Commissioners' decision. Department 2. Appeal from superior court, Mendocino county; R. MCGARVEY, Judge.

T. L. Carothers, for appellants. J. A. Cooper, for respondent.

FITZGERALD, C. This action is brought by plaintiff against the defendants to recover the sun of $1,002.93 for rent alleged to be due and unpaid on certain leased premises, described in the amended complaint as the "Capitol Hotel," and for damages in the sum of $200 for breach of covenant to restore the property in the condition provided for by the terms of the lease. The amended complaint, which is un verified, separately states two independent causes of action, in both of which the contract of lease, which is in writing, is pleaded in hæc verba. In the first count it is substantially alleged that on the 13th day of May, 1884, plaintiff let to the defendants upon the terms and conditions set forth in the lease the property known as the "Capi. tol Hotel, "and described therein as the hotel then in the possession of one Fairbanks. The second cause of action. after adopting paragraphs 1 and 2 of the complaint, sets up the covenant in the lease to restore the property, and avers damages in the sum of $200 for breach thereof. The instrument in writing executed by the par. ties hereto, and set out as stated in each of the foregoing causes of action, contains, as we think, two independent contracts

ground that the amended complaint improperly unites in one action a claim for money due on a written contract with a claim for unliquidated damages for waste and injury to realty. The demurrer was overruled by the court, and thereupon defendants answered by a general denial, aud as a separate defense set up as counter. claim damages in the sum of $6,137.50, for breach of covenants to complete the Palace Hotel according to plans and specifications, and to build a laundry upon the premises thereof, and pray judgment therefor and costs of suit. The case was tried by a jury, and a verdict rendered and judg. ment entered thereon in favor of plaintiff for $833.73, from which judgment and the order refusing a new trial this appeal is taken.

Defendants base their contention in support of the first ground of demurrer on the failure of the complaint to allege performance, or excuse non-performance, of the terms and conditions of the lease, out of which it is alleged this action arose. The amended complaint alleges the execution of the lease, which is set out in full therein, possession of the premises thereunder, and the non-payment of the rent alleged to be due and unpaid thereon. The covenants, the breach of which are set up as counter-claim for damages, are contained in and apply only to the lease of the Palace Hotel property. There are no such covenants in the lease of the Cap

ties, with the rent specifically fixed for each, and the terms commencing at different periods of time, as will be seen from the terms and conditions thereof, which are substantially as follows: One of the properties referred to is the building in course of construction at the time of the execution of the lease, and afterwards known as the "Palace Hotel." The lease of this property was for the term of five years from the date of its completion, at a monthly rental of $150, payable on the first day of each month, plaintiff agreeing to finish the building within a reasonable time, according to the original plans and specifications, except as varied by consent of parties, and to build on the premises a laundry and wood-shed of rough boards. It was further agreed that all improvements made upon the property during the said term should be enjoyed by defendants without further rent. "But that the storehouse under the hotel was no part thereof." The other piece of property, designated as the "Capitol Hotel," plaintiff "also leases" to defendants for the term of five years from the date of the expiration of the lease of one Fairbanks, then in the possession thereof, at a monthly rental of $25, payable on the first day of each month, defendants agreeing to yield up the premises in as good condition as when leased, reasonable wear thereof and damages by the elements excepted. But it is immaterial, in the view that we take of this case, whether this instrument in writing is construed as one contract of lease for both properties, or as separate contracts of lease for each piece thereof. Defendants demurred generally to each cause of action stated, and specially on the

the amended complaint should have alleged performance or excused non-perform. ance of these covenants, they are set up in the counter-claim, and the breach thereof alleged, and, as the case was tried upon those issues, we fail to perceive in what way the defendants were injured thereby.

