or his business and his good will, and in the transaction agrees not to carry on the same business with a limitation space, the agreement as to This must be so if the test supported or avoided on the as to the time, but none as to such restraint is wholly void. be that the contract is to be ground of public policy. If it be prejudicial to the public interests for a citizen to be debarred from pursuing anywhere the calling in which he has acquired skill or proficiency, or to encourage the establishment of monopolies by preventing competition, it must be for definite ast well as indefinite periods of time. A contract that would put it in the power of one party to prevent the other from carrying on his calling anywhere whatever is unreasonable." In an English case the rule is stated, as follows: 1 1 Wiley v. Baumgardner, 97 Ind. 66; s. C., 49 Am. Rep. 427, 429. As this is the leading case on this point in this country, the following statement of the case, taken from the opinion, may be of interest: The action was upon a contract in writing by which the appellant sold to the appellees the former's entire stock of dry goods, boots and shoes, merchandise and fixtures in his store in Bluffton at cost, less a certain per cent., and agreed to transfer to them his lease on the building occupied by him for his storeroom, and his unexpired insurance on said stock, and agreed not to engage in the dry goods business for a term of five years from the date of the agreement, being the 29th day of December, 1881, the appellees agreeing on their part, by way of payment, to transfer to the appellant a certain farm, which was to represent $6,000, to execute to him their promissory note for $1,000, and for the balance to execute their promissory notes, secured by mortgage on certain lands of one of the appellees. And it was agreed by all the parties, that 'for the faithful performance of the above contract, we hereby bind ourselves to each other in the sum of $1,000 liquidated damages.' It was alleged that the appellees intending to engage in the dry goods business in said town, the contract was entered into by them and the appellant for such purpose; that immediately after the purchase the appellees engaged in said business in said town, and that they were still continuing the same. The breach alleged was that in September, 1882, the appellant purchased a large stock of dry goods of the value of $10,000, and with them opened a dry goods store in said town within a few doors of the place of business of the appellees, and engaged in the dry goods business in said town and still continued the same; that during the time he had been thus engaged in business he had sold a large amount of dry goods in said town, the amount of $10,000, thereby taking away from the appellees "A limit in time does not by itself convert a general restraint into a partial one. "That which the law does not allow is not to be tolerated because it is to last for a short time only.' In considering, however, the reasonableness of a partial restraint, the time for which it is to imposed may be a material element to consider."1 § 43. Touching Territorial Limitations.-It is the rule that a contract in restraint of trade is valid only as it is limited as to space. If it is without limit it must be shown, in order to render it valid, that the peculiar circumstances render it a fit and reasonable agreement. Where this question is raised it will be settled by the court, not according to any hard and fast rule, but by an investigation of all the circumstances of the case, and by what, in view of the circumstances, appears to be reasonable and just. In a case before the Supreme Court of California, it was held that a contract in restraint of trade to be upheld must be restricted as to territory, and it must appear to the court in considering the nature of the business in connection with the territorial limits assigned that the limits designated are not unreasonable in extent.2 In the opinion in this case the said trade, to their damage, $1,500, for which they demanded judgment." See also Ward v. Byrne, 5 M. & W. 548; s. c., 3 Jur. 1175; Lawrence v. Kidder, 10 Barb. 647. However, in Proctor v. Sargent, 2 Man. & G. 20; s. c., 2 Scott, N. R. 289, Tindal, C. J., uses this language: "Ithink that when we are deciding upon the unreasonableness of a contract of this kind, we cannot leave out of consideration the duration of the restraint; for although I admit that where we once hold a restriction to be unreasonable in point of space, the shortness of time for which it is imposed will not make it good, yet where the question is whether the restraint is unreasonable or not in point of space, that which would be unreasonable, were it to continue for any length of time, may not be so when it is to last only for a day or two." 1 Maxim-Nordenfelt Co. v. Nordenfelt, L. R. (1893) 1 Ch. 630, 662. 