Eldridge v. Johnston

• Decision Date: 28 May 1952
• Citation: 195 Or. 379,245 P.2d 239
• Parties: ELDRIDGE et al. v. JOHNSTON.
• Court: Oregon Supreme Court

Page 239

245 P.2d 239

195 Or. 379

ELDRIDGE et al. v. JOHNSTON.

Supreme Court of Oregon.

Argued and Submitted in Pendleton, May 6, 1952.

Decided May 28, 1952.

S. H. Burleigh, of La Grande, argued the cause for appellants. On the brief were Dixon & Burleigh, and R. D. H. Swindley, all of La Grande.

Charles R. Cater, of La Grande, argued the cause and filed a brief for respondent.

Before BRAND, C. J., and HAY, LATOURETTE, WARNER and TOOZE, JJ.

TOOZE, Justice.

This is a suit for injunction, brought by D. W. Eldridge, individually, and D. W. Eldridge, Hazle B. Eldridge, John L. Eldridge, and D. W. Eldridge, Jr., partners, dba Eldridge Packing Company, as plaintiffs, against Harold Johnston, as defendant, to restrain defendant from carrying on a meat business in the counties of Union, Umatilla, Baker, and Wallowa, Oregon, in competition with plaintiffs, in violation of contract. The trial court entered a decree in favor of defendant; plaintiffs appeal.

Plaintiffs are engaged in the meat-packing business, with their principal place of business located in La Grande, in Union county, Oregon. Their operations extend into several parts of the state of Oregon, and, in particular, into the counties of Union, Umatilla, Baker, and Wallowa. They buy livestock, slaughter the same and process the meat, and sell the processed meat to customers. Defendant owns a small farm near Hermiston, in Umatilla county, and operates a slaughterhouse thereon. He buys livestock, slaughters the same, and sells meat in Umatilla county in competition with plaintiffs.

Prior to and on November 15, 1941, the Grande Ronde Meat Company, a corporation, owned and operated a meat-packing plant in La Grande, consisting of land, packing plant, barns, feed sheds, yards, and other outbuildings suitable to the meat-packing business, fixtures and equipment, and a stock of goods and merchandise. One F. A. Epling was the principal stockholder in and the manager of said corporation. For three years continuously immediately prior to November 15, 1941, defendant had been employed as the traveling salesman for the corporation. Prior to that time and beginning about the year 1929, defendant had been employed in the meat business in the state of Florida. He was thoroughly experienced as a salesman of meat products, and was in close contract with the trade built up by the Grande Ronde Meat Company. During the latter months of his employment with that corporation, defendant was paid $150 per month as compensation for his services. Also, during a part of 1941, plaintiff D. W. Eldridge was temporarily employed by the corporation, and became associated with defendant in the work of that organization.

In the fall of 1941, plaintiff D. W. Eldridge entered into negotiations with Epling for the purchase of the entire business of the Grande Ronde Meat Company, including the lands, buildings, equipment, and stock of goods and merchandise. While these negotiations were in progress, said plaintiff frequently conferred with defendant in regard thereto, and proposed to defendant that he remain connected with the business in the event of its purchase by plaintiff. As to this, defendant, as a witness on his own behalf, testified on direct examination as follows:

'Q. Who purchased the plant that is now known as the Eldridge Packing Company from the Grande Ronde Meat Company? A. D. W. Eldridge, Sr.

'Q. And you had nothing to do with that purchase? A. No, sir.

'Q. Had D. W. talked to you prior to his purchase of the thing? A. Yes, he had.

'Q. Will you tell the Court what was said? A. Well, Mr. Eldridge had talked to me. The deal was in progress between he and Epling--and whether I would want to stay or not, and what kind of a deal we could work out for us if he completed his deal with Mr. Epling.

'Q. Was anything said at that time about a partnership? A. Yes, sir, there was.

'Q. Will you tell the Court what was said? A. Well, he told me that he would form a partnership, which would be some sort of working agreement so that I could at some time own an interest in the plant. At least it was called a partnership all the time.

'Q. He led you to believe that you would be a partner in the plant? A. Yes, sir.

'Q. And what was the money arrangement? Were you to be paid, or what was to be the situation? A. I was supposed to draw so much per week, which I believe at that time was $50.00, and that was a very low wage at that time, and I was--I was supposed to pay him five dollars a week on my stock, and then the net profit from the company was supposed to pay for the balance of my stock.

