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    People’s Gaslight and Coke Co. v. Chicago Gaslight and Coke Co.
    1. Quasi public corporations—Executing franchises.—A corporation, the charter of which is permissive only and not imperative, and which is not vested with any exclusive privilege, is not bound by implication arising from the acceptance of the charter to execute its franchises throughout the entire territory in which it is authorized to operate.
    2. Contract between gas companies not to compete with each other.—Appellee, a gas company, was incorporated by act of Feb. 12, 1849, and was given “ full power and authority to manufacture and sell gas to be made from * * * and to be used for lighting the city of Chicago, * * * and to lay pipes for the conducting of the gas in any of the streets or avenues of said city.” It was given the exclusive privilege of supplying the city of Chicago and its inhabitants with gas for ten years. Appellant was incorporated by act of Peb. 12, 1855. The language in the grants to the two companies was almost identical. Appellant, however, was forbidden to lay pipes until Feb. 12, 1859, except with appellee’s approval. Appellee was furnishing gas on the north and south sides, and to the city and a few persons on the west side; appellant had laid its pipes on the south and west sides, when, in April, 1862, appellee, in consideration of a sum of money paid by one Garrison, and the conveyance of appellant’s gas mains, etc., on the south side, and its right to distribute gas there, and appellants and G.’s covenant not to lay gas pipes or. distribute gas on the south or north sides for a hundred years, agreed to convey to G. its improvements, gas mains, etc., on the west side, and its right to distribute gas there, and made a similar covenant not to interfere with appellant on the west side. Held, that, the contract was one which, from anything expressed in the charters of the companies, or to be implied from the granting of them, the companies were not forbidden to make; that it was one entirely within the scope of the powers impliedly given to the corporations, to conduct and manage their undertaking for their own profit and advantage and the public benefit and convenience.
    3. Agreements in restraint of trade.—An agreement in general restraint of trade is contrary to public policy, illegal and void, but an agreement in partial or particular restraint upon trade may he good where the restraint is only partial, the consideration adequate, and the restrictions reasonable. The contract in this case, held, not contrary to public policy as being in restraint of trade or tending to create a monopoly.
    4. Monopoly.—That is no monopoly which only secures one in the exclusive enjoyment of his business, as against a single competitor, while all the world besides are left at full liberty to enter upon the same enterprise.

      5. Specific performance of agreement in partial restraint of trade.—While the specific performance of a contract lies in the sound discretion of the court, the power is lodged in the court in order to prevent inequitable results, and will be exercised to perform a valid contract whepe a refusal to perform would result in manifest injustice. The contract in this case was carried out to the benefit of both companies for many years. Appellee, however, is now laying gas pipes on the west side. Upon bill of complaint filed by appellant, held, that equity will restrain appellee from thus violating its contract with appellant.
    6. Ultra vires—Estoppel.—A corporation can not avail itself of the defense of ultra vires where the contract has been in good faith performed by the other party to it, and the corporation has had the benefit of the contract and of the performance.
    Appeal from the Superior Court of Cook county; the Hon. Henry M. Shepard, Judge, presiding.
    Opinion filed January 6, 1887.
    Appellant filed its bill of complaint in the superior court, and obtained a preliminary injunction restraining appellee from laying mains and pipes in the west division of the city of Chicago, in violation of a contract set out in the bill. Appellee answered the bill, and filed certain affidavits in support of the answer, and a motion was made by appellee to dissolve the injunction, which motionwas granted by the court and an order was entered dissolving the injunction and dismissing the bill. The record was brought to this court by appeal, and application was made for an order continuing the injunction pending the hearing of the appeal, which order was made.
    The record discloses the following facts: The Chicago Gaslight and Coke Company was incorporated by an act of the General Assembly, approved Feb. 12, 1819, the second section of which is as follows:
    “ The corporation hereby created shall have full power and authority to manufacture and sell gas, to be made from any and all of the substances, or a combination thereof, from which inflammable gas is usually obtained, and tobe used for lighting the city of Chicago, or the streets thereof, and any buildings, manufactories, public places or houses therein contained, and erect all necessary works and apparatus, and to lay pipes for the conducting of the gas in any of the streets or avenues of said city: Provided, that no permanent injury or damage shall he done to any street, lane or highway in said city. The real estate which the corporation is entitled to hold shall not exceed in value fifty thousand dollars.”
    Section 3 provides, amcngother things, that the capital stocof the corporation shall not exceed three hundred thousand dollars, and that “said company shall have the exclusive privilege of supplying the city of Chicago and its inhabitants with gas, for the purpose of affording light, for ten years.”
    Appellant, the People’s Gaslight and Coke Company, was incorporated by an act approved Feb. 12, 1855. Section 2 of said act is as follows: “ The corporation hereby created shall have full power and authority forthwith, upon its due organization under this act, to proceed to the erection of the necessary works for the manufacture of gas and coke within said city of Chicago, and on and after the 12th day of February, 1859, to manufacture and sell gas to be made from any and all the substances, or a combination thereof, from which inflammable gas is usually obtained, and to be used for the purpose of lighting the city of Chicago, or the streets thereof, and any buildings, manufactories, public places or houses therein contained, and to erect all necessary works and apparatus as aforesaid ; and on and after the said 12 th day of February, 1859, or sooner, by and with the consent of the Chicago Gaslight and Coke Company, to lay pipes for the purpose of conducting the gas in any of the streets and avenues of said city, with the consent of the city counsel: Provided, that no permanent injury or damage shall be' done to any street, lane, or highway in said city. The real estate which this corporation is entitled to hold shall not exceed in value one hundred thousand dollars.”
    By section 3 the capital stock of the company was limited to five hundred thousand dollars, and section four limited the price of gas to the city, for public use, to a rate not exceeding two dollars per thousand, and to the inhabitants at not exceeding two dollars and fifty cents per thousand feet-
    Aug. 30, 1858, an ordinance was passed by the common council giving to said appellant permission to lay its gas mains, feeders and service pipes in any of the streets, alleys, avenues, public parks, etc., throughout the city, subject to the existing rights and privileges granted to the Chicago Gaslight and Coke Company, and subject to the consent of said last mentioned company, to be obtained in case pipes should be laid previous to February 12, 1859. Prior to April, 1862, appellant had, under the powers in its charter and the permission granted by the city ordinance, laid about six miles of pine for mains in Lake and Wells streets, in the south division of Chicago, for the distribution of gas, and had also laid service pipes, all of which ¡mains and service pipes were of great value, to wit, of the value of twenty thousand dollars, and had laid mains for the purpose of distributing gas in several of the streets of the west division of the city of Chicago, and connected service pipes therewith, all of which were of great value, to wit, one hundred thousand dollars, and acquired in the west division of the city a site for the construction of works for the manufacture and distribution of gas in the west, south and north divisions of the same.
    Appellee, the Chicago Gaslight and Coke Company, had, prior to April, 1862, laid mains and service pipes in many of the streets of the west division, and was supplying the city with gas in said division, and also some seven hundred persons; and there had been deposited with it by its customers considerable sums of money to secure the payment of gas bills.
    On April 23, 1862, an agreement was entered into between appellee of the first part, appellant of the second part and one C. K. Garrison of the third part, in and by which agreement appellee, in consideration of the payment to it by Garrison of the sums of money therein specified, and the covenants and agreements of said Garrison and appellant, sold and conveyed to said Garrison all the improvements, of every kind, belonging to said appellee on the west side of the Chicago river and its branched, in that portion of the city of Chicago known as the west division thereof, and all fixtures, etc., for manufacturing or distributing gas as the same were in the said west division, with the right to use the same in distributing or manufacturing gas, as fully as said appellee could convey the same; and in consideration of the conveyances so made to him, and by and with the consent of appellant, said Garrison did pay to said appellee the sum of forty thousand dollars ; and for and in consideration of the sale and conveyance of the said improvements by appellee to said Garrison, and of covenants and agreements therein contained, to be kept and performed by said appellee, said appellant and said Garrison separately, and each for themselves, agreed that they or either of them would not, during the period of one hundred years from that date, either jointly or severally, in their own names or in the names of any other party or parties, lay or cause to be laid any gas mains or gas pipes of any kind in the north and south divisions of said city of Chicago, or in such parts of the said city as may now or hereafter lie east of the north or south bran lies of the Chicago river, nor furnish nor sell illuminating gas to any person or persons for consumption or use within said portions of the city, nor during the period aforesaid interfere in any way with the business of said appellee in manufacturing and selling illuminating gas in said parts of the city. And in consideration of the purchase and payment so made by said Garrison, and of the covenants and agreements of appellant and said Garrison in said agreement contained, said appellee agreed that it would not, during a like period of one hundred years from the date thereof, either directly or indirectly, lay "or cause to be laid, any gas mains or gas pipes of any kind in the said west division of the city of Chicago, or in such part thereof as then or might thereafter lie west of the north and south branches of the Chicago river, nor furnish nor sell illuminating gas to any person for consumption or use within the said last mentioned portions of the said city, or interfere with or molest in any way whatever, the business of said appellant or said Garrison, or either of them, to manufacture and sell illuminating gas in said division of said city; and further, in consideration of said sale and purchase and the covenants and agreements of said appellee, said appellant and said Garrison did thereby sell, transfer and convey to the said appellee all the gas mains or pipes, etc., laid by said appellant and said Garrison, or either of them, in the south division of said city. It was further agreed that appellee should remain in possession of the mains, etc., in the west division, and use the same until June 1, 1869, at which time it would deliver them, and all parties agreed to execute and deliver to one another from time to time such further conveyances as should be deemed necessary to carry out the purposes of the agreement and for the protection of the legal and equitable rights of the parties.
    On June 1, 1862, in pursuance of said contract, there were turned over to appellant all the ,contracts which appellee had with customers on the west side, which contracts were assumed and performed by appellant, and the money deposited by customers to secure said contracts was accounted for to said •customers by appellant.
    Prior to the making of the agreement set out, Garrison had made large advances to appellant for the purpose of laying mains, etc., and proposed to make further advances, and after making said agreement appellant leased its property and franchises to Garrison until he should be paid his advances. He took possession under his lease and greatly extended the works and plant, till October, 1862, when he assigned an interest to A. M. Billings, and thereafter further advances were made for the extension of the works of appellant and said works were in full operation on the first day of June, 1862, and, under said arrangement, Garrison and Billings supplied the city and the inhabitants of the west division with gas until ¡November, 1874, when they surrendered their lease and the property to appellant, and since then appellant has extended its service and furnished gas amply sufficient for the west division, of good quality and at reasonable prices. The chief inducement for entering into the contract set out, was to relieve each company from the competition of the other, in the respective divisions of the city, to give appellant the right of distributing gas in the west division without the competition of appellee, and to give appellee the right of distributing gas in the south and north divisions without the competition of appellant. It is alleged in the bill, that, at the time of making the contract, appellee was limited in its means and unable to extend its mains so as to supply the west division, but this is denied in the answer. It is further alleged that appellant and Garrison have in all things kept and observed said contract, by means whereof appellee has been enabled to distribute gas in the north and south divisions free from competition with appellant, whereby it has derived large profits which it would not otherwise have derived, and that it is now about and threatens to lay its mains and service pipes in the west division for the purpose of supplying gas there in violation of its said contract.
    The answer denies that said appellant and Garrison have kept said contract; says that other organizations have been formed for the purpose of selling gas, and have engaged in said business in the north and south divisions of the city, and on information and belief, says that such organizations have confined themselves to the north and south divisions with the support and connivance of appellant, and that such competition required appellee to re-assert its right to supply gas in all" portions of the city; admits that it has undertaken the work of laying mains, etc., in the west division for the purpose of supplying gas therein, and insists that all provisions of said contract in any manner abridging the right of appellee to lay pipes and supply gas in the west division, are contrary to public policy ; in restraint of trade; tend to create a monopoly; and are void and not to be enforced in a court of equity.
    Mr. C. Beckwith and Mr. William Brown, for appellant;
    that a quasi public corporation does not, by the acceptance of its charter, enter into any contract with or undertake any duty to the State to construct the whole or any portion of the works which it is authorized to construct; that such corporation may, so far as the public is concerned, decline to construct the Avhole of the works authorized, or after constructing a part thereof, may refuse to construct the residue, cited Y. & N. Mid. Ry. Co. v. Queen, 1 Ellis & Blackburn, 856; Rex v. Proprietors, etc., 2 W. Bl. 708; 1 Horawetzon Corporations, §419; Re Norwegian, etc., Co., 35 Beavan, 223; Moss v. Averell, 10 N. Y. 449; Com. v. Fitchburg R. R. Co., 12 Gray, 180.
    A quasi public corporation after it has completed works Avhich it was authorized to construct, or partly completed the same, may, so far as the public is concerned, refuse to use or operate such works or any part thereof, and wholly or in part abandon them, if such corporation has a valid excuse for so doing: Reg. v. Ambergate, etc., Ry. Co., 1 Ellis & Blackburn, 372; Com. v. Fitchburg R. R. Co., 12 Gray, 180; Morawetz on Private Corporations, § 1119.
    If a contract of a corporation is not against public policy, the corporation may be estopped from asserting that it is ultra vires: Green’s Brice’s Ultra Vires, 36, Note a; Wood-ruff v. Erie R. R. Co., 93 N. Y. 609; Pomeroy on Contracts, 77; Whitney Arms Co. v. Barlow, 63 N. Y. 62.
    Competition between individuals or incorporated companies may promote, or be against, public policy. It is incumbent upon the party alleging that an agreement to suppress competition is against public policy, to allege and prove facts and circumstances showing it to be such: Collins v. Locke, 4 Law Rep. App. Cas.
    A corporation has implied authority to act in the same manner as a co-partnership in carrying on its legitimate business, and therefore it may enter into any contract which is reasonably adapted to further the enterprise for which it was chartered, unless it be restrained by charter or by a general law: White Water, etc. Co. v. Vallette, 21 How. 424; Old Colony R. R. Co. v. Evans, 6 Gray, 38, 39; 1 Morawetz on Private Corporations, § 362; B. & L. R. R. Co. v. S. & L. R. R. Co., 2 Gray, 32; City of Quincy v. Bull, 106 Ill. 337; People v. Mut. Gas Light Co., 38 Mich. 154; Taylor v. C. & M. Ry. Co., 2 Exc. R. 356, 384; Green’s Brice’s Ultra Vires, 65; Reynolds v. Stark, 5 Ohio, 205; South Wales Ry. Co. v. Redmund, 10 C. B. N. S. 675; Hare v. L. & N. W. Ry. Co., 2 J. & H. 101; Shrewsbury & B. Ry. Co. v. N. W. Ry Co., 2 Macnaghten & Gordon, 324.
    Mr. John N. Jewett and Mr. Melville W. Fuller, for appellant;
    as to monopolies, cited State v. Telephone Co., 36 Ohio St. 296 ; Collins v. Locke, 4 L. R. App. Cas. 674; Sayre v. L. Un. Ben. Asso., 1 Duvall (Ky.), 143; Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 Denio, 434 ; Metzger v. Cleveland, Greenwood’s Public Policy, 655.

