Gano v. Delmas , 140 Miss. 323 ( 1925 )

^* Headnotes 1. Contracts, 13 C.J., Section 427; 2. Sales, 35 Cyc., p. 600. Appellee, Claude Delmas, brought this action in the circuit court of Jackson county against appellant, S.A. Gano, for damages claimed to have been suffered by appellee, because of an alleged breach of contract of purchase by appellant from appellee of about thirty thousand barrels of Royal cement, and recovered a judgment for two thousand five hundred and thirty-three dollars and sixteen cents, from which appellant prosecutes this appeal.

There was no real conflict in the material evidence. The case, therefore, was one for a directed verdict for one party or the other. Appellee was a dealer in cement, having his residence and place of business in the city of Pascagoula. Appellant was a road contractor. He had a contract with the state highway commission and Jackson county to construct a concrete road along a part of the "Old Spanish Trail," that part between Moss Point in this state, and the Alabama state line. The construction of the road required the use of a large quantity of cement. Appellee handled Royal cement, and perhaps other brands. This cement was manufactured by the Dixie Portland Cement Company of Chattanooga, Tenn. Appellant and appellee entered into a written contract covering the sale and purchase of the required cement for said road project. The material provisions in the contract, so far as the rights of the parties to this cause are concerned, are substantially as follows:

Appellant agreed to purchase from appellee thirty thousand barrels of Royal cement, or so much thereof as might be necessary in the construction of said road. Appellee was the sole dealer in that territory on the products of the Dixie Portland Cement Company of Chattanooga, Tenn. One of these products was Royal cement, the brand purchased by appellant. The price fixed in the contract was three dollars and thirty-two cents per barrel, which carried a profit, as the evidence shows, of ten cents per barrel to the appellee as dealer. The contract provided that three dollars and thirty-two cents should be the maximum price, and that appellant, during the process of the construction of the road as he needed the cement, should have the advantage of any decline in the market price of Royal cement. After appellee had delivered the appellant something like five thousand barrels of Royal cement, appellant claimed that there had been a decline in the market price of that brand of cement, and called upon appellee to give him the benefit of this alleged reduction. After some negotiations, a reduction of twelve cents per barrel was made, but appellant declined to take any more cement, claiming that the market price was only two dollars and eighty-two cents per barrel, at which price the evidence showed it was selling at that time in the city of New Orleans.

The contract provides further:

"The quality of Royal cement mentioned on the reverse side thereof is sold and delivered for use in the work described, and if buyer shall sell or otherwise dispose of any portion of said cement or use any portion thereof in any work other than that described," appellee at his option shall have the right to decline further deliveries, etc.

It is this provision in the contract which is the basis of the main contest between the parties. By this suit, appellee sought to enforce that contract. Appellant urges upon the court that the contract is not enforceable, because it violates our anti-trust statute (sections 5002 and 5003, Code of 1906; sections 3281 to 3285, inclusive, Hemingway's Code). Appellant raised this question, first, by demurrer to appellee's declaration which was overruled, again during the trial by objecting to the introduction of the contract by appellee, and then again at the conclusion of the evidence by asking the court to direct a verdict in his favor. In fact both parties requested directed verdicts at the conclusion of the evidence, and the request of appellee was granted.

The principal ground, upon which appellant urges that the contract is void, is because he contends it is in restraint of trade; that the provision therein which bound appellant not to sell or otherwise dispose of any portion of the cement bought by him from appellee, or use any portion thereof in work other than the "Spanish Trail" road project, is violative of our anti-trust statute. To sustain his position, appellant cites the following from 24 R.C.L., p. 364, section 655:

"At common law, it was established at an early date, and has since been generally recognized, that a general restraint on the alienation of chattels, except when a very special kind of property is involved, such as a slave or an heirloom, is void. `If a man,' says Coke, `be possessed . . . of a horse or of any other chattel, real or personal, and give or sell his whole interest or property therein, upon condition that the donee or vendee shall not alien the same, the same is void, because the whole interest and property is out of him, so as he hath no possibility of a reverter; and it is against the trade and traffic and bargaining and contracting between man and man.'"

