Suburban Gas Service, Inc. v. Higgins

BARNARD, P. J. This is an application for a writ of supersedeas staying the enforcement of a preliminary injunction.

The Imperial Gas Company has been selling liquefied petroleum gas in the Hemet area of Riverside County for 23 years. From 1941 to 1945, E. D. Van Dorsten acted as its agent there. In 1945, Imperial appointed Van Dorsten as its distributor and sold to him certain equipment and a list of customers. The contracts provided that for 10 years he should act as sole distributor, and should buy gas only from Imperial; that if he violated the agreement Imperial might sell directly to, or serve, any customers in the area; and that a stated part of the purchase price need not be paid if he fully complied with the contracts.

Van Dorsten purchased only half of his gas from Imperial in 1948, less in 1949, and notice of default was given by Imperial. As a result of negotiations and $4,500 paid by Van Dorsten, a mutual release was executed in October, 1949, cancelling the 1945 contracts and completely releasing each party from all obligations or claims arising therefrom. Van Dorsten then sold his business to Suburban Gas Service, Inc., and Imperial began to solicit customers and sell gas in this area. [769]Fred Higgins had begun to work for Van Dorsten, delivering gas to customers, about a year before the distributor contracts of 1945 were executed. He continued so to work until April, 1949, when he was discharged by Van Dorsten. Some six months later he began to work directly for Imperial.

An action was brought to restrain Higgins and Imperial from soliciting any customers served by Higgins while in the employ of Van Dorsten. After a hearing on an order to show cause, a preliminary injunction was issued containing two parts. The first part restrains Higgins from soliciting, or selling or delivering to, any customers served by him while employed by Van Dorsten. The second part restrains Imperial from using Higgins in any way in that connection, and also from otherwise dealing with, or accepting orders from, any customers who had ever been served by Higgins, regardless of any other circumstance or condition.

The defendants seek a stay pending their appeal. They argue that the injunction as issued would deprive Imperial of its right to do business in this area, which it never abandoned and which was fully restored by the mutual release wiping out any previous limitation thereon; that the respondents are not in court with clean hands since their claims are based upon a violation of contract; and that Higgins acquired no confidential information the use of which could be restrained.