The Cal. Steam Navigation Co. v. Wright , 6 Cal. 258 ( 1856 )

Mr. Justice Terry, after stating the facts, delivered the opinion of the Court.

Mr. Chief Justice Murray concurred.

The first objection is untenable. The allegation that plaintiff was a corporation under the laws of this State, is sufficient to establish the right to sue, under the first section of the Act concerning corporations. Rev. Laws, 290.

The next objection is, that the contract declared on is not assignable. The contract is an instrument in writing, for the payment of money, and is made assignable by our laws. Besides, it has always been the policy of our law to construe contracts according to the intention of the parties, and it was evidently the intention of the parties that the contract should be assignable, as it is made payable to Chenery, his heirs, etc.; and as it appears from the complaint that the defendant was notified of the assignment, and received from the plaintiff the full sum of money which Chenery contracted to pay, he is estopped from denying that the contract was assignable. The third ground is not supported by the fact. The complaint does show that the contract was assigned by Chenery to plaintiff. The next objection is that the contract is against public policy, as being in restraint of trade.

At common law, all contracts by which one obliged himself to do an act or omission tending to injure the public, were void, and the general rule is that contracts in restraint of trade are contrary to public policy. The stringency of this rule has been gradually relaxed, as the reason for it (to wit: the security of mechanics and tradesmen) ceased.

As early as 1711, in the case of Mitchell v. Reynolds, 1 Peere Williams, 181; Parker, C. J., in delivering the opinion of the Court, says : “ The general question upon this record is, whether this bond, being made in restraint of trade, is good. And we are all of opinion, that a special consideration being set forth in the condition, which shows it was reasonable for the parties to enter into it, the same is good; and that the true distinction of this case is not between promises and bonds, but between contracts with and without consideration ; and that wherever a proper consideration appears to make it a proper and useful contract, and such as cannot be set aside without injury to a fair contractor, it ought to be maintained, but with this constant diversity, viz. : when the restraint is general not to exercise a trade throughout the kingdom, and when it is limited to a particular place; for the former of these must be void.”

In Pierce v. Fuller, 8 Mass., 223, it was held that an agreement not to run a stage coach on a certain road was valid. So in the case of' Chappel v. Brockway, 21 Wend., 157, where a party entered into a bond, under the penalty of twenty-five thousand dollars, that he would not at any time thereafter own, run, or be interested in, any line of packet boats on the Erie canal, it was held that the bond was valid.

In these oases, the doctrine seems to be, that there must be not only a consideration for the contract, but there must be some good reason for entering into it; and it must impose no restraint upon one party which is not beneficial to the other—21 Wend., 160. Applying the rule as laid down in the cases cited, to the one under consideration, we are satisfied that the contract is valid. The plaintiff paid to defendant a valuable consideration for the contract, and there was also a good reason for entering into it; no restraint was imposed on defendant which did not enure to the advantage of plaintiff.

It is objected that this contract gives to the plaintiff a complete monopoly of the waters named. This objection cannot be better answered than in the words of Mr. Justice Bronson, in the case above cited: “ That is certainly a new kind of monopoly which only licenses the plaintiff in the exclusive enjoyment of his business as against a single individual, while all the world besides are left at full liberty to enter upon the same enterprise.

The fifth objection is that the complaint does not allege any facts from which the measure of damages can be ascertained.

From the tenor of the contract itself, as well as from the allegations of the complaint, we are satisfied that it was the intention of the parties, that the sum of fifteen thousand dollars was agreed upon, as the sum which was to be paid by defendant in ease of a failure on his part to perform the contract. It was the sum which was received by defendant in consideration of the covenants on his part, and certainly if he failed to perform his agreement, there would be no hardship in requiring him to return the sum which he had received.

In the case of Williams v. Dakin, 22 Wend., 201, it was held that whether a sum agreed upon by the parties to a contract, as the measure of damages, shall be considered as liquidated damages, or only as a penalty, depends upon the interest of the parties, and the peculiar circumstances of the subject matter of the contract.

Chancellor Walworth, in that opinion, says : “ The remaining question is, whether the three thousand dollars is to be considered as a stipulated sum", which both parties intended should be paid as liquidated damages in case the covenant was broken; and if so, whether there is any rule of law which can authorize this Court, or any other Court, to say the plaintiff in error shall be excused from performing his agreement ; in other words, whether this Court can make a new agreement for the parties which they never intended to make for themselves. I think no one who reads the covenant can doubt for a moment that it was the intention of both parties that if it was broken, the whole three thousand dollars should be paid as the liquidated damages for such breach. The object of the covenant was to protect Dakin and Bacon, and their assigns, in the full enjoyment of the good will of a public newspaper, and of its patronage, for which good will and patronage they were paying the sum of three thousand dollars; and as the value of the good will or patronage of the paper, as well as the amount of injury which the. purchasers might sustain by any interference with it, were wholly uncertain and incapable of estimation otherwise than by mere conjecture, the amount to be paid upon the breach of that covenant was not only a proper subject for stipulated damages, but the precise sum paid for such good will or patronage, appears to be that which the parties would naturally fix upon as the amount to be refunded to the purchasers upon any breach of the covenant.” This opinion is sustained by Hodges, Exr., v. King, 7 Metcalf, 583; Perkins v. Fuller, 8 Mass., 222; and Perkins v. Lyman, 11 Mass., 81; Chamberlan v. Bailey, 11 N. H., 234; 5 Sand., 192.

The allegation of performance on the part of plaintiff and Chenery is sufficiently explicit under the sixtieth section of our Practice Act.

Judgment reversed and cause remanded.