allegiance are due both to the state and nation. Nor is it true, as a general rule, that a business established here cannot extend beyond the state, or that it may not be successfully established outside of the state. There are trades and employments which, from their nature, are localized; but this is not true of manufacturing industries in general. We are unwilling to say that the doctrine as to what is a general restraint of trade depends upon state lines, and we cannot say that the exception of Nevada and Montana was colorable merely. The rule itself is arbitrary, and we are not disposed to put such a construction upon this contract as will make it a contract in general restraint of trade, when upon its face it is only partial." A similar view is intimated in Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64, 67. But in neither of these cases was the validity of a covenant extending throughout the United States involved. Had the covenant in question in the New York case embraced the national domain, the reasoning of the court tends to the conclusion that it would have been sustained. Such covenants were sustained in the following cases: Morse Twist Drill & Machine Co. v. Morse, 103 Mass. 73 (1869); Mackinnon Pen Co. v. Fountain Ink Co., 48 N. Y. Super. Ct. 442 (1882); Watertown Thermometer Co. v. Pool, 51 Hun, 157 (1889); Carter v. Alling, 43 Fed. Rep. 208 (1890); Underwood v. Smith, 19 N. Y. Supp. 380 (1892); Oakdale Mfg. Co. v. Garst (1894), post. In Taylor v. Blanchard, 13 Allen, 370, 374, it is said by the court: "The plaintiff further contends that in this country a restraint ought not to be held void unless it extends throughout the United States, because they are one country in respect to trade and business, and the power to grant patents and copyrights and to regulate trade is vested in the United States government. But we cannot regard this view as just. A monopoly extending throughout the state may be as really injurious to the people of the state as if it extended throughout the whole country.”

7. Further as to general and partial restraints—restraints unlimited in space but limited as to the persons with whom or modes in which the business may be carried on -no hard and fast rule in the matter.- Contracts in general restraint of trade have usually been understood to be those which were unlimited in space, and this is especially so in this country. In Mitchell v. Reynolds, 1 P. Wms. 181, PARKER, Ch. J., says that "voluntary restraints by agreement of the parties are either, first, general, or, second, particular, as to persons or places." Many cases have held that restraints unlimited in space were valid, because they left the covenantor free to carry on the business in question with certain persons or in a certain manner. These cases will be referred to below. The whole subject was carefully gone over by BOWEN, L. J., in the Maxim-Nordenfeldt case, (1893) 1 Ch. 630, who says: "It has been, in my opinion, the doctrine of the courts of common law, ever since the reign of Queen Elizabeth, that contracts in general restraint of trade are void as being contrary to public policy. Contracts in general restraint of trade may be defined as those by which a person restrains himself from all exercise of his trade in any part of England. * Distinguished from these general restraints, which the English law discountenances, are partial or limited restraints, or, as they are sometimes termed, particular restraints, which, upon certain conditions, the English law permits and enforces. An agreement in particular' or 'partial' restraint of trade may be defined as one

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in which the area of restriction is not absolute. but in which the covenantor retains for himself the right still to carry on his trade either in some place, or for the benefit of some persons, or in some limited and prescribed manner. Particular restraints, according to the language employed in Mitchell v. Reynolds, 1 P. Wms. 181, are those in which there is some limitation in respect of places or persons short of an absolute or total restriction. But there is also a third kind of limitation which the law will sanction under reasonable conditions namely, a limitation in respect of the mode or manner in which the trade is to be carried on. The above are the three kinds of partial restraint recognized by law. The English rule, which strikes indifferently at all general restraints in trade, makes the validity of a partial restraint depend on the circumstances of each case. A partial restraint will be binding in law if made on good consideration and if it is reasonable." As illustrating the case of partial restraints where the contract leaves to the covenantor the right to trade with particular persons, he cites Young v. Timmins, 1 Tyrw. 226; Wallis v. Day, 2 M. & W. 273: Rannie v. Irvine, 7 M. & G. 969; Pilkington v. Scott, 15 M. & W. 657. As illustrating the third class of partial restraints, or those in which the restraint "regulates or confines the manner in which the trade is to be worked," he cites the cases of Collins v. Locke, L. R., 4 App. Cas. 674, and Jones v. Lees, 1 H. & N. 189.

He sums up his conclusions as follows: The result seems to me to be as follows: General restraints, or, in other words, restraints wholly unlimited in area, are not, as a rule, permitted by the law, although the rule admits of exceptions. Partial restraints, or, in other words, restraints which involve only a limit of places at which, or persons with whom, or of modes in which, the trade is to be carried on, are valid when made for a good consideration, and when they do not extend further than is necessary for the reasonable protection of the covenantor. A limit in time does not, by itself, convert a general restraint into a partial one. That which the law does not allow is not to be tolerated because it is to last for a short time only. In considering, however, the reasonableness of a partial restraint, the time for which it is to be imposed may be a material element to consider." The exceptions to the rule that general restraints are void, to which the learned judge refers, are evidently cases relating to the sale of trade secrets and patents or businesses protected by patents.

