
    John G. Walsh and G. Wells Walsh, Appellants, v. John Dwight and Others, Respondents.
    
      Contract in restraint of trade — agreement not to sell food, below a certain price.
    
    Contracts entered into by the manufacturer of a certain brand of saleratus and soda with jobbers and dealers in that commodity, by the terms of which the manufacturer agrees to sell the brand manufactured by it to such jobbers and dealers at a reduced price in consideration of their agreement not to sell it or different brands of the same article manufactured by other persons at less than a stipulated mice, are not illegal as to rival manufacturers of saleratus and soda, who do not allege that such contracts were entered into with their customers, or with any person other than the regular customers of the first-mentioned manufacturer, or that the customers of such rival manufacturers had been induced thereby to break any existing contracts with them.
    Such contracts do not contravene chapter 647 of the United States Statutes, passed July 2, 1890 (26 U. S. Stat.. at Large, 209), nor chapter 716 of the Laws of New York of 1893, declaring illegal contracts, restraining of preventing competition in the supply or price of any commodity of common use for .the support of life and health.
    
      ■Quaere, whether, assuming such a contract to be illegal, it would give a cause of action to a third party engaged in the same business, but having no contractual relations with the parties to such contract.
    Appeal hy the plaintiffs, John G. Walsh and another, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Hew York on the 12-th day of January, 1899, upon the dismissal of the complaint hy direction of the court after a trial at" the Hew York Trial Term.
    
      
      Isaac N. Miller, for the appellants.
    
      Alexander P. Ketchum, for the respondents.
   Ingraham, J.:

Upon the trial of this action the complaint was dismissed upon the ground that it did not state facts sufficient to constitute a cause of action„and from the judgment entered upon such dismissal the plaintiffs appeal. Upon this appeal the facts alleged in the complaint must be taken as established, and it must be determined whether upon such facts, as alleged, the plaintiffs were entitled to a verdict. The' complaint alleges that the plaintiffs, who are doing business in the city of Hew York as manufacturers of and dealers’ in saleratus and soda, which are articles of common use for the support of life and health, had expended large sums of money in advertising’ their business throughout the State of Hew .York and elsewhere ; had been to great expense in introducing their goods on the market; had, prior to. January 1, 1896, built up a large and lucrative business, and had prepared plates and wrappers for the various brands of goods used by the jobbers and general dealers in the trade to whom the plaintiffs supplied the said goods; that prior to January 1,1896, the defendants had been engaged in the manufacture and sale of saleratus and soda and had built up a large trade in what was known on the market as “ Dwight’s Cow Brand Saleratus and . Soda,” and that the said articles under the said name had come to be well known and in great demand throughout the country, though substantially of the same grade and quality as those sold by the-, plaintiffs; that the plaintiffs had, prior to January 1, 1896,.been supplying jobbers and the trade generally with the said articles at prices considerably lower than those charged for the articles manufactured and sold by the defendants, and thereby had been enabled to make large sales of their commodities; that the defendants, ^knowing this and with intent to injure...the plaintiffs^Jlestroy, restrain and prevent competition,' and for the purpose of advancing the prices of the said articles,, and contrary to the statute in such case made and provided, did, shortly before and on or about the 1st day of January, 1896, 'and at other times, wrongfully and unlawfully make and enter into contracts with large numbers of the jobbers and dealers throughout the' State of Hew. York and elsewhere, wherein and whereby these defendants undertook and agreed to pay to the said parties quarterly, one-half cent per pound on all purchases from said defendants- of the said Gow Brand Saleratus and Soda, in consideration of the said parties undertaking and agreeing not to sell, or to permit any person connected with them, or under their control, to sell Dwight’s Gow Brand Saleratus and Soda at less than the basis of five and one-half cents per pound in one^ •pound packages in boxes, or four cents per pound in bulk in kegs, free on board in Hew York city; other packages in proportion.^ “ (jobbers outside of Hew York city to add one-eighth of a cent per pound to the invoice prices for freight, which price was a fictitious and exorbitant ¡Drice caused by extensive and extravagant advertising, the benefit of which accrued only to said defendants), and further undertaking and agreeing not to sell any saleratus or soda in. bulk or in boxes under their own private or other brands at less price than Dwight’s Gow Brand ; jj^and that, by reason of the said wrongful and unlawful contracts and combinations of the said defendants, restraining and preventing competition and creating a monopoly in the said articles, the business of these plaintiffs was utterly destroyed, and they were wholly prevented from competing with the defendants or making any sales of their goods, and were injured to their damage in the premises in the sum of $50,000.

It is not alleged that the defendants had made any contracts with ■the customers of the plaintiffs, or with any others than those who were the defendants’ regular customers or persons regularly dealing with them, or that they had induced any of the plaintiffs’ customers to break any existing contract with the plaintiffs. The right of action appears to be based solely upon the illegality of the contracts made between the defendants and their customers or persons dealing with them; and the plaintiffs ask to recover from the defendants. the damages which they claim to. have sustained because, by reason of the alleged illegal contracts made between the defendants and their customers, the defendants’ customers refuse tó purchase the plaintiffs’ goods.

