Schemes to Control the Market. The simple case of restraint of trade is as obnoxious to a modern court as ever. Tuscaloosa Ice Company v. Williams (127 Ala. no), the latest uncomplicated case, shows that. The complaint recited that by the terms of an agreement between the plaintiff and de fendant, the first party was to pay $875 a year and the second party was to shut down his ice machine for five years. A demurrer to the bill, pointing out that the agreement was in restraint of trade, was sustained. Mr. Justice McClellan said in part: "This contract is clearly bad. It tends to injure the public by stifling competition and creating a monopoly. Its manifest purpose even upon its face, and certainly when taken in connec tion with the facts averred in the pica, was to secure to the covenantee a monopoly in the production and sale of ice in the town of Tuscaloosa and vicinity, and such is its oper ation and effect. Indeed, on the allegations of the plea it was even worse than this, for one of its results was to reduce the available supply of ice below the needs of the locality affected by it. It thus operated not only to put it in the power of the covenantee to arbi trarily fix prices, but directly and necessarily to create a partial ice famine, upon which the defendant company could batten and fatten at its own sweet will. That a monopoly was created is clear beyond all dispute. That ends the case against the validity of the covenant. Nor is there the least merit in the suggestion that ice could be brought to Tuscaloosa from other places, and hence that the defendant had no monopoly. All of the foregoing prop ositions sustaining the conclusion that the contract sued on is violative of public policy as stifling competition and promoting monopoly to the manifest injury of the public are fully supported." In recognition of this law various devices have been tried by astute lawyers to avoid it. A late example of this sort of scheme is the "dead lease" seen in Clark v. Needham (125 Mich. 84). The arrangements made by the
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attorney involved two leases, one from the party who was to sell out one branch of his business, absolute in form at a high rental to be paid by the buyer; the other from the buyer back to the seller at nominal rental, with covenants against engaging in that line of business. The court was quick to see through this elaborate plan; Mr. Justice Grant said on that point: "These two instruments consti tute but one instrument, and must be con strued together. Briefly stated, the agree ment is this: Plaintiffs, in consideration of $1500, to be paid to them annually, agreed for a period of five years not to manufacture or sell chaplets, except for only one party. Plaintiffs' sales were not limited to the place of manufacture, but extended into other States. The plain object of the agreement was to substantially close this part of plain tiffs' business, and to give defendants a monopoly of it. The parties evidently recog nized the invalidity of such a contract, put in plain and unequivocal language, and sought to evade it by these two so-called lease?. The arrangement was a bare subterfuge to evade the law. Defendants did not buy out plain tiffs' business, machinery and plant, or lease them for the purpose of continuing their (plaintiffs') business. The result intended and accomplished was to close that part of plain tiffs' business, to throw their employés out of employment, and to deprive the public of any benefit from the continuance of their busi ness. Such contracts tend to destroy com petition and create monopolies, and are void." These, then, are first principles. It is enough if between the two parties to the agreement the restraint is total in any par ticular. And it does not relieve the situ ation if the effects of that agreement may be limited to a greater or lesser extent by com petition of parties outside of the agreement. The law regards what the effect would be if more and more of such agreements were en tered into between competitors in the same
