Opinion
No. 3966.
April 16, 1931.
Appeal from District Court, Rusk County; R. T. Brown, Judge.
Suit by the National Automatic Machine Company against J. H. Dennard, doing business under the name of the Tri-State Sales Company. From a judgment in favor of plaintiff, defendant appeals.
Reversed and remanded, with instructions.
This suit by appellee, National Automatic Machine Company, a corporation under the laws of Minnesota, as plaintiff, was against appellant, J. H. Dennard, doing business under the name Tri-State Sales Company. It was on a promissory note for $1,350, dated October 25, 1928, payable to the order of the National Novelty Company in installments of $250 each. The $1,350 was a balance unpaid on a contract, dated July 25, 1928, between said novelty company and said Dennard covering the sale by the former to the latter of certain machines known as "K. O. Fighters." The contract (made a part of the petition) contained stipulations as follows:
"Whereas Vendor manufactures and sells a coil operated boxing amusement device known as `K. O. Fighters,' hereinafter called `Machines'; and
"Whereas Purchaser desires to obtain the right to sell, lease, operate and deal in said Machines within a certain area and desires to purchase the number of said Machines hereinafter set forth,
"Now therefore, in consideration of the mutual covenants herein contained and of the payments hereinafter recited, the parties hereto mutually covenant and agree as follows:
"1. Purchaser hereby buys and Vendor hereby sells and agrees to convey to Purchaser, subject to the provisions of paragraph four (4), Ten (10) said Machines for the aggregate sum of ($2,700.00) Two Thousand Seven Hundred and no/100 Dollars.
"4. (a) It is expressly agreed and understood between the parties hereto that title to all machines will remain with Vendor until the entire purchase price including any notes given in settlement thereof shall have been paid in full; provided, however, that Purchaser shall hold said Machines at his own risk pending the vesting of title in him, and any injury, loss or destruction of same after delivery to carrier shall not release Purchaser from its obligation to pay the said Purchase price. * * *
"5. (a) Vendor hereby grants unto Purchaser the right to sell, lease, operate and otherwise deal in said machines subject to the provisions of paragraph four (4), within the following described territory, to-wit:
"East and North East Texas including the counties of Lamar, Hopkins, Rains, Van Zandt, Henderson, Anderson, Houston, Angelina, San Augustine, Sabine, Red River, Bowie, Franklin, Titus, Morris, Cass, Wood, Camp, Upshur, Marion, Smith, Gregg, Harrison, Cherokee, Rusk, Panola, Nacogdoches, Shelby and Delta for the period of Five (5) years from the date hereof.
"(b) For so long during said period of time as Purchaser shall keep and perform all of the covenants and agreements by it to be kept and performed and while this agreement shall remain in force and effect, Vendor shall not sell, lease or operate any of said Machines within the above described territory and shall not authorize any person, firm or corporation, other than Purchaser, to do so and shall pay over to Purchaser all net sums which may be recovered by Vendor during said period from third persons as liquidated damages by reason of the sale, lease, operation or other dealing in said Machines within the above described territory by such third persons in violation of the terms and provisions of any contract which Vendor now or at any time may have with such third persons concerning said Machines.
"6. For the period of five (5) years from the date hereof Purchaser shall not sell, lease, operate, deal in, use, remove or cause or allow to be removed any of said Machines outside the above described territory. For each said Machine sold, leased, operated, dealt in, used, removed or caused or allowed to be removed by Purchaser outside the said territory prior to the expiration of the period of time above set forth in this paragraph, Vendor shall be entitled to recover or to retain from said deposit the sum of One Hundred Fifty Dollars ($150.00) as liquidated damages and not as a penalty.
"7. Any orders submitted by Purchaser for Machines in excess of the number purchased hereunder which may be accepted by Vendor shall be deemed subject to all the conditions to which the sale of Machines under this agreement is subject.
"8. It is understood by both parties hereto that applications for Letters Patent to cover said Machines are now pending in the United States Patent Office and all rights therein have been assigned to Vendor. * * *"
In his answer defending against the recovery sought against him, Dennard, by exceptions, questioned the right of appellee to maintain the suit against him, on the ground that it did not appear in its petition that it had authority to transact business in Texas, and alleged that the contract was void because in violation of the anti-trust laws of the state, and that appellee, for that reason, among others, should be denied any of the relief it sought. In a supplemental petition appellee alleged that it held a patent issued by the United States granting it "the right (quoting) to operate in any state or territory of the United States, and that by reason there-of it has a right to do business in any state or territory of the United States, and does not have to obtain a permit from Texas." The trial was to the court without a jury. He found against Dennard on all his contentions and rendered judgment against him as prayed for in appellee's petition.
Victor A. Smith, of Henderson, for appellant.
Futch Cooper, of Henderson, and Paul C. Thomas, of St. Paul, Minn., for appellee.
Appellant insists it appeared the contract sued upon was in contravention of the antitrust laws of the state (title 126, R.S. 1925, as amended [Vernon's Ann.Civ.St. arts. 7426-7447]), and that the trial court therefore erred when he held to the contrary and rendered the judgment complained of. In support of its contention, appellant cited National Automatic Machine Co. v. Smith (Tex.Civ.App.) 32 S.W.2d 678, where a contract containing stipulations identically the same as those in the contract here in question (set out in the statement above) was held to be not enforceable because in violation of said laws. The reasons for the holding in that case are stated in the opinion of the court affirming a judgment dismissing the suit brought by the appellant there (appellee in the instant suit). We think the conclusion reached by the court in that case was correct, and that the holding should be followed here. Therefore appellant's contention is sustained, and the judgment in question here will be reversed, and the cause will be remanded to the court below, with instructions to dismiss the action.