Assuming, for the purpose of this argument a question, however, which we do not determine that 'a contract made by a firm, engaged in the manufacture and sale of an article of commerce with those dealing with the firm, which is illegal or prohibited by law, would give á cause of action to any third party.engaged in the same business, having no contractual relation with either of the parties' to the contract alleged to be illegal, the illegality of the contract alleged must be established before there could be any cause of action. There is, however, nothing in the contract 'alleged in the complaint to have been made by the defendants which prevents the' jobbers and dealers from purchasing or selling the goods of others than the defendants. The defendants simply offered to parties purchasing their goods to make a reduction in' the price of the goods sold, in consideration of the purchasers agreeing not to sell the goods at a less price than that named, and not to sell the goods of other manufacturers at a less price than that at which they agreed to sell the defendants’ goods'. It is difficult to see upon what ground it can be claimed that such a contract is illegal. That the defendants would have the right to establish agencies for the sale of their goods, or to employ others to sell them at such price as the defendants should designate, cannot be disputed. Nor can it be that a manufacturer of merchandise cannot agree to sell to others upon condition that the vendees in selling at retail should charge a specifled price for the goods sold, or should sell only the manufactured product of the manufacturer. ^?f a dealer in articles of • this kind, for his own advantage, agrees to coniine his business to a particular • line of goods, or agrees with the manufacturers to charge a particular 'price for the articles which he sells in his business, such an agreement is not illegal as in restraint of trade or .as tending to create a monopoly, as there is nothing in the agreement to prevent others from engaging in the business, or the manufacturer of other articles from selling their product to any one who is willing to biiyTj There is nothing to prevent an individual from selling any property that he has at any price which he can get for it. Nor is there any reason why an individual should not agree that he will not sell' property which lie owns at the time of making the agreement, or which he thereafter acquires, at less than at a fixed price; and certainly a contract of this kind is not one which exposes the .parties to it to any penalty, or subjects them to an action for damages by those whose business such a contract has interfered with.

The plaintiff, however, claims that these contracts are rendered illegal by certain statutes of this State and of the United States. Reliance is placed upon chapter 716 of the Laws of 1893. • Section 1 of that act provides that (“ Every contract or combination in the form of trust or otherwise, made alter the passage of this -'act. whereby competition in the state of Hew York in the supply or. the price of any article or commodity of common use in said state for the support of life and health may be restrained or prevented, for the, pur pose of advancing prices, is hereby declared illegal. But this contract is not within the prohibition of this statute. There is nothing in this contract that restrains or prevents competition in the supply or the price of any article of commodity. The < act is entitlej “An act to prevent monopolies in articles of general-necessity,” and it makes illegal a contract or combination whereby ' competition in the State of Hew York in the supply or price of any article or commodity of common use may be restrained or prevented for the purpose of advancing prices. ^This act did not have the effect of preventing a manufacturer from fixing the price at which his articles should be sold, or from making an agreement with these persons who acted as the jobbers or retailers of his manufactured articles that they .would deal exclusively -in his merchandise, of would not sell the merchandise of other persons at a less price than that for which his product was sold. The act was evidently ■intendecTto preymitjaanufactnrfirs_Qr, dealersJhuanv ^article or commodity of common use from^pombining together to advance the pricjB^}3iSñihZarticle^ or commodityjyv ydneh—competition, in^-the supply or. price of the same wonldUbe—rest-rict.ed_or-~reg-u-lated..; but a contract__by_a^single_ manufacturer as to the price at which, his goodTwhen manufactured should be soldjyy those^selected by hnñYór'frhApurpose~of sale or distribution woiild-nof.„be-a_.con-traet byvvGicir^ómpéfition in "tlie"supply or price of the commodity .would jBg~í~estrain¿cLor prevented?^ All of the manufacturers could compete with these defendants in the sale of these goods or themaking of a contract such as was mádé by the defendants. The contract in question simply gave to those of their customers who chose to make the agreement with them an advantage as to the price for which the goods were purchased which those who refused to come to such an understanding did not share. That such an agreement is not illegal has been settled by a long, line of authorities. The principle upon which these decisions are based is stated by Lord Coleridge in the case of Mogul Steamship Co. v. McGregor (L. R. [21 Q. B. Div.] 544) as follows: “ The defendants are traders with enormous sums of money embarked in their adventures, and naturally and allowably desirous to reap a profit from their trade.. They have a right to push their lawful trade by all lawful means. They have a right to endeavor, by lawful means, to keep their trade in their own hands, and by the same means to exclude others from its benefits if they can. Amongst lawful means is certainly included the, indue-ing, by profitable offers, customers to deal.with them rather than with their rivals. It follows that they may, if they think fit, endeavor to induce customers to deal with them exclusively by giving notice that only to exclusive customers will they give the advantage of their profitable offers. I do not think it matters that the withdrawal of the advantages is out of all proportion to the injury inflicted on those who withdraw them by the customers who decline to deal exclusively with them dealing with other traders.” This extract from the judgment of Lord Coleridge was quoted with approval by Judge O’Brien in delivering the opinion of the Court of Appeals in Lough v. Outerbridge (143 N. Y. 283), where a contract made by a common carrier to transport freight for a less price when the shipper agreed not to ship by a rival line was held to be legal, Judge O’Brien saying: “ I cannot perceive anything unlawful or against the public good in seeking by such means to retain a business.” , The statute of the United States (Act of July 2, 1890, chap. 647 [26 U. S. Stat. at Large, 209]) does not apply. (United States v. E. C. Knight Co., 156 U. S. 1.)

We think, therefore, that no cause of action was alleged in the complaint, and the judgment is affirmed, with costs.

Van Brunt, P. J., Patterson, O’Brien and McLaughlin, JJ., ■ concurred.

Judgment affirmed, with costs.  