      The business of supplying illuminating gas to the city and its people, by means of pipes laid on the public highways under a grant from the State of the power so to do, is the exercise of a franchise belonging to the State, and the services rendered and to be rendered as the consideration for such grant are of a public character: Shepard v. Gaslight Co., 6 Wis. 539; N. O. Gas Co. v. La. Light Co., 115 U. S. 650; Louisville Gas Co. v. Citizens’ Gas Co., 115 N. S. 683.
    The contract in this case was to prevent competition between the two companies in the business for which they were organized, and in aid of which they received valuable grants and franchises from the State and is therefore void: East Anglican Ry. Co. v. Eastern Ry. Co., 7 Eng. L. & E. 505 ; McGregor v. Official Manager, D. & D. R. R. Co., 16 Eng. L. & E. 180; Mayor of Norwich v. Norfolk Ry. Co., 30 Eng. L. & E. 120; Tracy v. Talmadge, 14 N. Y. 163; Talmadge v. Tell, 3 Selden, 328.
    The privileges granted by the State for the public convenience and benefit, can not be abandoned or relinquished to another by contract, except it be a contract authorized by the State granting the privilege, amounting in effect to a modification of the charter: State v. H. & N. H. R. R. Co., 29 Conn. 538 ; Thomas v. R. R. Co., 101 U. S. 71-82.
    Contracts are void, if covenants in restraint of trade, as against public policy, enter into and form a part of them, and both parties are at fault in respect to such covenants: Saratoga Bk. v. King, 44 N. Y. 87; Craft v. McConoughy, 79 Ill. 346 ; Arnot v. P. & E. Canal Co., 66 N. Y. 558 ; Morris Run Coal Co. v. Coal Co., 68 Pa. St. 173; St. L. J. & C. R. R. Co. v. Mathers, 71 Ill. 592; Same v. Same, 104 Ill. 257.
    Any contract which disables a public or quasi public corporation from performing the duty which it has undertaken, or which has been imposed upon it, for the public weal, or compels it to make the public accommodation or convenience subservient to its private interests, is void: Am. Un. Tel. Co. v. Un. Pacific R. R. Co., 1 McCrary, 188; Thomas v. R. R. Co., 101 U. S. 71; Peoria, etc., Co. v. Coni, 68 Ill. 489 ; Clark v. O. & S. W. R. R. Co., 4 Neb. 458; State v. Hartford & N. H. R. R. Co., 29 Conn. 538; Bostor v. Wathem, 60 Ill. 138; St. L. J. & C. R. R. Co. v. Mathers, 71 Ill. 592; St. Jo & D. C. R. R. Co. v. Ryan, 11 Kan. 602; Linder v. Carpenter, 62 Ill. 309.
   Moran, J.

The questions to be determined in this case are, 1. Was the contract set out and to compel the observance of which the bill was filed, such a one as the appellant and appellee gas companies had power to make ?

2. Is said contract contrary to public policy as being in restraint of trade, or tending to create a monopoly ?

3. If the contract was within the powers of the corporations to make and is valid, do the circumstances of threatened breach and consequent damage stated in the bill, present a case requiring the interposition of a court of equity to compel specific performance ?

