The Cal. Steam Navigation Co. v. Wright

Mr. Justice Terry, after stating the facts, delivered the opinion of the Court. Mr. Chief Justice Murray concurred.

The first objection is untenable. The allegation that plaintiff was a corporation under the laws of this State, is sufficient to establish the right to sue, under the first section of the Act concerning corporations. Rev. Laws, 290.

The next objection is, that the contract declared on is not assignable. The contract is an instrument in writing, for the payment of money, and is made assignable by our laws. Besides, it has always been the policy of our law to construe contracts according to the intention of the parties, and it was evidently the intention of the parties that the contract should be assignable, as it is made payable to Chenery, his heirs, etc.; and as it appears from the complaint that the defendant was notified of the assignment, and received from the plaintiff the full sum of money which Chenery contracted to pay, he is estopped from denying that the contract was assignable. The third ground is not supported by the fact. The complaint does show that the contract was assigned by Chenery to plaintiff. The next objection is that the contract is against public policy, as being in restraint of trade.

At common law, all contracts by which one obliged himself to do an act or omission tending to injure the public, were void, and the general rule is that contracts in restraint of trade are contrary to public policy. The stringency of this rule has been gradually relaxed, as the reason for it (to wit: the security of mechanics and tradesmen) ceased.

As early as 1711, in the case of Mitchell v. Reynolds, 1 Peere Williams, 181; Parker, C. J., in delivering the opinion of the Court, says : “ The general question upon this record is, whether this bond, being made in restraint of trade, is good. And we are all of opinion, that a special consideration being set forth in the condition, which shows it was reasonable for the parties to enter into it, the same is good; and that the true distinction of this case is not between promises and bonds, but between contracts with and without consideration ; and that wherever a proper consideration appears to make it a proper and useful contract, and such as cannot be set aside without injury to a fair contractor, it ought to be maintained, but with this constant diversity, viz. : when the restraint is general not to exercise a trade throughout the kingdom, and when it is limited to a particular place; for the former of these must be void.”

In Pierce v. Fuller, 8 Mass., 223, it was held that an agreement not to run a stage coach on a certain road was valid. So in the case of' Chappel v. Brockway, 21 Wend., 157, where a party entered into a bond, under the penalty of twenty-five thousand dollars, that he would not at any time thereafter own, run, or be interested in, any line of packet boats on the Erie canal, it was held that the bond was valid.