State ex rel. McKinley Automotive, Inc. v. Oldham

• Decision Date: 26 September 1978
• Docket Number: No. 27-1105,27-1105
• Citation: 584 P.2d 741,283 Or. 511
• Parties: STATE of Oregon ex rel. McKINLEY AUTOMOTIVE, INC., an Oregon Corporation, Relator-Respondent, v. Gerald J. OLDHAM, Appellant. ; SC 25247.
• Court: Oregon Supreme Court

Page 741

584 P.2d 741

283 Or. 511

STATE of Oregon ex rel. McKINLEY AUTOMOTIVE, INC., an Oregon Corporation, Relator-Respondent, v. Gerald J. OLDHAM, Appellant.

No. 27-1105; SC 25247.

Supreme Court of Oregon, Department 1.

Argued and Submitted June 8, 1978.

Decided Sept. 26, 1978.

K. Patrick Neill, Eugene, argued the cause for appellant. With him on the briefs were Wilson C. Muhlheim, and Vonderheit, Hershner, Hunter, Miller, Moulton & Andrews, Eugene.

Jack A. Gardner, Eugene, argued the cause for respondent. With him on the brief were Gardner, Honsowetz & Johnson, Eugene.

Before HOLMAN, Presiding C. J., and HOWELL, BRYSON, and LENT, JJ.

BRYSON, Justice.

This is a civil contempt proceeding in which defendant was found in contempt of court and sentenced for violating an order of the trial court enjoining defendant from engaging in certain activities. Defendant appeals.

There are two issues on appeal. Could the trial court hold the defendant in contempt for violating its order enjoining defendant even though defendant had duly perfected his appeal to this court from the suit in which the injunction was issued? ¹ Was the injunction prohibitory or mandatory in nature?

Briefly, the issues arose from the following facts. After trial in a suit to enforce a covenant not to compete, plaintiff obtained the decree enjoining defendant. Defendant had entered into the covenant as part of the contract when he sold his Eugene automotive transmission and tune-up business to plaintiff on September 30, 1974. The defendant agreed not to compete with the buyer (plaintiff) in "any business, trade or occupation similar to the business sold to (buyer-plaintiff) * * * for a period of Ten (10) years, within the area now served (Lane County)." The consideration for the sale was "$120,000.00 of which * * * $60,000.00 (Six Thousand per year for a ten year period)" was for the covenant not to compete. Contrary to the contract, defendant opened an automotive shop in Eugene in 1976. Plaintiff brought suit and on April 22, 1977, the court decreed:

"Defendant, and all persons claiming by, through or under defendant, is hereby enjoined and restrained for a period of ten years from September 30, 1974, within Lane County, Oregon, from engaging in any automotive transmission or engine tune-up business; * * *."

The relevant events occurred in the following chronological order:

1. On April 22, 1977, the trial court entered the injunctive decree.

2. On May 16 the court issued an order to defendant to show cause why he should not be held in contempt for violating the decree between April 22 and May 16.

3. On May 19 defendant filed his notice of appeal from the April 22 decree. (This appeal was later dismissed on defendant's motion.)

4. On June 7 the trial court issued a letter opinion finding defendant in contempt.

5. On June 8 defendant filed his undertaking on appeal.

6. On June 9 the trial court issued an order finding defendant in contempt, but not imposing any sentence.

7. On June 30 the trial court issued a second show cause order for defendant's refusal to comply with the decree.

8. On August 11 the court entered an order and sentence finding defendant in contempt on the second contempt proceeding and set sentence to "apply concurrently for the contempt order dated June 9, 1977." Defendant then brought this appeal, raising the issues before us.

Both parties agree that a prohibitory injunction is not suspended by perfecting an appeal from the decree granting the injunction, but that a mandatory injunction is so suspended. In Helms Groover & Dubber Co. v. Copenhagen, 93 Or. 410, 177 P. 935 (1919), the court held:

" * * * An appeal from a decree granting a prohibitory injunction, which is self-executing and requires no affirmative action, merely maintaining the Status quo pending the appeal, does not suspend the injunction. On the other hand a mandatory injunction, that is, one which compels affirmative action by the defendant instead of merely preserving the Status quo, cannot be enforced pending a duly perfected appeal * * *." 93 Or. at 416, 177 P. at 938.

"When an appeal is taken from an order granting a prohibitory injunction, the trial court still retains jurisdiction pending the appeal to punish as a contempt, the violation of the injunction, as the contempt proceedings is wholly independent of the appeal, or any question to be considered by the appellate court. * * *." ² 93 Or. at 418, 177 P. at 938.

Thus, an injunction that maintains the status quo is not stayed pending appeal. The status quo to be maintained, however, is not necessarily the state of affairs that exists at the time the suit was filed. In fact, if it were, then few injunctions would be enforceable pending appeal since the vast majority of suits seeking injunctions are filed after the defendant has started to do the disputed acts. Further, if the status quo were limited to the state of affairs at the time of filing, a wrongdoer would be permitted to continue engaging in the disputed conduct until the case was finally resolved, as long as the wrongdoer began to act before the plaintiff filed suit. For this reason, the status quo to be preserved should be the last undisputed state of affairs that existed before the events that gave rise to the pending controversy occurred. This is the rule for granting preliminary injunctions, ³ which are granted even before there has been a trial on the merits; injunctions granted following a trial should be at least as easily enforced pending appeal.

In this case, defendant's opening of an automotive servicing shop was the very event that caused the pending controversy. The state of affairs that existed before that time did not, of course, include defendant's operation....