The appellant and appellee corporations were, at the time of making the contract in question, in possession of similar rights, privileges and franchises, and were subject to like pub-' lie duties and obligations. The right to lay down its mains and service pipes in the streets, alleys and public places of the city was conferred on the appellee, the Chicago Gaslight and Coke Company, by the legislature without the intervention of the city council, and the same right was conferred upon the appellant, subject to the consent of the city council, and that consent had been expressed by an ordinance granting to appellant full permission and authority in that regard. If, then, appellee had full capacity to make and bind itself by the promises and covenants in the contract, appellant had capacity, in consideration thereof, to bind itself by corresponding covenants. What, then, are the powers conferred on appellee by its charter? It must be observed, at the outset, that the words of the act are permissive and not mandatory or imperative. The grant to the corporation is authority to manufacture and sell gas and the privilege of laying its pipes in the streets for the purpose of supplying the city and its inhabitants. Did the acceptance of this grant impose upon the corporation any, and if any what, obligations to the public ? It has been denied by courts of last resort in two States, that a gas company, in accepting such a charter assumes any public duty whatever. Such companies are held by the Supreme Courts of New Jersey and Connecticut to be mere manufacturing corporations, not bound to make gas or to suffer the gas they do make to be used, and under no obligation to sell to all or to any who may apply for it, or to serve the public any farther than the managers may see fit Patterson Gaslight Co. v. Brady, 27 N. J. 245; Norwich Gaslight Co. v. Norwich City Gaslight Co., 25 Conn. 19 ; Norwich Gas Co. v. McCune, 30 Conn. 521.

We are inclined to the opinion, however, that the tendency of the later decisions in this country is to establish the doctrine that the manufacture and distribution of illuminating gas in towns and cities, and to the inhabitants thereof, is so related to the public comfort and convenience, that the business is of a public nature so far as to authorize the legislature to grant to corporations, created-for that purpose, exclusive privileges, and to impose on corporations invested by the legislature with the franchise of laying pipes and conduits in the streets and highways and other public places, an obligation, if the right is exclusive, to supply gas to customers and the city on reasonable conditions, and possibly the obligation to extend their pilles and fixtures as fast as the reasonable needs of the public require and the ability of the corporation will permit. New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650; Louisville Gas Co. v. Citizens’ Gas Co., 115 U. S. 674; Shepard v. Milwaukee Gaslight Co., 6 Wis. 537.

But here, as we have seen, the exclusive right conferred upon the corporation had expired before the contract in question was made, and we must therefore ascertain what duties toward the paublic are imposed upon the corporation by its acceptance of a charter permitting it to manufacture and sell gas and lay mains and service pipes for the distribution thereof in the streets of the city. If, from its acceptance of the charter, there was an implied undertaking that it would extend its mains as rapidly as possible throughout the city, and serve the city and its inhabitants with gas—if, in other words, it was bound by its charter, as being a contract with the State to execute to the full extent throughout the territory included within the city limits, the powers and franchises granted, then we will have little difficulty in concluding that the contract prohibiting it from executing those powers in one portion of the territory was ultra vires the corporation. Quasi public corporations, such as railroad companies, having public duties to perform, and having the right to acquire property necessary to the completion of their works by operation of the powers of eminent domain, have been held in England not to be under obligations to execute the works for which they were organized when the words of the charter were permissive and not compulsory. In the York & Midland R. R. Co. v. The Queen, 1 Ellis and Blackburn, the question was elaborately considered in the Exchequer Chamber, and the judgment of the Queen’s Bench granting a mandamus to compel the completion of a line of railroad, was reversed. The act of Parliament empowered the corporation to make a line • of railway between certain towns which were named in the act. The company built a portion of the line but did nothing upon the remainder of it. After pointing out that the words of the act are permissive, and not imperative, the court say: “But it is said that a railway act is a contract on the part of the company to make the line, and that the public are a party to that contract, and will be aggrieved if the contract be repudiated by the company at any time before it is acted upon. Though commonly so spoken of, railway acts, in our opinion, are not contracts, and ought not to be construed as such; they are what they profess to be, and no more; they give conditional powers which, if acted upon, carry with them duties, but which, if not acted upon, are not, either in their nature or by express words, imperative upon the companies to whom they are granted. Courts of justice ought not to* depart from the plain meaning of the words nsed in acts of Parliament; when they do so they make, but do not construe the laws $ and if it had been so intended, the statute should have required the company to make the line in express terms; indeed some railway acts are framed on that principle; and to say that there is no difference between words of requirement and words of authority when found in such acts is simply to affirm that the legislature does not know the meaning of the commonest expressions. ”

So far as we have discovered, the doctrine announced in this case has never been departed from in England. Counsel for appellee cite a number of cases which, they contend, indicate that a different view of corporate obligation is taken in this country. The State v. Hartford & Hew Haven B. E. Co., 29 Conn. 538, is relied on to sustain this contention. In that case the company was chartered to construct and operate a railroad from Hartford to the navigable waters of Heiv Haven harbor. After constructing the road and running trains over it for some years, it built a diverging track and discontinued the running of passenger trains to the original terminus at the tide water. A mandamus was applied for and the company set up as the only excuse for not running its passenger trains over the road as constructed to the terminus, a contract with another railroad company that it would not do so. The court held that the company was under a corporate duty to run its passenger trains, and that the contract it made not to permit the public to enjoy the benefit of part of their road amounted to nothing. This case is not an authority that a corporation will be compelled to construct the entire line described in its articles of incorporation, but rather decides that where a corporation has exercised its franchise so far as to construct its line, taking property for that purpose, it is not at liberty to refuse the public the accommodation of travel over such line. Another case is The People v. The Albany & Vermont Railroad Company, 24 N. Y. 261. The corporation was formed under the general act to construct and operate a railroad between Albany and Eagle Bridge. The road was constructed and put in operation, and after a time ceased to operate that portion of the road lying between Waterford Junction and Eagle Bridge, and with a view of abandoning that part, took up the rails and dismantled the road. A bill was filed by the attorney general to prevent the abandonment of that portion of the road and to compel the company to perform the duty of operating it. The court dismissed the bill, Wright, J., holding that the company was under no duty to operate its road, but saying that it could not legally operate a railroad from Albany to Waterford Junction under a franchise to maintain and operate one from Albany to Eagle Bridge. A majority of the court were of the opinion that the company was not at liberty to discontinue part of its road, hut was bound to operate it, hut the remedy sought was not the proper one. Wright, J., delivering the principal opinion, says: “The railroad act does not, in terms, require a company organized under it to construct, maintain" or operate the railway mentioned in the articles of incorporation. The act is permissive and not mandatory. The associates are endowed witli power to construct and operate a railroad for the conveyance of persons and property between established points, and in this sense, to exercise a public employment. The associates, by the act of acquiring corporate existence, do not absolutely agree with the State that in consideration of such corporate existence, and the franchise with which they are invested, they will construct the railroad mentioned in the charter and continue to operate it during the corporate existence. Ho contract obligation is thereby created on the part of the corporation.”

In Thomas v. Railroad Co., 101 U. S. 71, by a contract of lease, the railroad and all its appurtenances and franchises, including the right to do the business of a railroad and collect the proper tolls, were, for a period of twenty years, leased by the company to an individual, the corporation reserving no power of control in the management of the road, or in the exercise of the franchises of the company. The court held such contract of lease void, as forbidden by public policy, and beyond the powers of the company to make, and quotes, as stating with clearness the ground of decision, the language of the court in a case in the 17 Howard, 30, where a Pennsylvania company had committed the entire management of the road which it had built to a Maryland corporation, as follows : “But those acts involve an overturn of the relations which the charter has arranged between the corporation and the community. Important franchises were conferred upon the company to enable it to provide facilities for communication and intercourse, required for the public convenience. Corporate management and control over these were prescribed, and corporate responsibility for their insufficiency provided as a remuneration to the community for their grant. The corporation can not absolve itself from the performance of its obligations without the consent of the legislature.”

Neither of these cases, nor any of the other numerous cases cited upon this question by the counsel for the appellee, as we understand them, controvert the rule as laid down by the Exchequer Chamber in the case from which we have quoted. They do establish that a corporation can not transfer its franchises to an individual, or to another corporation; and that where the corporation has constructed its works and entered upon the operation of them, and in so doing has exercised to the full the franchise granted, it will not be permitted to cease and abandon the operation of a part thereof, to the inconvenience of the public. As to the latter proposition there is not a perfect accord. The Supreme Court of Massachusetts has determined that a railway company was justified in refusing to run trains where it had ascertained, by a fair and careful experiment, that the amount of travel would not pay the expense. Commonwealth v. Fitchburg R. Co., 12 Gray, 180.

