private subscriber was held invalid by the Supreme Court of South Carolina.1 The same rule appears to be applied by some of the courts to contracts between telephone companies whereby one company agrees to transmit messages only for or over lines of the other party to the contract. For example, where a long-distance telephone company which had just entered the field, made contracts with local telephone companies whereby the latter, which had previously been refused long-distance connection by the company formerly monopolizing the field, agreed to transmit its long-distance messages only over and to receive such messages only from the other party to the contract for a period of 99 years, the contracts were held void as tending to create a monopoly. The fact that as a result of these contracts the public had for the first time been given the benefit of competition in long-distance telephone service was not, in the opinion of the court, sufficient to justify the making of contracts of this character covering such a long period. And in a similar case where a long-distance telephone company entered into a contract with a local company whereby it was agreed that the latter should send its long-distance messages only over the lines of the former and that the long-distance company would give the local company all messages destined for points in a given county, the Supreme Court of Illinois held the contract void. In contrast with the above decision, the Supreme Court of Missouri held that a contract whereby a local telephone company undertook to build an extension of its lines to connect with those of another local line, and under the terms of which each company agreed to transmit over the lines of the other all messages destined to points on such lines, was valid and enforceable, the object of the contract not being to stifle competition but to build up competition against a long-distance line." So also the Supreme Court of Pennsylvania held in 1895 that an munication with persons who happen to be served by a rival company It is on this broad ground that I think we ought to condemn the exclusive clause of this contract as against public policy and, therefore, void. It tends to nullify the consideration moving to the public for the grant of the franchise, by lessening the sphere of telephonic service; and it is impossible to regard a contract as consistent with public policy which would defeat the very policy that induced the State to bring one of the parties to the contract into existence as a public-service corporation." But see Lough v. Outerbridge, 143 N. Y., 271 (1894). 1 Gwynn v. Citizens' Telephone Co., 69 S. C., 434 (1904). 2 Contracts binding public-service companies to serve one person exclusively, being opposed to the fundamental obligations of such companies to serve all impartially, are clearly invalid. Sammons v. Kearney Power & Irrigation Co., 77 Nebr., 580 (1906). The validity of grants of certain classes of exclusive privileges by these companies, however, in connection with the conduct of their business, has been frequently upheld. For the leading cases in the Federal courts see Express Cases, 117 U. S., 1 (1886); Chicago, St. Louis & Northern R. R. Co. v. Pullman Southern Car Co., 139 U. S., 79 (1891); Donovan v. Pa. Co., 199 U. S., 279 (1905). 3 U. S. Telephone Co. v. Central Union Telephone Co., 202 Fed., 66 (C. C. A., 1913). * Union Trust & Savings Bank of East St. Louis et al. v. Kinloch Long Distance Telephone Co., 258 Ill., 202 (1913). Home Telephone Co. v. Sarcoxie Light & Telephone Co., 236 Mo., 114 (1911). See also Cumberland Telephone & Telegraph Co. v. State ex rel. Attorney General, 100 Miss., 102 (1911). agreement by one railroad company to ship all its freight over another's lines was valid and should be enforced by injunction.1 2 Another class of contracts of public-service corporations which has been held invalid in a number of cases is that by which such corporations seek to secure exclusive privileges, such as rights of way, which will protect them from the competition of similar companies. Thus where eminent domain proceedings were instituted to condemn a right of way across a farm for laying gas pipes, and the owner of the land, in defense, claimed that he had given another gas company the exclusive right of laying pipes across his land, it was held that such contract was void since it restricted competition and tended to create a monopoly. In like manner a contract whereby the owner of a large tract of land granted to an oil pipe-line company an exclusive right of way and privilege of constructing oil pipe lines over said land, was held void as an attempt to impose a restraint upon a particular form of trade which the public interests required should not be restrained even partially. A similar ruling was made by the Supreme Court of Minnesota respecting the validity of a contract by the terms of which a landowner gave to a railroad company the exclusive right of way over his property for railway purposes.