Our Changing ConstitutionPierson, Charles W. (Charles Wheeler)
History
Our Changing Constitution
Pierson, Charles W. (Charles Wheeler)
Constitutional history -- United States; United States -- Politics and government
Brewer said that while he believed the Trans-Missouri case had been
rightly decided he also believed that in some respects the reasons given
for the judgment could not be sustained.
Instead of holding that the Anti-Trust Act included all
contracts, reasonable or unreasonable, in restraint of
interstate trade, the ruling should have been that the
contracts there presented were unreasonable restraints of
interstate trade, and as such within the scope of the Act....
Whenever a departure from common-law rules and definitions is
claimed, the purpose to make the departure should be clearly
shown. Such a purpose does not appear and such a departure was
not intended.
[Footnote 1: _United States v. Trans-Missouri Association_, 166 U.S.,
290.]
[Footnote 2: _Northern Securities Company v. United States_, 193 U.S.,
197.]
Nevertheless, the troublesome question remained, to plague lawyers and
the community generally, until it was finally put at rest and the
statute once more planted on the firm ground of common-law rule and
definition by the decisions in the Standard Oil and Tobacco cases.
What, then, is this common-law rule which President Taft found so clear?
No one has discussed it more lucidly than did the youthful Circuit Judge
Taft himself in delivering the opinion of the Circuit Court of Appeals
in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two
associates on the bench, the late Justices Harlan and Lurton, concurred.
The rule may be briefly stated as follows:
Every contract or combination whose primary purpose and effect is to fix
prices, limit production, or otherwise restrain trade is unlawful,
provided the restraint be direct, material, and substantial.
Where, however, the restraint of trade is not direct, but merely
ancillary or collateral to some lawful contract or transaction, it is
not unlawful, provided it is _reasonable_, that is to say, not broader
than is required for the protection of the party in whose favor the
restraint is imposed.
[Footnote 1: _United States v. Addyston Pipe & Steel Co._, 85 Fed. Rep.,
271.]
A familiar illustration is the sale of a business and its goodwill,
accompanied by a covenant on the part of the vendor not to compete. Such
a covenant is collateral to the sale, and if not broader than is
reasonably required for the protection of the vendee it will be upheld,
although a similar agreement, standing alone and not collateral to a
sale or other lawful transaction, would be in direct restraint of trade
and unlawful.
Public-domain text, read in full here on John Shaqi.
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