Mahlstedt v. Fugit

California Court of Appeal May 8, 1947 No. Civ. 15692Published

Before: Wilson

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Holding. The court held that the sale of a business's assets and equipment includes the transfer of its good will by implication, justifying a non-competition injunction, but clarified that the seller retains the right to permit others to use his name provided he is not personally involved in the competing business.

Issues

Whether the sale of business assets and equipment includes the transfer of good will by implication.
Whether a non-competition agreement lacking specified territory or duration is enforceable.
Whether the transfer of good will automatically includes the right to use the seller's name.
Whether the seller may permit third parties to use his name after selling his business.

Disposition. modified and affirmed

Quotations verified verbatim against the opinion

“If the property and business to which a good will adheres are transferred, the good will passes to the transferee as an incident although not specifically mentioned in the contract of sale.”

“If such a contract is indefinite as to time or territory the court will construe it in such manner as to make it valid.”

WILSON, J.

Defendant has appealed from a judgment granting an injunction restraining him for a period of ten years after May 6, 1941, in Los Angeles County, (1) from entering into or conducting any orchard heater business, either as manager or owner, and from soliciting or diverting any of plaintiff’s orchard heater business or customers; (2) from acting as salesman or representative of any company or person other than California Orchard Heater Company, the fictitious name under which plaintiff was doing business; (3) from using or permitting the use of the name “C. A. Fugit,” “Fugit,” “Fugit Smokeless Orchard Heater Company” or “Fugit Smokeless Heater” in connection with the business of manufacturing or conducting any orchard heater business; (4) from advertising or causing to he advertised in any manner any of said names.

[564]

On May 6, 1941, appellant and respondent entered into an agreement in writing reading as follows:

“This agreement made this sixth day of May 1941 between 0. A. Fugit, of Alhambra, Calif., hereinafter known as the ‘Seller’ and J. F. Mahlstedt, of Los Angeles, Calif., hereinafter known as the ‘buyer’ wherein both the buyer and the seller hereby agree to the hereinafter stipulated terms of this agreement wherein the seller agrees to sell and transfer to the buyer and the buyer agrees to accept the following items of property and for such transfer agrees to pay to the seller the sum of $5,000.00 as follows: $2,000.00 on the signing of this contract, and the balance of $3,000.00 at the rate of $1.00 per pipe line heater when sold whether it be a Fugit type or a California Orchard Heater type at the selling price established by the California Orchard Heater Company.

“On payment of the initial sum of $2,000.00 the seller agrees to release and deliver to buyer free and clear of all incumbrances, the following articles:

“All salable goods

hand as of May 3, 1941 as used and sold by the seller in the carrying-on of the business known as the Fugit Smokeless Orchard Heater Company.

“All tools and equipment on hand as of May 4, 1941 as used for the manufacture and installation of pipe line orchard heater systems, including 1 tractor, 1 trailer for tractor, 1 pipe bending machine, 1 flaring machine and all miscellaneous tools, two generators, hose, gauges complete.

Mahlstedt v. Fugit

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WILSON, J.

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