dealers to procure the patrons of a competing outside dealer to break their contracts for ice, by refusing to sell them unless they disregarded these contracts, and by threatening that when the competing dealer's supply of ice was exhausted the members of the association would not sell to anyone who had purchased from him. And where an association of laundrymen, for the purpose of compelling a competing laundry agent to maintain their scale of prices, procured other laundries, by offers of money or by threats to ruin their business, to refuse to perform their contracts to do work for the said laundry agent, it was held that the latter was entitled to damages and that the right of competition in trade was not a justification for such acts.2 In a number of other cases, both Federal and State, it has been held unlawful to induce a breach of contractual obligations by fraudulent or other unlawful means. In a majority of these cases, however, the parties to the controversy were not competitors and the question whether competition was a justification for the acts was not therefore passed upon.3

INDUCING BREACH OF CONTRACT BY LAWFUL MEANS.-As stated above, it is generally regarded as unlawful to induce or procure one of the parties to a contract to refuse to perform it if any unlawful means be employed to effect this end. A more difficult question, and one

1 In this case the court, per Robertson, Commissioner, said in part: In the instant case had the conduct of Schonwald and the ice company been directed and governed solely by the desire to legitimately eliminate Ragains' retail ice business by fair competition no action could have been maintained against them, but it is plainly evident that they were not so limited, directed, or actuated. The threats, coercions, and intimidating statements made by them to the customers of Ragains had for their sole and primary object, not the building up of their own legitimate business, but the destruction of Ragains' business, and that, too, by the most unreasonable, unfair, coercive, and unjustifiable methods. The only legitimate result of their conduct, as is plainly shown by the testimony, from the commencement of the troubles between them was to injure unfairly, and without sufficient excuse or justification, the business of Ragains. They did not sell their ice cheaper. They did not claim to have a better grade or quality of ice. They did not offer better delivery facilities. They did not offer any inducement by way of credits or time in payment of accounts. They did not show by any legitimate or reasonable or justifiable method that the customers by patronizing them would obtain better results or better service than Ragains could furnish, and their sole and only excuse was that they enjoyed a monopoly of the ice business in Blackwell and vicinity, and thereby controlled the ice market, and that unless the customers who had contracts with Ragains would forthwith break and violate those contracts they could not have or purchase any ice from said defendants in case Ragains' ice supply for any reason should become exhausted; and they further informed said customers that Ragains could not, in the event of his supply becoming exhausted, purchase ice from any other person who supplied said city with ice on account of combinations and understandings had by said defendants with other ice companies, the benefits of which said combinations were denied Ragains, and that, therefore, the said customers would be unable to procure any ice at all. There was no possible excuse or justification for such conduct. The actions of defendants without doubt were malicious and unwarranted."

2 Doremus v. Hennessy, 176 III., 608 (1898).

3 Bitterman v. Louisville & Nashville R. R. Co., 207 U. S., 205 (1907); Delaware, Lackawanna & Western Ry. Co. v. Frank et al., 110 Fed., 689 (C. C., 1901); Kinner et al. v. Lake Shore & Mich. So. Ry., 13-23 Ohio C. C. Dec., 294 (1902); American Malting Co. v. Keitel, 209 Fed., 351 (C. C. A., 1913); Krigbaum v. Sbarbaro et al., 138 Pac., 364 (Cal. Dist. Ct. of App., 1913); Perkins v. Pendleton et al., 90 Me., 166 (1897); Morgan v. Andrews, 64 N. W., 869 (Mich. Sup. Ct., 1895); London Guarantee Co. v. Horn, 206 Ill., 493 (1904).

on which the American courts are divided, is whether it is unlawful for a manufacturer or dealer to procure his competitors' customers to violate contracts already entered into where this is accomplished not by the use of unlawful means, such as misrepresentation, fraud, or coercion, but merely by persuasion, by the offer of lower prices, or by similar inducements. Some of the courts, both Federal and State, hold that it is unlawful actively and knowingly to procure a breach of contract, although only lawful means be employed. These courts announce the doctrine that the parties to a valid contract have a legal right to have it performed, and that whoever deliberately interferes and by persuasion, solicitation, or the offer of lower prices, or by any other means, procures one of the parties to abandon the contract, is liable in damages to the injured party. On the other hand, some of the courts hold that inducing a breach of contract by mere persuasion, or by the offer of better prices, is not actionable. Some of these decisions rest upon the ground that solicitation or offering inducements of a lawful nature must be protected in the interest of freedom of competition and that the injured party to the contract should be left to his remedy against the other contracting party.