* CONTRACTS FOR EXCLUSIVE AGENCY OR FOR EXCLUSIVE TERRITORY.Contracts by which a manufacturer agrees to do business in a certain territory exclusively through one dealer have been upheld in numerous decisions. Thus where a company sold goods upon condition that the purchaser should have an exclusive right to handle its goods in a particular town, but immediately violated the condition by selling the same class of goods to two other dealers in the same town, it was held that the contract was valid, and that the manufacturer could not recover the contract price of the goods sold. Similarly, where a coal mining company sold coal to a dealer under an agreement not to sell at wholesale prices to any other dealer in the same town, the Illinois Supreme Court held that the contract was valid and that the company could recover the purchase price of coal sold under it. Similar contracts have been sustained by the Federal courts, and the courts of Kansas, Massachusetts, California,10 Nebraska,11 New Jersey,12 and the District of Columbia.13 1 Bald Eagle Valley Ry. Co. et al. v. Nittany Valley Ry. Co. et al., 171 Pa., 284 (1895). * Calor Oil & Gas Co. v. Franzell, 128 Ky., 715 (1908). 3 West Va. Transportation Co. v. Ohio River Pipe Line Co., 22 W. Va., 600 (1883). Kettle River Ry. Co. v. Eastern Ry. Co., 41 Minn., 461 (1889). Keith v. Herchberg Optical Co., 48 Ark., 138 (1886). Superior Coal Co. v. Darlington Lumber Co., 236 Ill., 83 (1908). 7 Singer Sewing Machine Co. v. Union, etc., Co., Holmes (Fed.), 253 (1873). $ Roller v. Ott, 14 Kans., 609 (1875). "Central Shade Roller Co. v. Cushman, 143 Mass., 353 (1887). 10 Pac. Factor Co. r. Adler, 90 Cal., 110 (1891). 11 Woods v. Hart, 50 Nebr., 497 (1897). 12 New York Trap Rock Co. v. Brown et al., 61 N. J. Law, 536 (Sup. Ct., 1898). 13 Whitson v. Col. Phonograph Co., 18 App. D. C., 565 (1901). Contracts for exclusive territory which contain a corresponding obligation on the part of dealer or agent to sell only the goods of a particular manufacturer have likewise been upheld by the courts. For example, the supreme court of Montana held that a contract for the sale of cigars by the terms of which the purchaser was granted the exclusive right to handle a certain brand of cigars in specified territory upon condition that he would cease to advertise or sell other brands was held valid. And the supreme court of South Carolina has upheld a contract containing similar provisions.2 CONTRACTS FOR REBATES IN CONSIDERATION OF EXCLUSIVE DEALING.— A form of contract frequently employed for the purpose of inducing exclusive patronage is that whereby one of the parties offers the other a specified rebate on the purchase price of goods if at the end of a certain period he shall not have dealt in or sold the goods of any other. Under such contracts no obligation rests upon the dealer not to handle the goods of other manufacturers, but if he refrains from doing so he is entitled to the stipulated rebate. In some instances, however, where one of the parties occupies a strong position in an industry or a particular line of business, no rebate is offered, but he simply refuses to sell to those who will not agree to handle his goods exclusively. Contracts of this character have been very generally upheld at the common law. For example, where a manufacturer sold goods to the dealer and offered to rebate a certain proportion of the purchase price if he did not handle similar goods of others, it was held that the sales were valid and that the purchase price could be recovered. Similarly, where a manufacturing company at the close of the year offered a dealer a rebate on his purchases for that year if his requirements for the ensuing year should be purchased from it and the dealer forthwith deducted the amount of the rebate from the last payment for the current year, it was held that defendant could recover the amount deducted, as the right to the rebate did not arise until all of the conditions had been complied with. The court in discussing the offer of the rebate declared that such a contract was not in restraint of trade, and would not have been had it been accepted and performed on the part of the manufacturer. It has also been held 1 Newell et al. v. Meyendorff, 9 Mont., 254 (1890). 2 Walter A. Wood Mowing & Reaping Co. v. Greenwood Hardware Co., 75 S. C., 378 (1906). See also Weiboldt v. Standard Fashion Co., 80 Ill. App., 67 (1898); PickWilliamson Heating & Ventilating Co. v. Miller & Harris, 118 S. W., 376 (Ky. Ct. of App. 1909). 3 National Distilling Co. v. Cream City Importing Co., 86 Wis., 352 (1893). Corn Products Refining Co. v. Oriental Candy Co., 168 Ill. App., 585, 590, 591 (1912). Per Duncan, J.: "The proposition of the defendant in error of December 9, 1908, was not illegal. It was made to plaintiff in error after its contract for purchases for the year 1908, which is also legal and binding; and it appears to have been a mere voluntary proposition on the part of defendant in error, without imposing any obligation whatever upon plaintiff in error. It was a mere statement or proposition to give plaintiff in error certain profits on its purchases of 1908, on condition that it do certain things therein named, which plaintiff in error never did do, and which it never was obligated to do, and that where a company demands exclusive patronage as a condition of doing business with its customers, competitors who as a result of such demands are excluded from any share of the business can not recover damages, though their financial ruin may result therefrom. Thus, where a number of theater owners in various cities organized a corporation to take over their houses, and thereafter the corporation notified the owners of all burlesque shows, suitable to be played at its theaters, that it would not book any show except on condition that it would not play in any theater not owned by the corporation, it was held that a rival theater, which as a result of the action of the new corporation, was unable to book shows and went into the hands of a receiver, could not recover damages, the court being of the opin ion that the theater owners were not actuated by malice against the