Handyspot Co. v. Buegeleisen

WARNS, J. pro tem.

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This is an appeal from an order granting a preliminary injunction, and enjoining appellant from soliciting the trade of those of its former customers whose accounts had been transferred to respondent pursuant to a written agreement between the parties.

Prior to November 13, 1950, appellant had an established business which consisted of selling various drugs, sundries,

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and novelty items to certain retail establishments in the counties of Mendocino and Sonoma. Appellant regularly serviced the stores to whom it sold such goods, and, as needed, replenished the stock which was displayed on racks furnished therefor by appellant.

On November 13, 1950, appellant and respondent executed a written agreement under the terms of which appellant was to sell all its merchandise to respondent, and “to use its best efforts to transfer all of its customers” to respondent, who was to pay $5,000 for the transfer of at least 40 of approximately 65 large accounts set forth in a list attached to the agreement. Prices not in excess of $100 each were fixed for smaller unnamed accounts. No compensation was to be paid for any account whose monthly sales were less than $50. The contract provided that appellant would conduct the business for its own benefit and profit until December 15, 1950, but thereafter it would do so solely as agent for, and on behalf of, respondent until the ‘1 completion ’ ’ and1

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closing ’' of the agreement, which was to be no later than January 31, 1951, except that appellant was to continue “to do business on the same basis as formerly, with those customers not yet transferred” to respondent. There was no express sale of good will and no covenant that appellant would not engage in a competitive business.

The present action was brought to enjoin appellant from soliciting the trade of customers whose large accounts had been transferred to respondent, and from attempting to dissuade them from doing business with respondent. Appellant interposed a general demurrer to the first amended complaint on the ground that its complained of conduct was not enjoinable since the written agreement which was incorporated in respondent’s pleading by attachment and reference thereto did not contain a covenant against competition.