H. G. Fenton Material Co. v. Challet

121 P.2d 788, 49 Cal. App. 2d 410, 1942 Cal. App. LEXIS 822
CourtCalifornia Court of Appeal
DecidedJanuary 29, 1942
DocketCiv. No. 2739
StatusPublished
Cited by6 cases

This text of 121 P.2d 788 (H. G. Fenton Material Co. v. Challet) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
H. G. Fenton Material Co. v. Challet, 121 P.2d 788, 49 Cal. App. 2d 410, 1942 Cal. App. LEXIS 822 (Cal. Ct. App. 1942).

Opinion

GRIFFIN, J.

This is an action by plaintiff and appellant H. G. Fenton Material Company, a corporation, against defendants and respondents Paul Challet and Germaine Challet, husband and wife, and G. W. Billings and A. W. Billings, to enjoin respondents from operating or constructing a certain rock and gravel plant and from selling rock or gravel therefrom. Appellant, for a long time prior to the commencement of this action, had been engaged in the business of producing sand, rock and gravel for building and construction purposes and in operating several such plants in San Diego County. Some time prior to July 23, 1938, the respondents Paul Challet and Germaine Challet, under the name and style of Challet Concrete Service of San Diego, were engaged in a similar business in that county and were operating at a plant located in Otay Valley. Appellant and the Challéis on [412]*412July 23, 1938, entered into a written agreement appertaining to the sale of the Challet property and a ready-mix cement plant located thereon. Clause VI of the contract, signed by both Mr. and Mrs. Challet, is the important provision, as far as this appeal is concerned, and reads as follows:

‘ ‘ Seller, as a part of his sale, sells to Buyer and the Buyer purchases from the Seller the whole of the rock, sand, concrete and materials business now and heretofore operated by Seller, including the good will and full benefit thereof and Seller hereby covenants, promises and agrees to and with the Buyer that he will not either directly or indirectly, alone or with others, enter upon or engage in the rock, sand, gravel or concrete manufacturing business within the county of San Diego or city of San Diego, in the State of California, so long as the Buyer, or any person deriving title to the good will from him, carries on a like business therein, nor in any event within a period of ten years from this date. Seller further agrees to submit no bid or bids on outside public works, contracts or projects where in so doing he would be in direct competition with the Buyer, within San Diego County, within the period of time above specified.”

After the execution of the contract the possession of the premises and plant were surrendered to the appellant and the respondents Challet retired from the business. It is apparent from the evidence that notwithstanding the covenants so made by the respondents Challet, on or about October 25, 1939, and with the intention of engaging in the rock, sand, gravel and concrete manufacturing business within the county of San Diego in competition with the appellant, they purchased for $2,000, in Mrs. Challet’s name, a tract of land containing such a deposit of rock, sand and gravel. The tract was near to one of the plants of the appellant. Mrs. Challet claims that the money with which she purchased the property was her separate funds. The respondents Billings had been engaged in the trucking business in San Diego County since 1930. They claimed that for several years they had contemplated going into the sand and gravel business in order to find work for their trucks, and had bought a steam shovel and bunkers about two years prior- to the commencement of the present action; that a few months prior to March, 1940, one of the respondents, A. W. Billings, heard that Mrs. Challet had purchased the gravel land in Otay Valley; that [413]*413he called upon her for the purpose of negotiating a lease of the land; that no one invited him to contact her and he had not previously discussed with either Mr. or Mrs. Challet the possible use of the land; that he made a proposition to them to lease the land for the purpose of erecting a plant thereon and producing sand and gravel; that a few days later the lease was entered into; that before the execution of the lease, there was no discussion between the parties as to the employment of Paul Challet or in regard to any connection on his part with the enterprise. The lease was dated March 30, 1940, extended over a period of 99 years, and designated Germaine Challet as the lessor and Billings Truck Company, a copartnership, as the lessee. By its terms Mrs. Challet leased the property for the purpose of the lessees’ taking out, producing and removing sand, gravel, rock and other products thereof, and for which the lessees agreed to pay her 7% cents for each yard of sand, gravel, rock and other material removed from the land as rental thereof. The Challets borrowed $3,000 on certain property they owned, and Mrs. Challet loaned that sum to the respondents Billings to be used in the erection of the plant. This obligation was secured by a chattel mortgage on the plant and machinery. A note and mortgage representing that indebtedness was taken in the name of Frank Conde, the father of Mrs. Challet, which was later assigned to Mrs. Challet.

At the time of the trial of the case, the respondent Paul ChaHet was in the employ of the Billings, supervising the construction of the plant. The respondents all claim that no interest whatever was assigned or given to Paul Challet in the business or enterprise, and that his entire remuneration was agreed to be $40 per week; that the Billings Truck Company paid the salaries and wages of the men employed and all of the expenses of construction and for the machinery. On or about May 20, 1940, the respondents mutually agreed to cancel the lease and in lieu thereof entered into an agreement whereby Mrs. Challet should sell and transfer the leased land and deliver title to the Billings. This agreement was consummated. The consideration was a down payment of $200 and a further sum of $14,800 to be paid in amounts of $200 per month. The unpaid balance was secured by a deed of trust covering the land so sold.

A. W. Billings testified that the cost of the lease was too [414]*414great, and, therefore, decided to purchase the land outright. The trial court found generally that the transaction on the part of the Challéis was entered into with the intent of wrongfully profiting from their violation of the provisions of the contract which they had theretofore made with the appellant; that at the time of the commencement of the action the plant was being erected by the Billings with the intention of competing with the plaintiff in the sand, rock, gravel and concrete manufacturing business in the county of San Diego; that prior to March 30, 1940, the Billings examined and had full knowledge of the agreement between appellant and the Challéis and particularly paragraph VI thereof, but specifically concluded that “no conspiracy existed between the defendants.” From these facts and findings above mentioned the court concluded that the agreement between the appellant and the respondents Challet, which imposed restrictions against those particular respondents engaging in the rock, sand, gravel and concrete manufacturing business, was in all respects fair, reasonable, valid and binding; and that those defendants (Challéis) were not entitled, directly or indirectly, alone or with others, to engage in such business in the county of San Diego for a period of ten years, so long as plaintiff was carrying on a similar business therein; that the appellant was entitled to a decree .enjoining the respondents Challet from any violation of the provisions of clause VI of the contract and from being in the employ of the respondents Billings in the erection of the rock plant and from assisting them in any way relating to such business.

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Bluebook (online)
121 P.2d 788, 49 Cal. App. 2d 410, 1942 Cal. App. LEXIS 822, Counsel Stack Legal Research, https://law.counselstack.com/opinion/h-g-fenton-material-co-v-challet-calctapp-1942.