Fidelity Credit Assurance Co. v. Cosby

California Court of Appeal Mar 9, 1928 No. Docket No. 5129.Published

Before: Wood

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Holding. A contract containing provisions in restraint of trade is only void to the extent of those provisions, and such provisions may be severed if they are distinct from the remainder of the agreement. Furthermore, a requirement that equipment remain at a specific location during the term of a conditional sale contract is a reasonable protection for the seller and does not constitute an illegal restraint of trade.

Issues

Whether a contract containing a provision in restraint of trade is void in its entirety or only to the extent of the restraint.
Whether a contractual requirement to keep equipment at a specific location during the term of a conditional sale contract constitutes an illegal restraint of trade.

Disposition. reversed

Quotations verified verbatim against the opinion

“If the contract carries a provision in restraint of trade it is “to that extent” void. If the objectionable provision can be severed from the remainder of the contract the part which is not so tainted can be enforced.”

“The provision requiring that the equipment sold be kept at a definite location during the life of the contract affords but a reasonable protection to the seller.”

WOOD, J.,

pro

tem.

Defendant’s demurrer to the complaint was sustained without leave to amend and plaintiff appeals from the judgment entered in defendant’s favor. The action was commenced to recover the sum of $561.76, alleged to be the balance due on a conditional sale contract by which plaintiff’s assignor, the Mutual Refining Company, sold to defendant a pump and certain other gasoline service station equipment. Defendant paid the sum of $15.00 upon the execution of the contract and agreed to pay the balance of the purchase price at the rate of $15.00 per month. The contract contained the provisions which are usually found in conditional sales contracts. Most of the provisions are contained in 12 enumerated paragraphs. For

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the purposes of this decision it will not be necessary to set forth more than the first seven, which are as follows:

“It is further mutually promised and agreed as follows:

“1. That the title to all of said property shall remain in Seller until the complete performance by the Purchaser of all of the Purchaser obligations under this agreement.

“2. Time is of the essence of this contract with respect to the performance of the obligations herein assumed by or imposed upon the Purchaser and acceptance of the Seller of any delinquent payments shall not constitute a waiver

the same of this provision, nor shall it entitle the Purchaser to a notice or demand before the forfeiture by the Seller for or on account of a subsequent delinquency, and should the Purchaser be in default in the performance of any of the terms or conditions hereof on his part to be performed, then and in such case the Seller shall have the right to declare immediately due and payable the entire amount of principal and interest then remaining unpaid.

“3. Said Purchaser agrees to save the Seller harmless from any and all liability, including all costs and attorney’s fees, for all injury or damage to persons or property caused in any manner by the use of said property. Said Purchaser shall have no right to and shall not attempt to sell, assign, pledge, mortgage or otherwise dispose of this contract or of said personal property, or any part thereof, during the existence of this agreement, without the written consent of the Seller.

Fidelity Credit Assurance Co. v. Cosby

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WOOD, J.,

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