It is further contended that the court erred in overruling the demurrer to the amended complaint on the ground of misjoinder of causes of action. As to whether the second cause of action is in tort, or for breach of covenant to return the property in good condition, we are not called upon, in view of what transpired at the trial of the case, to decide. Admitting, however, that the causes of action were improperly united, and that the court erred in overruling the demurrer, it ap pears that this cause of action was wholly abandoned by plaintiff at the trial of the case, and no evidence offered thereon, and that the court so charged the jury. It is therefore evident that the jury could not have considered the question of damages claimed thereunder in the rendition of their verdict, which position is further strengthened by the verdict itself, which was for a sum less than the amount claimed to be due for rent. It therefore follows that the ruling of the court on this ground of demurrer, if erroneous, is affirmatively shown by the record to be error without injury. Code Civil Proc. § 475; Hayne, New Trials, § 286; Campbell v. Water, etc., Co., 35 Cal. 682; Reynolds v. Lincoln, 71 Cal. 184, 9 Pac. Rep. 176, and 12 Pac. Rep. 449.

It is further claimed that the court erred in granting plaintiff's motion to strike out the testimony of the witness Tanner,

as to the value of the use of the laundry to the Palace Hotel. Admitting that the evidence was competent for this purpose, and that the court erred in striking it out, the error was cured by this witness being subsequently recalled, and giving substantially the same testimony without objection.

The other rulings of the court excepted to and assigned for error are, save one, upon questions as to the value of the use per month of a laundry attached to the Palace Hotel, or to an hotel like it. The objections to these questions were properly sustained, as they failed to correctly state the rule of damage in such cases. It is indisputably shown by the evidence that the building of the laundry was waived by the defendants, and that they agreed to use the west wing of the Capitol Hotel as such, and that, after plaintiff had prepared it by making the necessary im. provements at his own expense for that purpose, it was so used by the defendants during the remainder of the time they were in the possession thereof. The witness Hagans, one of the defendants, testified that such a laundry as the one referred to would be worth from $8 to $15 per month; and by the witness Tanner, that, in connection with the Palace Hotel, it would be worth $20 per month. The evidence shows, and it is nowhere contradicted, that the amount of rent due was $1,002.93 The verdict was for $833.73, thus allowing the defendants the very liberal sum of $169.20 for the three months that they had the washing done elsewhere.

It is lastly claimed that the court erred in its charge to the jury, but counsel for appellant has failed to point out what particular part of it he objects to. We have, however, carefully gone over the charge, and, if any objection can be urged to it, it would come, it seems to us, more appropriately from the other side. We | therefore advise that the judgment and order be affirmed.

We concur: FOOTE, C.; BELCHER, C. C.

PER CURIAM. For the reasons given in the foregoing opinion the judgment and order are affirmed.

(90 Cal. 110)

PACIFIC FACTOR Co. v. ADLER. (No. 13,354.) (Supreme Court of California. July 1, 1891.) ILLEGAL CONTRACTS - MONOPOLIES LIQUIDATED DAMAGES-PLEADING-MOTION TO STRIKE OUT. 1. Where a contract for the sale of grainbags provides that the vendee shall have the exclusive sale of the same to the amount of 187,500, and the vendor agreed not to sell or offer the same for sale to any other person, and, if the vendee failed to sell the full amount, the vendor agreed to accept the sale of a pro rata amount, and such contract is a part of a scheme to gain a monopoly, it is void, as against public policy, and there can be no recovery for a breach thereof.

2. Civil Code Cal. § 1670, provides that "every contract by which the amount of damages to be paid for a breach of an obligation is determined in anticipation thereof is to that extent void, except as expressly provided in next section." Section 1671 provides that "the parties to a contract may agree therein upon an amount which shall be presumed to be the amount of damages sustained by a breach thereof when,

from the nature of the case, it would be impracticable or extremely difficult to fix the actual damages. " Held, that a contract for the sale of grain-bags, which provides that the vendor shall pay the vendee three cents for each bag which he refuses or neglects to deliver as liquidated damages, is void, although it recites that, from the nature of the case, it will be extremely difficult to determine the damages.

3. Where, in an action for a breach of contract, the answer is in avoidance, alleging that contracts were made as part of a scheme to gain a monopoly, but fails to allege that the contract sued upon was a part of the scheme, the defect cannot be taken advantage of by motion to strike out such allegation. The proper practice would be to demur.