Procuring breach by lawful means actionable.-In a comparatively recent case in the Federal circuit court it was held that schoolbook publishers were liable in damages to a rival publisher for inducing county schoolbook boards to adopt their books in lieu of those of their competitor where the latter had contracts to supply the books for a term of five years.1 And where a trading-stamp company induced merchants who had contracted to use only the stamps of a competing company, to violate their contracts and to adopt its stamps instead, the Federal district court issued a preliminary injunction restraining the company from interfering with its competitor's subscribers and from soliciting and inducing them to break their contracts.2 Recent opinions of the highest courts of several States are in accord with these Federal decisions. For example, the Maryland court of appeals held in a recent case that a dealer who had a contract to supply a distilling company with 2,000 gross of bottles could recover damages from a competitor who, with knowledge of the contract, induced the distilling company to cancel the contract by the

1 Heath et al. v. American Book Co., 97 Fed., 533, 536 (C. C., 1899). Per Jackson, J.: "In this case we think it cannot be denied that the damage complained of was the result of the defendant's act in submitting its book to the schoolbook boards, and urging them to adopt it in lieu of the plaintiffs' books, which resulted in supplanting the plaintiffs' books by the schoolbook boards and their use dispensed with in the schools, and that, when the contract was entered into between the schoolbook boards and the defendant, such was contemplated by both parties to it."

2 Sperry & Hutchinson Co. v. Associated Merchants' Stamp Co., 208 Fed., 205 (D. C., 1913).

offer of lower prices. Similarly where a hotel corporation appointed an exclusive booking agent for certain territory and subsequently was induced to give the same privilege to another, it was held that the latter could be enjoined from acting as the agent of the corporation within the specified territory and from seeking to prevent the agent first appointed from acting as the exclusive agent for that territory.2 The same court in a subsequent case held it unlawful for a manufacturer to induce an association of jobbers, organized for the collective buying of window glass, to refuse to perform its contract with a member to supply it with a specified amount of glass per year.3

The same principle was applied in Knickerbocker Ice Co. v. The Gardiner Dairy Co. There the dairy company had a contract with a retail ice company by which the latter was to supply it with ice not to exceed a specified quantity at a given price. The Knickerbocker Co., manufacturers of ice, desired the business of the dairy company for itself and threatened not to sell the retail company any more ice unless it abandoned its contract to supply the dairy company. Being compelled by existing market conditions to purchase ice from the Knickerbocker Co., the retail company yielded to the former's demands and declined to perform its contract with the dairy company. The latter sued the Knickerbocker Co. for inducing a breach of the contract, and the Maryland Court of Appeals held that it could recover.

1 Cumberland Glass Mfg. Co. v. De Witt, 87 Atl., 927 (Md. Ct. of App., 1913). In this case the defendant particularly urged that trade competition was a sufficient justification for procuring a manufacturer to cancel a contract with his competitor and to transfer the order to the defendant, but the court held the contrary, saying in part, by Burke, J.: Now, what is the justification upon which the defendant relies to exonerate itself from responsibility? It is the right of competition in trade. It asserts this proposition: That the right of competition justifies a defendant in knowingly and deliberately, for its own benefit or advantage, inducing the breach of a contract by offering lower prices. No case has been cited to support this contention. Counsel for appellant have cited a number of cases bearing upon the right of competition in trade or business. But this is altogether different from the right which one has to be protected from interference with his rights under existing contracts We, therefore, hold that the right to com

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pete furnishes no justification to the defendant in this case."

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2 Beekman v. Marsters, 80 N. E., 817 (Mass. Sup. Ct., 1907). Per Loring, J.: "The result of the findings of the master must be taken to be that the defendant induced the hotel corporation to break its contract with the plaintiff, but that he did not do this to spite the plaintiff or for the purpose of injuring him, but for the purpose of getting for himself (the defendant) business which the plaintiff alone was entitled to under the contract with the hotel corporation, that is to say, to get business which the defendant could not get if the hotel corporation kept its agreement with the plaintiff * *. No case has been cited which holds that the right to compete justifies a defendant in intentionally inducing a third person to take away from the plaintiff his contractual rights." 3 Wheeler-Stenzel Co. v. American Window Glass Co., 202 Mass., 471 (1909). Per Morton, J.: "It is manifest that to knowingly and maliciously induce another to break a contract with the plaintiff is not justified by fair trade competition." See also Dr. Miles Medical Co. v. Platt, 142 Fed., 606 (C. C., 1906); Wells & Richardson Co. v. Abraham et al., 146 Fed., 190 (C. C., 1906); Tubular Rivet & Stud Co. v. Exeter Boot & Shoe Co., 159 Fed., 824 (C. C. A., 1908); Filler v. Joseph Schlitz Brewing Co., 223 Fed., 313 (C. C. A., 1915); Illinois Steel Co. v. Brenshall, 141 Ill. App., 36 (1908).

469 Atl., 405 (Md. Ct. of App., 1908).

There are other decisions of State courts holding it to be unlawful to procure a breach of a valid contract regardless of whether the means employed be in themselves unlawful, but in most instances the parties to the controversy were not competitors and trade competition was not, therefore, urged as a justification for the defendant's action in procuring a violation of contractual obligations;1 though in cases involving the discharge of nonunion men at the instance of labor unions it has been unsuccessfully urged in justification of such action.2

Procuring breach by lawful means not actionable.-In contrast with the decisions above set out are opinions in both Federal and State courts holding that it is not actionable to procure a breach of a competitor's contracts with his customers if it be accomplished by mere solicitation, persuasion, or similar means. Thus in a wellconsidered Federal case, where a light and power company sought to induce the patrons of a rival company to cancel their contracts and offered to indemnify them in the event of suits being instituted by the competing company for breach of such contracts, it was held by the circuit court that if the object could be accomplished by solicitation or persuasion it was not unlawful, but that the company could not go so far as to offer to indemnify its competitor's customers against damages resulting from repudiating their contracts.3 Similarly where the proprietor of a theater had engaged a dramatic star

