194

THE GREEN BAG

regulation of trade (supra, p. 3); one of the most logical of the arguments advanced to convince the courts that the Anti-trust Act was to be construed to be aimed only at reasonable restraints of trade, was this: Congress intended to pass a reasonable law; the law would be unreasonable if it made illegal and criminal such ancillary contracts in restraint of trade; therefore, Congress did not intend to include all contracts in restraint of trade within the condemnation of the Act. The supreme Court has never ques tioned the truth of the premises of this argument, and has negatived its conclusion only when sought to be too broadly applied. The Court has never tried to escape the conclusion that so far as ancillary or col lateral contracts in restraint of trade are concerned, the Congress did intend to exclude some restraints of trade from the operation of the statute. The exception is made in favor of this' class of contracts, however, not because the restraint is held reasonable,but because the contract only indirectly regulates trade, —• because the agreement is but a " part of a sale of a business and not ... a device to control commerce." Until the term before last of the Supreme Court,1 this rule and its reason were supported, in that court, only by dicta. The reason of the rule had been forecast in the Joint Traffic case (P- 568): "... the sale of a good will of a business with an accompanying agreement not to engage in a similar business was instanced in the Trans-Missouri case as a contract not within the meaning of the act; ... To suppose, as is assumed by counsel, that the effect of the decision in the Trans-Missouri case is to render illegal most business con tracts . . . because, as they assert, they all restrain trade in some remote and indirect degree, is to'make a most violent assumption and one not called for or justified by the 1 Excepting Bement v. National Harrow Co., (186 U. S. 70), because it is based partly upon its peculiar facts as involving a patent, a legal mon opoly.

decision mentioned, or by any other decis ion of this court." Mr. Justice Brewer's opinion in the Northern Securities case, if strictly con strued, is but an indirect statement of the doctrine here suggested (193 U. S. 197, 360; supra pp. 6-7). In the Cincinnatti Packet Co. v. Bay (200 U. S. 179), decided in January, 1906, the question came squarely before the court by a suit for an instalment of purchase money upon a contract of sale sought to be avoided because the vendee had also agreed as a part of the consideration not to com pete with the vessel sold. The court said (p. 185): "... there has been no intimation from, any one, we believe, that such a contract, make as part of the sale of a business and not as a device to control commerce would fall within the act. On the contrary, it has been suggested repeatedly that such a con tract is not within the letter or spirit of the statute." By this construction there is excluded from the operation of the statute, in its entirety, the class of contract which were the subject of practically all of the contested cases at common law. It seems, then, that the effect of the statute is to illegalize but one class of con tracts which were valid at common law; for if the contract were chiefly and directly to regulate and restrain trade, the common law would pronounce it invalid, if unreason able, and valid, if reasonable, while the statute would invariably pronounce it illegal as directly restraining trade; and if the restraining covenant were collateral to a principal legal contract, then the common law might either pronounce it reasonable and valid, or unreasonable and invalid, but the statute does not apply at all, because it only incidentally and indirectly restrains trade. The contingency covered by the statute and not by the common law is the possible case where a contract directly and chiefly for the regulation and restraint