purchaser of the good-will of any trade, calling or industry to get the benefit of the same. In the very early days the considerations a and b were of controlling force, but, as the courts became more enlightened concerning the laws of trade and commerce, the considerations last named, c and d, controlled, and the progress of the law concerning contracts in restraint of trade may be traced in the gradual subordination of those considerations which regarded only the welfare of the public and the individual bound to the broader considerations which regarded the nature of the property transferred and its adequate protection. § 699. Mitchell v. Reynolds (1711). In this celebrated case the defendant had assigned to the plaintiff the lease of a certain bake-house for the term of five years, and agreed not to exercise the trade of a baker within the parish during that period; the penalty being that if he did exercise such trade he should pay to the plaintiff the sum of £50; the defendant urged that he was a baker by trade; that he had served his regular apprenticeship, and that the bond was void in law, and that, therefore, notwithstanding he exercised his trade within the period named and within the parish, the plaintiff could not recover. The case was argued several times, and the opinion of the court was delivered by Parker, C. J., as follows: "The general question upon this record is, whether this bond, being made in restraint of trade, be 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 sufficient 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.: where the restraint is general not to exercise a trade throughout the kingdom, and where it is limited to a particular place; for the former of these must be void, being of no benefit to either party, and only oppressive, as shall be shown by-and-by."2 11 P. Wms. 181; s. c., 1 Smith's Leading Cases, 705, with elaborate notes. 2 The learned justice then proceeds methodically to review the law bearing upon the subject, and in doing so It will be observed that the court in deciding this case lays stress upon two additional considerations which were not mentioned in the earlier cases, namely, the adequacy of the consideration, and the tendency of such contracts to create a monopoly. he wanders far afield. The case has been so frequently cited in this country as well as in England as the leading case upon the subject, that the following propositions, with the authorities cited in support thereof, from the opinion may be very appropriately quoted: The resolutions of the books upon these contracts seeming to disagree, I will endeavor to state the law upon this head, and to reconcile the jarring opinions; in order whereunto, I shall proceed in the following method: 1st. Give a general view of the cases relating to the restraint of trade. 2dly. Make some observations from them. 3dly. Show the reasons of the differences which are to be found in these cases; and 4thly. Apply the whole to the case at bar. As to the cases, they are either, first, of involuntary restraints against or without a man's own consent; or secondly, of voluntary restraints by agreement of the parties. Involuntary restraints may be reduced under these heads: a monopoly, and against the policy of the common law, and contrary to Magna Charta. 11 Co. 84. 3dly. A grant of the sole use of a new invented art; and this is good, being indulged for the encouragement of ingenuity; but this is tied up by the statute of 21 Jac. 1, ch. 3, $5, to the term of fourteen years; for after that time it is presumed to be a known trade, and to have spread itself among the people. [See the further regulations introduced by Stat. 5 & 6 W. 4, ch. 83; 2 & 3 V., ch. 57; 7 & 8 V., ch. 69.] Restraints by customs of three sorts: 1st. Such as are for the benefit of some particular persons, who are alleged to use a trade for the advantage of a community, which are good. [8 Co. 125; Cro. Eliz. 803; 1 Leon. 152; Mich. 22 H. VI., 14; 2 Bulst. 195; 1 Roll. Abr. 561.] 2dly. For the benefit of a community of persons who are not alleged, but supposed to use the trade, in order to exclude foreigners. [Dyer, 279, b; W. Jones, 162; 8 Co. 121; 11 Co. 52; Carter, 68, 114, held good.] 3dly. A custom may be good to restrain a trade in a particular place, 1st. Grants or charters from the though none are either supposed or crown. 2dly. Customs. 3dly. By-laws. Grants or charters from the crown may be: 1st. A new charter of incorporation to trade generally, exclusive of all others, and this is void. 8 Co. 121. 2dly. A grant to particular persons for the sole exercise of any unknown trade; and this is void, because it is alleged to use it, as in the case of Rippon. Register, 105, 106. Restraints of trade by by-laws are these several ways: 1st. To exclude foreigners; and this is good, if only to enforce a precedent custom by a penalty. [Carter, 68, 114; 8 Co. 125; Wooley v. Idle, 4 Burr. 1951.] But where there is no precedent custom, such by-law is void. 1 Roll. Abr. 364; Hob. 210; 1 Bulst. The conclusions reached by the chief justice, after an exhaustive review of the law, were: 1st. That to obtain the sole exercise of any known trade throughout England is a complete monopoly and against the policy of the law. 11; 3 Keb. 808. [Vide Harrison v. Godman, 1 Burr. 12; Hesketh v. Braddock, 3 Burr. 1856.] But the case in Keble is misreported; for there the defendants did not plead a custom to exclude foreigners, but only generally to make by-laws, which was the ground of the resolution in that case. 2dly. All by-laws made to cramp trade in general are void. Moor, 576; 2 Inst. 47; 1 Bulst. 11; Wannel v. Chamber of the City of London, 1 Stra. 675; The King v. Harrison, 3 Burr. 1322; Pierce v. Bartrum, Cowp. 269. 3dly. By-laws made to restrain trade, in order to the better government and regulation of it, are good, in some cases, viz., if they are for the benefit of the place, and to avoid public inconveniences, nuisances, etc., or for the advantage of the trade and improvement of the commodity. Sid. *284; Raym. 288; 2 Keb. 27, 873; and 5 Co. 62, b, which last is upon the by-law for bringing all broadcloth to Blackwell Hall, there to be viewed and marked, and to pay a penny per piece for marking. This was held a reasonable by-law; and indeed it seems to be only a fixing of the market; for one end of all markets is, that the commodity may be viewed; but then they must not make people pay unreasonably for the liberty of trading there. In 2 Keb. 309, the case is upon a by-law for restraining silk-throwsters from using more than such a certain number of spindles, and there the by-law would have been good, if the reasons given for it had been true. Voluntary restraints by agreement of the parties are either: 1st. General, or, 2dly. Particular, as to places or persons. General restraints are all void, whether by bond, covenant or promise, etc., with or without consideration, and whether it be of the party's own trade or not. Cro. Jac. 596; 2 Bulst. 