Malone v. Jones

• Citation: 208 Cal.App.2d 343,25 Cal.Rptr. 262
• Court: California Court of Appeals
• Decision Date: 10 October 1962
• Parties: Luther S. MALONE, Plaintiff and Appellant, v. Homer Campbell JONES, Defendant and Respondent. Homer JONES, Plaintiff and Respondent, v. Luther S. MALONE, Defendant and Appellant. Civ. 25529.

Page 262

25 Cal.Rptr. 262

208 Cal.App.2d 343

Luther S. MALONE, Plaintiff and Appellant, v. Homer Campbell JONES, Defendant and Respondent.

Homer JONES, Plaintiff and Respondent, v. Luther S. MALONE, Defendant and Appellant.

Civ. 25529.

District Court of Appeal, Second District Division 4, California.

Oct. 10, 1962.

Herbert Hafif, Claremont, for appellant.

Ben T. Kayashima, Pomona, for respondent.

BURKE, Presiding Justice.

This is an appeal from judgments entered granting motions for summary judgment in two separate cases which were consolidated in the trial court.

In the first action Luther S. Malone (Malone) sued Homer Campbell Jones (Jones) for breach of contract and for fraud. The second action was a complaint for money brought by Jones against Malone.

The two men were partners in a sewer business which involved two basic divisions in operations: one, the construction of septic tanks, cesspools and sewers, termed the 'construction segment'; the other involved the pumping out and servicing of septic tanks and cesspools, termed the 'pumping segment.'

The parties dissolved their partnership approximately fourteen months prior to the commencement of these actions, with the 'construction segment' going to Malone and the 'pumping segment' to Jones.

As partial consideration for obtaining the more valuable part of the operation, Malone gave Jones credit for $23,000 ¹ worth of materials and inventories and purchased the following aspects of the 'construction segment' for $25,000:

1. the going concern value;

2. the right to all referrals from the 'pumping segment' of the business; and

3. Jones' covenant not to compete with the 'construction segment' of the business within a 50-mile radius of Pomona for a period of 18 months.

Within thirty days Malone paid Jones $8,000 as a down payment for his part of the business and agreed to pay the balance of $17,000 in six equal installments evidenced by a non-interest bearing promissory note. At the time Malone filed his complaint in his action for breach of contract and for fraud, he had paid Jones nearly $14,000 for the 'construction segment' of the business, together with other rights described above.

In May of 1960, prior to the 18-month period having expired, Jones placed in the classified section of the telephone directory in the Pomona area an advertisement reading in part as follows: 'New septic tankcesspool and sewer installations and repairs.'

In the period since the partnership dissolution agreement was executed Jones referred four or five 'construction segment' jobs to Malone. Malone contends that this is an unreasonably low number of referrals inasmuch as his experience in the 'pumping segment' of the business was that on the average one construction or repair job arose out of every four or five pumping jobs and that Jones had done approximately four or five pumping jobs per day during the period from the date of the agreement to the date of suit.

Malone's first cause of action was based upon Jones' alleged breach of the covenants to refer construction jobs to him and not to compete. Malone's second cause of action was based upon fraud.

Jones' cause of action was for a money judgment for the balance due on the promissory note.

After demurrers were sustained twice to each cause of action alleged by Malone in his complaint, motions for summary judgment were granted in Jones' favor in the breach of contract and fraud actions and in the action for...