Contract, Validity. Equity Jurisdiction, To enforce negative contract, Laches. Anti-trust Law. Corporation, Ultra vires. Estoppel. Assignment. Equity Pleading and Practice, Defences, Hearings before master, Master's report, Petition to intervene. Damages, In equity for breach of contract. Interest. Release. Payment.
A contract in writing between a corporation which prints and sells strip tickets used by transportation companies and a corporation manufacturing an improved printing perfecting press, by which the manufacturing corporation sells a press to the printing corporation and agrees not to sell this type of press to other customers to be used by them for a similar purpose but reserves the right to make and sell the press for other uses for which it may be adapted, is valid.
If in a suit in equity by a corporation which sells strip tickets used by transportation companies, seeking damages from a corporation manufacturing an improved printing perfecting press for the alleged breach of an agreement in writing not to sell the type of press sold to the plaintiff to other customers to be used for a similar purpose, the defence that the contract sought to be enforced is void as in violation of 26 U.S. Sts. at Large, 209, commonly known as the anti-trust law, must be pleaded specially, and if the defendant files an answer and a cross bill in neither of which the point is taken, this defence is not open to the defendant.
If a corporation, organized under the laws of another State for the purpose of making and dealing in printing presses, sells a press to a corporation which sells strip tickets used by transportation companies and agrees in writing not to sell the same type of press to other customers to be used for a similar purpose, and receives and retains the price paid for the press and for its agreement, it cannot be permitted to repudiate its agreement as being in excess of its corporate powers.
If a corporation which prints and sells tickets used by transportation companies makes a valid contract in writing with a corporation manufacturing an improved printing perfecting press by which the manufacturing corporation sells it a press and agrees not to sell this type of press to other customers to be used by them for a similar purpose, the contract containing no provision for its assignment, and later in a reorganization the printing corporation conveys and assigns all its corporate property including choses in action to a new corporation, the manufacturing corporation not assenting to the assignment, the assignment passes to the new corporation any right of action against the manufacturing corporation for a breach of its agreement which occurred before the assignment, but does not assign the contract.
After a master has made a draft report and submitted it to the counsel for the parties, it is within his discretion to determine how far if at all he will reopen the hearing and admit further evidence offered by either party after hearing their objections and before finally settling his report.
Where an order referring a case to a master does not require him to report the evidence and he does not report it, exceptions to his report which depend on a different view of the testimony from that taken by the master or which are based on the ground that some of his findings are not supported by sufficient proof cannot be considered.
An exception to the admission of evidence by a master cannot be sustained, although the evidence was admitted erroneously, if its admission has been made immaterial by the fact that neither the findings of the master nor those of the judge who heard the case were affected by it.
In a suit in equity by the assignee of the property and choses in action of a corporation which was engaged in the business of printing and selling strip tickets to transportation companies, against a manufacturing corporation which had sold a press to the plaintiff's assignor under a valid contract in writing by which it agreed not to sell this type of press to other customers to be used by them for a similar purpose, seeking to recover damages for a breach of this contract before the assignment by the sale of a press to another corporation to be used for a similar purpose, the measure of damages is the difference between the value of the press purchased by the plaintiff's assignor when fitted for use in printing strip tickets and protected by the restriction of the contract and its market price after the depreciation caused by the defendant's sale in violation of the contract, with interest from the date of the breach.
Where a plaintiff is entitled to damages for a breach of contract he also is entitled to interest from the date of the breach as compensation for delay in payment.
In a suit in equity by the assignee of the property and choses in action of a corporation which was engaged in the business of printing and selling strip tickets to transportation companies, against a manufacturing corporation which had sold a press to the plaintiff's assignor under a valid contract in writing by which it agreed not to sell this type of press to other customers to be used by them for a similar purpose, to recover damages for a breach of this contract by the sale of a press to another corporation to be used for a similar purpose, a decree was made that the plaintiff was entitled to damages in a certain amount named, but the further facts appeared that the plaintiff first had brought an action of contract in this Commonwealth, to which the suit in equity was ancillary, and then had brought an action in another State against the corporation to which the press had been sold by the defendant in violation of its contract, and in the action in the other State had been compelled to join the defendant as a party, and thereafter had received from the purchasing defendant in the action in the other State a sum of money in settlement of all damages and had executed a release under seal to that defendant of all damages and demands, and had consented to an order discontinuing the action in the other State as against the defendant paying the money, the release executed by the plaintiff containing a declaration that it was not intended to release any claim which the plaintiff had against the defendant in the Massachusetts suit who sold the press to the plaintiff. Held, that, even if the reservation by the plaintiff of his claim against the defendant in the release prevented that instrument from being a full discharge, the payment was to be treated as a partial satisfaction and must be applied by the plaintiff in reduction of the sum awarded to him by the decree.
