plaintiff had the right to refuse to lease its machines altogether or to lease them on whatever terms best promoted its own interests.1

The same principles have been applied to licenses of patented articles. Thus, where the patentee of an invention for improvements in slubbing machines granted to another a license to use the invention during the life of the patent, the licensee agreeing not to make or sell any machines without the invention attached to them, it was held that the agreement was valid, notwithstanding the licensee's plea that the invention had become worthless.2

CONTRACTS FOR REBATES IN CONSIDERATION OF EXCLUSIVE DEALING.The practice of giving rebates to customers as an inducement for exclusive patronage was declared a lawful and legitimate form of competition by the House of Lords in Mogul Steamship Co. v. McGregor, Gow & Co. In that case the members of a so-called conference of shipowners offered a rebate of 5 per cent to all shippers who confined their shipments of tea and general cargo from China to Europe to members of the conference. A rival line which had been excluded from the conference sought damages and an injunction to restrain the continuance of this practice, but the House of Lords held, affirming the decision of the court of appeal, that since the action of the members of the conference was taken with the lawful object of protecting and extending their trade and increasing their profits and since no unlawful means had been employed the plaintiff had no right of action. And where a tobacco company offered a rebate of 6 per cent to all dealers who handled defendant's cigarettes exclusively it was held that the making of such contracts was not

1 United Shoe Machinery Co. of Canada v. Brunet, L. R. (1909), A. C., 330, 342, 343. Per Lord Atkinson: "By virtue of the privilege which the law secures to all traders, namely, that they shall be left free to have their own trade in the manner which they deem best for their own interests, so long as that manner is not in itself illegal, the respondents are at liberty to hire or not to hire the appellants' machines, as they choose, irrespective altogether of the injury their refusal to deal may inflict on others. The same privilege entitles the appellants to dispose of the products they manufacture on any terms not in themselves illegal, or not to dispose of their products at all, as they may deem best In their own interest, irrespective of the like consequences. This privilege is, indeed, the very essence of that freedom of trade in the name and in the interest of which the respondents claim to escape from the obligations of their contracts."

See p. 539 for English and Colonial statutes expressly declaring agreements of this character to be in restraint of trade.

2 Jones v. Lees, 1. H. & N., 189 (1856). v. Sampson, L. R. (1875), 19 Equity, 462. 3 L. R. (1892), 1 A. C., 25.

See also Printing & Numerical Registering Co.

Per Halsbury, L. C.: "I have been unable to discover anything done by the members of the associated body of traders other than an offer of reduced freights to persons who would deal exclusively with them; and if this is unlawful it seems to me that the greater part of commercial dealings, where there is rivalry in trade, must be equally unlawful." Per Lord Watson: "There is nothing in the evidence to suggest that the parties to the agreement had any other object in view than that of defending their carrying-trade during the tea season against the encroachments of the appellants and other competitors, and of attracting to themselves custom which might otherwise have been carried off by these competitors. That is an object which is strenuously pursued by merchants great and small in every branch of commerce; and it is in the eye of the law, perfectly legitimate." Per Lord Hannen: "The objects sought and the means used by the defendants did not exceed the limits of allowable trade competition, and I know of no restriction imposed by law on competition by one trader with another, with the sole object of benefiting himself."

unlawful at the common law, the court being of opinion that contracts of this character amounted to no more than ordinary competition.1

CONTRACTS FOR EXCLUSIVE AGENCY.-Contracts for exclusive agency appear to have been upheld by the English House of Lords in Mogul Steamship Co. v. McGregor, Gow & Co., where it was alleged, among other things, that the defendant companies, as members of a conference of steamship owners, had, in pursuance of their purpose to secure a monopoly of the tea-carrying trade between China and England, prohibited their agents from being interested in competitive steamers or from loading sailing vessels for others than members of the conference. Three of the lords writing opinions in this case declared it lawful for the steamship companies to thus prohibit their agents from serving others in a like capacity.

Section 14. Bribery of employees.

A common method of competition is the giving of secret commissions to another's employees for the purpose of securing preferential treatment in the distribution of the employer's patronage. It is fair to assume that in many cases the commission is demanded by the employee himself, who thus obliges the dealer to become a party to an illegal transaction or to abandon the business to a less scrupulous competitor. The practice of giving and demanding bribes has been described as "unfair, unjust and improper," and "a particularly hateful and demoralizing phase of unfair competition," and it has been denounced alike by the courts, legislative bodies, and commercial organizations. Notwithstanding the fact that the courts. have permitted the principal to recover the amount of the commissions so received, to discharge an employee receiving them, and to repudiate contracts made under such circumstances," it has been considered necessary in several States, as well as in England and a number of the English colonies, to further discourage this practice. by making it a criminal offense.

AMERICAN DECISIONS.

In a comparatively recent case the Supreme Court held that the United States was entitled to a decree against an Army officer for

1 Queen v. American Tobacco Co. of Canada, 3 La Revue de Jurisprudence, 453 (1897). See also Graham v. J. I. Case Threshing Machine Co., 19 Man., 27 (1909).

* L. R. (1892), A. C., 25, 43, 50.

