This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
So-called voluntary associations are often found, the members of which agree not to deal with those who are not members of their association, or, in some cases, of an allied association. Such associations generally enforce discipline by means of fines or threats of expulsion. Whether a non-member, whose business is wrecked by his being excluded from or voluntarily remaining out of such association can have any relief against such association, is a question upon which there is a conflict of authority. In some states, especial stress is laid on the right of any man or any number of men, acting singly or in combination, to deal only with such persons as they may please. "It is perfectly lawful for any man (unless under contract obligation, or unless his employment charges him with some public duty) to refuse to work for or deal with any man or class of men as he sees fit. This doctrine is founded upon the fundamental right of every man to conduct his own business in his own way, subject only to the condition that he does not interfere with the legal rights of others. And, as has already been said, the right which one man may exercise singly, many, after consultation, may agree to exercise jointly and make simultaneous declaration of their choice."1 If X gives to B the choice between remaining in the association X, and ceasing to do business with A, on the one hand, and leaving such association and doing business with A, on the other, X's act in giving such choice to B is said in some jurisdictions not to be a wrongful act; and A has no right of action against X if B elects to remain in such association and to cease doing business with A.2 It is held that one who is not a member of a voluntary association of dealers in live stock, who had a rule not to recognize any yard trader unless a member, and to expel members who dealt with those who are not members, can not have an injunction against such association, although his business is wrecked because practically all the persons with whom he can do business are in such association and will not deal with him.3 A retail lumber associa-tion agreed not to buy of any wholesale dealer who should sell to any customers or dealers not members of such association at any point where a member of such association did business. A, a wholesale dealer, sold at such a point to one outside the association. B, the secretary of the association, demanded that A pay into the treasury of the association ten per cent. of the amount received from such sales; and on A's refusal so to do, B declared his intention of notifying the members of the association of A's conduct. A sued for an injunction. It was held that injunction should not be given.4 A was a master plumber not a member of the local association nor of the national association, of which the local association was a branch. The national association had passed a resolution that none of its members would buy material from any firm selling to any persons other than master plumbers, which by construction was held to mean master plumbers in the association. A sued to enjoin the local association from using this resolution to prevent firms from selling material to A. The injunction was refused.5
Stonemasons ( 2 K. B. 88, 732) - and still less is it a defense to the wilful and malicious infringement in combination of that legal right of persona] freedom of action which they claim for themselves, but which others are entitled to quite as fully and as absolutely as they are." Larkin v. Long  A. C. 814.
7Brennan v. United Hatters, 73 N. J. L. 729, 9 L. R. A. (N.S.) 254, 65 Atl. 165.
1 Bohn Mfg. Co. v. Hollis, 54 Minn. 223, 234. 40 Am. St. Rep. 319, 21 L. R. A. 337, 55 N. W. 1119. See to the same effect, Klingel's Pharmacy v. Sharpe, 104 Md. 218, 64 Atl. 1029; Mc-Carter v. Baltimore Chamber of Com merce, 126 Md. 131, 94 Atl. 541.