The petition of a foreign corporation to intervene in a suit in equity in this Commonwealth properly may be denied when for many years the petitioning corporation has been engaged in litigation in another State founded upon a contention contrary to that which it alleges as the ground for its admission as a party, and where its admission would delay the doing of justice between the parties already before the court.
BRALEY, J.
The right of the plaintiff as a creditor to participation in the distribution of the assets in the possession of the receivers depends primarily upon the validity and construction of the contract made between the defendant corporation and the New York Bank Note Company of New Jersey, and later assigned to the plaintiff. Appeals having been taken by all parties from the interlocutory decrees, the various questions of title, of liability and of the measure of damages, if the plaintiff is entitled to prove for any amount, are open. At the outset it appears that the defendant corporation, being engaged in the manufacture and sale of an improved printing perfecting press, entered into a contract with the plaintiff's assignor, a corporation which printed and sold strip tickets used by transportation companies, by the terms of which, among other provisions, it agreed not to sell this type of press to other customers to be used by them for a similar purpose. While the defendant corporation was left unrestricted to make and vend the press for other uses to which it might be adapted, yet as the principal object was to create a partial monopoly the first contention is that for this reason the contract was void. At common law a sound public policy was held to require that the individual effort and competition which furnished an opportunity for earning a livelihood or the extension of trade should be unrestricted, as the welfare of the community demanded that the industrial and business activity of its members should be unhampered. But a distinction was early recognized between contracts which wholly restricted trade, and those which partially limited its development and extension either as to territory or to persons; the first being held void, while the latter, if reasonable, have been upheld as valid. Gamewell Fire Alarm Telegraph Co. v. Crane, 160 Mass. 50, 56. Anchor Electric Co. v. Hawkes, 171 Mass. 101, 105. Diamond Match Co. v. Roeber, 106 N.Y. 473. The nature of the business in which the New Jersey company was engaged appears to have been of such character that it was not unreasonable for its own protection that a stipulation should be inserted which left the defendant corporation at liberty to sell this press to all the world for other purposes, but prohibited sales to those who by their competition might and probably would ruin its business, and this restriction, therefore, did not render the contract invalid. Morse Twist Drill Machine Co. v. Morse, 103 Mass. 73. Gibbs v. Consolidated Gas Co. 130 U.S. 396. 2 Kent Com. note (x) 467, Restraint of Trade, and cases there collected. New York Bank Note Co. v. Hamilton Bank Note Engraving Printing Co. 180 N.Y. 280.
The defendant corporation further contends that the contract was in violation of the act of Congress of July 2, 1890, (26 U.S. Sts. at Large, 209,) commonly known as the anti-trust law, but, if applicable, neither in its answer nor by its cross bill is this ground for relief directly or inferentially stated. If at inception the contract was void as being prohibited by this statute, then to be available such a defence must be specially pleaded. R.L.c. 173, § 27. Granger v. Ilsley, 2 Gray, 521. Bradford v. Tinkham, 6 Gray, 494. Rice v. Enwright, 119 Mass. 187. Hunting v. Downer, 151 Mass. 275, 278.
It also is urged as another reason for avoidance that the contract was not within the scope of the defendant corporation's express or implied corporate powers. But it is a foreign corporation, and the terms of its charter are not shown. It is alleged in the original bill and is not denied by the answer, that it was organized for the purpose of making and dealing in printing presses, of which the manufacture and sale of the perfecting press comprised only a part. While created for the purpose of engaging in a particular kind of business, there was no prohibition upon the form of contracts it might adopt to effect a sale of its product, and it should not be permitted to repudiate as being in excess of its corporate powers a transaction which is otherwise valid and under which it received and has retained the consideration, when such a course must result in positive injury to the plaintiff. Slater Woollen Co. v. Lamb, 143 Mass. 420, 421. Prescott National Bank v. Butler, 157 Mass. 548, 549. Nims v. Mount Hermon Boys' School, 160 Mass. 177, 179.