We can find in the adjudged cases no support for the contention that a corporation, the charter of which is permissive only and not imperative, and which is not vested with any exclusive privilege, is bound by implication arising from the acceptance of the charter to execute its franchises throughout the entire territory in which it is authorized to operate. Doubtless there are strong reasons, based upon sound considerations of public policy, which imply enlarged public duties from the exercise by corporations of great public rights, such as the exercise by a railway company of the right of eminent domain, the right to turn watercourses, bridge streams, and to cross and run upon and occupy, to the exclusion of other modes of travel, the public highways. We have seen, however, that the grant and acceptance by the company of such great public powers does not constitute a contract that the entire line of road will be built, and at most obligates the company to operate the line when it has nsed its powers in constructing it. What ground is there, then, for implying that a gas company, which has the comparatively unimportant right to lay its mains and service pipes in the streets of a city and supply such persons as desire it with gas, has, by accepting its charter, contracted with the State that it will lay its pipes and serve its gas throughout the entire city whenever a customer can he found who wishes to use it? We are aware of no principle which would justify sucli a conclusion. The appellee, at the time of malting the contract in question, had no monopoly, no exclusive right. All duties, whatever they may have been, to which it was subject while such exclusive right existed and which grew out of such right, terminated with the exclusive right; and the corporation was left in the possession of rights and franchises which it was at Jiberty to exercise to just such an extent as it saw fit; and it was under no- obligation to extend its pipes into streets not then occupied by it, or to construct its works or to supply gas in portions of the territory in which it chose not to operate. The limitation of its field of operations to a portion of the territory included within the city limits, was, within the discretion necessarily reposed in the managers of a corporation, created for such a purpose, and the fair exercise of such discretion can not he construed as an abandonment of the objects of the corporation or as a non-user of its franchises.

“ A corporation may, for reasons of expediency, abandon a portion of the enterprise for which it was incorporated, provided the result he merely to contract the business within smaller limits, and not to change its character.” Morawetz on Corporations; Moss v. Averill, 10 N. Y. 449 ; In re Norwegian Iron Co., 35 Beav. 223 ; Com. v. Fitchburg. If, then, appellee was free to exercise its franchises or not, in the west division, was it not free to contract that it would not exercise them there, and could it not, for instance, have hound itself by a contract with an individual wTho was seeking an agreement with the city to light the streets with oil lamps, that, in consideration of his confining himself to the west division, and leaving it to make its arrangements for lighting the south side without his competition, it would not extend its works on the west side and would not compete with him in lighting the streets of that portion of the city? It seems to us that such a contract would be clearly within the scope of the company’s powers, and in no manner a violation of any policy of the State that can be implied from the grant of its charter. Nor do we see that by having granted a similar charter to another company the State has imposed any new obligation upon appellee, or indicated any policy which would compel competition between appellee and such other company in the supplying of gas within the entire city. While, as counsel suggests, the practical identity of language in the grants to the two companies indicates a legislative intention to place these two gas companies upon an equality of right and to impose upon them an equality of obligations, and to enable them to carry on the same business within the same territory, we are unable to infer from these facts any policy which would forbid their entering into any reasonable arrangement which would leave one portion of the territory to be supplied by one company and another to be supplied by the other, and which would restrain each from entering upon or supplying territory set off to the other. Hare v. London & N. W. Ry. Co., 2 J. & H. 101; Shrewsbury & B. Ry. Co. v. N. W. Ry. Co., 2 Mc. & Gordon, 324. The companies were as free to enter into any arrangement not to compete with each other, or to divide territory in which to carry on their business as private persons were, and were subject to the same restrictions as to public policy and contracts in restraint of trade, and none others.

Assuming then, as we have done in the foregoing discussion, these corporations to have been engaged in a business that affected public convenience, and to be, by reason of the franchises which they enjoyed, quasi public corporations, their obligations required of them only to furnish to the city and its inhabitants wherever they had extended then1 conduits and service pipes and customers were desirous of receiving it, gas, on reasonable and equal terms and conditions. Williams v. The Mutual Gas Co., 52 Mich. 199.

We conclude, then, that the contract was one, which, from anything expressed in the charters of the companies or to be implied from the granting of them, the companies were not forbidden to make; and that it was one entirely within the scope of the ¡Dowers impliedly given to the corporations to conduct and manage their undertaking for their own profit and advantage, and the public benefit and convenience.

2. Is the contract contrary to public policy, as being in restraint of trade or tending to create a monopoly ?

It is well settled that an agreement in general restraint of trade is contrary to public policy, illegal and void, but an agreement in partial or particular restraint upon trade has been held good, where the restraint was only partial, consideration adequate, and the restrictions reasonable. Craft et al. v. McCononghy, 79 Ill. 346. Says the Supreme Court of Michigan, “ If, considered with reference to the situation, business, and objects of the parties, and in the light of all the surrounding circumstances with reference to which the contract was made, the restraint contracted for appears to have been for a just and honest purpose, for the protection of the legitimate interest of the party in whose favor it is imposed, reasonable as between them and not specially injurious to the public, the restraint will be held valid. Hubbard v. Miller, 27 Mich. 15.

Where the question turns upon the reasonableness of the restriction of the party carrying on trade or business within a certain space or district, the answer may depend upon various circumstances that may be brought to bear upon it; such as the nature of the business, the populousness of the neighborhood, the mode in which the business .is carried on, the outlay necessary to conduct it, and other like circumstances. Greenhood on Public Policy, 716.

Appellee alleges in the "answer that Garrison, who was at the time of the making of said contract in substantial control of the complainant corporation, and who had been actively laying mains and service pipes in the streets of the city for the purpose of competing with appellee, was a man of large means, energy and influence, and it was his intention to prosecute the works of complainant in Chicago, and as far as practicable to diminish the business of selling gas by appellee; that said Garrison had commenced the construction of gas works in the west division and the laying of pipes in the west division and also in the south division, in some streets in which the pipes of appellee had been laid and were in use, thereby threatening serious competition with appellee. The west division at the time contained some ten square miles of territory and the south and north sides about seven square miles. The population ón the south and north sides exceeded that on the west side by something over twenty thousand, and all the public buildings and all the principal business buildings were upon the south side. The west division constituted a large and sparsely populated district, requiring a large expenditure for the extension of mains, and promising but comparatively small consumption of gas and but a meager immediate return on the outlay. Having regard to all these circumstances it appears to us that the restraint imposed was reasonable; that the purpose of it was the legitimate protection, by an honest method, of the manifest interests of the parties to it, and that at the time of its execution the contract tended more to promote the public interests than to operate with any special injury to them. It very probably induced a prompt outlay in the extension of their works by each company in their respective territory, by the expectation of legitimate returns, which it created, and provided to the distant resident' on a sparsely settled street the luxury of gas light, which timid capital, when subject to the threat of serious, perhaps ruinous competition, would not have been induced to furnish for years thereafter.

But it is said that the contract tended to prevent competition, and it is therefore void. It did prevent competition between the parties to it and so does every contract which is in partial restraint of trade. The purpose of such contracts always is to protect the business of one from the competition of the other, yet such contracts are not for that reason held void, where the means adopted are reasonable. The contract to prevent competition in the sale of gas between these two corporations is very different in its methods and effect from the corrupt combination to prevent all competition in the grain market, which was condemned by the Supreme Court in Craft v. McConoughy, supra. There all the- warehouses in the city, and every lot suitable to erect a warehouse on, were controlled by the combination, and all competition in the purchase, sale or storage of grain in the market was effectually excluded. Secret meetings were held at night at which prices were fixed, and while to the public the parties were held out as competing for business, secretly they conspired together and were working in a common cause and in the sole interest of each other. Here the agreement only prevented competition between the parties to it, and left each party, in its respective territory, open to the free competition of all other corporations or individuals who chose to embark in the business; and it appears from the answer of appellee that other organizations have been competing with it within the south and north divisions of the city.

The tendency of the courts is to regard contracts in partial restraint of competition with less disfavor than formerly, and the strictness of the ancient rule has been greatly modified by the modern cases. Maule, J., in Proctor v. Sargent, 2 Scott, N. R. 289, remarked that “ Many persons who are well informed upon the subject entertain an opinion that the public would be better served if, by permitting restrictions of this kind, encouragements were held out to individuals to embark large capitals in trade, and that it would be expedient.to allow parties to enter into any description of contract, for that purpose, that they might find convenient.” Greenwood on Public Policy, 689, and cases cited.

True, there is not and ought not to be any disposition to sustain contracts' or combinations that tend to produce a monopoly, but that is no monopoly which only secures one in the exclusive enjoyment of his business as against a single competitor, while all the world besides are left at full liberty to enter upon the same enterprise. Chappell v. Brockway, 21 Wend. 157.

The contract is not, then, void, as being in restraint of trade or tending to create a monopoly.

Are the circumstances such as to induce a court of equity to compel specific performance ? It is averred in the bill and not denied, that, induced by appellee’s promise not to lay pipes or furnish gas in the west division, appellant has expended a large amount of money in extending its mains and constructing its works which it would not otherwise have done. It is also alleged and practically admitted, that appellant has faithfully kept and performed the promises of the contract on its part, and refrained from extending its pipes or furnishing gas in the north or south divisions, and that by reason thereof appellee has made and derived large profits. It is shown that the damages which will be sustained by appellant from the threatened breach of the contract by appellee, will be practically impossible of ascertainment and adequate compensation at law.

Besides the performance of the contract by appellant in the matter of refraining from competition with appellee on the territory assigned to appellee by the contract, appellee has received, as further consideration for its promises, the sum of forty thousand dollars, and the conveyance of a quantity of gas mains which appellant had laid on the south side. An attempt was made to show that the forty thousand dollars was the difference in value between the gas mains and pipes conveyed by the parties to each other, but the contract is in writing, and states that what was paid, conveyed and promised by the one party was in consideration of what was conveyed and promised by the other, and it is not admissible to apportion the consideration to different items of the undertaking, where the writing treats'the consideration asa unit and entire.

