Laird v. Steinmann

WOOD, J.

Prior to February 5, 1946, defendants Edward Steinmann and Abe Goldberg were owners of a laundry business known as the Red Shop Towel Service, in which business they laundered shop towels or wiping rags used by service stations, garages and industrial plants. On said date they sold the business, including the good will, to plaintiff for $22,500. They agreed, as a part of the consideration for the agreement, that they would not carry on a laundry business in the county of Los Angeles for a period of five years after February 1, 1946. The agreement was in writing. Plaintiff paid the purchase price to defendants. At the time of said sale, and prior thereto, the plaintiff was operating a laundry business in Los Angeles known as California Overall Cleaning Company in which business he also laundered shop towels or wiping rags used by service stations, garages and industrial plants, and he also laundered coveralls, overalls and other work clothing. In November, 1947, defendants commenced the operation of a coverall and work clothing laundry in Los Angeles at the place where they had conducted the business which they sold to plaintiff.

This is an action to enjoin defendants from carrying on an industrial laundry business in Los Angeles County and to recover damages for breach of the contract. Judgment was for plaintiff as follows: (1) enjoining the defendants from engaging in any phase of the industrial laundry business in Los Angeles County until February 1, 1951; and (2) for damages in the sum of $5,200. Defendants appeal from the judgment. They also gave notice of appeal from an order denying their “motion to strike” the first amended complaint, and from an order overruling their demurrer to said

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complaint. Said orders are not appealable, and the purported appeals therefrom are dismissed.

Appellants contend that their agreement not to carry on a laundry business is contrary to public policy, is void and unenforceable. Their argument is to the effect that even though they agreed not to carry on a laundry business and even though they received a large sum of money for their agreement the plaintiff is not entitled, under the agreement, to be protected with respect to the work clothing part of his laundry business which he was operating at the time the agreement was made, since he did not purchase any good will of a work clothing laundry business from defendants. Section 16601 of the Business and Professions Code provides: “Any person who sells the good will of a business may agree with the buyer to refrain from carrying on a similar business within a specified county ... in which the business so sold has been carried on, so long as the buyer, or any person deriving title to the good will from him, carries on a like business therein.” Appellants argue also that the business of laundering shop towels or rags for use in industrial businesses or plants is not a business similar to that of laundering work clothing for use in industrial businesses or plants. The court found that the laundry business carried on by defendants (appellants) “is similar to the business conducted by them at the time of the sale to plaintiff and is similar to the business and the good will thereof which plaintiff purchased from defendants, and competes with plaintiff in the operation of plaintiff’s business.” The evidence supported said finding.