Undoubtedly, by thus curtailing the scope of general restraints and enlarg ing that of partial restraints, something is gained in the way of reconciling the "jarring opinions," or rather something is gained in support of an arbitrary rule because there are fewer cases that impinge it. But still the arbitrary rule remains that general restraints, thus curtailed, are void, irrespective of the question of reasonableness, and that courts are bound to pronounce against such restraints without stopping to look into the circumstances under which they are made. There does not seem to be any more reason for upholding this rule than for upholding the rule that restraints, general as to space, are void. It still remains true, we think, that there is not any English case in which a general restraint as defined by Mr. Justice BowEN has been held void, when the restraint was one which would withstand the ordinary tests of reasonableness, as applied in cases of partial restraints. Mr. Justice BowEN does not

cite any. On the other hand, there are at least five English cases in which restraints were held valid which forbid the covenantor to carry on the business in question in any manner or with any persons within the kingdom. These are: Whittaker v. Howe, 3 Beav. 383 (1841); Leather Cloth Co. v. Lorsont, L. R., 9 Eq. Cas. 345 (1869); Rousillon v. Rousillon, 14 Ch. Div. 351 (1880); Badische Anilin & Soda Fabrik v. Schott, (1892) 3 Ch. 447; Moenich v. Fenestre, 61 L. J. Ch. 737 (1892). If we exclude Leather Cloth Co. v. Lor. sont, as based upon the sale of a trade secret, there still remain three cases, and to these may be added the Maxim-Nordenfeldt case itself, in which Mr. Justice BowEN formulated the theory of partial and general restraints now under discussion. In that case the defendant was restrained from carrying on the specified business anywhere or in any manner, except on behalf of the plaintiff company, for the period of twenty-five years. The company was obligated to employ the defendant as its managing director for the space of seven years only, and was not obligated to employ him in any capacity after that. He thus retained no right to carry on the business after the seven years, and the restraint was practically absolute after that time. It is true the defendant was a stockholder in the plaintiff company and thus had an interest in its business. But if this alone made the restraint partial, then Mr. Justice BOWEN would have to further revise his definitions and add a fourth class of partial restraints, viz., where the covenantor retained an interest in the business, as stockholder or otherwise, though he might be restrained from carrying it on personally anywhere or in any manner.

In Whitney v. Slayton, 40 Maine, 224, where the defendant had sold his iron foundry to the plaintiff and agreed not to engage in the business of iron casting for ten years within a prescribed territory, it was held that the defendant had violated the covenant by organizing a corporation to carry on the business and becoming a stockholder and manager thereof. But the defendant had built the plant on his own responsibility and then turned it over to the corporation, and was doubtless its principal stockholder and the mainstay of the business. Similar cases are Beal v. Chase, 31 Mich. 489, and Mackinnon Pen Co. v. Fountain Ink Co., 48 N. Y. Super. Ct. 442. In all three cases the covenantor was an active participant in the business. If merely becoming a stockholder in a corporation carrying on the prohibited business would constitute a violation of a covenant not to engage in that business, then it would follow that if the covenantor retained an interest in the business as a stockholder he would still be carrying it on in a qualified sense, and a restraint otherwise general, but which permitted him to retain such interest, would be a partial restraint within Mr. Justice BOWEN's definition. But no case has held that merely becoming a stockholder in a corporation carrying on a business is a violation of a covenant not to engage in that business. In the Maine case just cited it is said: "If the defendant was interested as a stockholder in such corporation it cannot be doubted that he was engaged in the business of iron casting within the meaning of the contract. This would put him most emphatically in a position to carry out extensively the very objects which it must have been the intention of the parties to prevent; and his being in the service of the corporation carrying on the business was alike a violation of the contract." But this language must be taken in connection with the facts of

the case and qualified accordingly. If the retaining an interest as a stockholder in a business as to which the restraint is given is alone sufficient to make the restraint partial, then the retaining one share out of 10,000 or 100,000 might determine the important question whether the restraint is valid or void.