We have found the contract to be one which the corporations were not forbidden to make ; not against public policy, as being in restraint of trade ; that a valuable consideration passed to appellee ; that it had the benefit of and has profited by the contract, and that the breach thereof will cause damage which can not be adequately compensated at law. If the court does not interpose appellee will be practically secure in deliberately violating a written contract, the execution of which it admits and from the operation of which it has derived great benefit. While the specific performance of a contract lies in the sound discretion of the court, the power is lodged in the court in order to prevent inequitable results, and will he exercised to perform a valid contract where a refusal to perform would result in manifest injustice. The power has been frequently exercised to compel the observance of contracts in restraint of trade by enjoining a breach. Thus, in Guerand v. Dandelet, 32 Md. 561, where one sold out a dyeing establishment and covenanted that he would not at any time thereafter exercise in the city of Baltimore the trade of a dyer or scourer, or compete with the vendee in said business, the court enjoined a breach, saying that the authorities fully maintain the light of a court of equity to restrain by injunction the violation of contracts of that character. So where one agreed to work as a tailor exclusively for another and not to carry on the trade of a tailor, in a certain town, he was enjoined from carrying on the trade in said town. Rolfe v. Rolfe, 15 Sim. 88. In Ropes v. Upton, 125 Mass. 258, the court enjoined the breach of an agreement not to carry on business where the agreement provided the forfeiture of §1,000, in case of breach, saying a court of equity fastens on the real contract and compels the execution of the very thing to be done. See also Fox v. Scard, 33 Beav. 327; McCall v. Braham, 16 Fed. Rep. 37.

Even if the contract is in fact ultra vires, it not being against public policy, not malum in se or malum prohibitum, the corporation, having received the consideration and enjoyed the benefits of the contract, could not be heard to allege the want of power to make it, to justify its refusal to observe it. It is well settled by the weight of modern decisions that a corporation can not avail of the defense of ultra vires where the contract has been in good faith performed by the other party to it, and the corporation has had the benefit of the contract and of the performance. Bradley v. Ballard, 55 Ill. 413 ; Darst v. Gale, 83 Ill. 136; Watson et al. v. Furnes Ry. Co., 9 L. R. Eq. 28.

There is a paramount public policy that controls in such cares which requires that contracts freely entered into shall be held sacred and faithfully performed, and a court of equity will so contrive, that parties who have enjoyed the fruits of an agreement, shallnot be permitted to absolve themselves from their valid obligations.

The decree of the superior court will, therefore, be reversed and the case remanded to that court with directions to enter a decree enjoining and restraining the said Chicago Gaslight and Coke Company from laying gas mains or pipes in the said west division or entering into contracts for supplying the city or the inhabitants in said west division with gas and from in any manner violating said contract.

Reversed and remanded with directions.


source: Caselaw Access Project

author: McAllister, P. J.

license: Public Domain

text:
    Matthew Johnson v. Anna Christine Johnson.
    Temporary alimony—Bill eor separate maintenance.—In a bill for separate maintenance the court has power to grant temporary alimony.
    Appeal from the Circuit Court of Cook county ; the Hon. M. F. Tuley, Judge, presiding.
    Opinion filed December 22, 1886.
    Messrs. Miller, Leman & Chase, for appellant;
    that temporary alimony can not be granted in a bill for separate maintenance, cited Foss v. Foss, 2 Bradwell, 411.
   McAllister, P. J.

This was a hill in equity brought August 17, 1885, by appellee, as the wife, against appellant, her husband, for separate maintenance, the bill alleging a marriage January 6, 1881, cohabitation until August 13, 1885, when, as she alleged, she wTas compelled to leave the defendant on account of bad treatment and cruelty, so that she had been living separate and apart from him, without her fault. The defendant answered, October 6, 1885, admitting the marriage and cohabitation, but denying the several charges of cruelty and that she was living separate and apart from him without her fault. At the succeeding April term of the court, upon motion of the complainant, supported by affidavits, an order was entered requiring the defendant to pay her as temporary alimony the sum of seven dollars a week, from which he took’ an appeal to this court. It appears from the allegations of the bill and admissions of the answer that defendant was possessed of ample means; but his counsel take the position that the court below had no power, under any circumstances, to award temporary alimony. Ho counsel for appellee has appeared in this court.

The statute, under which the suit was brought, reads as follows: “That married women, who, without their fault, now live, or hereafter may live, separate and apart from their husbands, may have their remedy in equity in their own names respectively, against their said husbands, for a reasonable support and maintenance while they so live or have so lived separate and apart; and in determining the amount to be allowed, the court shall have reference to the condition of the parties in life, and the circumstances of the respective cases, and the court may grant allowance to enable the wife to prosecute her suit, as in cases of divorce.” 1 Starr & Our. Stat. p. 1281.

The argument in support of the contention against the power to grant temporary alimony may be thus summarized: The authority for bringing the suit in the wife’s name did not exist by either the common law or the general principles of equity ; a statute was necessary ; hence it is purely a statutory proceeding; the statute must be strictly construed, and the statute expressly authorizing the granting an allowance of suit money and being silent as to the granting temporary alimony, it must be construed as impliedly forbidding the latter, and the ease of Foss v. Foss, 2 Bradwell, 411, is cited in support of that view, which, if well decided, does sustain it.

After a somewhat careful analysis of the statute in question and consideration of the subject, we are brought to the conclusion that the statute should not receive the narrow construction which has been put upon it in that case, and by counsel for appellant, in this case.

The duty or obligation of a husband to supply his wife with reasonable support and maintenance according to their condition in life, arises from the common law. The statute in question does not profess to create such duty or obligation, but pre-supposes its existence. It is true that by the prevailing current of authorities, courts of equity, while recognizing such duty or obligation, would not take jurisdiction of a suit in the wife’s own name to enforce it, when that was the sole object of the suit, and held that a statute conferring the jurisdiction was indispensable. Ross v. Ross, 69 Ill. 569; Trotter v. Trotter, 77 Ill. 510. To accomplish that end the above statute was passed. It is not only a remedial statute to be liberally construed, but it is very broad in its terms, though concisely worded. It gives to courts of equity full and complete jurisdiction over the subject-matter of the husband’s common law duty to furnish his wife reasonable support and maintenance, whenever she, without her fault, shall be living separate and apart from her husband, and a remedy, in her own name, to be administered with reference to the condition in life of the parties, and the circumstances of each ease. The grant of jurisdiction thus conferred must necessarily carry with it and include all the powers ordinarily belonging to courts of equity, of affording an adequate and complete relief, according to the general ¡Principles of equity, as the special circumstances may require. Such grant necessarily carries with it all the ordinary powers of a court of equity over the writ of injunction, ne exeat, or process by attachment, as in other cases, upon proper showing being made. Such duty of support arising at common law, and being prima facie a continuously subsisting obligation, why was it necessary to specify in the statute the power of the court as to an ad interim support, any more than any of the other inherent or incidental powers necessary to an adequate and complete remedy ?

The power in question is necessary to an adequate remedy, under some circumstances. To illustrate, let us suppose a ease. A marriage between parties in comfortable condition in life is consummated in another State. The wife has been faithful to all her marital obligations, but her husband deserts her, and leaving her without means of support, he comes and makes his domicile here, bringing with him all of his property. She follows him here and applies to him for support, but although possessed of ample means, he refuses it. She then brings her suitunder said statute for separate maintenance alleging the marriage, and that she is living separate and apart from him without her fault. He answers, expressly admitting the marriage, but the other allegation, though true in fact, he denies. By that he causes an issue to be formed which must be tried before decree. To get a tidal may require months or even years. By that course he compels her to wait for justice. Meanwhile, being without friends or means, she is reduced to the actual alternative of suffering for the necessaries of life, or the humiliation of a life in the poor house, while he is faring sumptuously every day. Is a court of equity, having jurisdiction of the subject-matter and the parties, without power, in such case, to afford temporary relief ? Such a power, it seems to us, must necessarily be inherent in the general jurisdiction which the act confers upon the court.

In speaking of such a power in divorce suits where the statute is silent as to temporary alimony, Bishop says, “ It springs necessarily from the legal relation of the parties, and the condition of facts appearing of record before the court to which the application is made. And if any one principle of our jurisprudence is more worthy of commendation than another, it is that a judicial tribunal may always be pressed to action when a case is presented which comes within established legal rule, though not within any precedent.” 2 Bish. on Mar. and Div., 5th Ed., § 396.

By § 2 of the Divorce Act, B. S., 1845, it was provided that the circuit court, sitting as a court of chancery, should have jurisdiction in all cases of divorce and alimony by that chapter allowed. Then § 6 declared that “ when a divorce shall be granted, it shall be lawful for the court to make such order touching the alimony and maintenance of the wife, * * as from the circumstances of the parties and nature of the case shall be fit, reasonable, and just.” There was no provision expressly authorizing temporary alimony.

In Petrie v. The People, 40 Ill. 334, temporary alimony had been allowed the wife in her suit against her husband for a divorce, under the last mentioned statute, and proceedings instituted by attachment to enforce payment. The case was taken to the Supreme Court, and the question was whether the court below, in the absence of any provision of the statute expressly authorizing it, had the power to award temporary alimony. In a very carefully prepared opinion by Chief Justice Walker, the court announced this doctrine : Without citing further authorities, we may safely say that the general American doctrine is, that the wife may have alimony pendente lite, as well as money to defray the expenses of the suit, even in absence of statutory provision to that effect, up n the principle that alimony is an incident of the divorce, and that the jurisdiction of the latter necessarily includes the power to enforce such a right, as a legal attendant upon the marital relation, under the circumstances' under which the parties litigant are placed.”

