Mowing Co. v. Hardware Co. , 75 S.C. 378 ( 1906 )

The following are the reasons why I do not concur in the opinion of Mr. Justice Jones:

The plaintiff agreed, (1) to manufacture and sell to the defendant, certain machines at prices specified in the contract; (2) that it would use reasonable diligence to prevent other agents from interfering or making sales of machines covered by the contract, in the territory named as Greenwood and vicinity.

The defendant agreed, (1) to canvass said territory thoroughly, for purchasers of said property; (2) that it would not accept the agency for, or sell any other machines during the term of the contract; (3) that it would sell the said machines for use only in said territory.

The contract further provided, that in case of the violation of said conditions, the plaintiff should have the right to refuse to furnish machines not delivered.

Section 2845, of the Code of Laws, provides that "all arrangements, contracts, agreements, trusts, or combinations between two or more persons as individuals, firms, or corporations, made with a view to lessen, or which tend to lessen, full and free competition, in the importation or sale of articles imported into this State * * * and all arrangements, contracts, trusts, syndicates, associations, or combinations between two or more persons as individuals, firms, corporations, syndicates, or associations, that may lessen or affect, in any manner, the full and free competition, in any prices, etc., or seek to control, or in any way or manner, prices, etc., in any branch of trade, business, or commerce, are hereby declared to be against public policy, unlawful and void."

The statute came before the Court for construction, in the case of State v. Chemical Co., 71 S.C. 544,51 S.E., 455, and it was decided, that it must be interpreted, as intending that the contracts therein mentioned, are unlawful and against public policy only, when made with a view to lessen, or which tend to lessen full and free competition to an unreasonable extent. In logical order the first question for consideration is whether the contract herein was made with such a view. The fact that the plaintiff agreed to use reasonable diligence, to prevent other persons from selling machines in said territory; that the defendant agreed to canvass the territory thoroughly for purchasers of said articles; that it would not sell any other machines than those purchased from the plaintiff, during the term of the contract; and that it would sell the machines, for use only in said territory, not only shows that the parties entered into the contract, with a view to lessen full and free competition to an unreasonable extent, but that it naturally tended to bring about such a result.

"Where a contract belongs to a class which is reprobated by public policy, it will be declared illegal, though in that particular instance, no actual injury may have resulted to the public, as the test is the evil tendency, and not its actual results." 15 Enc. of Law, 934.

Having reached the conclusion that the contract is obnoxious to section 2845, of the Code of Laws, the next question for consideration is, whether this case comes within the exception to the general rule, recognized in Packard v. Byrd,73 S.C. 1. "Where the party complaining can exhibit his case, without relying upon the illegal transaction."

The policy of this State in regard to illegal contracts will be seen by reference to the following cases: Lowry v. Pinson, 2 Bailey, 324; Mordecai v. Dawkins, 9 Rich., 262;Willis v. Hockaday, 1 Spears, 379; Harvin v. Weeks, 11 Rich., 601; Wallace v. Lark, 12 S.C. 576; McConnell v.Kitchens, 20 S.C. 430; Gist v. Tel. Co., 45 S.C. 363, 89,23 S.E., 143; Lanahan v. Bailey, 53 S.C. 498;31 S.E., 332; Garvin v. Garvin, 55 S.C. 560, 33 S.E., 458; Pierson v. Green, 69 S.C. 559; State v. Robinson, 70 S.C. 468,50 S.E., 192.

These cases announce the general principles, that the Court will not lend its aid in the enforcement of an illegal contract; nor, when the contract is tainted with illegality, will it undertake to separate that which otherwise would be valid from the part which is contrary to law; nor will it suffer a recovery for the value of goods delivered in pursuance of a contract infected with illegality; nor permit a recovery for goods sold by a person, who not only knew that they were to be used in furtherance of an unlawful scheme, but who actively participated in bringing about the contemplated result. It thus appears that public policy demands, that the exception to the general rule, laid down in the case of Packard v. Byrd, 73 S.C. 1, should not be extended.

"Where a contract which is entire contains a stipulation or agreement which is illegal, and which, therefore, is not severable from the balance of the contract, such illegal stipulation or agreement can not be ignored, and the other provisions of the contract enforced; the illegal stipulation or agreement in such a case penetrates and corrupts the whole contract, and violates it as an entirety." 15 Enc. of Law, 988. "IF a promise to do several things or several distinct promises, although they be founded on a legal consideration, are indivisible, and one or more of the promises are illegal, the legal promise or promises cannot be enforced, but the whole agreement is void." 9 Cyc., 565-6. "A contract may be said to be entire, when by its terms, nature and purposes it contemplates and intends that each and all of its parts, material provisions, and the consideration are common each to the other and inter-dependent. A divisible contract is one, in its nature and purposes susceptible of division and apportionment, having two or more parts in respect to matters and things contemplated and embraced by it, not necessarily dependent upon each other, nor intended by the parties to be so." 15 Enc. of Law, 988.

In the case of Packard v. Byrd, 73 S.C. 1, the Court said: "The parties by their course of dealing with each other, give some evidence of their intention, that payment for each bill of shoes sold and delivered, was not conditioned or dependent upon the performance by plaintiffs, of their agreement to give the defendant exclusive right to handle plaintiff's line of shoes in Greenwood, S.C."

In the case under consideration, there was no such evidence; on the contrary, it appears upon the face of the contract, that "it contemplates and intends that each and all of its parts, material provisions, and the consideration, are common to each other, and inter-dependent." This fact clearly appears from that portion of the contract, which provides that in case of violation of its conditions, the plaintiff should have the right to refuse to furnish machines. In other words, the furnishing of machines from time to time, was conditioned and dependent upon the performance by the defendant of its part of the contract; and, its promises were not made solely in consideration of the agreement on the part of the plaintiff, to furnish the machines, but upon the further agreement that it would use reasonable diligence to prevent other persons from interfering, or making sales of machines in said territory.

Under these circumstances the contract was not severable, and his Honor, the Circuit Judge, erred in sustaining the demurrer.