The contract being neither immoral nor void for want of corporate authority, the defendant corporation became bound to its full performance. Without reviewing the evidence there was abundant proof to support the finding that by the sale of a similar press to the Hamilton Bank Note and Engraving Company, without the assent of the New Jersey company, there was a breach by the defendant corporation which entitled the New Jersey company to recover damages. But although this corporation was dissolved without having brought suit, and was succeeded by the present plaintiff, to which all of its corporate property including choses in action was conveyed and assigned, the fiduciary relations between the parties under the terms of the contract relating to the proceeds of other sales were such, that, without a provision to that effect, which is not found, or without the defendant corporation's assent, which was not given, the plaintiff was not substituted, and hence the assignment passed only the bare right of action which previously had accrued to the assignor. Boston Ice Co. v. Potter, 123 Mass. 28, 30. New York Bank Note Co. v. Hamilton Bank Note Engraving Printing Co., ubi supra. Robinson v. Drummond, 2 B. Ad. 303. Arkansas Valley Smelting Co. v. Belden Mining Co. 127 U.S. 379. Delaware County Commissioners v. Diebold Safe Lock Co. 133 U.S. 473. Burck v. Taylor, 152 U.S. 634.
Upon the entry of an interlocutory decree which thus properly defined and limited the plaintiff's claim, the case was referred to a master for the assessment of damages. To his report numerous exceptions were taken by both parties concerning the exclusion and admission of evidence, as well as to the rule adopted by him for the ascertainment of damages. While no appeal was taken by the plaintiff from the decree overruling the exceptions and confirming the report, the defendant corporation having appealed, its exceptions are next to be considered. These exceptions so far as they relate to the reopening of the hearing after the submission of the draft report call for no comment, as the admission of further evidence offered by either party after hearing their objections and before finally settling his report was within the master's discretion. Under the decretal order the master was not required to report the evidence, and those exceptions which either depend upon a different view of the testimony, or are based on the ground that some of his findings were not supported by sufficient proof, are not tenable and may be dismissed without further remark. O'Brien v. Murphy, 189 Mass. 353.
The remaining exceptions, which relate to the measure of damages, present the principal question.
It is evident that the plaintiff endeavored to obtain compensation based upon the difference between the cost of printing tickets and their price which the assignor was receiving under its contracts. But this estimate not having been taken as a measure of computation either by the master or the trial judge, the defendant corporation has not been prejudiced by evidence admitted in support of this position, and its exception to such admission becomes immaterial. The report recites that the parties agreed that the sale to the Hamilton company was before the date of the assignment, and, as this sale was the specific act of violation, whatever cause of action the New Jersey company possessed then accrued. At that time the assignor owned two presses which if new could have been bought in the market for much less than the sum paid for the second press, the price of which also was taken as the basis of valuation of the first press bought before the contract was made. The value of both presses when fitted for use in printing strip tickets, and protected by the restriction, may be fairly said to have been equal, and besides, this value even if divided by the recitals in the contract was the total estimate fixed by the agreement. Parker v. Simonds, 8 Met. 205, 213. The difference between this amount, which as to one press was enhanced by the cost of certain mechanical changes, and the market price established the loss caused by the depreciation, and provided a correct measure of compensation. What further elements of damage might have been presented if the assignor had continued in business and brought suit need not be considered, as within this limit at least it would have been entitled to recover. Westfield v. Mayo, 122 Mass. 100, 105. Sargent v. Franklin Ins. Co. 8 Pick. 90, 99. Noble v. Ames Manuf. Co. 112 Mass. 492, 497. Somers v. Wright, 115 Mass. 292. Townsend v. Nickerson Wharf Co. 117 Mass. 501. Manning v. Fitch, 138 Mass. 273, 277. Whitehead Atherton Machine Co. v. Ryder, 139 Mass. 366, 371. Abbott v. Hapgood, 150 Mass. 248. The addition of interest was proper, for the amount assessed became due when the contract was broken, and as the plaintiff should be fully compensated it ought not to suffer loss from the delay in payment. Hovey v. Newton, 11 Pick. 421, 422. Ainsworth v. Lakin, 180 Mass. 397. Peabody v. New York, New Haven, Hartford Railroad, 187 Mass. 489.
