1 Reported in 214 N.W. 754. Plaintiff appealed from an order sustaining separate demurrers of the defendants on the ground that the complaint does not state a cause of action.
The complaint alleges: A subsisting agency contract between plaintiff and defendant corporation which, in the event of any question arising threatening to interfere with their mutually satisfactory business relationship, could be terminated only by notice of 60 or 10 days depending on whether plaintiff was an exclusive Chevrolet dealer. The business relations between plaintiff and defendant corporation were mutually satisfactory. The contract required the corporation to furnish cars and parts which plaintiff agreed to advertise and sell. Plaintiff purchased special tools and equipment for repairing Chevrolet cars. He advertised extensively and had a valuable business. Defendant Sander was plaintiff's competitor. Defendants conspired and agreed to destroy and take away plaintiff's business. Sander knew of plaintiff's contract with the corporation, and defendants agreed to acquire plaintiff's business for Sander. Pursuant to this plan and the agreement between defendants, the corporation wrongfully repudiated its contract with plaintiff without giving the notice therein required for cancelation. Plaintiff's business was thereby destroyed by the wrongful acts of defendants. This was done with actual malice toward plaintiff and such malice of the two defendants was well known to each and adopted by both of them.
Every act done by a business man in diverting trade from a competitor to himself is an act intentionally done, and when successful is an injury to the competitor because to that extent it lessens his profits. But it is not wrongful. Trade must be free and unrestricted, but the competitor should operate within the zone of fair *Page 262 dealing. Competition justifies the use of all lawful and fair means to gain the trade that would otherwise go to a competitor in business.
The mere fact that plaintiff suffered a loss does not render defendants' acts unlawful or actionable. That depends upon whether the acts in and of themselves are unlawful. There is no injury in law resulting in damages except that which flows from an unlawful act. Bohn Mfg. Co. v. Hollis, 54 Minn. 223,55 N.W. 1119, 21 L.R.A. 337, 40 Am. St. 319.
Ertz v. Produce Exch. of Minneapolis, 79 Minn. 140,31 N.W. 737, 48 L.R.A. 90, 79 Am. St. 433, holds that a person having no legitimate interests to protect may not lawfully ruin the business of another by maliciously inducing his patrons and third persons not to deal with him.
Joyce v. G.N. Ry. Co. 100 Minn. 225, 110 N.W. 975,8 L.R.A. (N.S.) 756, holds that wrong and malicious interference by a stranger with contract relations existing between others, causing one to commit a breach thereof, amounts to an actionable tort, and that an action against the party to the contract for a breach thereof is not the exclusive remedy but the wrongdoer may be pursued. We previously held that it was equally unlawful to so prevent the making of a contract. Gray v. Building Trades Council, 91 Minn. 171, 97 N.W. 663, 63 L.R.A. 753,103 Am. St. 477, 1 Ann. Cas. 172. The Joyce case was followed in Mealey v. Bemidji Lbr. Co. 118 Minn. 427, 136 N.W. 1090; Twitchell v. Nelson, 126 Minn. 423, 148 N.W. 451, 601. In the latter case it is held that the wrongful interference with the contract relations of others causing a breach is a tort. It does not use the word "malice" but Faunce v. Searles, 122 Minn. 343,142 N.W. 816, is cited as authority. The act is termed wrongful and being the wilful violation of a known right is, in law, the equivalent of being done maliciously. In the Faunce case we said if two defendants, by concert of action and with malice, procure a party to breach his contract, they are liable to the injured party as joint tort-feasors.
In Victor Talking Machine Co. v. Lucker, 128 Minn. 171,150 N.W. 790, we quoted from the Joyce case: "To justify an act of interference *Page 263 of this sort, it must be founded upon some lawful object." The court then also followed the Ertz case and extended the rule by saying:
"This was a notice by one competitor telling buyers not to do business with another. Such conduct, without more, is not actionable. One man may lawfully seek the business of a competitor and may tell the `trade' not to buy of his competitor, so long as he indulges in no threat, coercion, misrepresentation, fraud or other harassing methods."
In Boasberg v. Walker, 111 Minn. 445, 127 N.W. 467, we held that in an action based on conspiracy the plaintiff must show that the purpose of the conspiracy was unlawful or, if lawful, that the means adopted for its accomplishment were unlawful. If the result to be obtained be lawful and lawful means be adopted for its accomplishment, it is immaterial what motive prompted those engaged therein.
In Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946,22 L.R.A. (N.S.) 599, 131 Am. St. 446, 16 Ann. Cas. 807, it was held that where a man starts an opposition place of business, not for the sake of profit to himself, but regardless of loss to himself, and for the sole purpose of driving his competitor out of business, he is guilty of a wanton wrong and actionable tort. In such a case he would be doing an act which cannot be judged separately from the motive which actuated him.
In Roraback v. Motion Picture Mach. Op. Union, 140 Minn. 481,483, 168 N.W. 766, 169 N.W. 529, 3 A.L.R. 1290, we said:
"No person or combination of persons has the right maliciously to injure or destroy the business of another by acts which serve no legitimate purpose of his own."
A person may use any lawful means to accomplish a lawful purpose, although the means adopted may incidentally cause injury to another, but he may not intentionally injure or destroy the other's business to accomplish an unlawful purpose. Canellos v. Zotalis, 145 Minn. 292, 177 N.W. 133. The absence of conspiracy, malice or *Page 264 ulterior motive is emphasized in Scott-Stafford Op. H. Co. v. Minneapolis M. Assn. 118 Minn. 410, 136 N.W. 1092. The wrongful interference with the contract relations of others causing a breach is a tort. Bacon v. St. Paul Union Stockyards Co.161 Minn. 522, 201 N.W. 326; Minnesota W.G. Co-Op. M. Assn. v. Radke,163 Minn. 403, 204 N.W. 314; Carnes v. St. Paul Union Stockyards Co. 164 Minn. 457, 205 N.W. 630, 206 N.W. 396.
In the Carnes case it is said:
"The term `malice,' as used in the class of cases mentioned, means nothing more than the intentional doing of a wrongful act without legal justification or excuse, or otherwise stated the wilful violation of a known right. Whether a wrongdoer's motive in interfering is to benefit himself, or to gratify his spite by working mischief to another, is immaterial, malice in the sense of ill-will or spite not being essential. Numerous cases thus defining malice are collected in 15 R.C.L. pp. 56 and 57."
Where a person does an act solely to impose civil liability, which otherwise would not exist, upon another, such conduct is wrong and, being followed by damages, is actionable in tort. Silliman v. Dobner, 165 Minn. 87, 205 N.W. 696.
In Minnesota W.G. Co-Op. M. Assn. v. Radke, 163 Minn. 403,204 N.W. 314, we held that it was not a tort to buy a staple wholesome commodity simply because the buyer knew the owner was under contract to sell to another — the buyer not having held out any questionable inducement.
Where a party does a wrongful act resulting in damages to another there is liability. The damage alone does not establish liability. If the act is rightful there is no liability. If a person adopts lawful means to accomplish a lawful result the motive is immaterial. It is also immaterial, if while so acting, another is incidentally injured. Liability may rest upon an unlawful use of a legal right.
Defendant Sander had a perfect right to negotiate and make an agency contract with defendant corporation. If he did this for his own welfare and resorted to no wrongful means to accomplish the purpose he has not subjected himself to liability and the situation *Page 265 is not changed by the fact that, as an incident thereto, plaintiff was damaged. But did he so act?
Likewise, the defendant corporation had a legal right to breach its contract with plaintiff and pay the resulting damages. It also had the legal right to make an agency contract with Sander for the purpose of advancing its own interests. But did it so act?
The allegations of the complaint are in effect that defendants' purpose was solely to destroy plaintiff's business. If such was the case, it was wrongful and, if followed by damages, which are alleged, liability would follow.
If the corporation deliberately breached its contract it subjected itself to a certain definite liability to plaintiff, but that liability rests on a cause of action other than that mentioned in the complaint.
Under his contract with the corporation plaintiff had built up a valuable business. His relations with the company were mutually satisfactory. Sander, a stranger to the contract, wished to put an end to the business relations between plaintiff and the company and induced the company to repudiate the contract. If he had done this for no other purpose than to deprive plaintiff of the benefits of the contract and of his established business, under all the cases Sander would be liable for his wrongful interference in the contract relations between plaintiff and the company. But according to the complaint Sander had another motive. Not only did he wish to deprive plaintiff of his business, but he also desired to appropriate the business to himself. It cannot be said that this desire furnishes an excuse or justification for an act which would otherwise be unlawful. On the contrary, it accentuates the inherent wrongfulness of Sander's conduct. Under these circumstances, it would be contrary to the decided weight of authority to hold that Sander was serving his legitimate interests or that his conduct was free from wrong, or that, since plaintiff has a cause of action against the company for breach of contract, Sander should go scot-free. It seems clear that elementary principles of business ethics demonstrate the unlawfulness of Sander's conduct, and the law ought to insist on as high a standard of business morality as prevails among reputable business men. *Page 266
The liability of the corporation under the allegations of the complaint is equally apparent, for it is alleged that it was a party to the agreement with Sander to deprive plaintiff of his business, and by its acts enabled Sander to appropriate the business.