Department 1. Appeal from superior court, city and county of San Francisco; F. W. LAWLER, Judge.

Henry K. Mitchell, for appellant. Naphtaly, Freidenrich & Ackerman, for respond

ent.

GAROUTTE, J. This is an action upon a contract to recover liquidated damages. The portions of plaintiff's complaint necessary to consider in the decision of this cause are: "That plaintiff is a corporation, incorporated in this state for the purpose of conducting and carrying on the business of buying, selling, and otherwise dealing in goods, wares, and merchandise, either in its own behalf or as agent for others on commission; that on the 16th day of May, 1888, in consideration of one dollar, defendant entered into an agreement in writing with plaintiff, whereby he agreed to give it (plaintiff) the exclusive sale of all grain-bags or burlaps amounting to one hundred and eightyseven thousand and five hundred bags. which was or would be under his control prior to January 1, 1889; and defendant further agreed to accept for said bags or burlaps the average price the plaintiff might obtain for all grain-bags or burlaps it might sell between the date of said contract and January 1, 1889. And, in case plaintiff should fail to sell said one hundred and eighty-seven thousand five hundred bags, defendant agreed to accept the sale of a pro rata amount of grainbags or burlaps as 187,500 is to the entire number of grain bags and burlaps which plaintiff should sell from this date until the 1st day of January, 1889; and defendant agreed to deliver to said company, or on their order, whatever number of grainbags or burlaps, up to 187,500, the said company should call on him to deliver between this date and the 1st day of Janu. ary, 1889, on payment to him, when such bags were delivered, (less one per cent. commission.) of seven and one-half cents for each bag or burlap delivered; and in case defendant should receive more money or deliver more bags or burlaps than his pro rata of the whole number sold by plaintiff between this date and the 1st day of January, 1889, the defendant would refund the excess of money received, and accept other bags in lieu thereof; and defendant agreed not to sell or offer for sale said 187,500 bags or burlaps to any one other than to the plaintiff or upon its order; and defendant further agreed to pay plaintiff one per cent. on all sales of said bags, or any part thereof; and defendant

further agreed to pay plaintiff three cents for each bag or burlap which he refused or neglected to deliver on demand as liquidated damages; and the said plaintiff agreed to sell and draw on defendant from time to time, as sales were made, as near as in its judgment it could determine, a pro rata amount of said 187,500 bags or burlaps as 187,500 is to the entire number of bags that are placed in its hands for sale between this date and January 1, 1889." The complaint further alleges that plaintiff, in pursuance of the covenants in said agreement, demanded of said defendant prior to January 1, 1889, said 187,500 bags, and defendant at that time had said bags in his possession, but neglected and refused to deliver them to plaintiff.

The answer of defendant practically admits the allegations of the complaint, and sets out certain matters in avoidance, as a special defense, to the effect that plaintiff, through its board of directors, about the 16th day of May, 1888, devised a scheme to control the sale and supply of all or the greater portion of the grainbags and burlaps which were then within the state of Californía, or to arrive prior to January 1, 1889, for the purpose of increasing the price of bags and burlaps, and of limiting the number of dealers from whom such bags could be obtained, and compelling the farmers of this state to purchase said bags from plaintiff at a price in excess of their real value; that the demand in this state for such bags and burlaps, for the purpose of sacking the grain, amounts annually to between 32,000,000 and 35,000,000 bags; that plaintiff calculated that the quantity of grain-bags and burlaps which were then within this state, and which were to arrive prior to January 1, 1889, amounted to 42,000,000 bags, and that, if plaintiff could make contracts with the holders and owners of said bags whereby it could secure the exclusive right of making sales thereof, thereby competition for the sale of said bags among said owners and dealers would be reinoved, and the plaintiff would be enabled to fix a larger price therefor, and compel the parties who required said bags, to remove the grain raised on the Pacific coast, to purchase the same from plaintiff, and pay therefor the price which plaintiff might demand; that in pursuance of said scheme plaintiff entered into contracts with other holders and owners of grain-bags and burlaps, in all respects similar to the contract made with defendant; that the entire quantity of said grain-bags and burlaps, covered by all the contracts of plaintiff, aggregated 30,000,000 bags, or thereabouts; that all of said contracts, including the contract with defendant, are contrary to public policy, and void. The foregoing matters, in addition to others not necessary to note at this time, are set out in detail by defendant.

