§ 90. (Contracts, Sec. 58.) Consideration in subscriptions. (Note: Subscriptions, or promises to contribute, are of two general sorts: charitable; and business subscriptions. A charitable subscription is generally looked upon as an offer only, and not contractual, until accepted by the beneficiary by doing some act upon the faith of it. Until that time, it can be withdrawn, and death or insanity before such act will revoke it. (See Case 51, supra.) However, mutual subscriptions, made in reliance upon each other, have been upheld as upon sufficient consideration. See extensive note, 48 Lawyers' Reports Annotated, new series, page 783. Business subscriptions, as to the stock of a corporation may become effective upon acceptance.) CHAPTER 11. LEGALITY OF CONTRACTS. A. Legality of contract an essential element. A. Legality of Contract an Essential Element. § 91. (Contracts, Sec. 59.) Illegal agreements void. (Note by editor: If legality is an essential element in contract, obviously an illegal agreement is not a contract, and it is incorrect to speak of an illegal contract. Inasmuch, however, as that phrase has usage and is convenient to carry the idea that an agreement is contractual except for its illegality we may not only tolerate its use, but in fact recognize its convenience. The editor has thought that a more logical treatment than that attempted here would be to differentiate more definitely between contracts of a positively illegal character and those merely unenforceable because against sound public policy. Such a distinction is at any rate worthy of notice. Among contracts (or stipulations in contracts) not enforceable as being against public policy would be contracts in restraint of trade and agreements inflicting penalty for breach (treated under Interpretation of Contracts in this book.) B. Particular Classes of Illegal Agreements. 1. Contracts whose objects or tendencies are in violation of law or opposed to public policy. 2. Contracts illegal because of manner of formation. 1. Contracts whose objects are in violation of law or opposed to public policy. § 92. Contracts in restraint of trade. § 93. Contracts of monopolistic tendency. § 94. Contracts limiting liability. § 95. Usurious contracts. § 96. Wager contracts. § 97. Contracts tending to corrupt the public service. § 98. Agreements in restraint of marriage. § 92. (Contracts, Sec. 60.) trade. Contracts in restraint of Case 100. Harris (defendant) v. Theus (complainant), Ala., 10 L. R. A. N. S. 204. - Facts: Theus purchased from Harris certain leases of pine land at or near Geneva, Alabama, for turpentine purposes, and erected a distillery for the manufacture of turpentine. In the contract it was provided that Harris would not engage in the turpentine business at any point within 10 miles of the town of Geneva so long as Theus should be engaged in said business in Geneva. Theus files his bill setting forth that Harris has not observed this agreement and asks for an injunction. Point Involved: That a court of equity will enforce by injunction an agreement in partial restraint of trade, if reasonable, when entered into in connection with the sale of a business. DENSON, J., delivered the opinion of the court: "It may be conceded as being the general rule in all the states, as well as in England, that contracts in general restraint of trade are void as against public policy. In determining what is the public policy in this regard, we have, however, to take into account certain contracts which restrain trade. It is of public interest that everyone may freely acquire and sell and transfer property and property rights. A tradesman, for example who has engaged in a manufacturing business, and has purchased land, installed a plant, and acquired a trade connection and good will thereby, may sell his property and business, with its good will. It is of public interest that he shall be able to make such a sale at a fair price, and that his purchaser shall be able to obtain by his purchase that which he desired to buy. Obviously, the only practical mode of accomplishing that purpose is by the vendor's contracting for some restraint upon his acts, preventing him from engaging in the same business in competition with that which he has sold. His contract to abstain from engaging in such competitive business is a contract in restraint of trade, but one which has been recognized as not inimical to, but permitted by, public policy. Therefore, while the public interest may be that trade in general shall not be restrained, yet it also permits and favors a restraint of trade in certain cases. Contracts of this sort, which have been sustained and enforced by courts, have been generally declared to be such as restrain trade, not generally, but only partially, and no more extensively than is reasonably required to protect the purchaser in the use and enjoyment of the business purchased, and are not otherwise injurious to the public. This is the doctrine recognized in the courts of many of the states, including our own court. 9 Cyc. Law & Proc. p. 529, and cases cited in note 70; 24 Am. & Eng. Enc. Law, 2d ed. p. 850; Mc-. Curry v. Gibson, supra; Tuscaloosa Ice Mfg. Co. v. Williams, 127 Ala. 110, 50 L. R. A. 175, 85 Am. St. Rep. 125, 28 So. 669; Trenton Potteries Co. v. Oliphant, supra. that crude gum is an "It is made to appear * article that is purchased by those engaged in the naval stores business and that one engaged in the business at or near Geneva may obtain, and does purchase the gum from persons within a radius of ten miles from Geneva so that the place fixed by the covenant within ten miles of Geneva, considered in connection with the nature of the business and the purpose of the contract scems to afford only a fair protection to the interests of the covenantee without being so large as to interfere with the interests of the public. *" [Agreement upheld.] * Question 100: (1) Is a contract in restraint of trade when made by itself void? Why? If it is made in connection with a sale of a business is it valid? Why? In the latter case is it necessary to place any limitations upon the agreement not to compete? Why? (2) A plans to establish a mill to compete with B's mill. B hears of this and in order to keep A out of the territory proposes to pay A a certain annuity if he will not establish the mill. A agrees to this and refrains from establishing the mill. He sues for the annuity. Has B any defense? Case 101. Tillinghast v. Boothby, 20 Rhode Island Reports, 59. Bill in equity to restrain respondent from practising dentistry in the county of Providence. Heard on demurrer to the bill. Per Curiam. "This bill seeks to restrain the defendant from violating the terms of his agreement by which he was employed to work for the complainant, as a dentist, with a stipulation that he would not, after the termination of the contract, 'either directly or indirectly carry on or be employed or concerned in the practice of dentistry in the county of Providence, Rhode Island.' "The ground urged upon demurrer to the bill is that the restrictions are unreasonable. It was decided in French v. Parker, 16 R. I. 219, that such a contract was valid though unlimited as to time; and in Herreshoff v. Boutineau, 17 R. I. 3, and in Oakdale Co. v. Garst, 18 R. I. 484, that the reasonableness of a restriction in a contract is the test of its validity. There is no manifest unreasonableness in the contract before us, and hence there is no ground apparent in the bill upon which we can declare it to be invalid." "The demurrer is overruled." Question 101: Is a contract in restraint of trade that is unlimited in point of time valid? What was the territorial restriction in the above case, and what did the court say about its apparent reasonableness? Case 102. Hall Mfg. Co. v. Western Steel & Iron Works, 227 Fed. 588, L. R. A. 1916 C. 620. Facts: This is a bill brought by the Hall Mfg. Co. against the Western Steel & Iron Works to enjoin breach |