Many of the early cases involving this question embrace the breach of contracts for personal services between master and servant. The rule was extended, beginning with Lumley v. Gye, 2 El. Bl. 216, 22 L.J.Q.B. 463. See 2 Harv. L.Rev. 19. It is now recognized that there is no distinction between a defendant wilfully inducing a third person to break any other contract between him and the plaintiff. The right of competition is not the right to destroy contractual rights. Beekman v. Marsters,195 Mass. 205, 80 N.E. 817, 11 L.R.A. (N.S.) 201, 122 Am. St. 232,11 Ann. Cas. 332, and note. The contract between the plaintiff and defendant corporation imposed duties and rights. This contract and the benefits therefrom constituted a property right. An intentional interference therewith by one not having an equal or superior right is wrongful and precipitates liability. The intentional procurement of the breach of an existent contract without just cause or excuse makes him who causes the breach liable for resulting damages, and this is so even though he promoted his legitimate interests. When one has knowledge of the contract rights of another his wrongful inducement of a breach thereof is a wilful destruction of the property of another and cannot be justified on the theory that it enhances and advances the business interests of the wrongdoer. Fraud, misrepresentation, intimidation, coercion, obstruction, molestation, or the wilful and intentional procurement of violation of contractual relations are practices which competition does not authorize. R an W Hat Shop v. Sculley,98 Conn. 1, 118 A. 55, 29 A.L.R. 551; Lamb v. S. Cheney Son,227 N.Y. 418, 125 N.E. 817; Angle v. C. St. P.M. O. Ry. Co.151 U.S. 1, 14 Sup. Ct. 240, 38 L. ed. 55; Bitterman v. L. N.R. Co.207 U.S. 205, 28 Sup. Ct. 91, 52 L. ed. 171, 12 Ann. Cas. 693; Dr. Miles Medical Co. v. John D. Park Sons Co. 220 U.S. 373,31 Sup. Ct. 376, 55 L. ed. 502; Berry v. Donovan, 188 Mass. 353,74 N.E. 603, 5 L.R.A. (N.S.) 899, and note, *Page 267 108 Am. St. 499, 3 Ann. Cas. 738; Wells Richardson Co. v. Abraham (C.C.) 146 F. 190; Wheeler-Stenzel Co. v. American Window Glass Co.202 Mass. 471, 89 N.E. 28; Dunshee v. Standard Oil Co. (Iowa)126 N.W. 342; Johnson v. Aetna Life Ins. Co. 158 Wis. 56,147 N.W. 32, Ann. Cas. 1916E, 603, and note; 38 Cyc. 508; Raymond v. Yarrington, 96 Tex. 443, 72 S.W. 580, 73 S.W. 800, 62 L.R.A. 962, and note, 97 Am. St. 914; Gore v. Condon, 87 Md. 368,39 A. 1042, 40 L.R.A. 382, 67 Am. St. 352; West Virginia Trans. Co. v. Standard Oil Co. 50 W. Va. 611, 40 S.E. 591, 56 L.R.A. 804,88 Am. St. 895; 15 R.C.L. 60, § 20; Martens v. Reilly, 109 Wis. 464,84 N.W. 840; Knickerbocker Ice Co. v. Gardiner Dairy Co.107 Md. 556, 69 A. 405, 16 L.R.A. (N.S.) 746, and note; Macauley Bros. v. Tierney, 19 R.I. 255, 31 A. 1, 37 L.R.A. 455,61 Am. St. 770. In Tubular Rivet Stud Co. v. Exeter Boot Shoe Co. (C.C.A.) 159 F. 824, the court said:
"But where there is either a binding contract for employment for a specific time or a valid contract for the sale and delivery of goods, or other valid executory contract, the interference of a third party lays a direct basis for a suit, precisely as with any other direct blow knowingly struck against any property interest which the law protects."
First Nat. Bank of Hastings v. Corp. Sec. Co. 120 Minn. 105,139 N.W. 296, holds that a complaint challenged by demurrer will be held sufficient if the facts alleged and those fairly inferable from the allegations give rise to a cause of action.
We hold that the complaint states a cause of action.
Reversed.