Bradley v. Anglo-American Gas Control Co.

California Supreme Court Jun 5, 1894 No. No. 15449Published

Before: Harrison

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Holding. The court held that the plaintiffs stated a valid cause of action for the judicial cancellation of a contract under Civil Code section 3412, as the defendants' continued assertion of rights under the agreement despite their alleged breach created a reasonable apprehension of serious injury.

Issues

Whether a complaint seeking cancellation of a contract and injunctive relief states a cause of action when the defendants dispute the plaintiffs' right to terminate the agreement following an alleged breach.
Whether the plaintiffs are entitled to seek judicial cancellation of an agreement rather than relying solely on a contractual termination clause.

Disposition. reversed

Quotations verified verbatim against the opinion

“The plaintiffs have the right to a judicial declaration that the agreement has been violated by the defendants, and a consequent judgment for the cancellation of the agreement.”

“The threat of the defendants, that they will endeavor to enjoin the plaintiffs from disposing of the machines within the specified territory constitutes a reasonable apprehension that the instrument may cause injury to the plaintiffs.”

Synopsis

Cancellation of Instruments—Code Remedy—Multiplicity of Suits —Settlement of Controversy.—Under section 3412 of the Civil Code, a written instrument, in respect to which there is a reasonable apprehension that, if left outstanding, it may cause serious injury to a person against whom it is void or voidable, may, upon his application, he so adjudged, and ordered to he delivered up or canceled; and the fact that the plaintiff might successfully defend other suits in which the written instrument may he relied' upon is immaterial, the remedy provided for by the code being intended to strike at the basis oí all other suits, and in one controversy determine the rights of the parties for them all.

Id.—Agreement for Exclusive Right to Patented Machines—Breach of Contract—Termination.—Where the plaintiffs granted to the defendants the exclusive right to sell and dispose of patented machines throughout the Pacific Coast, on- the condition that the grantee would make faithful efforts to sell the machines within the same territory, an agreement by the grantee with the proprietor of a rival machine, with the intention of preventing the introduction and sale of the plaintiff’s machine within a portion of the territory, is such a violation of the agreement as to justify the plaintiff in treating it as terminated, and beginning an action for its cancellation.

Id.—Clause Giving Right to Terminate Agreement—Adverse Claim —Judicial Cancellation.—A clause in the instrument giving to the plaintiffs the right to terminate the agreement, upon a violation of its provisions, does not prevent the plaintiffs from seeking its cancellation by a judicial determination; and a claim by the defendants that, notwithstanding their violation, they possess all the rights conferred by the agreement, and dispute the right of the plaintiffs to terminate it, gives to the plaintiffs a right to invoke judicial action to cancel the agreement.

Id.—Threat of Injunction Suit—Apprehension of Injury—Defense Immaterial. —The threat of the defendants that they will endeavor to enjoin the plaintiffs from disposing of the matihines within the specified territory constitutes a reasonable apprehension that the instrument may cause injury to the plaintiffs, and the fact that the plaintiffs might successfully defend any injunction suit, or suits, in the various states covered by the agreement, is no objection to the remedy for cancellation of the instrument.

Id.—Damages—Preventive Relief—Joinder of Causes—Sufficiency of Complaint.—It is no objection to the complaint for the cancellation of an instrument that a judgment for damages and for preventive relief is sought in the same action; and if the allegations of the complaint are insufficient to entitle the plaintiffs to introduce proof of such damages, that fact does not impair the sufficiency of the complaint to establish their right to the equitable relief.

Harrison, J. The plaintiffs being the proprietors of letters patent issued to one Stott for a certain gas regulator or governor, entered into an agreement February [6307],1891, with the defendant Gaden by which they granted to him and his assigns the sole and exclusive right, during the life of said letters patent, to buy, sell, rent, and otherwise dispose of the said governor, for use within the state of California and other states constituting the Pacific Slope. Gaden did not receive the right to manufacture the governors, but it was provided that he should purchase from the plaintiffs all that he might require, and that, in case he failed to faithfully prosecute their introduction or sale, the plaintiffs might terminate the agreement and resume and enjoy all rights under it as fully as if it had never been made. Gaden assigned an interest in the agreement to the defendant Anglo-American Gas Control Company; and this corporation continued to act under the agreement until May, 1892, since which time it has ceased to purchase any of said governors; and in January, 1893, Gaden informed the plaintiffs that they would no longer use this governor in San Francisco. In pursuance of an agreement between these defendants and the other defendant, the Gas Consumers’ Association, the interest in said agreement, so far as it relates to San Francisco and the counties of Alameda and Marin, has been assigned to the last-named defendant. The complaint alleges that the Gas Consumers’ Association is a rival and competing corporation, and that the assignment to it and the agreement between it and the other defendants are for the purpose of freezing out and wrecking the Stott patents in the city of San Francisco and the counties of Marin and Alameda, and were made in the interest of this rival corporation, and are in violation of the provisions of the aforesaid agreement that Gaden and his assigns would faithfully introduce the said governors into the aforesaid territory, and that the effect of the transfer to the Gas Consumers’ Association is to exclude the Scott machines from this territory, and to entirely deprive the plaintiffs of any market therein. The plaintiffs notified the defendants that on account of their failure to diligently and faithfully push [631]the introduction and sale of the said Stott machines the said agreement was terminated, and that they resumed all the rights they had before it was entered into; but, notwithstanding such notice, the defendants still claim all the rights and interests secured to them by said agreement, and that said notice by the plaintiff's is inoperative, and threaten to bring an injunction suit against the plaintiffs if they should attempt to deal in or sell the said Stott machine within the foregoing territory. The plaintiffs thereupon brought this action to obtain a judgment for the cancellation of said agreement, and that it shall cease to have any force or binding effect, and that the defendants be perpetually enjoined from •claiming any thing by virtue thereof, and for damages. A demurrer to the complaint was sustained, and the plaintiffs have appealed.

Bradley v. Anglo-American Gas Control Co.

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