But although none of the exceptions can be sustained, it also is contended that this assessment should be reduced by deducting a sum subsequently received by the plaintiff from the Hamilton company. This question comes up in the form of a report which states that all the facts relating to the material issues appearing in the record of the entire litigation are to be considered in its determination. After bringing an action at law in this State, which appears still to be pending and to which the original bill in the present case is ancillary, the plaintiff proceeded with an action against the Hamilton company already begun in another jurisdiction. A demurrer having been interposed, it had been obliged to join the defendant corporation as a party. New York Bank Note Co. v. Hamilton Bank Note Engraving Printing Co. 83 Hun, 593. And instead of prosecuting the action here, in which any liability of the defendant corporation could have been speedily determined, it chose to proceed with the litigation in another forum. New York Bank Note Co. v. Hamilton Bank Note Engraving Printing Co. 180 N.Y. 280. But wherever prosecuted, and whether at law or in equity, the plaintiff at common law had only one cause of action, namely, the chose assigned by the New Jersey company. It now suggests notwithstanding the express allegations of the bill before us to the contrary that the defendant corporation was joined merely as a matter of form, while relief and damages were asked only as to the principal defendant. When, however, the history of the entire controversy is read, form ceases to be of primary importance, and whatever the plaintiff's attitude the only object sought was the recovery of damages from both parties, and for relief by injunction solely because this defendant had broken its contract. New York Bank Note Co. v. Kidder Press Manuf. Co. 176 Mass. 151, 152. The multiplication of actions for the same cause whether sounding in tort or contract does not have the effect of multiplying damages, and while the release under seal is couched in general terms, no attempt was made to show the existence of any other demand, and it is to be assumed that the suit was brought and prosecuted in good faith. Smith v. Way, 9 Allen, 472. Burnett v. Smith, 4 Gray, 50. Indeed the discontinuance of the action and the discharge of the bond sufficiently indicate that the compromise was regarded as a settlement of the litigation with the releasee. See Brown v. Cambridge, 3 Allen, 474, 476; Aldrich v. Parnell, 147 Mass. 409. It is not material to determine whether the defendant corporation and the Hamilton company were joint debtors within the meaning of § 1942 of the Civil Code of the State of New York, relating to the compounding of claims against joint debtors, under which one debtor is not discharged by settlement with the other, as the plaintiff's claim had not been merged in a joint judgment. Before this settlement had been effected the amount which the plaintiff could recover had been established by a decree of a court of competent jurisdiction, to the final decision of which it had submitted its cause. In either jurisdiction, although the breach of the contract in itself was not a tort, it was entitled to but one satisfaction of damages, whether obtained by compromise when unliquidated, or by payment after the amount had been ascertained and adjudicated. Vanuxem v. Burr, 151 Mass. 386, 388, 389. In Stimpson v. Poole, 141 Mass. 502, 505, it was said "money paid, which is to be in full for an unliquidated or a disputed claim, is taken in discharge of it, and constitutes a full defence against any further assertion of the claim. What has been received is in law deemed to be a satisfaction of the claim." That the Hamilton company in fact might not have been liable to respond does not affect the adjustment or the application of the payment. Leddy v. Barney, 139 Mass. 394, 397. If the reservation by the releasor that it did not relinquish its claim against the defendant corporation prevents the release from being a full discharge, the receipt of a partial payment likewise is to be treated as a partial satisfaction which the plaintiff must apply in reduction of the sum awarded by the decree. Brown v. Cambridge, ubi supra. Wood v. Mann, 125 Mass. 319. Hudson v. Baker, 185 Mass. 122, 125. This conclusion being adverse to the plaintiff, it then contends that the appeal of the New Jersey company from a decree which denied a petition for leave to intervene should be sustained. After many years of litigation, when it became apparent that the contract was unassignable, this right is asked for the purpose of getting enhanced damages, which if recoverable would go to the plaintiff, but if for no other reason the lapse of time, united with the persistent and unsuccessful effort to maintain a contrary proposition in the courts of another State at a large expense to the estate, is sufficient to justify the refusal by a court of equity to allow further delay doing manifest injustice to other creditors as well as to the debtor. Cooke v. Barrett, 155 Mass. 413, 414.
We do not find it essential to consider specifically other questions of procedure raised by the appeal of the receivers and referred to in their brief. It may be presumed that until their accounts are passed and the claims of intervening creditors have been adjusted no order for distribution will be made, and that payment to the plaintiff will not be ordered until these steps have been taken.
It follows from what we have said that all the interlocutory decrees and orders from which appeals have been taken are affirmed. But while affirming the second decree because no error is found therein at the time of entry, it is to be modified, either by an interlocutory or in the final decree, by deducting from the amount of damages the payment received by the plaintiff, with such allowance of interest at the legal rate as may be considered expedient.
Ordered accordingly.