Dutch Maid Bakeries, Inc. v. Schleicher

• Decision Date: 01 December 1942
• Docket Number: 2199
• Citation: 58 Wyo. 374,131 P.2d 630
• Parties: DUTCH MAID BAKERIES, INC. v. SCHLEICHER ET UX
• Court: Wyoming Supreme Court

131 P.2d 630

58 Wyo. 374

DUTCH MAID BAKERIES, INC. v. SCHLEICHER ET UX

No. 2199

Supreme Court of Wyoming

December 1, 1942

APPEAL from the District Court, Laramie County; V. J. TIDBALL Judge.

Action by Dutch Maid Bakeries, Inc., a corporation, against Harry C Schleicher and another to restrain defendants from manufacturing and dealing in bakery goods in the City of Cheyenne, during a period ending December 31, 1943. From a judgment for defendants, plaintiff appeals.

Affirmed.

For the appellant, there was a brief and an oral argument by John U Loomis of Cheyenne.

In the latter part of 1937, respondent Harry C. Schleicher made an agreement with Omar, Incorporated (then called National Baking Company), to form a corporation to be called Dutch Maid Bakeries, Inc., which was to buy and operate certain bakeries then owned by Wigwam Bakery, Inc., and certain other bakeries then owned by Harry Schleicher. Omar, Incorporated was to own 51% of the stock of the new corporation and Schleicher was to own 49%. Schleicher was to be a director as well as President and Manager of the new corporation, and the other directors and officers were to be nominees of Omar Incorporated. This agreement was carried out, and in the contract of purchase of the Schleicher Bakeries, Schleicher and his wife agreed that they would not directly or indirectly engage in the retail or wholesale bakery business in competition with the buyer for a period of five years after January 1, 1938, within the cities of Cheyenne, Wyoming and Scottsbluff, Nebraska, nor within the trade territories of the aforesaid cities. The new corporation commenced the operation of said bakeries under the presidency and management of Schleicher. The Omar, Incorporated loaned it money from time to time in the amount of $ 17,000, it originally having contributed $ 25,000 in cash for stock issued to it. The new corporation did not prosper and became involved in debt. Thereupon a termination of the agreement between Omar, Incorporated and Schleicher with respect to the new corporation was agreed upon. Schleicher was continued as manager at a reduced salary. Schleicher surrendered to Omar, Incorporated his stock in the new company which he had theretofore transferred to Omar, Incorporated as collateral for a loan. Thereafter Omar, Incorporated sold all of the stock of Dutch Maid Bakeries to Wigwam Bakery, Inc., and Schleicher's employment was then discontinued. In July, 1939, Schleicher in violation of his agreement with Dutch Maid Bakeries, Incorporated, opened a bakery business in Cheyenne, Wyoming. This action is brought for an injunction to restrain Schleicher and wife from continuing that business. Respondents set up defenses alleging a violation of an agreement that he was to be employed at a salary of $ 100.00 per week as manager and that he should not be discharged without cause, or a hearing; that he was induced to enter into said agreement by misrepresentation made by plaintiff's agents and attorneys; that said agents and attorneys had hindered and interfered with his management of the business, thus rendering it difficult for him to manage the business successfully; that plaintiff failed to file an acceptance of the Wyoming Constitution. Respondents filed a cross-petition alleging the foregoing defenses as grounds for damages. The trial court found in favor of respondents on the ground that plaintiff had not done equity and dismissed the action. The court found against defendants in a cross-petition. The trial court erred in not granting plaintiff an injunction and an award for damages against respondents for violating their agreement not to compete with plaintiff in the bakery business. 2 Pomeroy's Equity Jurisprudence, 3d Ed. Sec. 934; Feenaughty v. Beall (Ore.) 178 P. 600; Flaerty v. Libby (Me.) 81 A. 166; Francisco v. Smith (N. Y.) 38 N.E. 980; Harris v. Theus (Ala.) 43 So. 131; Holliston v. Ernston (Minn.) 144 N.W. 415; Marvel v. Jonah (N. J.) 90 A. 1004; Laundry Co. v. Schmeling (Wis.) 109 N.W. 540; Niles v. Fenn, 33 N.Y.S. 857; Robinson v. Brick Co. (C. C. A. 4) 127 F. 804; Rowe v. Toon (Iowa) 169 N.W. 38; Standard Slide Corporation v. Appel, 180 N.Y.S. 431. Injunctions have been granted in cases where the restrictions involved businesses, and time and limits of application, as follows: Industrial Corp. v. Teichholtz, 164 N.Y.S. 289; Bloom v. Home Ins. Agency (Ark.) 121 S.W. 293; Francisco v. Smith (N. Y.) 38 N.E. 980; Hickey v. Brinkely (Nebr.) 129 N.W. 553; Stove & Range Co. v. Stove Co. (Pa.) 57 A. 77; Robinson v. Brick Co. (C. C. A. 4) 127 F. 804; Wills v. Forester (Mo.) 124 S.W. 1090; Zimmermann v. Gerzog, 43 N.Y.S. 339. It is not necessary to show actual damages to entitle the plaintiff to an injunction. Johnston v. Blanchard (Cal.) 116 P. 973; Locke v. Murdoch (N. M.) 151 P. 298. Nor is it necessary that it specifically appear in the contract of sale that the good will of the business was sold. Wall v. Chapman (Okla.) 202 P. 303. The plaintiff may recover damages up to the date of decree. Diamond Match Co. v. Roeber (N. Y.) 13 N.E. 419; Hickey v. Brinkley (Nebr.) 129 N.W. 553; Loutzenhiser v. Peck (Wash.) 154 P. 814; Wilkinson v. Colley (Pa.) 30 A. 286; Wills v. Forester (Mo.) 124 S.W. 1090; Wirth v. Wirth (N. Y.) 192 N.E. 297; Zimmerman v. Gerzog, 43 N.Y.S. 339. Damages may be proved by evidence showing a reasonable probability based on human experience that business loss resulted to the plaintiff from the breach of the defendant. Loutzenhiser v. Peck (Wash.) 154 P. 814; Hitchcock v. Anthony, 83 F. 779; Wittenberg v. Mollyneaux (Nebr.) 83 N.W. 842; Salinger v. Salinger (N. H.) 45 A. 558; McDaniel v. United Rys. Co. (Mo.) 148 S.W. 464. Damages are clearly proven in the case at bar. There is no evidence to sustain the court's finding that an unwritten employment agreement, containing the condition that the defendant was not to be discharged without cause, and that he should be notified in writing of any charges against him, was made, or that defendant was led to believe that such an agreement would be reduced to writing or embodied in a private memorandum. A promise cannot properly be applied where the circumstances do not warrant an inference of such a promise and where there are facts inconsistent with the contract to be implied. 12 Amer. Juris, 500. The business under the management of respondent had lost about $ 27,000 in less than a year of operation. It was a good cause for terminating his employment. State v. O'Hern (Mont.) 65 P.2d 619, 625. There was no evidence to sustain the court's finding that plaintiff's agent interfered in the management of the business. Such interference could not constitute a defense to the plaintiff's action in any event. Williams v. McNally, 39 Wyo. 130. There is no evidence to sustain a finding that representations were made or breached to the effect that plaintiff would put large sums into the bakery with which to operate and expand the business. Plaintiff carried out its agreement to pay accounts and notes of the defendant. The court's finding that plaintiff had not done equity and had not come into court with clean hands is not sustained by the evidence. The judgment of the district court should be reversed with instructions to make a decree permanently enjoining the defendant, Harry C. Schleicher, in accordance with his agreement and giving judgment to the plaintiff for damages on the basis of $ 17.50 a day from July 1, 1939, to the date of such final decree.