2 Callahan v. Donnolly, 45 Cal. 152. See also generally the following cases involving questions of space where contracts were upheld: Butler v. Burleson, 16 Vt. 176; Miller v. Elliott, 1 Ind. 484; McClurg's Appeal, 58 Pa. St. 51; Mott v. Mott, 11 Barb. 127; Dwight v. Hamilton, 113 Mass. 175; Gravelly v. Barnard, L. R. 18 Eq. 518; s. C.. 43 L. J. Ch. 649; 30 L. T. 863; Mercer v. Irving, El., B. & E. 563; Reynolds v. Bridge, 6 El. & B. 528; Sainter v. Ferguson, 7 Com. B. 716; s. c., 13 Jur. 828; 18 L. J. court said: "A contract in restraint of trade and which is not by its terms limited as to the territory embraced in its operation is not to be supported. 'It is to be remembered, however (said Tindal, C. J., in Horner 1 Com. P. 217; Hastings v. Whiteley, 2 Excheq. 611; Davis v. Mason, 5 T. R. 118; Whittaker v. Howe, 3 Beav. 383; Dendy v. Henderson, 11 Excheq. 194; s. C., 24 L. J. Excheq. 324; May v. O'Neill, 44 L. J. Ch. 660; Galsworthy V. Strutt, Excheq. 659; Smalley v. Green. 52 Iowa, 241; s. c., 35 Am. Rep. 267; Doty v. Martin, 32 Mich. 462; Linn v. Sigsbee, 67 Ill. 75; Holbrook v. Waters, 9 How. Pr. 335; Harms v. Parsons, 32 Beav. 328; s. c., 9 Jur. (N. S.) 145; 32 L. J. Ch. 247; 7 L. T. 815; 11 W. R. 250; Whitney v. Slayton, 40 Me. 224; Gill v. Ferris, 82 Mo. 156; Stewart v. Challacombe, 11 Ill. App. 379; Beard v. Dennis, 6 Ind. 200; s. c., 63 Am. Dec. 380; Hedge v. Lowe, 47 Iowa, 137; Ropes v. Upton, 125 Mass. 258; Johnson v. Gwinn, 100 Ind. 466; Baumgarten v. Broadaway, 77 N. Car. 8; Arnold v. Kreutzer, 67 Iowa, 214; s. c., 25 N. W. Rep. 139; Morgan v. Perhamus, 36 Ohio St. 517; s. C., 38 Am. Rep. 607; Harrison v. Lockhart, 25 Ind. 112; McAllister v. Howell, 42 Ind. 15; Studebaker v. White, 31 Ind. 211; Pierce v. Woodward, 6 Pick. 206; Jenkins v. Temples, 39 Ga. 655; Ellis v. Jones, 56 Ga. 504; Dunlop v. Gregory, 10 N. Y. 241; s. c., 61 Am. Dec. 746; Perkins v. Lyman, 9 Mass. 522. Contra: Horner v. Graves, 7 Bing. 735; s. c., 5 Moore & P. 768; Taylor v. Blanchard, 13 Allen, 370; s. c., 90 Am. Dec. 203; Lawrence v. Kidder, 10 Barb. 641; Alger v. Thacher, 19 Pick. 51; s. C., 31 Am. Dec. 119; Wiley v. Baumgardner, 97 Ind. 66; Wright v. Ryder, 36 Cal. 347. A covenant in restraint of trade which is unlimited in regard to space, except by the words "so far as the law allows," is not void either as being against public policy or as being too uncertain in its terms to be capable of being enforced, Such a covenant is to be construed as providing for a restraint to the full extent that the doctrine of law as interpreted by the courts will allow a person to contract himself out of the privilege of trading in a particular business, and will be enforced so as to secure to the covenantee the full benefit of that which he has purchased from the covenantor. Davies v. Davies, 56 L. J. Ch. 481; s. c., 35 W. R. 697. Defendant agreed to purchase $200,000 worth of goods from plaintiff, who agreed not to sell like articles in some thirty States and territories of the United States. In an action for goods sold and delivered, defendant set up this contract, and alleged breaches of it as a counterclaim. There was nothing to show the ordinary amount of manufacture and sale by either party, or that defendant had established a trade in more than one State out of the thirty. Held, that the pleading was demurrable in not affirmatively showing that the restraint was reasonably necessary to protect defendant's interest under the contract. Richards v. American Desk & Seating Co., 87 Wis. 503, 58 N. W. Rep. 787. Plaintiff and defendant were corporations engaged in selling "benefit certificates" entitling 1 v. Graves), that contracts in restraint of trade are in themselves, if nothing more appears to show them reasonable, bad in the eye of the law.' A contract in restraint of trade must designate the space within which it is to