Hedrick v. Perry, 1785.

Citation102 F.2d 802
Decision Date03 March 1939
Docket NumberNo. 1785.,1785.
PartiesHEDRICK et al. v. PERRY.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Fred E. Wilson, of Albuquerque, N. M. (James F. Warden, of Albuquerque, N. M., on the brief), for appellants.

G. Dexter Blount, of Denver, Colo. (Harry S. Silverstein, of Denver, Colo., and H. Leslie Williams, of Albuquerque, N. M., on the brief), for appellee.

Before PHILLIPS, BRATTON, and WILLIAMS, Circuit Judges.

BRATTON, Circuit Judge.

This was a suit in equity to enjoin further breach of contract and for damages for past breach. Reference will be made to J. D. Perry, plaintiff below and appellee here, as Perry, and to Wasco T. Hedrick, Carl Penn, and Penn Trucking Company, Inc., defendants below and appellants here, as Hedrick, Penn, and Penn Company, respectively.

The court found that for several years Perry and Hedrick were competitors in the trucking business between Albuquerque, New Mexico, and Denver, Colorado, and intermediate points; that Hedrick developed a large number of regular customers in his business; that on April 14, 1937, Hedrick, with the knowledge of Penn and Penn Company, entered into an oral agreement with Perry in which it was agreed that for a cash consideration of $8500, then and there paid, he would and did sell, assign, and transfer to Perry his trucking business, the entire good will thereof, the three trucks with one refrigerator plant used in the operation of such business, and the regularly issued permits under which the trucks were operated; and that the trucks and refrigerator plant were of an aggregate value not to exceed $3000, as Perry, Hedrick, Penn, and Penn Company well knew. The court also found that the contract provided that Hedrick would immediately discontinue the trucking business between the points named, except between Albuquerque and Santa Fe, New Mexico, and would not further compete with Perry directly or indirectly; and that he would exert his best efforts to induce his customers to continue as customers of Perry. The court further found that immediately after the oral agreement was entered into the parties executed a written contract in which Hedrick bound himself to refrain for a period of ten years from engaging directly or indirectly in the trucking business over the route in question, except between Albuquerque and Santa Fe. And the court further found that shortly before the date on which such contracts were entered into, Hedrick, Penn, and Penn Company formed a conspiracy to cheat and defraud Perry; that the substance of the conspiracy was that upon Hedrick inducing Perry to enter into the contract with him, Hedrick, Penn, and Penn Company would cause Penn Company to qualify through authorizing permits and become a competitor of Perry in the trucking business, and that Hedrick would then endeavor to cause to be transferred to Penn Company the customers, business, good will, and employees of Hedrick instead of causing them to be transferred to Perry; that pursuant to such conspiracy Penn Company became qualified and entered the trucking business in competition with Perry; that Hedrick thereby engaged and has continued to engage, directly or indirectly, or concern himself in carrying on or conducting the business of trucking in competition with Perry in violation of the contract; and that as a result of the conspiracy and the acts of Hedrick, Penn, and Penn Company in furtherance of it, Perry was cheated and defrauded, and suffered damages in the sum of $7500.

By decree, Hedrick was enjoined for a period of ten years from the date of the contracts from engaging directly or indirectly in the trucking business in competition with plaintiff, except between Albuquerque and Santa Fe; and damages in the sum of $7500 were awarded against Hedrick, Penn, and Penn Company.