ed, and also that the court erred in not granting his motion for judgment upon the pleadings. The affirmative defense of the answer is defectively pleaded, and should not be allowed to stand if attacked by demurrer. It fails to allege that the contract under consideration in this cause was entered into as a part of, and in pursuance of, the scheme or plan set out; and if the contract relied upon by plaintiff to recover formed no part of the general “plan” to make a "corner" of the bag and burlap market of the state, then such plan was outside of the questions involved in this litigation, constitut ed no defense to this suit, and should have been stricken out as surplusage. But it is quite apparent from the pleadings, taken as a whole, that the defendant intended by this defense to claim that the contract embraced in the complaint formed part of this "scheme" or "plan," and was therefore void, as being against public policy.

At the trial plaintiff introduced the contract in evidence, and rested. Defendant made a motion for a nonsuit, which motion was granted. This is an appeal from that judgment. Appellant insists that his motion to strike out the affirmative matter in the answer should have been grant

A defective pleading cannot be stricken out by reason of its defects upon the ground of surplusage. In this case a demurrer would have been the proper means to have tested the sufficiency of the answer, and the motion to strike out was properly denied. Without passing upon the question as to whether any of the allegations of the complaint were denied by the answer, we think the affirmative defense relied upon by defendant was sufficient to defeat the motion of plaintiff for judgment upon the pleadings, when considered in the light of the construction just placed upon it. While it is clear that public policy favors the utmost freedom of contracts within the limits of the law, and requires that business transactions should not be fettered by unnecessary restrictions, yet agreements in restraint of competition, that threaten the public good, entered into with the object and view of controlling, and, if necessary, suppressing, the supply, and thereby enhancing the price of articles of actual necessity, that embrace in their evil effects all the territory and practically all the people of this great state, become a grave menace to the best interests of the com. monwealth, and therefore are opposed to sound public policy. The entire number of bags in the state on the 16th day of May, 1888. and which would arrive prior to January 1, 1889, amounted to 42,000,000. The annual demand for bags was 32,000,000. The plaintiff entered into this "scheme" or "plan" to obtain the control of these 42,000,000 bags, and in pursuance of said plan by contract, did actually secure the control of 30,000,000 of these bags from the owners and holders thereof. The plaintiff did not purchase the bags; at the same time, by the rigor of its contract, it prevented the owners from selling them. It is clear this "scheme" or" plan" was devised, and these contracts entered into, for the purpose of removing all competition, and thereby compelling the farmers to purchase bags from plaintiff at a price in excess of their real value. Plaintiff controlled three-fourths of all the bags which were in the state, or which would arrive within the ensuing six months. It held the bag market in its

hands, for competition was gone, and the price demanded must be paid. These agreements were not entered into for the purpose of aggregating capital, nor for greater facilities in the conducting of their business, nor for the protection of themselves by a reasonable restraint upon active competitors, but for the purpose of regulating, controlling, and withholding the supply of bags, and thereby to take an unjust advantage of the farmers' necessities, by disposing of the fruits of its unlawful labors at an unreasonable advance in price.