The court there expressly recognized the doctrine which we have endeavored to establish, that the power to allow temporary alimony was necessarily included in the jurisdiction over the subject-matter of, and remedy for, reasonable support and maintenance.

We insist, however, that the doctrine applies with far more directness to a case like this at bar, than in the Petrie case. In the latter the temporary alimony was regarded as a mere incident of a divorce—another subject-matter ; and the power to allow it was held to be included in the jurisdiction of the court over that other subject-matter. In the case at bar, alimony, or support pendente lite, is not a mere incident of some other subject-matter, as the main object of the suit; but it is a homogeneous, or kindred part of the main object of the suit. And we perceive no more practical difficulty in affording that species of temporary relief in this kind of case, than in divorce cases. In truth, the whole relief afforded by this class of suits is of a temporary character. 2 Bish. on Mar. and Div., § 361. The complainant is only required to show prohable grounds, for the suit. And we think that was done, within the rule, in this case. The defendant admitted the marriage and the amount allowed was very moderate. We are disinclined to interfere with the chancellor’s discretion, and the order appealed from should be affirmed.

Affirmed.


text:
    J. Young Scammon v. The Commercial Union Ins. Co.
    1. Fraudulent sale by mortgagee—Alienation clause in insurance policy.—A sale of insured premises under a power contained in a mortgage covering the premises at the time of the issuing of the policy, where the mortgagee himself, through a third party, becomes the purchaser, and which sale is repudiated by the mortgagor and subsequently set aside by a decree in chancery, does not, under the clause against alienation contained in the policy, defeat a recovery for a loss occurring after such sale, and before the rendition of the decree setting it aside.
    2. Proofs of loss—Waiver of objection as to time of filing same.—Where an insurance company claims that its policy has been invalidated by a sale of the insured premises in contravention of the terms of the policy, and decides that it will not for that reason pay the loss, which claim and decision are communicated to the assured before a reasonable time had elapsed for furnishing proofs of loss, the question whether the proofs of loss were furnished in seasonable time is wholly immaterial.
    Appeal from the Circuit Court of Cook county; the Hon. Kirk Hawes, Judge, presiding.
    Opinion filed January 3, 1887.
    This was an action brought July 6, 1875, by the appellant, Scammon, against the insurance company, appellee, upon a policy of insurance issued January 2, 1874, by the latter to the former, upon a building of the plaintiff known as Ho. 209 Michigan avenue, in the city of Chicago, insuring the same in the sum of 85,000 against loss by fire, from January 4, 1874, to January 4, 1875.
    The building was destroyed by fire July 19, 1874, during the life of the policy, the loss being upward of thirty thousand dollars.
    The declaration was upon the policy, and under the plea of non-assumpsit and stipulation as to admission of all special matters in evidence, the case was submitted to the court for trial, without a jury, May 1, 1886, (that being the third trial) and resulted in a finding and judgment for the defendant, from which plaintiff brought this 'appeal, insisting that upon the evidence the finding should have been for him.
    The material facts shown by the evidence are that in May, 1872, the plaintiff being the owner in fee of the premises in question, his wife joining, executed a mortgage to the United States Mortgage Co., a corporation for the purpose of loaning money, created by a statute of the State of New York.
    This mortgage covered the premises in question and other real estate of the plaintiff, and was given to secure the bond of the latter for the repayment of a loan to him by said mortgage company, completed about July 9, 1872, of two hundred and twenty thousand dollars, payable in installments, running through a period of ten years, with interest at the rate of nine per cent, per annum, payable semi-annually, both the bond and mortgage giving to said mortgagee the right, at its election, to declare the whole debt due, upon the failure of the plaintiff to pay any part of principal or interest when due. The mprtgage contained a provision authorizing said mortgagee, its successors, legal representatives or assigns, either in person or by attorney, to sell the mortgaged premises and all benefit and equity of redemption of the mortgagors, at public auction, on giving thirty days notice by advertisement, for breach of any of the covenants, etc., therein contained; and in the name of the mortgagors, or as their attorney, to make and deliver a good and sufficient deed of the premises to the purchaser at such sale.
    It appeared that for an alleged default in the plaintiff to pay interest due in November, 1873, said mortgagee, in the month of February, 1874, elected to declare the whole indebtcdn.ss due, and advertised the mortgaged premises for sale, under said power, on the last day of March, then next; that said matter being under the control and direction of Samuel D. Babcock, the president of said mortgage company, he, said Babcock, just before the time of such sale, made arrangements with James H. Beese, to the effect that said Beese should attend said sale and bid off the mortgaged property in his own name, but for him, said Babcock, such president as aforesaid; that the property was put up for sale at auction, and Beese bidding one hundred thousand dollars therefor, it was struck off to him on said 31st day of March, and on the same day, without anything being paid by Beese or anybody else, said mortgagee, acting through said Babcock, as president, and by .its secretary, executed and delivered to said Beese a deed purporting to have been executed under said power and cutting off the said mortgagor’s equity of redemption in said property; and that April 20, 1874, said Beese (his wife joining) made and delivered, without consideration, a deed of the same property to said Babcock.
    It appears that the mortgaged property was at the time of such sale worth some four or five times the amount so bid as aforesaid; that the plaintiff being in the open and visible possession of the mortgaged property, including that insured and in question, the same as he had been for years previously, was informed as to the facts aforesaid respecting said sale, and immediately gave notice to said Babcock that he' regarded said sale as illegal and invalid; that he repudiated it, and should not surrender the possession to him; that such notice was given several weeks prior to said July 14, 1874, when the fire occurred, and plaintiff, disaffirming such sale, continued in possession of the mortgaged and insured premises, down to, at the time, and after said fire; that he subsequently brought a suit in the circuit court, by bill in chancery, setting up all of said facts respecting said sale and conveyances, charging fraud and making said mortgage company, Babcock and Beese, parties defendant, and praying that said sale and conveyances might be set aside for fraud, and said mortgagors be permitted to redeem; that said court having jurisdiction of the subject-matter and said parties, such proceedings were' had in said suit; that March 19, 1886, a decree was entered setting aside said sale and conveyances for fraud, and giving the mortgagors the right to redeem, which decree remains in full force and effect.
    The policy in suit contained the following conditions: “ If the property be sold or transferred, or any change takes place in title or possession, whether by legal process or judicial decree, or voluntary transfer or conveyance, * * * in every such case this policy shall be void. When property has been sold and delivered or otherwise disposed of, so that all interest or liability on the part of the assured herein named has ceased, this insurance on said property shall immediately terminate.”
    The plaintiff, immediately after the loss, gave the defendant due notice thereof, but the proofs of loss were not actually presented to defendant until some nine months thereafter; but it appeared not only by a very strong preponderance of evidence, but really without any conflict, that before a reasonable time had elapsed for furnishing such proofs, the defendant, having knowledge of all material facts, resolved that it ivas in no event liable for said loss and should not pay it, and, through one of its authorized agents, so notified the plaintiff; that such position of non-liability was based upon the alleged ground, that by said mortgage foreclosure the plaintiff had lost all title to the insured property, which position of non-liability was ever afterward adhered to on the part of the defendant.
    Mr. Charles F. White and Mr. M. L. Wheeler, for appellant;
    that the sale was invalid, cited Ross v. Demoss, 45 Ill. 452; Hamilton v. Lubukee, 51 Ill. 421.
    Clauses in insurance policies against alienation or change of title are strictly construed: Commercial Ins. Co. v. Spankneble, 52 Ill. 53; Aurora Fire Ins. Co. v. Eddy, 55 Ill. 213; Lazarus v. Com. Ins. Co., 5 Pick. 76; Strong v. Man. Ins. Co., 10 Pick. 43; Stetson v. Mon. Mut. Fire Ins. Co., 4 Mass. 330; Jackson v. Silvernail, 15 John. 278.

      A sale to avoid a policy under such clause must be one that wholly divests the owner of the property of all insurable interest therein: Lay v. Home Ins. Co., 24 Minn. 315; Stephens v. Ill. Mut. F. Ins. Co., 43 Ill. 327; Browning v. Home Ins. Co., 71 N. Y. 513; Bragg v. N. E. Mut. Fire Ins. Co., 5 Fost. 289; Cone v. Niagara Fire Ins. Co., 60 N. Y. 619; Farmers Mut. Ins. Co. v. Graybill, 74 Pa. St. 17; Strong v. Man. Ins. Co., 10 Pick. 40.
    As to waiver of proofs of loss: Peoria M. & F. Ins. Co. v. Lewis, 18 Ill. 553; Norwich Trans. Co. v. West. Mass. Ins. Co., 34 Conn. 561; Williamsburg City F. Ins. Co. v. Cary, 83 Ill. 453; McComas v. Cor. Mut. Life Ins. Co., 56 Mo. 573.
    Messrs. Miller, Lewis & Judson, for appellee;
    that a sale that is merely voidable is an alienation that defeats a recovery for a loss occurring before the sale has been set aside cited Wood on Fire Ins., §§ 312, 315, 317; Flanders on Fire Ins. 449 ; Power v. Ocean Ins. Co., 19 La. 28 ; Worthington v. Bearse, 12 Allen, 382; Savage v. Howard Ins. Co., 52 N. Y. 502; Langdon v. Minn. Farmers Asso., 22 Minn. 193; Foote v. Hartford Fire Ins. Co., 119 Mass. 259; Western Mass. Ins. Co. v. Ricker, 10 Mich. 279.
    Retaining notice of loss and proof of loss without objection is not a waiver of the objection that they were not served within a reasonable time: Knickerbocker Ins. Co. v. Gould, 80 Ill. 388; Trask v. State, F. & M. Ins. Co., 29 Pa. 198.
    There can be no waiver after forfeiture: Underwood v. F. J. S. Ins. Co., 57 N. Y. 505; Ripley v. Ætna Ins. Co., 30 N. Y. 136; Van Allen v. F. J. S. Co., 5 L. J. 731.
   McAllister, P. J.

