to apply the ancient rule with the same strictness as formerly. Considering this subject with reference to adjective law, we find that the courts refuse to aid the parties to such contracts, and there can be no wrong ex delicto in connection with the same. "No action at common law will lie, or ever has lain, against any individual or individuals for entering into a contract merely because it is in restraint of trade." 8 So we pass it with the above brief notice. But in some instances a contract in restraint of trade may be made in general restraint of trade, so that a monopoly will be thereby created, and hence the same may be invalid. This will be considered later.

§ 492. Contracts in Restraint of Trade-Elements of Illegality-Illustrations.-The legality or illegality of contracts in restraint of trade, depending as it does upon whether or not the restraint imposed upon the vendor is reasonable or unreasonable, the determination of what constitutes the boundary line between what is reasonable and unreasonable restraint upon individual action becomes a very important and difficult problem, involving great responsibility upon the judiciary, and is a question of mixed law and fact. No arbitrary rule can be laid down; each case must depend upon its own conditions and circumstances, the question being in the particular instance whether the vendor has placed such restraint upon himself as will injure public interests, and this will depend upon the character and condition of trade.

It has been well stated that "the older cases attempting to fix arbitrary geographical bounds beyond which a contract to forbear from competition would

7 People's Gaslight Co. v. Chicago Gaslight Co., 20 Ill. App. 473, 492; Beach on Monopolies, sec. 37.

8 Mogul Steamship Co. v. McGregor, L. R. 21 Q. B. 544, 23 Q. B. D. 598, App. Cas. 1892, 25.

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." 9 The controlling principle which it seems has been universally applied appears to be, that whenever the restriction upon the vendor is reasonable in time and area, depending upon the business, trade or profession, the contract will be upheld; if unreasonable, invalid. The time and area of territory must be limited to such an extent only as will amply protect the party for whose benefit the contract is made.10 If the limit as to time is too long, or as to locality too great, or if there is no limit as to either, then there is nothing to support the contract. A limitation not to engage in the profession of teaching in a state for a year, or a contract to give another the sole and exclusive right to sell and deal in a certain line of goods in a state,13 the sale of a match manufacturing business, with the goodwill, with a covenant by the vendor not to engage within ninety-nine years in the like business, except for the purchaser, in any of the United States or territories, except Nevada and Montana, or to abandon one's own business and enter the employ of another,15 a contract not to carry on

12

14

9 Cowan v. Fairbrother, 118 N. C. 406, 54 Am. St. Rep. 733, and cases cited in opinion of court, 24 S. E. 212.

10 Long v. Towl, 42 Mo. 545, 97 Am. Dec. 355.

11 Chapin v. Brown, 83 Iowa, 156, 32 Am. St. Rep. 297, 48 N. W. 1074; Kramer v. Old, 56 Am. St. Rep. 656, note.

12 Herreshoff v. Boritineau, 17 R. I. 3, 33 Am. St. Rep. 850, 19 Atl. 712.

13 Newell v. Meyendorff, 9 Mont. 254, 18 Am. St. Rep. 738, 23 Pac. 333.

14 Diamond Match Co. v. Roeber, 106 N. Y. 473, 60 Am. Rep. 464, 13 N. E. 419.

15 Carnig v. Carr, 167 Mass. 544, 57 Am. St. Rep. 488, 46 N. E.

a particular trade or business in a particular town or county for a reasonable time,16 or a sale of the right to carry on a secret trade with a covenant not to carry it on nor to divulge the secret,17 or a contract of purchase by one person of five distinct manufactories of a public commodity, containing a stipulation by each of the vendors that they will not engage in a competitive business for a long period of time (in this case fifty years), and over a great extent of country, 18 have been held valid as not in general restraint of trade. On the other hand, where one binds himself never to engage in a certain business in a city, county and state,19 or within a state, or elsewhere in the United States for a period of twentyfive years,20 and in some instances within a state,21 or a contract is made on the part of a manufacturer of lumber to make and deliver, during a certain year, a certain quantity of lumber, and not to manufacture lumber to be sold to others within four counties,22 or contracts between grain dealers of a town, apparently for a lawful purpose, the real purpose being to effect a secret combination,23 or contracts for the exclusive sale of a product,24 or contracts on the part

16 Washburn v. Dosch, 68 Wis. 436, 60 Am. Rep. 873, 32 N. W. 551; Angier v. Webber, 14 Allen, 211, 92 Am. Dec. 748; Chapin v. Brown, 83 Iowa, 156, 32 Am. St. Rep. 297, 43 N. W. 1074; Morgan v. Perhamus, 36 Ohio St. 517, 38 Am. Rep. 607; Pierce v. Fuller, 8 Mass. 223, 5 Am. Dec. 102.