It will be observed from the terms of the contract that the amount of cement purchased by appellant was limited to the requirements of this particular road project, estimated to be about thirty thousand barrels. The question is whether or not the provision in the contract, by which appellant agreed not to sell or otherwise dispose of any portion of the cement so bought, or use any portion thereof on any other work than the "Spanish Trail" project, was such a restraint of trade as is violative of our anti-trust statute. Certainly it was a partial restraint of trade. The contract, if carried out, would operate to restrain trade to some extent. But that is not the criterion. It was held in Telephone Co. v. State, 100 Miss. 102, 54 So. 670, 39 L.R.A. (N.S.) 277; Sivley v. Cramer, 105 Miss. 13, 61 So. 653, and Pearson v. Harry Price and wife, the opinion in which latter case is handed down with this opinion, that all contracts and agreements in restraint of trade are not violative of our anti-trust statute; that it is only those which are inimical to the public welfare. Conceding that the contract involved is in restraint of trade, the question therefore is whether it is such a restraint of trade as is inimical to the public welfare.

It was held in Houck v. Wright, 77 Miss. 476, 27 So. 616, that a wholesale merchant could confine his sale of goods to one dealer in a given territory, without violating our anti-trust statute. The supreme court of the United States, whose construction of the federal Anti-trust Act is substantially the same as that given our statute by this court, held in U.S. v.Colgate Co., 250 U.S. 300, 39 S. Ct. 465, 63 L. Ed. 993, 7 A.L.R. 443, that in the absence of any purpose to create a monopoly the Sherman Anti-trust Act did not restrict the long-recognized right of a trader or a manufacturer engaged in private business freely to exercise his own independent discretion as to parties with whom he would deal, and to announce in advance the circumstances under which he would refuse to sell. In Railroad Co. v. Pullman Southern Car Co., 139 U.S. 79, 11 S. Ct. 490, 35 L. Ed. 97, it was held that an agreement that the Pullman Southern Car Co. should have exclusive right for fifteen years to furnish drawing rooms and sleeping cars for the use of a railroad company, and that the railroad company should not, during that period, contract for cars of that kind with any other party or parties, was not void as against public policy or in restraint of trade.

The restraint of trade involved under this contract consisted simply in this: That appellant should take the thirty thousand barrels of Royal cement, the estimated requirements for the construction of the road project he had under contract, and use it exclusively on that road construction; that he would use no other cement, and would not dispose of any part of the cement so purchased by him to any other person or for use on any other work. To begin with, appellant had all the cement dealers in the country to purchase from. After he refused further deliveries from appellee, he went out into the open market and bought another brand of cement with which to finish his contract. The same markets were open to him before he contracted with appellee. We are of opinion that the restraint of trade resulting from this contract was reasonable, and therefore not inimical to the public welfare.

Another question in the case is, whether or not appellant was entitled to a directed verdict, because of an alleged violation of the contract by appellee in refusing to give appellant the benefit of the decline in the market price of Royal cement, which appellant contends took place as the road work progressed. As stated above, there was no conflict as to the material facts. The facts out of which this question arises, in addition to what has been stated, were as follows: Appellee had no authority or power as a dealer in Royal cement, to fix the market price; he was not the manufacturer of it; the manufacturer was the Royal Portland Cement Company of Chattanooga, Tenn. Appellee was a mere dealer in their product, in Pascagoula, and added to the market price in that territory enough to net him ten cents a barrel for each barrel handled. Appellant's evidence showed, it is true, that Royal cement was sold in New Orleans at the time this road was being constructed, at two dollars and eighty-two cents per barrel, but it showed further, that the manufacturer fixed that price to meet the price of cement in the New Orleans territory fixed by foreign importers. The manufacturer, not appellee, refused to reduce the price in the territory in which appellee handled Royal cement. And the evidence showed without conflict, that appellee could not have gotten Royal cement in New Orleans or elsewhere in the country, for less than the price at which he offered it to appellant; that if he had bought it in New Orleans, for illustration, from the dealer there at two dollars and eighty-two cents a barrel the freight from New Orleans to Pascagoula would have made the same price exactly in the latter city as that appellee made appellant. There is no evidence whatever tending to show that appellee entered into conspiracy or understanding with the manufacturers of Royal cement by which the price was fixed. On the contrary, the evidence showed, as stated, that appellee had nothing whatever to do with the fixing of the price of Royal cement in his territory or elsewhere. Furthermore, the evidence showed either directly or by necessary inference, that the market price contemplated in the contract was the market price delivered at Pascagoula.

We find no merit in the other questions argued.

We are of the opinion that the court committed no error in directing a verdict for appellee for the amount sued for, there being no controversy as to the amount.

Affirmed.