Ragsdale v. Nagle

Garoutte, J. This is an action to restrain the defendant from carrying on the business of searcher of records, or abstracter, in the county of Sonoma. An injunction as prayed for was issued by the trial court, and an appeal has been taken from the judgment and from the order denying a new trial.

The cause of action is based upon a certain contract entered into between plaintiff and one Brown upon the one side, and defendant Nagle upon the other. At the date of the contract both plaintiff and defendant were engaged in the business of abstracting in the county of Sonoma, and, in consideration of the sum of seven thousand dollars, Nagle transferred to Ragsdale and Brown the personal property then used by him in the business, also the goodwill; and he further covenanted that he would not carry on the business of searcher of records in Sonoma county, or the business of conveyancing in the city of Santa Rosa, so long as either Ragsdale or Brown should carry on a like business in said county. In accordance with the terms ef his agreement defendant ceased business for the time being, but some months thereafter reentered the field, and was actively engaged in the abstract business at the time this action was begun. Defendant denies that he has violated the terms of his agreement, and justifies his acts upon the plea that neither plaintiff [335]Ragsdale nor Brown was engaged in the business when he entered the field the second time. Upon this question it appears by the evidence that, prior to the contract with the defendant, plaintiff Ragsdale had transferred to a corporation known as the Sonoma County Abstract Bureau all the personal property used by him in the making of abstracts, and that subsequently to the contract with Nagle he transferred to this corporation all the personal property secured by him and Brown under said contract. And, to put the matter more concisely, defendant claims that neither Ragsdale nor Brown was engaged in the business of abstracting at the time he re-entered therein, but that their business had passed to the said corporation, and, consequently, he was absolved from the covenants of the contract.

1. The court found that during these times plaintiff had continuously carried on the business of making abstracts, searching records, and conveyancing in Son o ma county, and this finding meets with our approval. The evidence discloses that Ragsdale did business under the name of the Sonoma County Abstract Bureau prior to its incorporation, and that it was incorporated by him for the sole purpose of securing funds by placing the stock as collateral. He subscribed for all the stock save forty shares, which passed to the other four directors without consideration, they being accommodation directors only; that during this time, and up to the date of the aforesaid contract with the defendant, plaintiff had full and entire charge of the business, hired, paid, and discharged employees, appropriated the receipts, accounted to nobody, did not consult the directors, and in every way carried on the business as an owner and proprietor. This was all done, not only without objection by the directors of the corporation, but with their knowledge and consent. As far as conducting the business was concerned, the corporation was entirely passive, and, judged by the evidence, it certainly was a matter