136; Allen, 67. Particular restraints are either: 1st, without consideration, all which are void by what sort of contract soever created. 2 H. V. 5; Moore, 115, 242; 2 Leon. 210; Cro. Eliz. 872; Noy, 98; Owen, 143; 2 Keb. 377; March, 191; Show. 2 (not well reported); 2 Saund. 155. Or 2dly, particular restraints are with consideration. Where a contract for restraint of trade appears to be made upon a good and adequate consideration, so as to make it a proper and useful contract, it is good (2 Bulst. 136, Rogers v. Parry), though that case is wrongly reported; as appears by the roll which I have caused to be searched, it is B. R. Trin. 11 Jac. 1; Rot. 223. And the resolution of the judges was not grounded upon its being a particular restraint with a consideration, and the stress lies on the words, as the case is here, though as they stand in the book they do not seem material. Noy, 98; W. Jones, 13 Cro. Jac. 586. In that case all the reasons are clearly stated, and, indeed, all the books, when carefully examined, seem to concur in the distinctions of restraints general and restraints particular, and with or without con 2dly. That when restrained to particular places or persons (if lawfully and fairly obtained), the same is not a monopoly. 3dly. That since these restraints may be by custom, and custom must have a good foundation, therefore the thing is not absolutely and in itself unlawful. 4thly. That it is lawful upon good consideration for a man to part with his trade. 5thly. That since actions upon the case are actions injuriarum, it has been always held that such actions will lie for a man's using a trade contrary to custom, or his own agreement; for there he uses it injuriously. 6thly. That where the law allows a restraint of trade, it is not unlawful to enforce it with a penalty. 7thly. That no man can contract not to use his trade at all. Sthly. That a particular restraint is not good without just reason and consideration. Regarding the considerations urged against contracts in restraint of trade in some of the earlier decisions, it was said: "The true reason of the distinction upon which the judgments in these cases of voluntary restraints are founded are: 1st, the mischief which may arise from them, first to the party by the loss of his livelihood and the subsistence of his family; secondly, to the public, by depriving it of a useful member. "Another reason is the great abuses these voluntary restraints are liable to; as, for instance, from corporations who are perpetually laboring from exclusive advantages in trade, and to reduce it into as few hands as possible; as likewise from masters, who are apt to give their apprentices much vexation on this account, and to use many indirect practices to procure such bonds from them lest they should prejudice them in their custom when they come to set up for themselves. "3dly. Because, in a great many instances, they can be of sideration, which stands upon very good foundation. Volenti non fit injuria: a man may upon a valuable consideration, by his own consent, and for his own profit, give over his trade, and part with it to another in a particular place. Palm. 172, Bragg v. Stanner. The entering upon the trade, and not whether the right of action accrued by bond, promise or covenant, was the consideration in that case. Vide March's Rep. 77, but more particularly Allen's, 67, where there is a very remarkable case, which lays down this distinction, and puts it upon the consideration and reason of the thing." no use to the obligee; which holds in all cases of general restraint throughout England; for what does it signify to a tradesman in London what another does at Newcastle? And surely it would be unreasonable to fix a certain loss on one side without any benefit to the others. The Roman law would not enforce such contracts by an action.1 "4thly. The fourth reason is in favor of these contracts, and is that there may happen instances wherein they may be useful and beneficial, as to prevent a town from being overstocked with any particular trade; or in case of an old man who, finding himself under such circumstances, either of body or mind, as that he is likely to be a loser by continuing his trade, in this case it will be better for him to part with it for a consideration, that, by selling his custom, he may procure to himself a livelihood, which he might probably have lost by trading longer. "5thly. The law is not so unreasonable as to set aside a man's own agreement for fear of an uncertain injury to him, and fix a certain damage upon another, as it must do if contracts with a consideration were made void.” In conclusion the court referred to the particular circumstances of the case before it. "Here the particular circumstances and consideration are set forth upon which the court is to judge whether it be a reasonable and useful contract. The plaintiff took a baker's house, and the question is whether he or the defendant shall have the trade of this neighborhood. The concern of the public is equal on both sides. What makes this the more reasonable is that the restraint is exactly proportioned to the consideration, viz., the term of five years. To conclude: In all restraints of trade, where nothing more appears, the law presumes them bad; but if the circumstances are set forth, that presumption is excluded, and the court is to judge of those circumstances and determine accordingly; and if upon them it appears to be a just and honest contract, it ought to be maintained.” § 700. By-law of Gunmakers' Company.- The Gunmakers' Company had a by-law prohibiting the sale of guns under certain conditions to any person engaged in the trade in London or within four miles thereof not a member of the company, and 1 See Puff., lib. 5, ch. 2, sec. 3, 21 H. VIL, 20. |