rival theater owner, but that their chief purpose was to advance their own financial interests. A by-law of a press association, however, which required its members not to purchase news from any other association declared by the board of directors of the former to be antagonistic to it, was held void by the Illinois Supreme Court as tending to restrict competition and to create a monopoly." A contrary result respecting the validity of a similar by-law has been reached by the New York and Missouri courts.3 ENGLISH DECISIONS. While at the early common law all contractual restrictions upon one's right to do business were held to be against public policy and unenforceable, the rule has been relaxed and modern English decisions uniformly declare contracts by which a person agrees to deal exclusively with another to be valid. Moreover, it appears to be settled by a comparatively recent decision of the House of Lords that was never in any way compelled or urged to do. It was simply a proposition that might have become an obligation on the part of the defendant in error had plaintiff in error seen fit to have accepted its terms and to have performed the conditions upon which it was informed it could have the profits therein named. It is not an illegal contract or contract in restraint of trade, and would not have been, if it had been accepted and performed on the part of plaintiff in error. It was not in any sense a part of the contract for the purchase by plaintiff in error for the year 1908, and in no way affected the validity of that contract. This same proposition, in substance, or so-called contract, was in every way upheld by the Appellate Court of Indiana, in the case of Bessire & Co. v. Corn Products Manufacturing Co., 94 N. E., 353." 1 Roseneau v. Empire Circuit Co. et al., 131 N. Y. App. Div., 429 (1909). 2 Inter-Ocean Publishing Co. v. Associated Press, 184 Ill., 438 (1900). See also Minn. Tribune Co. v. Associated Press, 83 Fed., 350 (C. C. A., 1897). In a letter from the Attorney General of the United States, dated Mar. 12, 1915, to James M. Beck, counsel for the Sun Printing & Publishing Association of New York, the view is taken that a similar by-law of the Associated Press in so far as it prevents or seriously hinders the members of that association from purchasing or otherwise obtaining news from a rival agency, is in violation of the Sherman law, and should be abrogated. Matthews v. The Associated Press, 136 N. Y., 333 (1893); Bleistein v. The Associated Press, 136 N. Y., 662 (1893); State v. Associated Press, 159 Mo., 410 (1901); Dunlop's Cable News Co. v. Stone, 15 N. Y., Supp. 2 (Sup. Ct., 1891). See also Lloyd Sabaudo v. Cubicciotti, 159 Fed., 191 (C. C., 1908). Standard Oil Co. v. United States, 221 U. S., 1, 51 (1911). third parties, whose field of operation may be restricted as a result of such contracts entered into by other competitors, can not recover damages where the object of the contracting parties is to increase their business, and there appears to be no express intent to injure the business of another. CONTRACTS TO BUY FROM OR DEAL EXCLUSIVELY IN THE GOODS OF ONE PERSON. Among the contracts for exclusive dealing which have come before the English courts were those by which the lessors of property to be used for public houses require the lessees to sell beer and other beverages of the lessors' manufacture to the exclusion of all others. While in several early cases the courts appear to have regarded these covenants for exclusive dealing with disfavor,1 they apparently were not held invalid, and subsequent cases clearly hold them to be lawful and enforceable. The same principle has been applied to sales of lands with similar covenants by the purchaser. Thus, where land was sold to a freehold society which covenanted with the vendor that he should have the exclusive right to supply beer to any public house erected on the land, and one of the members of the society, himself a brewer, acquired a portion of the land on which he erected a public house which he supplied with his own beer, it was held that an injunction should issue to restrain the breach of the covenant.3 The court was of opinion in this case that the covenant was not void for uncertainty or want of mutuality, or as being in unreasonable restraint of trade, or because it purported to be perpetual. Similarly, where a lease of a public house contained a covenant that the lessee and his assigns would, during the continuance of the lease, purchase all beer, porter, etc., sold or consumed on the premises from the lessor, and contained also a provision that so long as the lessee should purchase all beer from the lessor the latter would accept onehalf of the yearly rental specified in the lease as full satisfaction of the rent, it was held that the lessee must purchase all beer from the lessor and that he did not have the alternative of purchasing elsewhere and paying the full rental.* In the same way, contracts to purchase exclusively from one person or to sell all of one's supply of an article to another are upheld. For example, it has been held that a contract to take all the electrical energy required on one's premises from a given company for a period of not less than five years is valid and enforceable, and an injunction issued which restrained the party "from taking electrical energy 1 Cooper v. Twibill, 3 Camp., 285 n. (1808); Thornton v. Sherratt, 8 Taunt., 529 (1818). 218 Halsbury's Laws of England, 573. 3 Catt v. Tourle, L. R. (1869), 4 Ch. App., 654. 30035°-16-27 See also Courage & Co. v. Noakes & Co. (Ltd.) v. Day, |