Balkema v. Deiches

California Court of Appeal Mar 2, 1949 No. Civ. 16540Published

Before: Dooling

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Holding. The court held that the evidence supported the trial court's finding that the husband had no vendible interest in his wife's business, rendering his non-competition covenant void under Business and Professions Code section 16600.

Issues

Whether the evidence supports the finding that the husband had no vendible interest in the business sold by his wife.
Whether a non-competition covenant signed by a spouse without a vendible interest in the business is void under Business and Professions Code section 16600.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

“It is conceded that under section 16600 the covenant of B. H. Balkema not to engage in a competing business in Long Beach is void unless he had a vendible interest in the business of Gibson’s Style Shop”

DOOLING, J. assigned.

On July 16, 1946, respondent Mayme Yoll Balkema and appellant Walter Deiches executed an agreement in writing whereby said respondent sold to appellant a ladies’ wearing apparel business known as Gibson’s Style Shop located in Long Beach, California, together with the assets and good will thereof. The agreement recites that the seller owns such business and her husband, the other respondent herein, is not mentioned in the agreement of sale as a seller or otherwise and is not a signatory of said agreement. However appended to the agreement of sale and signed contemporaneously therewith by respondent B. H. Balkema appears the following:

“The undersigned, B. H. Balkema, the husband of the Seller, named in the foregoing Agreement, does hereby agree

[429]

that he shall not for a period of at least two years from the date hereof, engage, directly or indirectly in any business competitive to the Business being sold by Seller . . . within the corporate limits of the City of Long Beach, California. ...”

On November 6, 1946, B. H. Balkema filed a complaint for declaratory relief against Deiches seeking a declaration that the above quoted covenant signed by him was illegal and void as in violation of section 16600 of the Business and Professions Code. Deiches filed a cross-complaint in which he prayed that B. H. Balkema be enjoined from engaging in Long Beach in a business competitive with Gibson’s Style Shop and also joined Mayme Voll Balkema as a cross-defendant seeking a reformation or rescission of the agreement of sale.

When the case came on for trial it was agreed by all parties that the court should first try the issue of whether B. H. Balkema had a vendible interest in Gibson’s Style Shop, it being conceded that if the court found that he had no vendible interest in the business that finding would dispose of the entire litigation. This single issue was tried and the court found that B. H. Balkema had no interest in the business sold to Deiches and accordingly gave judgment for him on his complaint and against appellant Deiches on the cross-complaint.

On this appeal the sole issue presented is whether the evidence supports the finding that B. H. Balkema had no vendible interest in the business sold by his wife to appellant. This question is pointed to section 16600 and 16601, Business and Professions Code, reading:

Balkema v. Deiches

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