Freed v. Manchester Service, Inc.

• Decision Date: 17 November 1958
• Citation: 331 P.2d 689,165 Cal.App.2d 186
• Court: California Court of Appeals Court of Appeals
• Parties: Edward B. FREED, Plaintiff and Appellant, v. MANCHESTER SERVICE, Inc., a corporation, David Shusett et al., Defendants. David Shusett, Respondent. Civ. 23114.

Page 689

331 P.2d 689

165 Cal.App.2d 186

Edward B. FREED, Plaintiff and Appellant, v. MANCHESTER SERVICE, Inc., a corporation, David Shusett et al., Defendants David Shusett, Respondent.

Civ. 23114.

District Court of Appeal, Second District, Division 2, California.

Nov. 17, 1958.

Beardsley, Hufstedler & Kemble, Los Angeles, Edward B. Freed, Inglewood, Seth M. Hufstedler, Los Angeles, for appellant.

Leon Turret, Los Angeles, for respondent.

FOX, Presiding Justice.

In this action plaintiff seeks to recover damages from defendants for assertedly inducing one Gordon to breach his contract with plaintiff. Defendant Shusett's general demurrer to plaintiff's third amended complaint was sustained without leave to amend. ¹ Plaintiff has appealed from the order sustaining said demurrer without leave to amend and from the ensuing judgment of dismissal.

Plaintiff alleged that in July, 1950, the defendant Shusett (through his alter ego Manchester Service, Inc.) leased certain auto washrack facilities to Seymour Gordon for a five-year period. There were located on the same premises, but not included in this lease, a service station and an auto paint and body shop. On May 24, 1951, Gordon was evicted from possession of the washrack portion of the premises. Gordon, on that date, retained plaintiff, an attorney, to recover possession, and in the event of such recovery, to advise Gordon as to washrack operations and accounting procedure, plaintiff having had practical experience in such matters. On the next day, plaintiff and Gordon entered into a written 'Contract of Legal Retainer,' to the effect what if plaintiff was successful in obtaining possession for Gordon, plaintiff would thereafter be entitled to one half of the property so recovered. Thereafter the contract was orally modified so that Gordon would draw $80 per week before a division of profits. Through plaintiff's efforts, Gordon was restored to possession on or about June 1, 1951. Plaintiff continued to advise Gordon on the business aspects of the operation. Plaintiff further alleged that the operation of the washrack showed a profit during June and July and that Gordon paid plaintiff $100 on account thereof. Shortly thereafter defendants entered into a new lease with Gordon and another person, as copartners, which included the washrack and other facilities on the premises and terminated the prior lease of July, 1950, between Gordon and defendants, thereby extinguishing, so it is alleged, plaintiff's right to receive his share of the profits from Gordon's operation of the washrack.

Plaintiff alleged, although inartfully, that (1) defendants actually knew plaintiff had a contract with Gordon; (2) defendants intended to induce Gordon to breach his contract with plaintiff; (3) Gordon did in fact breach his contract; (4) plaintiff's rights were interfered with wrongfully; (5) the breach of the contract by Gordon was proximately caused by defendants' conduct; and (6) he suffered damages as a result thereof.

It is well settled in California that an action will lie for inducing a breach of contract although the means employed were in themselves lawful, unless there is sufficient justification for such conduct. Imperial Ice Co. v. Rossier, 18 Cal.2d 33, 35, 112 P.2d 631; Dominguez Estate Co. v. L. A. Turf Club, 119 Cal.App.2d 530, 541, 259 P.2d 962; Rest., Torts, § 766. Liability also exists for unjustifiable interference with contractual rights despite the fact that the contract is terminable at will. Speegle v. Board of Fire Underwriters, 29 Cal.2d 34, 39, 172 P.2d 867; Romano v. Wilbur Ellis & Co., 82 Cal.App.2d 670, 673, 186 P.2d 1012. Therefore, whether plaintiff's interest in the Gordon lease or his contract with Gordon was coupled with an interest or vested is immaterial and need not be considered. As stated at page 39 of 29 Cal.2d at page 870 of 172 P.2d in the Speegle case, supra, '[r]ecognizing that the fact that a contract is 'at the will of the parties, respectively does not make it one at the will of others,' [citations].'