3 Australian (Commonwealth) Debates, 1905, Vol. XXV, p. 495.

4 United States v. Carter, 217 U. S., 286 (1910).

Swale r. Ipswich Tannery, 11 Commercial Cases (Mathew), 88 (1906); Wade r. William Barr Dry Goods Co., 155 Mo. App., 405 (1911).

City of Findlay v. Pertz et al., 66 Fed., 427 (C. C. A., 1895); Alger r, Keith et al., 105 Fed., 105 (C. C. A., 1900); Panama & South Pacific Telegraph to. v. Indiarubber, G. P., & T. Works Co., 32 Law Times Reps., 517 (1875).

See p. 504.

* See p. 534.

a sum of money representing secret profits resulting from contracts over which he had control, and to enforce such decree against any of his property, including property in the hands of third parties having knowledge of how the money was obtained, and this, irrespective of whether the Government was able to show any specific abuse of discretion, or that it had suffered any actual loss.1 In another case the circuit court of appeals held that a municipality was entitled to rescind a contract for separators used on natural-gas wells, where it was shown that the manufacturers agreed to allow the superintendent of the gas works a commission on each separator purchased. And in a suit by an employee against his employer, based on an alleged wrongful dismissal, where it appeared that while acting as buyer for his employer's toy department he had regularly received secret gifts and gratuities from a firm from which he purchased toys, it was held that such conduct justified his discharge.3

ENGLISH DECISIONS.

There are a number of English cases involving the payment of secret commissions or bribes to the agents and employees of another, as a reward for having done some act in relation to their principal's business, in most cases for favoring the briber in the purchase of goods for their employer. The courts have vigorously condemned the practice and in all such cases have permitted a recovery of the amount so paid. Thus where a merchant who supplied coal to a municipal gas works paid a secret commission of 1s. per ton to the manager of the plant, the city was held entitled to recover from the merchant the amount of the loss sustained by reason of having paid an increased price for the coal; and in another case where it appeared that a firm of wholesale tobacconists had, during a period of years, paid the plaintiffs' buyers the sum of £700 in secret commissions, the court permited the recovery of that amount from the wholesalers, although the jury had found that the prices at which

1 United States v. Carter, 217 U. S., 286 (1910).

City of Findlay r. Pertz et al., 66 Fed., 427, 435 (C. C. A., 1895). Per Lurton, Circuit Judge: "Such arrangements are a fruitful source of public extravagance and peculation. The conflict created between duty and interest is utterly vicious, unspeakably pernicious, and an unmixed evil. Justice, morality, and public policy unite in condemning such contracts, and no court will tolerate any suit for their enforcement."

* Wade v. William Barr Dry Goods Co., 155 Mo. App., 405 (1911). Per Caulfield, J.: "Any conduct upon plaintiff's part involving lack of fidelity or reasonably calculated to destroy the confidence of a reasonable employer under such an employment would be inconsistent with plaintiff's continuing as buyer for the defendant and justify his discharge, whether the misconduct caused defendant to suffer actual loss or not."

The Mayor, Aldermen, and Burgesses of the Borough of Salford v. Lever, L. R. (1891), 1 Q. B., 168 (Ct. of App.).

the tobacco had been sold were not in fact excessive.1 A similar method of selling tobacco was disclosed in an action brought against a firm which had paid a secret commission, and against the buyer who had accepted the bribe. There it was held that the plaintiff was entitled to recover the amount from either of the defendants, and this, regardless of whether a different price would have been obtained if there had been no bargain for a commission.2

In another case it appeared that the buyer of a large cutlery firm was paid commissions regularly by a manufacturer from whom he purchased. The commissions were recovered from the manufacturer in an action brought before the lord chief justice, who expressed the opinion that the practice was "dishonest to the fair trader," and "dishonest to the fair employer;" that "it was unnecessary to point out how the evils worked; they operated to the detriment of the honest trader who was above such nefarious practices." *

1 Hovenden & Sons v. Millhoff, 83 Law Times Reps., 41, 43 (Ct. of App., 1900). Per Romer, L. J.: "If a gift be made to a confidential agent with the view of inducing the agent to act in favor of the donor in relation to transactions between the donor and the agent's principal and that gift is secret as between the donor and the agent-that is to say, without the knowledge and consent of the principal-then the gift is a bribe in the view of the law. If a bribe be once established to the court's satisfaction, then certain rules apply. Amongst them the following are now established, and, in my opinion, rightly established, in the interests of morality with the view of discouraging the practice of bribery. First, the court will not inquire into the donor's motive in giving the bribe, nor allow evidence to be gone into as to the motive. Secondly, the court will presume in favor of the principal and as against the briber and the agent bribed, that the agent was influenced by the bribe; and this presumption is irrebuttable. Thirdly, if the agent be a confidential buyer of goods for his principal from the briber, the court will assume as against the briber that the true price of the goods as between him and the purchaser must be taken to be less than the price paid to, or charged by, the vendor by, at any rate, the amount or value of the bribe. If the purchaser alleges loss or damage beyond this, he must prove it. As to the above assumption, we need not determine now whether it could in any case be rebutted. As at present advised, I think in the interests of morality, the assumption should be held an irrebuttable one; but we need not finally decide this, because in the present case there is nothing to rebut the presumption."