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The supreme court of the state of Ohio, in speaking upon this question, said: "The clear tendency of such an agreement is to establish a monopoly, and to destroy competition in trade, and for that reason, on grounds of public policy, courts will not aid in its enforcement. It is no answer to say that competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreasonably advanced. Courts will not stop to inquire as to the degree of injury inflicted upon the public; it is enough to know that the inevitable tendency of such contracts is injurious to the public." Salt Co. v. Guthrie, 35 Ohio St. 672. In considering the question as to what is a reasonable restraint of trade, Chief Justice TINDAL in Horner v. Graves, 7 Bing, 743, used the following language: We do not see how a better test can be applied to the question than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favor of whom it is given, and not so large as to interfere with the interests of the public; * * * whatev. er is injurious to the interests of the public is void on the ground of public policy." Craft v. McConoughy, 79 Ill. 346; Arnot v. Coal Co., 68 N. Y. 558. It is difficult to distinguish upon principle the case of Lumber Co. v. Hayes, 76 Cal. 387, 18 Pac. Rep. 391, from the case at bar. "Plaintiff, being a manufacturer of lumber, entered into contracts with various manufacturers of lumber to purchase so many thousand feet from each during the year 1881, and said parties agreed not to manufacture during said time any other lumber to be sold in the four counties where plaintiff was doing business. The sole object and consideration in entering into these contracts was for the purpose of increasing the price of lumber, limiting the supply, and giving the plaintiff control of the lumber market within the territory specified." Chief Justice SEARLS, in holding one of the contracts void, said: "With the results naturally flowing from the laws of demand and supply, the courts have nothing to do; but when agreements are resorted to, for the purpose of taking trade out of the realm of competition, and thereby enhancing or depressing prices of commodities, the courts cannot be successfully invoked, and their execution will be left to the volition of the parties thereto."

After plaintiff had introduced the contract in evidence and rested, defendant was granted a nonsuit upon two grounds: (1) That no proof of actual damage was of

fered, and the clause of the contract fixing liquidated damages is void, under sections 1670 and 1671 of the Civil Code. (2) That the contract is void, as being in restraint of trade and against public policy. Section 1670 of the Civil Code provides: "Every contract by which the amount of damage to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided in the next section." Section 1671: "The parties to a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when from the nature of the case it would be impracticable or extremely difficult to fix the actual damage. The allegation of the complaint that "it was understood and agreed between plaintiff and defendant at the time of making the contract that, owing to the nature of the case, it would be impracticable and extremely difficult to fix the actual damage," added no merit to the pleading, and its denial in the answer was unnecessary labor. Whether a contract is such that, "from the nature of the case," it would be impracticable or extremely difficult to fix the actual damage sustained by a breach thereof, is a question of fact, which must be determined in each particular case; and for the purpose of determining this question the court must examine the attendant and surrounding circumstances under which the contract was entered into, as well as the terms of the contract itself. Parties can. not by their arbitrary agreement preclude such examination by the court, or avoid the provisions of the statute. Brick Co. v. Moore, 75 Cal. 205, 16 Pac. Rep. 890; Eva v. McMahon, 77 Cal. 472, 19 Pac. Rep. 872. In the present case we think that, when the plaintiff rested, the "nature of the case," as presented by the terms of the contract, and its breach as admitted by the answer, was such that the court could decide as a fact that it was neither extremely difficult nor impracticable to fix the actual damage sustained by the plaintiff by reason of the defendant's breach of the contract. The refusal of the defendant to deliver the bags may have deprived the plaintiff of its commissions for selling, and under certain circumstances it may have suffered other damage; but we can imagine no case where any damage could have resulted to the plaintiff by reason of a breach of this contract, and which the plaintiff would have been entitled to recover in a court of law, where it could be said that it was impracticable or extremely difficult to fix the actual damage. Is the contract void as being in restraint of trade and against public policy? This question, when the motion for a nonsuit was made, was to be determined by an examination of the terms of the contract itself. We have already decided that it was so corrupted by the bad company with which it associated, as set forth in the answer of defendant, as to be beyond the pale of the law at that time; but at an earlier age, when it appears in the complaint, no stain or blemish is found to discolor it. The plain

blocks 33 and 25, being subdivided into lots. The lots are of different sizes; some of the blocks being divided into a greater number of lots than others. Appellants claim that the unsubdivided blocks 33 and 25 are “lots," within the meaning of that part of the mortgage above quoted, and so subject to release, in accordance with its terms.

