barb. (N. Y.) 425; Hamon v. Falle, 4 A. C. (1879) 247; Ratcliffe v. Evans, L. R. (1892) 2 Q. B. 524; Dudley v. Briggs, 141 Mass. 582; Boynton v. Shaw Stocking Co., 146 Mass. 219; Davey v. Davey, 50 N. Y. S. 161.

2 Pennyman v. Rabanks, Croke, Eliz., 427; Pitt v. Donovan, I Maule & Selwyn, 639; Paull v. Halferty, 63 Pa. St. 46; Hatchard v. Mège, 18 Q. B. D. 771; Lewin v. Welsbach Light Co., 81 Fed. 904; Western Counties Manure Co. v. Lawes Chemical Co., L. R. 9 Exchequer, 218; Hubbuck v. Wilkinson, 1 Q. B. (1899) 86.

Garrett v. Taylor, Croke, James, 567; Keeble v. Hickeringill, 11 East, 574, note; Ibbottson v. Peat, 3 Hurlstone & Coltman, 644; Tarleton v. McGawley, Peake, 205; Murdock, Kerr & Co. v. Walker, 152 Pa. St. 595.

• Nichol v. Martyn, 2 Esp. 732; Graham v. Newman, 47 La. Ann. 215; Robinson v. Texas Pine Land Association, 40 S. W. Rep. (Texas) 843; see Allen v. Flood, A. C. (1898) 1.

51 P. Williams, 981, King's Bench, Hilary Term, 1711. See Diamond Match Co. v. Roeber, 106 N. Y. 473; Nordenfelt v. MaximNordenfelt Co., 1894 A. C. 535; Cummings v. Union Blue Stone Co., 164 N. Y. 401; Park v. Nat'l Druggists Ass'n, 175 N. Y. 1; Straus v. Publishers' Ass'n, 177 N. Y. 473; Arnot v. Pittston & Elmira Coal Co., 68 N. Y. 558; Homer v. Ashford, 3 Bing. 322; Hitchcock v. Coker, 6 A. & E. 438; Ward v. Byrne, 5 M. & W. 548; Mallan v. May, 11 M. & W. 633; Tallis v. Tallis, 1 E. & B. 391; Avery 2. Langford, Kay, 663; Printing Co. v. Sampson, L. R. 19 Eq. 462; Rousillon v. Rousillon, 14 Ch. D. 351; Davies v. Davies, 36 Ch. D.

the authorities were all summarized and the law stated as follows:

"First. That to obtain the sole exercise of any known trade throughout England is a complete monopoly, and against the policy of the law.1

"Second. That when restrained to particular places or persons, if lawfully and fairly obtained, the same is not a monopoly.

"Third. That since these restraints may be made by 359; Baker v. Hedgecock, 39 Ch. D. 520; Mills v. Dunham, 1891, 1 Ch. 576; Underwood v. Baker, 1899, 1 Ch. 300; Abergario Co. v. Holmes, 1900, I Ch. 188; Carter v. Allrug, 43 Fed. 188; Navigation Co. v. Winsor, 20 Wall. 64; Moore Co. v. Towns Co., 82 Ala. 206; Webster v. Williams, 62 Ark. 101; S. S. Co. v. Wright, 6 Cal. 258; Cook v. Johnson, 47 Conn. 175; Bullock v. Johnson, 110 Ga. 486; Lawzil v. Mfg. Co., 184 Ill. 326; Martin v. Murphy, 129 Ind. 464; Hedge v. Lowe, 47 Iowa, 147; Pohlman v. Dawson, 63 Kans. 471; Davis v. Brown, 98 Ky. 475; Whitney v. Slayton, 20 Me. 276; Guerand v. Dandelet, 32 Md. 561; Bishop v. Palmer, 148 Mass. 346; Beal v. Chase, 31 Mich. 490; Gill v. Ferris, 82 Mo. 526; Perkins v. Clay, 54 N. H. 518; Mandeville v. Harmon, 42 N. J. Eq. 185; Curtis v. Gokey, 68 N. Y. 300; Cowen v. Fairbrother, 118 N. C. 106; Lufkin Co. v. Fringeli, 57 Oh. St. 117; Paxson's Appeal, 106 Pa. 429; Herreshoff v. Boutineau, 17 R. I. 1; Machine Works v. Perry, 71 Wisc. 495; Transportation Co. v. Pipe Line Co., 22 W. Va. 600.

1 King v. Waddington, 1 East, 143; Hilton v. Eckersley, 6 E. & B. 47; Cousins v. Smith, 13 Ves. 542; Ontario Co. v. Merchants' Co., 18 Gr. Ch. 540; U. S. v. Jellico Co., 46 Fed. 342; U. S. v. Nelson, 52 Fed. 646; Lowry v. Tile Ass'n, 98 Fed. 817; U. S. v. Fuel Co., 105 Fed. 93; Addyston Pipe Co. v. U. S., 175 U. S. 211; Mill Co. v. Hayes, 75 Cal. 387; Moore v. Bennett, 140 Ill. 69; Houston v. Kentlinger, 91 Ky. 333; Fabacker v. Bryant, 46 La. Ann. 820; State v. Firemen's Fund Ins. Co., 152 Mo. 44; Bingham v. Brands, 77 N. W. 940; Cohen v. Envelope Co., 166 N. Y. 292; Emery v. Candle Co., 47 Oh. St. 320; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; Nester v. Brewing Co., 161 Pa. St. 480; Oak-. dale Co. v. Garst, 18 R. I. 484; Mallory v. Oil Works, 86 Tenn. 598;. Fuqua v. Pabst Co., 90 Tex. 298; Richards v. Desk Co., 87 Wisc..