2 Cohen v. Kuschke & Co. and Koenig, 16 Times Law Reps., 489 (Q. B. Dlv., 1900).

3 Statement of Lord Russell of Killowen, Parliamentary Debates, Apr. 20, 1899, p. 20. And see Hippisley v. Knee Bros., L. R. (1905), 1 K. B., 1, 7, where Lord Chief Justice Alverstone observed: "Unfortunately there appears to prevail in commercial circles in which perfectly honourable men desire to play an honourable part an extraordinary laxity in the view taken of the earning of secret profits by agents. The sooner it is recognized that such secret profits ought to be disapproved of by men in an honourable profession, the better it will be for commerce in all its branches."

4 Oetzmann & Co. v. Long & Co., London Times, July 7, 1896, pp. 2-3. The benefits derived from suits of this character are indicated by the following excerpt from a statement made by Mr. Oetzmann, plaintiff in the above case: "My firm have had some experience in recovering sums of money from manufacturers and others. The most notorious case we had was Oetzmann v. Long. We had, however, found out others before that case. We compromised one case in which we recovered about £15, sums paid to our then late buyer. In Long's case we recovered about £120 and a considerable sum more as damages and costs. After Long's case we took up one or two others, in one of which we got £120 before the issue of the writ, and in the other case we recovered £300 after the issue of the writ with full costs, but that does not represent anything like the benefit we have received. We have benefited immensely by being able to buy cheaper. Immediately after Long's case we had many manufacturers calling upon us, some of whom we knew before. others of whom were more or less unknown, but who all said, now there is a chance of their doing business with us." (Report from the special committee on secret commissions to the council of the London Chamber of Commerce (July, 1898), p. 5.)

In another case, where the manager of a tannery received secret commissions from an insurance company on insurance placed on his employer's property, it was held that they were entitled to discharge him without notice although his contract of service had not expired.1 Although it has been held actionable to receive secret commissions, the court of appeal has ruled that the injured party can not follow money so paid into the investments thereof nor restrain the party from dealing with such investments.2

It has likewise been held actionable to bribe another's employee to divulge confidential information respecting his employer's business. Thus a grain merchant recovered damages from a competitor who had bribed a clerk to give him information respecting the names of the plaintiff's customers and his contracts.3

Section 15. Competing with purchaser after sale of business and good will.

Not infrequently purchases have been made of an established business, including the good will, without any express agreement by the vendor not to compete in the same line of business with the purchaser. The same situation sometimes arises in connection with the sale of the practice of a professional man. In such cases the vendor has sometimes reentered the business or profession in competition with the purchaser, and the courts have been called upon to determine how far, if at all, the purchaser is entitled to be protected from the competition thus thrust upon him. The American courts are not in accord regarding the relief which should be afforded in such cases.

1 Swale v. Ipswich Tannery, 11 Commercial Cases (Mathew), 88 (1906).

2 Lister & Co. v. Stubbs, L. R. (1890), 45 Ch. Div., 1, and see Powell & Thomas v. Evan Jones & Co., L. R. (1905), 1 K. B., 11. Cf. U. S. v. Carter, P. 421.

3 Hamlyn v. John Houston & Co., L. R, (1903), 1 K. B., 81. Since 1906 the bribery of another's employees has been a criminal offense in England. See p. 534. See also Rex v. Whitaker, L. R. (1914), 3 K. B., 1283, where the commanding officer of a regiment was found guilty of bribery and of conspiracy to bribe. It appeared that representatives of Lipton (Ltd.) had paid the appellant to induce him to show them favor in relation to certain canteen contracts. In the House of Lords it was stated on behalf of the Government that "on June 15 the War Office addressed a letter to the General Officers Commanding-in-Chief of all the districts, intimating that no contracts were under any circumstances to be entered into with the firm of Lipton's, Limited, and steps were to be taken for all contracts now held by this firm to be terminated as soon as possible *." On November 26, 1914, an inquiry was made whether there was any present Intention of reinstating their name upon the list of firms eligible for army contracts. The reply was in the negative. (Great Britain Parliamentary Debates, H. L., July 27, and Nov. 26, 1914.)

4 Good will was early defined by Lord Eldon as follows: "The good will which has been the subject of sale is nothing more than the probability that the old customers will resort to the old place." Cruttwell r. Lye, 17 Vesey, 335, 346 (1810). The English courts have recognized in late years that this definition is entirely too narrow to cover good will under changed commercial conditions. Lord Herschell said of this definition: "If the language of Lord Eldon is to be taken as a definition of good will of general application, I think it is far too narrow, and I am not satisfied that it was intended by Lord Eldon as an exhaustive definition." Trego v. Hunt. L. R. (1896), A. C.. 7, 17. And Lord Macnaghten said: "Generally speaking, it good will] means much more than what Lord Eldon took it to mean in the particular case actually before him in Cruttwell e. Lye. Often

it happens that the good will is the very sap and life of the business, without which the