Kofsky v. Smart & Final Iris Co.

McCOMB, J.

This appeal is from an order granting a preliminary injunction restraining defendant from violating the Unfair Practices Act by selling cigarettes below cost with intent to injure competitors and to destroy competition.

We assume, for the purposes of this appeal only, that the record discloses the following facts:

Plaintiff and defendant were competitors in the wholesale tobacco business and in the sale of other products. Defendant sold cigarettes at less than cost in violation of the Unfair Practices Act in order to injure competitors and destroy competition. Plaintiff also had sold cigarettes and other merchandise below cost with a like intent thereby being guilty of violating the Unfair Practices Act.

[531]

Questions:

First:

Since plaintiff had violated the Unfair Practices Act of the State of California, would the unclean hands doctrine, to wit, that equity will not aid one party or another to a transaction which is illegal or contrary to public policy where the parties are equally at fault, but will leave them just where it finds them, apply so as to prevent the granting of the preliminary injunction in favor of defendant?

No.

In the instant ease the following provisions of the Business and Professions Code are applicable:

Section 17043 reads: “It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.”

Section 17078 reads: “If it appears to the court upon any application for a temporary restraining order, or upon the hearing of any order to show cause why a preliminary injunction should not be issued, or upon the hearing of any motion for a preliminary injunction, or if the court shall find, in any such action, that any defendant therein is violating, or has violated, this chapter, then the court shall enjoin the defendant from doing all acts which are prohibited by the section, or sections, of which any provision thereof is being violated, or has been violated, by the defendant.”