Texas & Pacific Coal Co. v. Lawson

The Texas Pacific Coal Company being the owners of a large quantity of land, upon which it had a coal mining camp, called Thurber, in Erath County, Texas, containing about two thousand people engaged directly or indirectly in the development and operation of the company's mines, about four hundred of them being miners, and being also the owners of various buildings designed for store, drug store, livery stable and saloon for the purpose of supplying the wants of such a community, did on the 31st day of March, 1890, enter into an agreement with Thomas Lawson, whereby said company leased to Lawson its saloon, cold storage building and dwelling and yard of one acre connected therewith, for a term of five years with a privilege of renewal, and obligated itself to the effect, (1) that neither it, its successors nor its assigns would, during the continuance of such lease, sell or permit any other person or persons other than said Lawson, his agents or servants, to sell any wine, beer or spirituous liquors upon any lands owned or occupied by said company during the term of said lease, (2) that in case of sale of any such lands restrictions should be inserted in the deeds prohibiting sale of such liquors, (3) that said company, its successors and assigns should during said lease "issue checks to all persons in its employ to whom money may be due for wages or labor performed, and to redeem weekly all checks so issued which said Lawson may receive for wines, beer or spirituous liquors sold by him."

It is disclosed on the face of the instrument that it is "the purpose of this lease to confirm to said Lawson the exclusive privilege of selling wine, beer and spirituous liquors upon the land of the company during the term of this lease."

By the terms of this instrument Lawson obligated himself, (1) to conduct said saloon business in a prudent, buiness-like and economical manner, (2) to render to said company "monthly statements showing the full, complete and accurate status of said business," (3) to pay to said company, its successors and assigns, "for the rental of said premises and the exclusive right and privilege as aforesaid for the sale of beer, wine or spirituous liquors," a "sum equal to two-thirds of the net profits arising from said business monthly during the term of this lease," it being provided that payment of such rent should not be required during such periods as the operation of the mines might be suspended for as much as a month at a time.

The company sued on this contract for rent and by distress warrant seized the stock of liquors in said saloon, and thereafter entered and took possession of the leased premises and began business therein on its own account.

Lawson in his answer claimed, (1) that he was not, on a correct settlement of the accounts between him and the company under the contract, indebted to the company in any sum, but that it was justly due him a large sum for which he prayed judgment, (2) that his stock aforesaid was wrongfully seized and sold under said proceedings, and prayed judgment for its value, (3) that he had been wrongfully deprived of said lease and exclusive privilege, to his great damage, for which he prayed judgment, and (4) that said seizure of his stock and leased premises was wrongful and malicious, for which he prayed exemplary damages.

There were other issues presented by the pleadings on both sides, not necessary to mention here.

Verdict and judgment thereon was rendered against plaintiff, and for defendant, on each of the claims above stated, which being affirmed by the Court of Civil Appeals, the cause has been brought to this court by writ of error.

The following questions present themselves to us: (1) Was the contract aforesaid, when made, void as a matter of law, as being an undue restraint upon trade, or as tending and intended to create and foster a monopoly, or as being a trust within the statute? (2) If so, has this court the power, having acquired jurisdiction of the case by granting a writ of error upon an application not raising the question as to the legality of the contract, to declare the contract void therefor when its legality is first questioned by the court after submission of the cause, or in other words, is the court compelled to pass over the question as to the binding force of the contract and determine whether errors of law have been committed by the other courts in attempting to administer the supposed legal rights of parties based upon such an agreement, simply because neither party has seen fit by pleading or otherwise to assert an invalidity apparent on its face? (3) If the contract be held void, what effect will such holding have upon the various claims, counter-claims and defenses set up in the pleadings of the respective parties? (Beer v. Landman, 31 S.W. Rep., 805; Anheuser Busch Brewing Association v. Houck, 30 S.W. Rep., 869.)

As these questions were not discussed in the briefs upon which this cause was submitted, we deem it proper to set aside the submission and refer the cause back for oral and written arguments or either as counsel may desire upon the questions above stated.

Delivered November 25, 1895.

Additional brief of Seth W. Stewart and W.T. League, on request of Supreme Court.

In response to questions submitted by this honorable court to be briefed and argued, we beg leave to say:

Having filed this suit to recover rent of Lawson which had accrued under the terms of the contract, the validity of which is now called in question by this court, we are at a loss to know just exactly "where we are at" as attorneys.

It never occurred to us at the time we filed the suit, nor afterwards, that the contract was in violation of the act prohibiting contracts in restraint of trade. The suit was filed only about a year after that statute took effect, and before any adjudication of our courts, known to us, had been made, and hence our oversight of this most important question. We dislike very much to be compelled to take inconsistent and contradictory positions in this case, but from a careful reading of the statute of 1889, and the case of Brewing Company against Houck, 27 S.W. Rep., 692, and cases there cited, as well as those cited on motion for rehearing, and same case as decided by this court in 30 S.W. Rep., 870, we are driven to admit that the contract sued on by us is a contract entered into in restraint of trade in "beer, wines and spirituous liquors." It occurred to us at first that a person or corporation could do as he pleased on his own land, and put up one store or two stores, one saloon or two saloons; and that having this privilege inherent in his right to acquire and hold property, the law could not interfere with him; but while this may be true, it seems that the policy of Texas now is, as evinced by this statute, to prohibit persons, firms and corporations from binding themselves by contract in any manner so as to restrict the right at any time to change their course of conduct in reference to matters affecting restrictions of trade, if they should see proper to do so; all the contract sued on would clearly, if valid, prevent the Coal Company from putting up another saloon on the premises during the ten years, however great might appear the necessity, nor could it grant the privilege to others. This certainly, then, is a contract restricting the saloon business in the hands of one man on the 25,000 acres owned by the company for ten years, and prohibits any competition in that line on that land for that length of time, and probably is in violation of the statute. See Crawford Murray v. Wicks, 18 Ohio St. 190; Sutherland on Statutory Construction, sec. 336, and cases cited; Craft v. Mconoughy,79 Ill. 346; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St., 173; Arnot v. Pittson Coal Co., 68 N.Y. 558; Central Salt Co. v. Guthrie, 35 Ohio St. 666; India Bagging Association v. Kock, 14 La. Ann., 164.

