Decision In The Beal-chase Controversy

Appeal from Washtenaw. Opinie n by Dampbell, J. Affirmed with oosts, leavng questions of damages to be determined at law, and dirocting a power of uthoiity to be executed whereby Beul au obtain the letters belonging to hiiu, nd so niadifying the decree below as inay be necessary to that end. The deree inay stand as equivalent thereto ntil such authority is executed, and be sed to obtain such letters from the ostoffice. Practice - Supplemental decrees during ending of appeal. - There have been two ippeals in this case. The last one was 'rom a decree taken while the formar was pending in the Supreme Court and was made as one additional deoree upon no new hearing, and upon the oase as resented to the Cirouit Court when the irst deoree was made. As the statute xpressly declares that on a chancery appeal " all proceeding shall be stayed until otherwise ordered by the Supreme Court," [Comp. L., 5181] a majority of us think the Circuit Court had no ower to make the second decree, and hat it should be reversed but without costs, as the return was not duplinated and the second decree was made on the udges own motion. We do not discuss ,he questions covered by it. Upon the first decree the court has arrived at a substantial agreement, al;hough not agreeing in all respects in ;he reasons on which their action will be based. They will content themselves with as brief a reference as will make their views intelligible. The bill was filed to restrain the alleged violation of rights secured to complainant in connection with a sale to him by defendant Chase of a printing and publishing business and certain copyrights. Chase had built up a large and prosperous business in Ann Arbor, known very generally through the State and elsewhere and having a very widely extended custom under the name of " Dr. Chase's Steam Priuting House," He had also bublished a very popular receipt book, which was circulated largely by means of correspondence and agencies, as well as advertising, and brought in large profits. For a large and adequate consideration, Chase sold to Beal his whole establishment, including a newspaper, the reoeipt-book and other oopyrights, " together with the good will of the business of printing and publishing, and also the right to use the name of Dr. Chase in tion with said book, and proviaing that the said Beal, on his part, if he chooses, niay carry on said business, and shall have that exclusive right under the name of "Dr. Chase's Steam Printing House," and may add R. A. Bea!, proprietor. The accounts were also transferred and some other things not important here. The following important provisión are directly involved in this controversy : Chase agreed not to engage directly or indirectly "in the businesss of printing and publishing in the State of Michigan," so long as Beal should remain in the business of printing and publishing in Ann Arbor. Beal was also " to have the privilege of receiving the letters connected with gaid business and opening the same." This was iu August, 1869. Chase left Ann Arbor not many months thereafter, and was absent sometime in another residence in the West. Just after the sale he gave Bnal authority tojtake froni the postoSice all letters not directed to his private box, and to obtaiu and receipt for all remittances and orders for money. Beal continued in a prosperous business and unmolested, until the course of action complained of began in 1872. Chase, during that year, having oonceived the opinión that his contract was void as an undue restraint of trade, began preparations for a new printing business, and began to prepare a new reaeipt book, and revoked his authority to Beal to obtain the letters not addre8sed to the printing house. In August, 1872, several persons who had been thinking of setting up a print ing establishment, but who had done nothing, negotiated with Chase, the re sult of which was the formation of the defendant's Corporation with a nomina capital of 50,000, of which Chase Ukx one-half. They iininediately began a gen eral printing and publishing busines and started a newspaper, and became a formidable rivals of Beal. Dr. Chase became, and was announced conspicu ously as their president and busines manager. He prepared a new receip book, which was called Dr. Chase' Second Receipt Book, and which pur ported to include receipts on many sub jeots covering similar ground with the tirst, but more extensivo and highe priced. Vigorous efforts were made to circuíate it as superior to the first, and it was brought directly to the attention of persons who had dealt in or purchased the flrst. For this purpose use was made of correspondence intended for the publishers of the first book, and persons writing for that were informed of the publication, and impressed with the superiority of the second book. Beal filed a bilí in 1872 torestrain th publication of this second book, which the Ann Arbor Printing and Publishing Company had made an agreement to publish as a royalty. In July, 1873 the present bill was filed ootnplaining o all the acts above mentioned. After suit was brought Chase sold on his stock and retired from the company and the publication of the second reoeipt book was removed to Toledo. The final decree enjoined Chase from being engaged directly or indirectly in the printing and publishing business in this State, or printing or publishing the second receipt book in this State, and from taking or opening auy letters relating to Dr. Chase's recipes or Chase's Steam Printing House. The defendant corporation was enjoined from doing said business with or for Chase, direotly or indirectly. Contract - breaeh of- We are all agreed that Chase's connection with the busiof the defendant company was such as to be a direct violation of his contract, and that the company knew of the oontraot throughout. We are all agreed that the measures taken to get a circulation of tho New Eeceipt Rook by the agencies and correspondence which had been or were at any time used or designed for the first were unlawful We are all agreed that Beal was entitled to all correspondence intended for tho old establishment and first receipt book, and that in case of doubt he was entitled to the benefit of the doubt as to its being so intended. We are all agreed that Cbase had no right to publish, by the terrus of thut contract, in Michigan (if valid),' any receipt book so connected with his name as to lead to the inference that it was designed to supersede the old one. And we concur (with some doubt on the part of oue of us) that the naw receipt book, with its title and announcements, has that tendency. Contract in restraint of trade. - Conconoerning the validity of the agreement, we concur in regarding it as not unreasonable in fact, and as based on full consideration. One of us has doubted whether it could properly include the whole State, but considering the rule to the contrary as somewhat artificial, he concurs in maintaining the agreement. Although some queetions might arise as to whether a corporation could be restrained from dealings prohibited to a stockholder merely because it had such a stockholder, we do not discuss that because Chase's connection with nis company was something more, and ie terms of the decree cannot fairly be wrested iuto any unreasonable mean"g-