Consolidated Photographic Industries, Inc. v. Marks

California Court of Appeal Feb 18, 1952 No. Docket Nos. 18550, 18551Published

Before: Moore

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Holding. The court held that the respondents, as successors in interest to the original buyer of a business, were entitled to enforce the seller's covenant not to compete under Business and Professions Code section 16601, but that the injunction against the corporate defendant was overbroad because the evidence failed to establish that the corporation was the alter ego of the seller.

Issues

Whether a covenant not to compete is enforceable by successors in interest to the original buyer of a business's good will.
Whether a corporation can be enjoined from competing based on an officer's personal covenant without proof that the corporation is the officer's alter ego.

Disposition. Modified and affirmed

Quotations verified verbatim against the opinion

“Respondents are entitled to the benefit of Marks' covenant with Twentieth Inc., to refrain from engaging in a competing photo business.”

109 Cal.App.2d 310 (1952) 240 P.2d 718 CONSOLIDATED PHOTOGRAPHIC INDUSTRIES, INC. (a Corporation) et al., Respondents,

ROBERT MARKS et al., Defendants; ATLAS PHOTOGRAPHIC INDUSTRIES, INC. (a Corporation) et al., Appellants. WINSTON E. GRIFFITH et al., Respondents,

ROBERT MARKS et al., Defendants; ATLAS PHOTOGRAPHIC INDUSTRIES, INC. (a Corporation) et al., Appellants.

Docket Nos. 18550, 18551. Court of Appeals of California, Second District, Division Two.

February 18, 1952. [311] Kenneth N. Chantry and Gerson Marks for Appellants.

Warner, Peracca & Cowan and Keatinge, Arnold & Zack for Respondents.

MOORE, P.J.

By the judgment herein Robert Marks was "enjoined and restrained until November 1, 1952, from engaging in the photo finishing business in the County of Los Angeles." Atlas Photographic Industries, Inc. was enjoined from employing Marks "as an officer, agent or otherwise" and from servicing specified photographic accounts in Los Angeles County. Both have appealed on the grounds that Mr. Marks' covenant not to compete with his vendee is void, and that section 16601 of the Business and Professions Code does not protect respondents' prior business from competition by Marks or his codefendants.

On October 27, 1947, appellant Marks as the sole owner of a photofinishing concern operating under the fictitious name of Twentieth Century Photo Laboratories entered into a written agreement for the sale of such business including [312] its tangible assets and good will to Twentieth Century Photo Laboratories, Inc., a corporation, hereafter referred to as Twentieth Inc. In that agreement Marks also covenanted not to engage in the photofinishing business in Los Angeles County for a period of five years.

Consolidated Photographic Industries, Inc. v. Marks

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MOORE, P.J.

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