In other states, however, it has been held that the conduct of such voluntary associations is unlawful if it is intended to wreck the business of others by inducing third persons to cease dealing with such others.6 A combination of persons for the purpose of causing a malicious injury to another by running his business, is held to be actionable at common law as well as by statute.7 A combination of a number of dealers to maintain prices and to prevent supplies from being furnished to dealers, who will not join their organization, is illegal.8 An action for damages lies by a dealer who has been prevented from obtaining articles necessary in his business by a combination of other dealers formed for the purpose of maintaining prices, if such combination so acts in order to compel him to become a member thereof.9 If an association of dealers imposes fines upon its members, for dealing with those who are not members, and such fines are so large as to amount to coercion, such association is liable to persons whose trade or business is injured by their conduct.10 Thus it has been held that a druggist who was not a member of the druggists' association of a certain city, could have an injunction to prevent the association restraining or from sending circulars out to wholesale dealers, notifying them that if they continued to deal with plaintiff the druggists' association would not buy from them.11 It has been suggested in argument that a distinction should be made between cases where the association attempts to influence the action of its own members only, and those where the association attempts to influence the conduct of those outside of the association.12 This distinction has, however, been repudiated on the ground that the system of fines and expulsions amounts to coercion, and that no logical distinction can be drawn between coercion of those outside of an association, and coercion of a minority of the members of an association by the majority.13 An association of granite manufacturers, including practically all those in that business with whom A could have dealings, made a rule that they would not sell to or deal with persons not members of their association. The association notified A, who owned the plant for polishing granite, that he could not do any polishing until he joined the association. They did not try to affect the conduct of any not members of the association, but a system of fines compelled the members of the association to comply with the resolutions passed by the majority. It was held that A could recover actual damages from those persons who had, by passing and enforcing such resolution, wrecked his business.14 It has also been held that an action for damages would lie at common law against a combination of wholesalers who agreed to sell to or deal with certain retailers only.15 It has been suggested that in order to make such combinations unlawful, so that a third person may have a right of action against the combination or the members thereof, the action of the combination must be malicious. Thus a combination of cattle dealers who refused to sell to A, a butcher, and induced a third person to refuse to deal with A, was held actionable if malicious, otherwise not.16 This distinction is open to the criticism that if "malice" means personal ill will, or a desire to injure, this rule makes motive the controlling factor, instead of the doing of a wrongful act, followed by damage caused thereby; while if "malice" means the doing of a wrongful act without just excuse, the rule begs the entire question, as the point to be determined is whether any wrongful act has been done, and whether any just excuse exists. If the article whose sale is contracted for is one in which a legal monopoly exists, such as a proprietary or a patent medicine, it has been held that a contract entered into with a retail druggists' association, requiring the proprietor not to sell to "cut-rate" druggists, is not an unlawful interference with the business of a "cut-rate" druggist.17 Members of an illegal organization to maintain prices will be enjoined from instigating a strike among the union workmen of one who has been a member of such organization but who has withdrawn therefrom.18
2Klingel's Pharmacy v. Sharpe, 104 Md. 218, 64 Atl. 1029; McCarter v. Baltimore Chamber of Commerce. 126 Md. 131, 94 Atl. 541.
3Dounes v. Bennett, 63 Kan. 653, 88 Am. St. Rep. 256, 55 L. R. A. 560, 66 Pac. 623.
4Bohn Mfg. Co. v. Hollis, 54 Minn. 223, 40 Am. St. Rep. 319, 21 L. R. A. 337, 55 N. W. 1119.
5Macauley v. Tierney, 19 R. I. 255,
61 Am. St. Rep. 770, 37 L. R. A. 455, 33 Atl. 1. (The doctrine of competition was invoked as the ground for refusing such injunction. Bohn Mfg. Co. v. Hollis, supra, was cited and followed.)
6Martell v. White, 185 Mass. 255. 64 L. R. A. 260, 69 N. E. 1085.
7 State, ex rel. Durner, v. Huegin, 110 Wis. 189, 62 L. R. A. 700, 85 N. W. 1046.
8 Klingel's Pharmacy v. Sharpe, 104 Md. 218, 118 Am. St. Rep. 309, 7 L. R. A. (N.S.) 976, 64 Atl. 1029.
9Klingel's Pharmacy v. Sharpe, 104 Md. 218, 118 Am. St. Rep. 399, 7 L. R. A. (N.S.) 976, 64 Atl. 1029.
10Martell v. White, 185 Mass. 255, 102 Am. St. Rep. 341, 64 L. R. A. 260, 69 N. E. 1085.
11 Brown v. Pharmacy Co., 115 Ga. 429, 90 Am. St. Rep. 126, 57 L. R. A. 547, 41 S. E. 553.
12 See argument in Boutwell v. Marr, 71 Vt. 1, 76 Am. St. Rep. 746, 43 L. R. A. 803, 42 Atl. 607, as discussed in opinion of the court.
13 Boutwell v. Marr, 71 Vt. 1, 76 Am. St. Rep. 746, 43 L. R. A. 803, 42 Atl. 607.