Karsh v. Haiden

• Decision Date: 04 September 1953
• Citation: 260 P.2d 633,120 Cal.App.2d 75
• Court: California Court of Appeals Court of Appeals
• Parties: KARSH et al. v. HAIDEN et al. Civ. 15384.

Page 633

260 P.2d 633

120 Cal.App.2d 75

KARSH et al. v. HAIDEN et al.

Civ. 15384.

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

Sept. 4, 1953.

Theodore Golden, J. Bruce Fratis, Robert N. Stefan, Oakland, for appellants.

Harry M. Gross, Oakland, for respondents.

NOURSE, Presiding Justice.

This is an action of unfair competition in connection with an agreement transferring a business formerly operated by defendant George P. Haiden with its goodwill and firm name to plaintiffs. All findings were indiscriminately for defendants, and plaintiffs, appealing from the adverse judgment, contend that they are not supported by the evidence, whereas respondents urge that the denial of relief is justified on the facts and that in so far as the findings are unsupported they are not decisive of the dispute and are surplusage.

The following facts are mainly undisputed: In the year 1939 defendant George P. Haiden started in San Francisco a pleasure auto wrecking business under the name 'Haiden Auto Wrecking.' Prior to that time he had since 1910 been in similar business in Oakland, since 1918 under the name 'Haiden Auto Parts.' On April 14, 1947 Haiden sold the San Francisco business located at 655 Potrero Avenue for $22,500 to plaintiffs by written contract which contained among others the following provisions: 'The sale of said business includes the goodwill thereof, and the right to continue the use of the name 'Haiden Auto Wrecking' in connection with said business. And seller agrees not to engage in the Auto Wrecking business in the City and County of San Francisco, State of California, in competition with buyers, either as proprietor or employee * * *. It is understood and agreed that 'Haiden Auto Wrecking's business as sold herein shall appy only to pleasure cars and pleasure car parts, and shall not include or apply to the business of truck wrecking and handling truck parts and used cars and trucks, as now conducted by seller at 777 Potrero Avenue, San Francisco, California.' Although the business transferred was located in San Francisco only, it had many customers in Northern California outside San Francisco. Among the active accounts at the time of the transfer were many from customers in Oakland. The names 'Haiden Auto Wrecking' and 'Haiden' were favorably known in the line of business involved. The right give to the buyers to use the name 'Haiden Auto Wrecking' was for the purpose of assisting them in holding to the best of their ability the accounts of the business sold, also those outside San Francisco.

After the sale defendant Haiden continued the truck wrecking business in San Francisco together with defendant Thomas E. Miles under the name 'Haiden & Miles Truck Exchange.' In January 1949 they acquired the 'Karren Auto Wrecking' of 3263 San Pablo Avenue, Oakland which they operated through a corporation, the defendant 'Haiden and Miles, Inc.' After four or five months they changed the name into 'H. and M. Auto Wrecking' under which name they still operate it. After the change of name they advertised their firm in the Oakland telephone directory printing the name H. and M. Auto Wrecking with large letters and adding portrait heads of defendants Haiden and Miles with their names in very small print under them. The head of Haiden was much larger than that of Miles and at the top of the advertisement next to the name of the firm. Next to this portrait and under the name of the firm was in small letters: '40 years Wrecking Experience'. In an advertisement in a later edition of said directory there is inserted between the firm name and '40 years wrecking experience' in small letters: 'The original Geo. T. Haiden of Haiden Auto Parts.' As soon as the first advertisement had appeared plaintiffs received telephone calls asking whether the Oakland place was theirs or who was running each place. (Testimony of plaintiff Harry Karsh; defendant Haiden testified he thought there was no confusion.) Defendants also used 'the original Geo. P. Haiden of Haiden Auto Parts, 40 years Wrecking Experience' in small print on their printed matter which carried in heavy lettering 'H. and M. Auto Wrecking.' Later they placed on their roof (on San Pablo) a large sign 'The original George P. Haiden and John Miles' and in much smaller letters 'H. & M. Auto Wrecking'.

