Harrison v. Cook

BISHOP, J. pro tem.

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Defendant Homer Cook has appealed from that provision of the judgment that denied him any relief on his cross-complaint and also from those provi

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sions of the judgment that tied his hands so that in the future he can never make any use of the five promissory notes that were the main basis of his cross-complaint. We have concluded that because of his breach of the contract of which the promissory notes were an integral part, the judgment was proper and should be affirmed.

This is a judgment roll appeal and we gather the facts partly from those agreed upon in the pretrial statement, mostly from the 44 findings of fact with which the trial court rendered its decision. It appears that defendant Homer Cook for a period of some 36 years was identified with the Cook-Nichols Company, which was at first a partnership, then a corporation. It was engaged in the electrical wholesale supply business in the City of Pasadena and defendant Homer Cook was first a partner; then, sometime before 1957 he became the owner of substantially all the common stock of the company.

In September of 1957 defendant Homer Cook entered into a contract with six of the plaintiffs whereby he sold, they bought, all his stock in the Cook-Nichols Company. We need not note how much stock each of the six acquired, but for it they, all told, agreed to pay the defendant $40,000 and to give him five promissory installment notes, totalling $75,000 of which each bore one or two signatures of the plaintiffs as makers. Two of the plaintiffs were to sign one of the notes as guarantors. We are especially interested on appeal in the following provision of the contract:

“16. Agreement not to Compete. Cook agrees that so long as Buyers are not in default of any of the terms of this agreement, that he shall not establish or conduct or lend his name to any business organization doing business in Los Angeles, Orange, San Bernardino, Riverside or Ventura Counties which is competing or attempting to compete with any line of business now engaged in by the Company.”

The sale was consummated September 25, and the plaintiffs who were to acquire the stock of Cook-Nichols Company did so and undertook operation of the company. The promissory notes and a collateral security agreement were also executed on that day. For three months thereafter several of those who had previously been employed by the company continued in its service. Among them were Wilbur Cook, son of defendant, and Patricia Cook, his son’s wife. In October, Wilbur asked his father to loan him $20,000 to start up his own business and that sum was promised him. In December he advised his father, the defendant, that he was going to open up a business