Fullerton Lumber Co. v. Torborg

Gehl, J.

(dissenting). The majority agree that the ten-year restraint imposed by the contract is unreasonably long. This court has consistently held that an unreasonably long restraint is unenforceable, void, and illegal. Cottington v. Swan, 128 Wis. 321 , 107 N. W. 336 ; My Laundry Co. v. *149 Schmeling, 129 Wis. 597 , 109 N. W. 540 ; Durbrow Commission Co. v. Donner, 201 Wis. 175 , 229 N. W. 635 ; Milwaukee Linen Supply Co. v. Ring, 210 Wis. 467 , 246 N. W. 567 ; Wisconsin Ice & Coal Co. v. Lueth, 213 Wis. 42 , 250 N. W. 819 , and that a void contract, one against public policy, cannot be.made the foundation of any action, whether in law or equity. Brill v. Salzwedel, 235 Wis. 551 , 292 N. W. 908 .

It is true, as the majority say, that there has been a tendency on the part of some courts to ascertain whether a contract in restraint of trade is divisible and, if found to be, to hold it unreasonable only to the extent necessary for the protection of the covenantee. Unless that position is limited, however, as it has been by this court, it gives effect to the court’s notion as to what should be included in the contract, rather than to the intent of the parties as' expressed in the contract, the parties who, had they desired a narrower or a broader provision, should and could have expressed it in the writing. If the provision is to be treated as being divisible, such purpose must be found in the contract itself; that quality should not be supplied by the court simply because it might be considered that the parties should have made broader or narrower provision against possible competition than they did. That is the rule of this state.

General Bronze Corp. v. Schmeling, 208 Wis. 565 , 243 N. W. 469 , was an action brought by a corporation to restrain former stockholders from competition. The defendants had been the principal stockholders of a manufacturing corporation which had sold its assets to the plaintiff. By the terms of the agreement it was provided that the defendants would not within fifteen years from the date of the transfer engage in competition with the plaintiff in the United States, the District of Columbia, the Dominion of Canada, and the Republic of Mexico reserving, however,'the right by the defendants to engage in a limited way in the state of Nevada. *150 The action was brought to restrain the defendants from violating the provisions of the covenant. The court said (p. 572) :

“There is no evidence that the business of this company extended into Canada or Mexico, and to the extent that the covenant restricts competition in these countries it is broader than is reasonably necessary to protect the good will sold. However, it is contended by the plaintiff that the contract by its own terms is divisible, and that the portions of the contract which are void by reason of being in restraint of trade may readily be separated and dropped, and the contract enforced as to the proper territory. Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 43 Atl. 723 , 46 L. R. A. 255, 78 Am. St. Rep. 612 ; Amalgamated Industrial Corp. v. Teichholtz, 177 App. Div. 456 , 164 N. Y. Supp. 289 ; John T. Stanley Co. v. Lagomarsino, 53 Fed. (2d) 112; Fleckenstein Bros. Co. v. Fleckenstein, 76 N. J. L. 613, 71 Atl. 265 , 24 L. R. A. 913-920; 30 Michigan Law Review, p. 1111. [Emphasis supplied.]

“We have concluded that this contention is valid. The parties have adopted as one unit of the restrictive agreement the states and territories of the United States and the District of Columbia, descriptive in a territorial sense of the entire United States; as a second unit the Dominion of Canada, and as a third unit the Republic of Mexico. These areas are dis-junctively described and furnish a proper basis, under the doctrine of the foregoing cases, for dividing the covenant and enforcing it in the territory which is coextensive with the business of the old company.”

It will be observed that the court said and pointed out very clearly that the contract “by its own terms is divisible.” It could not be questioned that if the divisibility as to area should appear in the contract itself, the same requirement should apply as to time. This case is cited in the opinion of the majority, but the majority omits to refer to the fact that the court based its conclusion upon the fact that the contract was by its own terms divisible.

The question in Wisconsin Ice & Coal Co. v. Lueth, 213 Wis. 42 , 250 N. W. 819 , was whether the territory covered *151 by a restrictive covenant was unreasonably large in view of the circumstances. We said in that case (p. 47) :

“If the contract is unreasonable in its territorial scope, and if the contract itself furnishes no basis for dividing the territory to which the restriction applies, the restrictive covenant is void and is not aided by the plaintiff’s willingness to accept in the injunctional order a restriction that is proper in scope.” (Emphasis supplied.)

I have found no Wisconsin case which suggests that the court, rather than the parties who made the contract, should be permitted to substitute arbitrarily for the parties a provision making an indivisible covenant divisible. The citation of text authorities and of cases from other jurisdictions “is but misplaced industry.” They are of no help to this court which has so clearly stated the rule that if a covenant is to be treated as being divisible and therefore enforceable to the extent that it is a reasonable restriction, the fact of divisibility must appear from the contract itself. If it can be said that a single provision as to time, ten years as is this case, is divisible and it is possible to read that quality out of the terms of the contract, then it is only reasonable to ask, how could a provision indivisible as to time be effectively expressed ?

It is apparent that the majority have construed the contract and applied a rule in the light of what has taken place since its execution. It occurs to me to inquire: As of what time are we to determine that the terms of a contract are or are not unreasonable ? Is it to be determined as of the time of its execution, or as of a later time ? May we say that a contract is void and then, not because of its terms, but because of the manner in which one of the parties to it has subsequently construed its terms, or because he has violated its provisions to the loss of the other party, still hold it enforceable in whole or in part ? I doubt it.

In Sheffield-King Milling Co. v. Jacobs, 170 Wis. 389 , 175 N. W. 796 , we said (p. 400) :

*152 “The validity of a contract is to be determined as of the date of its execution, and a contract valid when made cannot be rendered invalid even by legislative action. Superior v. Douglas Co. Tel. Co. 141 Wis. 363 , 122 N. W. 1023 . It is the situation of the parties at the time of the inception of the contract that governs. Davis v. La Crosse H. Asso. 121 Wis. 579 , 99 N. W. 351 .”

It would seem that if a provision of a contract valid when made cannot be rendered invalid even by legislative action, one invalid when made cannot be validated, in whole or in part, by action of the parties.

The mere fact that developments subsequent to the execution of the contract show that the parties, or one of them, should have made a better bargain for himself does not affect the situation. Miller Saw-Trimmer Co. v. Cheshire, 172 Wis. 278 , 178 N. W. 855 .

I would affirm.