There are a number of American cases in which general restraints, as defined by Mr. Justice BOWEN, were held valid. They are: Morse Twist Drill & Machine Co. v. Morse, 103 Mass. 73 (1869); Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64 (1873); Beal v. Chase, 31 Mich. 489 (1875); Mackinnon Pen Co. v. Fountain Ink Co., 48 N. Y. Super. Ct. 442 (1882); Diamond Match Co. v. Roeber, 106 N. Y. 473 (1887); Watertown Thermometer Co. v. Pool, 51 Hun, 157 (1889); Underwood v. Smith, 19 N. Y. Supp. 380 (1892); Carter v. Alling, 43 Fed. Rep. 208 (1890); Oakdale Mfg. Co. v. Garst, post (1894). The first of these cases is very like the Maxim-Nordenfeldt case. The defendant sold out his business to the plaintiff company and became a stockholder therein and its superintendent. But there was no agreement to employ him beyond three years and the restraint was unlimited in time. In Diamond Match Co. v. Roeber defendant sold his business and agreed not to engage therein except as agent or employee of the vendee. He was also to become a stockholder in the vendee and did become one in the plaintiff company, which succeeded to the rights of the vendee. There does not appear to have been any agreement on the part of the vendee to employ the defendant, but he was employed for several years. In Oakdale Mfg. Co. v. Garst, the defendant transferred his business to the plaintiff company, for stock in such company but it does not appear that he was to be employed by the company. If these cases are excluded as coming under the head of partial restraints, the others remain and are not subject to any qualification. But it would not seem that a restraint otherwise general and absolute was rendered partial by reason of a permission that the covenantor may carry on the business in question on behalf of, or as agent or employee of the covenantee, unless the right to so carry on the business is secured to the covenantor for the entire term of the restraint. Besides the cases referred to by Mr. Justice BOWEN and cited above, the following are also instances of restraints which, though unlimited as to space, were otherwise limited, so as to fall within his definition of partial restraints: Hartley v. Cummings, 5 C. B. 247; 57 E. C. L. R. 246 (1847); Gale v. Read, 8 East, 80 (1806); Mills v. Dunham, (1891) 1 Ch. 576. There are American cases which doubtless fall within the same category. Matthews v. Associated

Press, 136 N. Y. 333; 32 N. E. Rep. 981 (1893); National Benefit Co. v. Union Hospital Co., 47 Minn. 272; 47 N. W. Rep. 806 (1891); Chicago, etc., R. Co. v. Pullman So. Car Co., 139 U. S. 79 (1891); 4 Am. R. R. & Corp. Rep. 213. See, also, §§ 21 and 25 below. But to hold a partial restraint valid is by no means equivalent to holding a general restraint void. Nor does the latter proposition follow logically from the former. When the restraint in litigation is partial, it is unnecessary to decide upon general restraints, and what is said upon the subject is dictum. And whenever a general restraint has been able to bear the tests of reasonableness applied to partial restraints, it has been held valid by the English courts. The only exceptions are to be found in the three or four American cases noticed in the last section.

The distinction between general and partial restraints is purely arbitrary. Even Mr. Justice BOWEN does not attempt to give it any rational basis. Being arbitrary it can be evaded by an arbitrary exception. If the court will consider the reasonableness of a restriction which covers three-fourths of a state, there is no reason why it should not consider the reasonableness of one that covers nine-tenths or nineteen-twentieths, and so on until the minutest fraction remains. It would follow, then, that if the restraint forbids the covenantor to carry on business anywhere in the state, with any body or in any manner, the courts are precluded from considering its reasonableness and are bound to pronounce it void, but if the covenantor is left free to carry on the business in any part, however small, with any persons, however few, or in any manner, however restricted, then the restraint is valid if reasonable. Such a position is manifestly unsound.

C. VALIDITY OF RESTRAINTS

8. Grounds upon which contracts in restraint of trade have been held void-public policy infringed by reason of injury to the individual and injury to trade. The reasons given by Chief Justice PARKER in Mitchell v. Reynolds, 1 P. Wms. 181, why contracts in restraint of trade are invalid are as follows: 'First. The mischief which may arise from them, first, to the party by the loss of his livelihood and the subsistence of his family; secondly, to the public, by depriving it of a useful member. Another reason is the great abuses these voluntary restraints are liable to; as, for instance, from corporations, who are perpetually laboring for exclusive advantages in trade, and to reduce it into as few hands as possible; as likewise from masters, who are apt to give their apprentices much vexation on this account, and to use many indirect practices to procure such bonds from them, lest they should prejudice them in their custom, when they come to set up for themselves. Thirdly. Because, in a great many instances, they can be of no use to the obligee, which holds in all cases of general restraint throughout England; for what does it signify to a tradesman in London what another does at Newcastle? And surely it would be. unreasonable to fix a certain loss on one side, without any benefit to the other."

The court in Alger v. Thacher, 19 Pick. 51 (1837), gives the reasons as follows: "1. Such contracts injure the parties making them, because they diminish their means of procuring livelihoods and a competency for their families. They tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions. And they expose such person to imposition and oppression.

"2. They tend to deprive the public of the services of men in the employments and capacities in which they may be most useful to the community as well as themselves.

"3. They discourage industry and enterprise, and diminish the products of industry and skill.

"4. They prevent competition and enhance prices.

"5. They expose the public to all the evils of monopoly. And this especially is applicable to wealthy companies and large corporations, who have the