operate and must not be unreasonably extended. Such contracts, when upheld, are only in cases where the parties have restricted the territory in which they are to operate, and where the court, in considering the nature of the business in connection with the territorial limits assigned, is of opinion that the designated limits are not unreasonable in extent.""2 In a case in Alabama the rule is stated, as follows: "It is true that such contracts must be limited as to the space they are intended to cover, or they cannot be supported. The meaning of a contract of this character is not to be found solely from a consideration of its expressed terms. Courts look to all the circumstances surrounding the parties and attendant upon the transaction, and from a consideration of these circumstances in connection with the expressions of the undertaking, they will first construe the contract and then proceed to pass upon its reasonableness as thus construed."3 This rule, so far as it can be termed a rule, relating to territorial limitations, is stated by the Supreme Court of the United States, in the case of the Oregon Steam Navigation Company, as follows: "In accordance with these principles it is well settled that a stipulation by a vendee of any trade, business or establishment, that the vendor shall not exercise the same trade or busi the holders, in case of sickness or injury, to maintenance and treatment in hospitals provided by the company. The plaintiff had established a lucrative business in Wisconsin, Minnesota and the northern peninsula of Michigan, and had acquired valuable hospital contracts. The plaintiff agreed to refrain for three years from selling certificates in the territory named, except to railroad employes, and to turn over its hospital contracts, in consideration of which the de fendant promised to make certain payments, and also to refrain for three years from selling certificates to railroad employes within said territory. Held, that the contract was not void as an unreasonable restraint of trade. Nat'l Ben. Co. v. Union Hospital Co., 45 Minn. 272; s. C.. 47 N. W. Rep. 806. 1 Horner v. Graves, 7 Bing. 744. 2 Callahan v. Donnolly, 45 Cal. 152. 3 Moore & Handley Co. v. Towers Hardware Co., 87 Ala. 206. ness, or erect a similar establishment within a reasonable distance, so as not to interfere with the value of the trade, business or thing purchased, is reasonable and valid. In like manner a stipulation by the vendor of an article to be used in a business or trade in which he is himself engaged, that it shall not be used within a reasonable region or distance so as not to interfere with his said business or trade, is also valid and binding. The point of difficulty in these cases is to determine what is a reasonable distance within which the statutory prohibition may lawfully have effect, and it is obvious at first glance, that this must depend upon the circumstances of the particular case, although, from the uncertain character of the subject, much latitude must be allowed to the judgment and discretion of the parties. It is clear that a stipulation that another shall not pursue his trade or employment at such a distance from the business of the person to be protected, as that it could not possibly affect or injure him, would be absurd. On the other hand, a stipulation is unobjectionable and binding which imposes the restraint to only such extent of territory as may be necessary for the protection of the party making the stipulation, provided it does not violate the two indispensable conditions, that the other party be not prevented from pursuing his calling, and that the country be not deprived of the benefit of his exertions." § 44. The Subject Continued.—In some of the States the courts have manifested a disposition to relax, or to modify, in some degree, the rule in regard to territorial limitations as set forth in the foregoing section. In the leading case of the Diamond Match Company v. Roeber, the court said: "In the present state of the authorities we think it cannot be said that the early doctrine that contracts in general restraint of trade are void without regard to circumstances has been abrogated. But it is manifest that it has been much weakened and that the foundation upon which it was originally placed has, to a considerable 1 Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64, 68. |