It is contended that there was no evidence of a conspiracy, no evidence of actionable injury on the part of Perry for which Hedrick, Penn, and Penn Company are liable, and no competent evidence that Hedrick violated either the oral or the written contract. As we understand these several contentions, they merely challenge the sufficiency of the evidence to support the findings of the court in respect to the formation of the conspiracy, the breach of the contract, and the accrual of injury for which damages may be had. They are so interwoven that they may be considered together. There was evidence which tended to show these facts. Perry and Hedrick each had an established and efficiently managed trucking business. At the conclusion of negotiations which covered about two weeks in time, they entered into the oral contract on April 14, 1937, in which it was agreed that Hedrick would sell, assign, and transfer to plaintiff his business and good will, the three trucks and one refrigerator plant used in such business, and the permits — one issued by the Corporation Commission of New Mexico, and the other issued by the Public Utilities Commission of Colorado — for the agreed consideration of $8500. It was further agreed that Hedrick would discontinue the trucking business between the points named, except between Albuquerque and Santa Fe, would turn over to Perry his telephone numbers and docks, and would help Perry in any way he could to hold the business which Hedrick then had. It was also agreed that Hedrick would aid in making arrangements for his truck-drivers and other employees to continue in the employ of Perry. The consideration was paid and the property transferred. Immediately thereafter the written contract was prepared and executed. It adverted to the oral agreement and recited that the property was being sold and transferrred contemporaneously with the execution of the written contract; and it then provided that for a period of ten years from that date Hedrick should not engage directly or indirectly, or concern himself either as principal, agent, or servant, in carrying on or conducting the business of motor carrier of merchandise between the points named in competition with Perry.

Hedrick and Penn had known each other for about thirty years. They had grown up together. For some time prior to May 30, 1936, Penn was engaged in the trucking business between Trinidad, Colorado, and various points in New Mexico, but his operations did not reach Denver and he did not receive any business from that point. Penn Company was incorporated on May 30th for the purpose of taking over the business conducted by Penn. The entire authorized capital stock was issued to Penn except two qualifying shares. On the following day — May 31 — Hedrick and an associate purchased at a sale in bankruptcy two permits authorizing the transportation by freight on the highway between Albuquerque and Denver. One, issued by the Corporation Commission of New Mexico, applied to that part of the highway in New Mexico; and the other, issued by the Public Utilities Commission of Colorado, had application to that part in Colorado. These are referred to as the Eagle Permits. Hedrick and his associate transferred them to Penn Company in September, 1936, for an agreed consideration of $11,000, payable at the rate of $300 per month. Penn planned to extend the trucking line of Penn Company into Denver, and the monthly payments were to be made out of the earnings of the operations between Albuquerque and Denver. With that in mind, it was provided that the first payment should be made ninety days after operation of the extended line began. Perry knew at the time he purchased the business from Hedrick that the latter had purchased the Eagle Permits, but he did not know that they had been assigned to Penn Company. He had never heard of Penn, and he did not know that Penn Company existed. He understood that under a rule of the Interstate Commerce Commission permits were cancelled when not used, and he thought or assumed that the Eagle certificates had been cancelled for nonuse. Hedrick did not say anything to him in the course of their negotiations respecting these permits. In November, 1936, Penn Company submitted petitions for approval of the assignments of the permits to the respective commissions of the two states and to the Interstate Commerce Commission. The last approval was granted May 5, 1937. Penn Company began the operation of trucks between Albuquerque and Denver under such permits about April 21, 1937, and it has been in constant and regular competition with Perry ever since, but none of the monthly payments of $300 has been made to Hedrick.

Hedrick had six truck-drivers. When Perry took over the business he offered to continue them in the same work at the same wages, but three of them quit immediately and the other three followed within two or three weeks. Some of them left their trucks at various places — just called up and said they were quitting. Most of them started to work for Penn Company. Hedrick had four other employees. Three of them quit and became employees of Penn Company; and Penn offered to employ the fourth but she declined and remained with Perry. Penn Company acquired the office in Denver formerly occupied and used by Hedrick. Girard had been manager for Hedrick there; he continued in the employ of Perry for about a week during which time he had access to the office records showing the names of Perry's customers and the amount of work he was doing; and he then quit without notice and became manager for Penn Company in Denver. He authorized the telephone company to disconnect the telephone formerly used by Hedrick, asked for the refund due, and sought to obtain the number for Penn Company. Upon learning that the telephone had been disconnected, Perry appealed to Hedrick several times to have it re-connected and the number assigned to him. Hedrick replied that he was not interested and that it was Perry's lookout. The telephone was re-connected, remained so for about a day, and then was again disconnected. Perry then appealed to Girard. He said that he was not interested and would...

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