There were but two points of objection to a recovery relied upon by the defendant below on the trial, and the same are insisted upon here on its behalf as appellee. They are (1) that the sale by the United States Mortgage Company, under the power of its mortgage and the conveyance thereunder, made March 31,1874, some three months and fourteen days before the fife, constituted a breach of the condition in. the policy against alienation, which rendered the policy void, and that at all events the plaintiff, for that reason, had no insurable interest in the property at the time of the loss; (2) that the plaintiff failed to seasonably furnish defendant with proofs of loss as required by the policy.

It is indisputable that, as respects every other matter, the plaintiff’s cause of action was clearly made out, so that, upon this appeal, the only questions demanding consideration are those arising upon the above stated grounds of defense, and they are mixed questions of law and fact. All the material facts are, however, established by undisputed evidence. If, when the law is properly applied to the facts, either or both of said grounds of defense shall be found tenable, the judgment below should be affirmed; but if found untenable as to both, then it should be reversed.

First, then, as to the alleged breach of condition of the policy against alienation. What is to be taken as the true meaning when the different clauses are construed together ? All the authorities agree that such conditions must receive a strict construction, the court having in view the object of the insurance company in inserting them. The language in which the condition in question is expressed is as follows:

“If the property be sold or transferred, or any change takes place in title or possession, whether by legal process or judicial decree or voluntary transfer or conveyance, * * in every such case this policy shall be void. When property has been sold and delivered or otherwise disposed of, so that all interest or liability on the part of the assured herein named has ceased, this insurance on said property shall immediately terminate.”

When both the above clauses are considered together in the light of the rules to which we have adverted, it appears to us that the last clause was intended to explain and qualify the meaning of the words of the former, and define what sort or nature of transfer or conveyance of the property and change of title was contemplated and provided against. The character so given and intended was such a sale or disposition of the property as caused all interest of the insured in or control over the property to cease. That was the construction given to causes in the same language by the Court of Appeals of New York, in Browning v. Home Ins. Co., 71 New York R. 513.

In Ayers v. Hartford Ins. Co., 17 Iowa, 176, the court, in discussing what -transfer or change of title would avoid the policy, held to the following sensible views :

“ The object of the insurance company by this clause is, that the interest shall not change so that the insured shall have a greater temptation or motive to burn the property, or less interest or watchfulness in guarding and protecting it from destruction by fire. Any change in or transfer of the interest in the property, of a nature calculated to have this effect, is in violation of the policy. But if the real ownership remain the same—if there is no change in tiiefact of a title, but only in the evidence of it, and this latter change is merely nom'nal and not of a nature calculated to increase the motive to burn or diminish the motive to guard the property from loss by fire, the policy is not violated.”

Lay v. Home Ins. Co., 24 Minn. 315, supports the same doctrine, and many other cases of the same import might he cited. The case of The Orrell v. Hampden Fire Ins. Co., 13 Gray, 431, is in harmony with the same principles, for it holds that to constitute a breach of the condition of insurance relating to the conveyance of the property, there must have been an actual sale or transfer of the property, valid as between the parties. There is a vein of the same doctrine in Daily v. Westchester Fire Ins. Co., 131 Mass. 113; May on Ins., § 273.

The question is, were the sale and conveyance made by the mortgage company under the power in its mortgage, and under the circumstances of that sale, an actual sale, and valid as between the plaintiff below and said mortgage company ?

Let us premise our answer to that question by the statement that the defendant below, having set up that sale as a defense, it has thereby voluntarily assumed the attitude of privity with said mortgage company, by which it .stands affected by every fact and circumstance legitimately bearing upon the question of the validity of that sale. Stephens v. Ill. Mut. F. Ins. Co., 43 Ill. 327.

Mow what are the circumstances legitimately bearing upon the validity of that sale ? In making it the mortgage company was acting under a power contained in its mortgage, given by the plaintiff, constituting the former the agent and trustee of plaintiff, and authorizing only an ordinary sale, at public auction, upon a certain contingency. But the mortgage company, in making the sale under that power, made it to itself. In violation of its duty as trustee, it became the purchaser at its own sale, and for a stun less than a fourth of the fair value of the property. The evidence shows that arrangements were made by the mortgage company, before said sale and without the knowledge of plaintiff, to sell the property under said power. That such sale was fraudulent, all the authorities agree ; and it is unnecessary to cite more than one case. In that the principal authorities are cited. Michaud v. Girod, 4 How. (U. S. ) 552; approved in 43 Ill. 126.

That sale and the conveyance under it were undoubtedly fraudulent, illegal and voidable, as to the plaintiff, at his election. And it appears that he promptly elected to repudiate and disaffirm it, and gave notice to that effect to the said mortgage company, the purchaser, some two months before the loss, and that he should continue to retain possession of the premises, which he did. Mot only that, but plaintiff brought a bill in equity to have said sale annulled, and obtained a decree of annulment before the trial below, and introduced the same in evidence.

That decree being conclusive between the parties to the suit in which it was rendered, and the said mortgage company being a party, it must follow from the attitude of privity with said mortgage company as respects said sale, which the defendant in this present suit had voluntarily assumed by setting up said sale as a defense, that if said decree, though rendered after the issues in the present case were made up, would have been conclusive between the parties to it, of which there is no doubt, it was, for the reasons stated, admissible in evidence in this present suit, and equally conclusive as to the defendant herein. Dow v. McMichaels, 6 Paige, 139 ; Sheldon v. Patterson, 55 Ill. 507.

So that such sale having been annulled by a court of competent jurisdiction, it is to be regarded as if never made. But aside from the decree, the sale having been fraudulent and voidable as to plaintiff, at his election, and he having elected to avoid it, his actual ownership of the equity of redemption was unaffected thereby. Ross v. Demoss, 45 Ill. 452; Roberts v. Fleming, 53 Ill. 196.

Plaintiff’s open and visible possession alone was good against a title acquired by fraud. Niles v. Anderson, 5 How. (Miss.), 365 ; Flint v. Lewis, 61 Ill. 229.

From the whole case, it is clear that there was no actual sale or transfer ; that plaintiff’s interest in and control over the property were not divested. He continued in possession down to the time of the fire, claiming ownership of the equity of redemption, as in fact he had a right to ; he had the same motive for that reason to guard and preserve the property from destruction by fire after said supposed sale, as he had before, and when said policy issued. We think, therefore, that the first ground of defense was untenable.

We are of the opinion that the second is also untenable, because it appears that the defendant, before a reasonable time had elapsed for furnishing proofs of loss, determined on its own part that it was in no event liable for said loss, and that it would not pay it, and gave plaintiff notice to that effect.

That being the case, the question whether such proofs were furnished in seasonable time was wholly immaterial. Peoria, etc., Ins. Co. v. Whitehill, 25 Ill. 470 ; Williamsburg, etc., Ins. Co. v. Cary, 83 Ill. 453.

We have considered the objection of res adjudicaba, upon a former appeal, and think that also untenable. The judgment should be reversed and cause remanded.

Judgment reversed.


author: Moran, J.

