Langendorf United Bakeries, Inc. v. Phillips

THOMPSON, J.

Plaintiff brought this action to restrain the defendants from soliciting former customers of the Phillips Baking Company to purchase from appellants bread and

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other bakery products, and this is an appeal by appellants from a preliminary injunction granted against them.

The circumstances giving rise to the litigation, according to the allegations of the complaint and supporting affidavits, are not greatly complicated. Some time prior to September 7, 1935, the Phillips Baking Company had been engaged in the baking and sale of bread and other bakery products in the city and county of San Francisco, and also prior to that date had become financially involved and had filed a proceeding in the United States District Court under section 77-B of the Bankruptcy Act (see 48 U. S. Stats., p. 912) for a corporate reorganization. During the pendency of this proceeding, one Milton Meyer made an offer to purchase the “baking equipment, machinery, trucks, accounts receivable, inventory, good will, copyrights, registered trade-marks and all appurtenances of said business” for the sum of $35,000. On September 7th, after an order was made approving and confirming the sale to Meyer, the Phillips Baking Company, by S. M. Phillips, its president, and I. S. Phillips, secretary, executed a bill of sale covering the property already described to Milton Meyer, who subsequently conveyed the same to the respondent. From affidavits it is made to appear that before the appellant S. M. Phillips would accept the Meyer offer he had to be assured that he would be forgiven certain obligations owed by him and the directors and employees to the corporation. However, in consideration of such release, Meyer exacted from appellant S. M. Phillips, who apparently owned most of the stock, a promise that he would not engage in the baking business “in San Francisco and vicinity under the name of Phillips Baking Company, or any similar name, or any name in which the name of Phillips is used”, and further that he would not “use any of the following names in connection with his products, to wit: Phillips, Indian, Veribest, Electriebake, or any of the names copyrighted or otherwise, designs or color schemes heretofore and now used by said Phillips Baking Company”. Within such restrictions, appellant was granted the right to engage in the baking business in San Francisco under the name of “First Lady Bread” or “Major Phillips”. It is also alleged that on September 7th, the Phillips Baking Company had approximately thirteen trade routes, which trade routes were designated in trade route books, some of which books were