In considering this question the public character of the 25,000 acres of land owned by the coal company must not be overlooked. As shown by the record, the company has established a town on said land with a postoffice and all kinds of stores and trading establishments usual and necessary to supply the demands of the public in that country; and which town, at the date of the contract under consideration, contained a population of 2000 people.

In the establishment of this town upon its lands the coal company has voluntarily conceded to the public certain rights and privileges which it cannot now restrict, restrain or abridge, by a contract entered into with a third person such as the one under consideration in this case. It is true, the company being the owner of all the lots in said town, thus established it, could at its pleasure maintain a single saloon, but at any time the public necessities demanded enlarged saloon facilities the company could have established a dozen or a hundred if there should be any necessity therefor. However, if the contract entered into with Lawson is valid, the company has put it entirely beyond its reach to establish any other saloon, or to permit any one else to do so, in said town, for and during the period of ten years, notwithstanding the population might have increased during that period to 25,000 people, and notwithstanding public necessity may have demanded a dozen saloons. On this line of argument the case of Crawford Murray v. Wicks, 18 Ohio St., and other cases above cited are relied on. Crawford Murray v. Wicks was a case in many respects similar to the one under consideration.

If the court comes to the same conclusion, then we understand it desires our views and authorities on whether it would have jurisdiction to declare the contract void, when the writ of error was granted on other grounds, and the invalidity of the contract was raised after argument and submission of the case, by the court itself. We unhesitatingly affirm that the court has such jurisdiction. It is certainly a fundamental error, if error at all, and this court has always, so far as we can find, exercised the jurisdiction and right to consider and decide fundamental errors, whether assigned or not. See Sayles Stats., art. 1033; Rules 23 and 24, Cts. Civ. App., 84 Tex. 700; Harris v. Petty, 66 Tex. 516; Hardin v. Abbey.57 Tex. 582; Hardesty v. Fleming, 57 Tex. 395 [57 Tex. 395]; Railway v. Scanlon, 44 Tex. 650 [44 Tex. 650]; City of Austin v. Nalle, 85 Tex. 539 [85 Tex. 539]; Rev. Stats., 1043. And we think this court ought not to deprive itself of so important a right and jurisdiction, for it is always exercised in the interest of putting an end to litigation, and has that effect and no other.

We also understand from the court's order referring the case back to us, that in case the court holds the rent contract void, our views are desired as to the effect such a holding would have upon the claims, counter-claims and defenses set up by the respective parties. Here again we believe that the statute referred to cuts a great figure; it certainly will, in our opinion, cut off the defendant from recovering any damages for breach of void contract, or for repossessing itself of the saloon premises, whether actual or exemplary, and will leave the defendant to claim the value of the goods actually taken and his claim for $1000 for services in obtaining miners for plaintiff. On the plaintiff's side it seems to us that we would be precluded from claiming rents accruing under and by virtue of the stipulations in the void contract; but we submit that we should be left the right to recover for use and occupation so much as the premises were reasonably worth, and that our suit for rent ought not to be dismissed unless the counter-claim for the value of the goods seized is dismissed also.

We think that the defendant's counter-claim for the market value of the goods seized is well plead against us, and that we ought to be permitted to amend our pleadings so as to sustain our distress warrant by an obligation setting up a claim for the reasonable value of the use and occupation of the premises. No limitation has been plead against us, and we apprehend could not be plead successfully, as the suit is for rents, and while we may have mistaken the grounds upon which the rent accrued, yet it did accrue, and we sued for it, and this would stop the statute of limitation from running against our claim for rent of the premises for the period named.

The plaintiff would also be left with its rights to assert its actual ownership of the goods seized, or at least a two-thirds interest therein, in defense of defendant's claim for the value thereof, which, upon the present pleadings, or at all events under amended pleadings, would be legitimate matter of inquiry in the court below. * * *

John W. Wray, in reargument for defendant in error, concludes: The whole question before us then, on the facts and on the law is summed up in one proposition, viz.: Can an owner of private property, impressed with no quasi-public duties, grant an exclusive privilege to a man to conduct a legalized business thereon? The proposition must necessarily answer itself. To deny is to deny that private ownership of property carries with it any exclusive rights. In the forcible language of Lord Denman this denial "carries its death wound apparent on it." Citing: Ins. Co. v. State, 86 Tex. 265; Natl. Benefit Co. v. Union Hospital Co., 11 Law. Rep. Ann., 437; Mollyneaux v. Wittenberg, 58 N.W. Rep., 205; Sharp v. Whitesides, 19 Fed. Rep., 157; Ladd v. Compress Co., 53 Tex. 172; Railway v. Robards, 60 Tex. 545; Morris v. Tuscaloosa Mfg. Co., 3 So. Rep., 689; Ice Co. v. Brewing Assn., 27 S.W. Rep., 211; Wiggins v. Railway, 73 Mo., 389; Richmond v. Railway, 26 Iowa 191; In re Green, 52 Fed. Rep., 115; Laredo v. Bridge Co., 66 Fed. Rep., 246; Slaughter-house Cases, 16 Wall., 36.