California Linoleum & Shades Supplies, Inc. v. Schultz

NORTON, J.,

pro

tem.

This is an appeal from a judgment entered in favor of defendant after an order sustaining a demurrer to plaintiff’s complaint without leave to amend. The demurrer was upon the ground that the complaint did not state facts sufficient to constitute a cause of action.

The complaint discloses that the gist of plaintiff’s cause of action arises out of a state of facts which, succinctly stated, is as follows: That plaintiff and appellant is a corporation engaged in the business of manufacturing window shades, awnings and linoleums in Los Angeles County; that the California Window Shade Company was a corporation located in the same county and engaged prior to the sale thereof to plain■tiff in a similar business as that of plaintiff; that prior to the incorporation of the California Window Shade Company the business in which it was engaged was conducted by

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the defendant and two other individuals as a copartnership; that the California Window Shade Company sold its business and the goodwill thereof to the plaintiff and appellant and agreed in the contract of sale that it would not engage in the same business in the county of Los ^Angeles as long as defendant was engaged in said business.

The plaintiff further alleged in his complaint that the partnership referred to herein incorporated the California Window Shade Company and transferred their business to it merely for the purpose of more conveniently handling it and “that while it was in form a corporation, yet in truth and in fact it was a copartnership.” The issued capital stock was issued to the three copartners in equal shares and they constituted the board of directors of the corporation.

The complaint seems to proceed upon the theory that the copartnership continued to exist after the formation of the corporation and that the sale of the goodwill and the business formerly conducted by the partnership by the California Window Shade Company was in fact a sale of the partnership interest. However, there are no facts alleged supporting such an inference. Prom the facts alleged it appears that after the corporation was formed, the copartnership was absorbed by it and its business carried on and conducted by it; that its stock was issued and officers elected, the defendant being the president and Van Stigt, one of the co-partners, secretary thereof; that the contract of sale of the business and goodwill purchased by plaintiff was executed by it and that plaintiff dealt with it as a corporation.