1 Raymond v. Yarrington et al., 73 S. W., 800 (Tex. Sup. Ct., 1903); Bowen v. Speer, 166 S. W., 1183 (Tex. Ct. of Civ. Apps., 1914); Faunce v. Searles, 142 N. W., 816 (Minn. Sup. Ct., 1913); Iron Molders' Union v. Allis-Chalmers Co., 166 Fed., 45 (C. C. A., 1908). 2 Berry v. Donovan, 188 Mass., 353 (1905).

Citizens' Light, Heat & Power Co. v. Montgomery Light & Water Power Co., 171 Fed., 553, 560 (C. C., 1909). Per Jones, J.: "The trader who has made a contract with another person has a right, which the law will protect, to have that other keep it. Other traders have a correlative right to solicit the custom to which the contract relates. Whatever damage results to the first trader by the mere solicitation is privileged, so far as the solicitor is concerned, in the interest of proper freedom of competition. Were the law otherwise, the first person occupying the field of public service in many localities, by procuring long contracts to take water, light, and the like from him, might intrench himself in a monopoly there for years, because another thereafter could not solicit customers, thus bound, to change their patronage to him, and thereby enable a rival enterprise to enter the field. The faithful observance of contracts, however, is as essential to the public welfare as the right of competition. Property rights, public and private morality, and liberty itself are insecure when the law encourages the nonobservance of contract obligations. Hence, while the law allows the trader by mere solicitation to persuade customers to change their business relations, it does not permit such a solicitor, even in the interest of competition, to go further, intervening actively between the contracting parties, as a dominant agency in producing a breach by promise of indemnity to one of them to induce the breach. When the solicitor knowingly and intentionally goes beyond mere solicitation to induce another man's customer to do business with him, and promises to hold that other man's customer harmless for breach of contract with him, he transcends the rights of the law of competition, has no sufficient justification,' and thereby becomes liable to him whose customer is taken over. Such conduct is an unlawful interference with another man's rights, for which he may maintain an action and recover nominal damages, although the contract be not actually breached in consequence of the solicitation."

to perform at his house the Supreme Court of Kentucky held that he could not recover damages from the owner of a rival house who induced her to cancel the contract and to perform at his theater instead, there being no evidence that any fraud, misrepresentation or other unlawful means had been employed to procure the breach of contract;1 and the same court has held that a party who had contracted with a farmer for the purchase of the latter's crop of tobacco could not recover damages from another who persuaded the farmer to repudiate the contract and to sell the tobacco to him, it not appearing that any fraud or force had been employed.2

In addition to the cases already referred to, there are a number of others which affirm the doctrine that inducing a breach of contract is not actionable unless unlawful means be used to procure it. And in a recent case the Federal circuit court held that where a person purchased property with knowledge that the owners had contracted to sell it to another he would not be liable in damages to the latter unless he had taken some active step to bring about the breach of contract of sale or had at least induced or persuaded the owner to abandon the earlier agreement to sell the property.*

ENGLISH DECISIONS.

It is apparently an established principle of English law that it is unlawful knowingly to induce the violation of a contract if it be valid and for a determinate period, the law on this subject having been reviewed and stated at length in several recent decisions of the House of Lords. Expressions are to be found in some of the decisions to the effect that procuring the breach of or abandonment of a contract might be justified on the ground that the person procuring it was under a duty to advise or persuade one of the contracting parties not to perform the contract, as if a parent or guardian should persuade a child or ward to abandon a contract to marry. But there appears to be little doubt that business competition or competi

1 Bourlier Bros. v. Macauley, 91 Ky., 135 (1891).

2 Chambers et al. v. Baldwin, 91 Ky., 121 (1891). Per Lewis, J.: "But as Wise was not induced by either force or fraud to break the contract in question, it must be regarded as having been done of his own will and for his own benefit; and his voluntary and distinct act, not that of appellee, being the proximate cause of damage to appellants, they, according to a familiar and reasonable principle of law, cannot seek redress elsewhere than from him." See also Roseneau v. Empire Circuit Co., 131 N. Y. App. Div., 429 (1909), post, p. 416.

Boyson v. Thorn, 33 Pac., 492 (Cal. Sup. Ct., 1893); Swain v. Johnson et al., 65 S. E., 619 (N. C. Sup. Ct., 1909); Jackson v. Morgan et al., 94 N. E., 102 (Ind. Appellate Ct., 1911); Ashley v. Dixon, 48 N. Y., 430 (1872); Glencoe Sand & Gravel Co. v. Hudson Bros., etc., 40 S. W., 93 (Mo. Sup. Ct., 1897); Tenn. Coal Co. v. Kelly, 163 Ala., 348 (1909); Sleeper v. Baker et al., 22 N. Dak., 386 (1911).

Sweeney v. Smith et al., 167 Fed., 385 (C. C., 1909).