As this is an appeal from a judgment of dismissal following the sustaining of a general demurrer to plaintiff's complaint without leave to amend, the primary question on appeal is whether or not sufficent facts were alleged to constitute a cause of action. Although no single California case sets forth in detail all the elements which ordinarily must be alleged in order to state a cause of action for inducing a breach of contract, a sufficient number of cases have dealt with the question, either directly or indirectly, so that it is possible to identify the allegations necessary in order for the complaint to withstand a general demurrer. Specifically, plaintiff must allege the existence of a valid contract (Collins v. Vickter Manor, Inc., 47 Cal.2d 875, 883, 306 P.2d 783; 28 Cal.Jur.2d 431; See 84 A.L.R. 1; 2 Witkin California Procedure, p. 1362); that the defendant had knowledge of the existence of the contract and intended to induce a breach thereof (Collins v. Vickter, supra, 47 Cal.2d at page 883, 306 P.2d at page 788; Imperial Ice Co. v. Rossier, supra, 18 Cal.2d at page 37, 112 P.2d at page 633; Augustine v. Trucco, 124 Cal.App.2d 229, 246, 268 P.2d 780; Romano v. Wilbur Ellis & Co., supra, 82 Cal.App.2d at page 674, 186 P.2d at page 1015; See Roberts v. Wachter, 104 Cal.App.2d 281, 289, 231 P.2d 540); that the contract was in fact breached resulting in injury to plaintiff (Collins v. Vickter, supra, 47 Cal.2d at page 883, 306 P.2d at page 788; Imperial Ice Co. v. Rossier, supra, 18 Cal.2d at page 39, 112 P.2d at page 634; Remillard-Dandini Co. v. Dandini, 46 Cal.App.2d 678, 679, 116 P.2d 641), and the breach and resulting injury must have been proximately caused by defendant's unjustified or wrongful conduct. (AUGUSTINE V. TRUCCO, SUPRA, 124 CAL.APP.2D AT PAGE 246, 268 P.2D AT PAGE 791²; 26 A.L.R.2d 1249.)

Unless it appears on the face of the complaint that a defendant's conduct was justified, justification is an affirmative defense. Collins v. Vickter, supra, 47 Cal.2d at page 883, 306 P.2d at page 788; 26 A.L.R.2d 1263, 1264; see Prosser, Torts, p. 735 (2d Ed.1955). This proposition is stated in the Collins case, supra, 47 Cal.2d at page 883, 306 P.2d at page 788, as follows: 'Whether or not [defendants] were privileged to cause the corporation to discontinue its relations with plaintiffs, * * * is a matter of defense, to be decided by a resolution of the factual issues presumptively involved. Their right, if any, to such privilege, does not affirmatively appear on the face of the complaint.'

In the case at bar, the complaint, as previously stated, did allege that (1) plaintiff had a contract with Gordon, (2) defendants knew of this contract, (3) defendants intended to induce its breach, (4) Gordon did breach the contract, (5) defendants' wrongful conduct was the proximate cause of the breach, and (6) plaintiff suffered damages. The above allegations were sufficient to state a cause of action in light of the California authorities to which reference has already been made unless it can be said that the acts of defendant Shusett were privileged and such fact affirmatively appeared on the face of the complaint. Hancock v. Burns, 158 Cal.App.2d 785, 323 P.2d 456.

The cases establish no precise formula or standard by which a defendant's conduct is to be evaluated in order to determine whether it was justified. The courts and legal writers often speak in terms of a 'balancing of interests,' (see, e. g., Masoni v. Board of Trade of San Francisco, 119 Cal.App.2d 738, 742, 260 P.2d 205; 41 Harv.L.Rev. 728, 745). The Restatement of Torts, § 767, cited in many California cases (e. g., Imperial Ice Co. v. Rossier, supra, 18 Cal.2d at page 36, 112 P.2d at page 633; Hancock v. Burns, supra, 158 Cal.App.2d 794, 323 P.2d 461; Masoni v. Board of Trade of San Francisco, supra, 119 Cal.App.2d at page 742, 260 P.2d at page 207), suggests that the following factors are pertinent when the question of justification is in issue:

'(a) the nature of the actor's conduct,

'(b) the nature of the expectancy with which his conduct interferes,

'(c) the...