We concur: BEATTY, C.J.; HARRISON, J. (90 Cal. 181)

ONTARIO LAND & IMP. Co. v. Bedford et al. (No. 13,692.) (Supreme Court of California. July 10, 1891.) MORTGAGE-RELEASE-FORECLOSURE SALE.

1. A mortgage of property that had been platted into lots and blocks provided that the mortgagor should be entitled to a partial release of the mortgage on payment of a certain sum for each lot released. The blocks contained 32 lots each, but a few of the blocks had not been subdivided into lots. Held, that such unsubdivided blocks were not "lots," within the meaning of the release provision of the mortgage.

2. Code Civil Proc. Cal. § 694, which provides that at execution sale the judgment debtor may direct in what order the property shall be sold applies also to foreclosure sales where the decree does not specify any order of sale.

In bank. Appeal from superior court, San Bernardino county; C. W. C. ROWELL, Judge.

Chas. J. Perkins and H. C. Rolfe, for appellants. Waters & Gird, for respondent.

DE HAVEN, J. There are appeals in this case from a judgment in favor of plaintiff, foreclosing a mortgage, from an order refusing defendants' motion for a new trial, and also from an order of the court denying the motion of defendants to set aside a sale of the mortgaged premises made under an execution in the action. The mortgage covers separate parcels of land in what is known as "Ontario Colony,' and contains a provision by which the mortgagees agree to "release from the lien of this mortgage those parts, portions, or subdivisions of said mortgaged premises designated on said plat of said town of Magnolia, as fronting on Euclid avenue, upon the payment to said parties of the sum of two hundred dollars for each of said lots. All lots fronting on First, Second, and Third streets, north of D street, upon the payment to them of one hundred and twenty dollars for each of said lots; all lots fronting on First, Second, and Third streets, north of D street, upon the payment to them of one hundred and forty dollars for each of said lots; all lots fronting on Fourth street, upon payment to them of ninety dollars for each of said lots; and all lots fronting on Fifth and Sixth streets, and Camper's avenue, upon the payment to them of eighty dollars for each of said lots." The map referred to shows that the town of Magnolia is laid off into streets and

1. The word "lot" may undoubtedly be so used in a conveyance as to mean the entire premises conveyed, whether such premises consist of a farm or even a block in a city. But the ordinary meaning of this word, when used with reference to town or city property, is a subdivision of a block according to the map or survey of such town or city; and there is nothing upon the face of this mortgage to indicate that it was used in any different sense by the parties thereto. The map of the town of Magnolia is expressly referred to, and, for the purpose of construing the mort. gage, must be deemed a part of it. This map shows that there are town lots fronting upon all the streets named in that part of the mortgage relating to releases, and, as these answer or satisfy the description given to the parcels subject to release, the mortgage must be construed as referring to them; and the amount to be paid for the release of each lot refers to a town lot, as designated on the map, and not to an entire block. To hold that block 33 is a lot would enable the defendants to secure its release upon payment of the same sum as is provided for the release of the one thirty-second part of the adjoining block 34; and, while it would have been competent for the parties to have made such an agreement, the intention to do so is not to be inferred from the use of a word which, in ordinary acceptation, as applied to town property such as this, conveys a different meaning.

2. The judgment in this case did not mention the particular manner or order in which the several parcels of the mortgaged property should be sold. The record shows that the attorneys for the defendants directed the officer making the sale to sell the lots separately, and also the order in which they should be sold. These directions were disregarded, and the defendants subsequently moved the court. to set aside the sale because of the failure of the officer to follow such instructions. The motion was denied. This ruling of the court was erroneous. The process under which the judgment in this class of cases is enforced is provided for in section 684 of the Code of Civil Procedure, and the subsequent section 694,1 which is a part of the same chapter dealing with the general subject of the execution of judgments, is applicable to sales of real property under judgment of foreclosure; and when, as in this case, the judgment is silent as to the manner or order in which the separate parcels shall be sold, the judgment debtor