Cummings v. Union Blue Stone Co. , 44 N.Y.S. 787 ( 1897 )

Willard Bartlett, J.:

On February 21, 1887, the Union Blue Stone Company, as the party of the first part, entered into a written agreement with the plaintiff, the firm of the defendants Sweeney and thirteen other parties of the second part, for the purpose of controlling, the blue stone trade in the city of New York, and increasing the price of blue stone over the rates then prevailing in the market. By the first article of the contract the Union Blue Stone Company, as sales agent, undertook to make sales, as far as practicable, for the parties of the second part, of all the manufactured and unmanufactured marketable blue stone which the market would take for six years from the date of the agreement at such rate or tariff of prices as should be fixed by a body known as the Blue Stone Association. This body was composed of the parties of the second part themselves, who were the principal wholesale dealers in blue stone along the Hudson river. The Union Blue Stone Company agreed to apportion such sales between the members of the association in certain specified proportions, based on aggregate sales amounting to the sum of $1,905,000; and the proportion or quota representing the plaintiff’s interest or the quantity of blue stone to be sold in his behalf was stated at $90,000. This amount was. to be increased or diminished according to the total amount of sales. The blue stone dealers covenanted, in the second article of the contract, to furnish the required stone in the proportions indicated, and by the third article they agreed not to sell or deliver, either directly or indirectly, any stone to any person or corporation, except such as should be sold through the Union Blue Stone Company. There were many other provisions, and among them a declaration to the effect that any violation of the contract should subject the offending party to an action at law. for damages, or a suit in equity to enforce the agreement.

On August 30, 1888, the plaintiff assigned to the firm of E. Sweeney & Sons all the rights, interests and privileges acquired by him under the aforesaid combination agreement; and the firm agreed to pay to the plaintiff ten per cent upon the gross amount of sales apportioned to him thereunder.

After the establishment of the combination the price of blue stone to retailers in the New York market increased twenty, twenty-five and thirty per cent. The Blue Stone Association enjoyed some years of prosperity, but in February, 1890, it had become so threatened by outside competition that the combination was abandoned by a majority of the contracting parties, who declared the agreement canceled, though against the objection and vote of the plaintiff.

The present suit is brought to recover $40,000 damages against the Union Blue Stone Company and the survivors of the firm of E. Sweeney & Sons, upon the charge that since about January 1, 1890, the corporation wrongfully, and with the knowledge, consent and connivance of the defendant Sweeney, has refused and declined to request the plaintiff to furnish his quota of stone under the combination agreement, and that this refusal on the part of the company has been induced by the firm.

Upon the trial, after the evidence on both sides was all in, the learned justice who presided directed the jury to find a verdict for the defendants, upon two grounds : First, that the combination agreement was illegal and void as being in restraint of trade, and consequently no action could be maintained upon it; and, second, that there was no proof of any refusal on the part of the Union Blue Stone Company to perform its obligations to the plaintiff under the contract, and no evidence that the defendant Sweeney had committed any act to the detriment of the plaintiff or omitted to perform any obligation which he owed him.

It seems to me quite clear that this agreement between the wholesale dealers in blue stone, who then controlled ninety to ninety-five per cent of the manufactured stock sold in the State, was a contract inimical to trade and commerce, under the authority of The People v. Sheldon (139 N. Y. 251) and the cases therein cited. It is true that the combination which was the subject of consideration in that case had for its object the prevention of competition between dealers in coal, which may be regarded as an article of necessity in the ordinary sense, while there is no such general need or demand for blue stone as to bring it within that category. Nevertheless, a production, the sales of which in this State in a single year amount to $1,500,000, is sufficiently useful and important to the community to bring it within the operation of that rule of law which invalidates agreements to prevent competition in trade. (See, also, People v. Mille Exchange, 145 N. Y. 267.)

It was insisted by the counsel for the plaintiff that he was entitled to go to the jury upon the question of the validity of the contract, inasmuch as an agreement to increase the price might be either lawful or unlawful, according to the circumstances, but his request in this regard was properly denied inasmuch as there was no dispute in regard to the terms of the contract, or what had been done under it.

But even if the combination agreement were to be regarded as valid, the learned trial judge was entirely right in directing a verdict for the defendants, because the plaintiff utterly failed to prove the allegations of the complaint in respect to their conduct. It was shown, in the most positive manner and without contradiction, that the president of the Union Blue Stone Company notified the plaintiff that his corporation would be ready to sell any stone that he would send forward under the agreement, notwithstanding the action of the association in reference to its cancellation, and that, at no time was any arrangement made, or understanding had, with the firm of E. Sweeney & Sons, or any of its members, that the combination should be abrogated, or that any blue stone furnished by the plaintiff should not be taken and sold. After the meeting, at which a majority of the Blue Stone Association voted to cancel the agreement, the plaintiff never requested the Union Blue Stone Company to sell any stone for him, or offered it any stone, or informed it that he had any stone for sale. Upon this state of the evidence, in view of the form of the complaint, there was no question of fact to be submitted to the jury.

The judgments should be affirmed, with costs.

All concurred.

Judgments affirmed, with costs.