For the respondents, there was a brief and an oral argument by Walter Q. Phelan of Cheyenne.

Defendants contend that plaintiff's evidence fails to show any damages caused by defendants' alleged breach of contract. Plaintiff proved that plaintiff suffered a daily loss of $ 42.00 for six months prior to July 1, 1939, also that plaintiff's average daily loss after defendants opened up on July 1, 1939, was $ 59.00. Plaintiff cannot recover damages for an increase in losses, but only for a decrease in profits due solely to defendants' alleged breach. There being no proof of either fact, the trial court had nothing to base damages on except conjecture. There were other occurrences after plaintiff opened up that could have caused it to suffer losses: (a) establishment of union wages; (b) higher prices of flour because of war; (c) evacuation of Fort Warren; (d) competition by other bakeries, particularly the Town Talk and Rainbo from Denver, entering the field; (e) general decline in business in the Cheyenne vicinity. A court will not issue an injunction to prevent an injury when no injury has been proven. 32 C. J. 33; Grater v. School District (Colo.) 173 P. 714; McLean v. Canal Co. (Colo.) 98 P. 16; Longshore Printing Co. v. Howell (Ore.) 38 P. 547; In re Penn. Dev. Co., 220 F 222. Irreparable injury alleged must be real, unavoidable and certain. Kelly v. Conner (Tenn.) 123 S.W. 622; Healy v. Smith, 14 Wyo. 263. There was no proof of this. Plaintiff failed to pay outstanding debts of defendants in accordance with its agreement. Debts occurring prior to December 10, 1937, were defendants' obligations assumed by plaintiff. Debts occurring after December 10, 1937, were plaintiff's obligations. Courts will apply payments to debts least secured in the absence of agreement of parties. 21 R. C. L. 101; Anspacher v. Utterback (Ky.) 68 S.W.2d 15; Long v. Republic, 160 A. 860. It would have been folly for defendant to put his business into a corporation which he did not control, if his employment in that corporation was as unstable as plaintiff's contention would make it. The evidence shows that plaintiff transferred his interest to the corporation upon misrepresentations made by the promoters. 7 R. C. L. 80-83; Daniel v. Daniel (Ky.) 226 S.W. 1070; Kefuff v. Whitley (Mich.) 189 N.W. 76; ...