Earlier, in November 1949, plaintiffs had opened a branch yard in Oakland at 6325 San Leandro Boulevard under the name 'Haiden Auto Wrecking'. Claude Cardwell, the manager of this branch (who previously had been in the employ of defendants when they operated their new Oakland business under the name 'Karren Auto Wrecking') testified that after the opening of the yard on San Leandro they received frequent calls for George Haiden, and customers asked whether their San Pablo store would have a part which they did not have in stock or told them that they had been on San Pablo instead of San Leandro. There was received in evidence a letter of the Department of Motor Vehicles to a third party of March 24, 1950 in which it was stated that according to the records of the Department Haiden Auto Wreckers no longer operated at 655 Potrero Avenue, San Francisco, but were then located at 6235 (sic) San Pablo Avenue, Oakland.

The evidence further showed that defendants had done no business and had not advertised in San Francisco and that they thought that they were free in the use of the name Haiden outside of San Francisco, that plaintiffs had objected to the use made in Oakland of the name Haiden and that defendants had not objected to the use by plaintiffs of the firm name 'Haiden Auto Wrecking' in Oakland. The San Francisco business after the purchase by plaintiffs showed a continuous growth so that the gross volume at the time of the trial was about $250,000 a year. The new business of plaintiffs in Oakland moreover had then a gross annual volume of about $65,000.

The complaint alleged in substance that the stated acts of defendants, particularly the use of the words 'The Original Haiden' were intentionally fraudulent, for the purpose of causing confusion between defendant's new business and the business now operated by plaintiffs under the name 'Haiden Auto Wrecking' and of appropriating the goodwill of the latter business and also that because of said fraud confusion and damage were caused. The prayer was in effect for an injunction restraining defendants from using for business purposes the name 'George T. Haiden', or 'Haiden' or the 'Original Haiden' or 'Haiden Auto Wrecking' or any colorable imitation thereof without a qualifying statement differentiating the business so indicated from plaintiffs' business under the name 'Haiden Auto Wrecking', for an accounting of all the profits of defendants' Oakland business, for damages caused plaintiffs by the use of the name Haiden by defendants and for $10,000 for damages to the goodwill and trade name of plaintiffs' business.

Appellants contend that findings to the following effect are not supported by the evidence: a. That the business sold had no valuable goodwill and that neither the names 'Haiden Auto Wrecking' nor 'Haiden' had a valuable reputation; b. that defendants did not operate their business ('H. and M. Auto Wrecking') in competition with plaintiffs' and did not announce to the public that defendant George P. Haiden was part of their firm; c. that the acts of defendants were not intentionally fraudulent, not for the purpose of deceiving plaintiffs' customers into the belief that plaintiffs' San Pablo business was the same as the business of defendants or of filching the goodwill of said business; d. that defendants did not represent that George P. Haiden was connected with plaintiffs' business and did not use any artifices to mislead the public as to the identity of plaintiffs' and defendants' establishments; e. that no confusion was caused between the establishments of the parties and no business was done with defendants under the belief the transactions were with plaintiffs, and that such would not happen in the future either; f. that no damage was done to plaintiffs and that none will result in the future.

It is clear at first sight that the findings succinctly stated by us under a. and b. are contrary to the evidence stated before. There can be no doubt that the parties are competiting for the Oakland business and that in their competition they consider the name Haiden and firm names containing that name as valuable--according to the evidence rightly so. It is also undisputable that defendants not only announced that defendant Haiden was part of their firms but that they actively tried to cash in on defendant Haiden's personal reputation.

However, this in itself is not necessarily unfair. The contract of sale of the business expressly restricted the non-competition clause to San Francisco only. It gave plaintiffs the use of the name 'Haiden Auto Wrecking' in connection with the business sold but did not expressly limit defendant Haiden in the use of his own name wherever the contract permitted him to compete. There was no evidence that prior to the sale the old firm used the name Haiden in any other manner than as a part of the firm name 'Haiden Auto...