'Q. Was a partnership agreement ever entered into? A. Well, just what we have here. That was the only agreement we ever had.'

On November 15, 1941, the Grande Ronde Meat Company, as seller, and plaintiff D. W. Eldridge, as purchaser, entered into a conditional sales contract of sale and purchase, whereby the seller sold to the purchaser the entire business of the seller, including lands, buildings, equipment, etc., for the sum of $45,000, plus the inventoried value of the stock of goods and merchandise then on hand. The contract provided for the payment of the purchase price in monthly installments according to a schedule therein set forth. Title to all the property remained in the seller until the purchase price was paid in full. Immediate possession, however, was delivered to the purchaser, and thereafter the purchaser and his associates conducted the business. Defendant was employed as head salesman at the agreed salary of $50 per week.

On November 15, 1941, plaintiff and defendant entered into an agreement whereby defendant agreed to purchase an interest in said business. Defendant was wholly without funds with which to pay for such interest, and it was agreed that he might pay therefor out of the profits, plus weekly cash payments of $5. This agreement was reduced to writing and executed between plaintiff D. W. Eldridge and defendant in February, 1942, and is as follows:

'This contract made and entered as of date November 15, 1941 by and between D. W. Eldridge, as party of the first part, and Harold Johnston, as party of the second party [sic], Witnesseth:

'That whereas D. W. Eldridge as of date November 15, 1941, purchased from the Grande Ronde Meat Company the packing plant, equipment and inventory of the packing plant of the said company at La Grande, Oregon, under a contract of purchase, and is now operating the said plant under the name of Eldridge Packing.

'And it further appearing that the parties hereto desire to enter into a contract whereby the second party is to receive a working interest in said business.

'Now therefore, in consideration of the mutual covenants one to the other, it is hereby contracted and agreed between the parties as follows, to-wit:

'That said business shall be capitalized on the basis of $51,500.00, and that the party of the first part hereby agrees to sell unto the second party an interest therein on the basis of $5,000.00 of said capitalization, same to be sold, paid for and delivered as follows, to-wit:

'The said second party shall pay to the first party the sum of $5.00 per week, cash to be applied on said capital interest, and in addition thereto, there shall be applied thereon the proportionate earned net dividends from said business that would be apportioned to said interest, same to be applied on a monthly basis, said cash payments and said monthly application of earned net dividends to be applied from time to time and as herein provided, until said sum of $5,000.00 shall have been paid in full, without interest.

'It being further provided that in the event the second party resigns as an employee of the organization and prior to the time that said interest shall have been paid for in full, or should die, that then and in that event the said second party, or his executors or administrators, shall have repaid to him, or them, without interest the cash that he has paid on said interest after such resignation. However, it is specifically provided that he is not to receive any payment whatsoever for any earned dividends from the business that may have been applied on said purchase price.

'It being further provided that in the event the contract with the Grande Ronde Meat Company for the purchase of said property is forfeited and becomes null and void, that all rights of said second party under this contract shall cease at the same time, and there shall be no obligations on the part of the first party hereunder.

'It is further provided that the party of the first part shall act as the general manager in the conduction of the business of said packing plant, and shall have full charge of the operation of the business.

'It is further provided that the interest of the second party as created hereby cannot be assigned by the second party prior to its full payment, without the written consent of the party of the first part, as this contract is personal with the party of the second part and runs to him only.

'In witness whereof the parties hereto have hereunto set their hands and seals to this and another instrument of the same tenor and date.

'Dated at La Grande, Oregon, this ___ day of February, 1942.

'[Sgd.] D. W. Eldridge (SEAL)

Party of the First Part

[Sgd.] Harold Johnston (SEAL)

Party of the Second Part.'

On January 31, 1942, there was duly recorded in the official records of Union county a certificate of assumed business name, in words and figures as follows:

'Notice is hereby given, that the undersigned, D. W. Eldridge, John Eldridge and Harold Johnston, will conduct the business of, and are the sole owners of the business known as Eldridge Packing Company, in the City of La Grande, Union County, Oregon, and so conducted under the name of Eldridge Packing Company, and the true and real names of the owners of the said business are D. W. Eldridge, John Eldridge and Harold Johnston. The said D. W. Eldridge, John Eldridge and Harold Johnston are the...