17 Vickery v. Welch, 19 Pick. 523.

18 Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 78 Am. St. Rep. 612, 43 Atl. 723.

19 More v. Bonnet, 40 Cal. 251, 6 Am. Rep. 621.

20 Lufkin Rule Co. v. Fringeli, 57 Ohio St. 596, 63 Am. St. Rep. 736, 49 N. E. 1030.

21 Dunlop v. Gregory, 10 N. Y. 241, 61 Am. Dec. 746.

22 Santa Clara Valley etc. Co. v. Hayes, 76 Cal. 387, 9 Am. St. Rep. 211, 18 Pac. 391.

23 Craft v. McConoughy, 79 Ill. 346, 22 Am. Rep. 171.

24 Pacific Factor Co. v. Adler, 90 Cal. 110, 25 Am. St. Rep. 102, 27 Pac. 36.

of a manufacturer to discontinue his business, in order that another might have a monopoly;25 a contract by one manufacturer to sell to another and not engage in the business in eight specified states for five years thereafter, nor to allow his premises to be used for manufacturing purposes,26 such limitations and contracts are invalid.

493. Monopolies and Trusts-The Various Forms Considered with Legal Consequences-The Original Form. The monopoly of to-day is unlike those in existence. in early times. The first monopolies with which the courts of England had to deal were those created by special grant, and we see now in this country certain states holding out special inducements for the organization of corporations upon specially liberal conditions. The modern so-called trust or monopoly is generally a "tramp corporation." Well may it be remarked that one state should not be allowed to "spawn" corporations for the purpose of doing business in another state. We fully coincide in the language of a learned writer that "the 'tramp corporation' should not be judicially recognized, but that its members should be held liable upon their contracts as partners, and upon their torts as joint tort-feasors." The pioneer monopoly and trust was the Standard Oil Company. Its form of organization, though perhaps familiar to the reader, will be briefly set forth. The stockholders of some forty corporations then in existence in various states entered into an agree

"27

25 Tuscaloosa Ice Mfg. Co. v. Williams, 127 Ala. 110, 85 Am. St. Rep. 125, 28 South. 669.

26 Western Woodenware Assn. v. Starkey, 84 Mich. 76, 22 Am. St. Rep. 6S6, 47 N. W. 604.

27 6 Thompson on Corporations, secs. 7895, 7898; Land Grant etc. Co. v. Coffey County, 6 Kan. 245; Montgomery v. Forbes, 148 Mass. 249, 19 N. E. 342; Hill v. Beach, 12 N. J. Eq. 31; Booth v. Wonderly, 36 N. J. L. 250.

ment, by which they were to transfer and assign the legal title of their stock in the individual corporations to nine trustees of the Standard Oil Trust, who were to hold the legal title and to vote the stock, and substantially control the business of the several corporations. Thus arose the name "trust," because the legal title to this stock was placed in the hands of the trustees to be held by them in trust, the business of the corporations managed by them for the benefit of the stockholders. The corporate entity of the various corporations was preserved, nominally, by allowing sufficient number of the shares to remain in the hands of stockholders to maintain a directory for such corporations. Notwithstanding this attempted "trust" relation, by analogy to a trust recognized in equity, conceived as it was in sin, was pronounced illegal and void, courts and legislatures have taken up the name, engrafted it into our jurisprudence as a branch of monopolies, and use it constantly, though generally with an apology. The name thus used is a misnomer.

Agreements of this character were condemned because they tend to the creation of a monopoly, to control production as well as prices, and are against public policy. The Standard Oil Trust, in 1892, and the Sugar Trust, in 1890, were condemned under this ruling.2

28

Another form of monopoly, called in question prior to these cases, was where one corporation was formed, for example, for the purpose of engaging in a lawful business, as manufacturing gas. But where such corporation acquires the stock in other corporations of like character, for the purpose of controlling

28 State v. Standard Oil Co., 49 Ohio St. 137, 34 Am. St. Rep. 541, 30 N. E. 279; People v. North Sugar Refining Co., 121 N. Y. 582, 18 Am. St. Rep. 843, 24 N. E. 834.