text:
    Henry C. Sailors v. The Nixon-Jones Printing Co.
    1. Partnership.—Where the question of partnership is to be determined from a contract between the parties to it, the relation must be found from the terms and provisions of the contract, and even though parties intend to become partners, yet if they so frame the terms and provisions of their contract as to leave them without any community of interest in the business or profits, they are not partners, either in fact or in law. Held, that under the contract in this case appellant was bound to become a partner at the end of two years, but until that time, was a joint owner merely, and not a partner.
    2. Incompetent testimony in deposition.—The statement of one of the partners in his deposition, that appellant was one of the firm, without proof that appellant authorized the statement, was incompetent.
    8. Same—Practice.—When incompetent testimony gets into a case, in the shape of depositions or otherwise, it is the duty of the court, when required, at any stage of the trial, to exclude it or direct the jury to disregard it. ,
    Appeal from the Superior Court of Cook county; the Hon. Kirk Hawes, Judge, presiding.
    Opinion filed January 26, 1887.
    An action was brought by appellee against appellant, impleaded with Jules T. Gfuibout and Tryon J. Woodward. The issue tried was upon a plea by appellant denying joint liability. It appeared that in the spring of 1884, appellant being the pwner of a system of commercial reporting and rating, in part consisting of certain boobs or forms which had been copyrighted by him, sold a one-third interest to one Black, and another third to Woodward. The business, which was called the Merchants’ Mutual Protection and Collection Association, was located at St. Louis, and appellant living in Chicago, Black and Woodward were to conduct the business. In June or July, 1884, appellant sold his third interestto one Nixon, and after the business had been conducted awhile by Woodward, Nixon and Black, Black left the concern, and having failed to pay appellant in full for the third purchased by him, that third interest reverted under the contract of purchase to appellant. After a time Nixon sold his interest to one Gnibout, and about Jan. 1, 1885, Woodward being the owner of one third of the copyright books and the business in St. Louis, Gnibout the owner of another one third and appellant of the other third, the following contract in writing was made between them:
    “This article of agreement, made and entered into, in duplicate, this 2d day of January, 1885, by and between Henry C. Sailors, of Chicago, Illinois, and Jules T. Gnibout and Tryon J. Woodward of St. Louis, Missouri, in consideration of the mutual covenants herein named, witnesseth: that whereas, by mutual terms this da3r agreed upon by the parties hereto, said Jules T. Gnibout has become possessed of an undivided one-third interest in and to the business heretofore carried on at St. Louis, under the firm name of Woodward & Co., managers of the Merchants’ Mutual Protection and Collection Association of that city, now it is expressly and further agreed by the parties hereto:
    Item one. That said business shall be conducted and carried on as before by the parties hereto, except that while the said Henry C. Sailors is hereby released from all active management or responsibility of said business for two years from and after this date, said other partners are hereby declared and agreed to be the sole responsible managers for two years from this date; and they agree to use all diligence and skill required by said business, and to advance its interests and promote the same by their reasonable endeavor, and to share all profits and losses between them, the said two persons, during said two years. Said Henry C. bailors shall have no pecuniary interest or liability therein, during said time, but shall have the right, from time to time, to a reasonable inspection of the current books and business of said firm, and to advance its interests in any reasonable manner, from time to time, and to ask and receive at proper times, from his said copartners, or either of them, such information as they may from time to time possess.

      At the expiration of said two years, said partnership shall continue, but the profits and losses thereafter shall be shared in proportion to the several interests of the parties hereto, and said Henry C. Sailors, by himself or representative, to be by him named and accepted by all parties, shall actively cooperate in the conduct, management and promotion of the business thereof.
    Witness our hands and seals at Chicago, Illinois, the day and year first above written.
    H. C. Sailors, [seal.]
    Jules T. Guiisout, [seal.]
    Teton J. Woodward, [seal.]

      Addenchm,:

    By mutual agreement by and between the undersigned, and in consideration thereof, the partnership name of the within business and copartnership is this day changed to that of the ‘ Union Mercantile Agency.5
    Witness our hands and seals this the 6th day of April, 1885.
    Witness:
    Henrt C. Sailors, [seal.]
    J. T. Guibout, [seal.]
    T. J. Woodward. [seal.]55
    'In May, 1885, the indebtedness for which the action was brought was incurred on the order of Guibout and was imprinting certain books containing ratings which were to be distributed to customers with a view of increasing the profits of the business. Ho participation by appellant in the conduct or management of the business was shown, but in their depositions offered in behalf of appellee, both Woodward and Guibout say that appellant was a partner.
    May 26, 1885, an agreement of sale of their interest was made "by Guibout and Woodward, in the business, to one Clark, to which transfer appellant consented. The agreement of sale was as follows: “ St. Louis, May 26, 1885. J. T. Guibout and T. J. Woodward: I propose to purchase your two-thirds interest in the business known as the Union Mercantile Agency (formerly the Merchants’ Mutual Protection and Collection Association of the City of St. Louis, Mo.), including all books, blanks, office furniture, contracts, good will of the business, office lease, insurance policies, and in fact, your entire interests and control in said business,' for which I agree to pay you two thousand dollars. The bill of sale to be executed and immediate possession of office and all property named above given me upon payment of said money, which shall be on or before June 10, 1885. The amount shall be in full and any liabilities, if any there be, shall be fully paid and satisfied by yon. Money to be paid, $1,000 to each. That is, $1,000 to said Guibout, and $1,000 to said Woodward.
    W. J. Clabk.
    In consideration of one dollar to me in hand paid, we hereby accept the above proposition.
    Jules T. Guibout.
    Tbton J. Woodwabd.
    Witness: I hereby consent to said transfer of interests.
    H. C. Sailobs.”
    The agreed sale was not consummated, and on June 26, 1885, a voluntary assignment was made at St. Louis by Woodward and Guibout. In Guibout’s deposition which was read at the trial by appellees, was the following questions and answers:
    “ Q. Did you inform the officers of this company (meaning plaintiffs) at the time this contract was made, as to who constituted your association ?
    A. Yes, sir.
    Q. What was the information you gave them ?
    A. Well, I informed Mr. Mixon, of Mixon-Jones Printing Co., that the firm consisted of Mr. Woodward, Mr. Henry C. Sailors and myself.”
    After the appellee rested, appellant moved to strike out and take from the consideration of the jury the foregoing portion of the testimony of Guibout, but the court overruled the motion, and the appellee excepted.
    Guibout further testified that the books were printed with appellant’s knowledge “and also with his understanding that he was going to help us pay for them. While those books were being printed I went to Chicago and had a conversation with Mr: Sailors at his place of business, and I told him of our straitened circumstances, and he told me that that book would surely give us a boom and enable us to collect all that was due from subscribers and take many more, and he told me besides that he would certainly bo able to help ns in a little while.”
    Appellant in his testimony denied that he ever agreed to pay anything toward the books, or that he knew anything of them until they were printed.
    There was a verdict against appellant, and judgment, and the case is brought to this court by appeal.
    Mr. Joseph D. Hubbard, for appellant.
    Messrs. Flower, Remy & Gregory, for appellee.
   Moran, J.

The contract of January 2, 1885, between Woodward and Guibout and appellant, did not constitute appellant a partner in the business which Woodward and Guibout were to conduct in St. Louis. True, the word “partnership” is used to designate the relation of the parties, but the whole agreement shows plainly that Sailors was a joint owner merely, and that the business was to be conducted wholly by the others, and they were to have the entire profits accruing, and bear all losses that might happen in running the business, till, at the end of two years, Sailors was to come into a participation of the business and thereafter share the profits and losses of the business that should be done. It was a contract which bound appellant to become a partner at the end of two years, but such contract would not make him liable for debts contracted before his relation as partner commenced. The agreement is very explicit that he shall not share the profits nor be liable for the losses. He retained only his one third ownership in the books and good will of the business, and had no control over its management and no right beyond seeing to the preservation of the property. The fact that the parties to such relation themselves call it a partnership will not make it so. Where the question of partnership is to be determined from a contract between the parties to it, the relation must be found from the terms and provisions of the contract, and even though parties intend to become partners, yet if they so frame the terms and provisions of their contract as to leave them without any community of interest in the business or profits, they are not partners either in fact or in law. Parsons on Partnership, 91. A partnership inter se must result from the intention of the parties as expressed in the contract, and they can not be made to assume toward each other a relation which they have expressly contracted not to assume. The terms of the agreement, where there is one, fixes the real status of the parties toward each other.

If there is no agreement, then if they deal with each other as partners, sharing losses and profits, their interest will be gathered from their acts, and they will be partners inter se. Collyer on Partnership, See. 2 and note. A mere community of interest in property will not make the owners partners. There must be an agreement for a joint venture and to share profits and losses; and in the absence of such a mutual agreement they are mere tenants in common of the property and the act of one will not bind the other. Chase v. Barrett, 4 Paige, 148; Nichoff et al. v. Dudley, 40 Ill. 406; Smith v. Knight, 71 Ill. 149.

As the contract did not make appellant a partner, he could only be held on the ground that he had held himself out as one or authorized or assented to his being so held out. Nixon says that he knew appellant was a partner when the books were ordered, but he does not state how he knew it, and it may well be inferred that he only knew from what Guibout told him at the time the books were ordered. The question whether the appellant had been, with his consent, held out as a partner to the plaintiff, was one of fact for the jury ; and it was important that in determining that question the jury should be confined to whatever competent testimony was before them. The statement in Guibout’s deposition that he told Nixon that appellant was one of the firm without proof that appellant authorized the statement, was incompetent, and in view of all the evidence in the ease was calculated to mislead tlie jury. A party has a right .to insist that irrelevant and incompetent testimony shall be excluded. Incompetent testimony in a deposition, though not objected to when the deposition is taken, may be objected to on the trial. The objection is not as to mere form, it is substantial. Cooke v. Orne, 37 Ill. 186; Lockwood v. Mills, 39 Ill. 602.

Mor did appellant lose his right to have the evidence excluded by failing to object to it when read from the deposition. When incompetent testimony gets into the case in the ship e of depositions or otherwise, it is the duty of the court, when required, at any stage of the trial, to exclude it or direct the jury to disregard it. Pittman v. Gaty, 5 Gilm. 186; Greenup v. Stoker, 2 Gilm. 688; Wickenkamp v. Wickenkamp, 77 Ill. 92.

The refusal of the court to exclude the evidence on appellant’s motion was material error, and, while we are much inclined to. the opinion that there was no legal evidence before the jury to support a verdict that appellant was jointly liable, still we prefer to rest the reversal on the error above specified, and remand,the case for such further action as the parties may desire to take.

Reversed and remanded.