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Timestamp: 2019-04-25 23:40:14+00:00

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Justia › US Law › Case Law › California Case Law › Cal. App. 2d › Volume 231 › Boughton v. Socony Mobil Oil Co.
Boughton v. Socony Mobil Oil Co.
ROBERT L. BOUGHTON, JR., et al., Plaintiffs and Appellants, v. SOCONY MOBIL OIL COMPANY, INC., Defendant and Respondent.
Stanley D. Clark for Plaintiffs and Appellants.
Robert H. Buchanan, Sims Hamilton and R. H. Zahm, Jr., for Defendant and Respondent.
Plaintiffs, owners of a parcel of real property, sued to have the court declare a restriction prohibiting the dispensing of petroleum products thereon to be invalid and unenforceable. It having been stipulated under defendant's motion for summary judgment to dismiss the complaint under section 437c, Code of Civil Procedure, judgment was entered for defendant adjudging the restriction to be valid and enforceable against plaintiffs; they appeal therefrom.
On June 22, 1959, General Petroleum Corporation, by corporation grant deed, conveyed to Kelley and Clark as tenants in common a parcel of real property "Subject to: ... 2. A restriction against the use of the hereinabove described property for the dispensing of petroleum products to November 1, 1979. Should the property be used for service station purposes prior to November 1, 1979, the title should be revested and revert to General Petroleum Corporation." Thereafter, General Petroleum Corporation was merged into Socony Mobile Oil Company, Inc., defendant herein, who became the successor in interest to General Petroleum Corporation, the owner and holder of the reversionary interests. In March 1962, Kelley and Clark conveyed the property to plaintiffs subject to "covenants, conditions, reservations, restrictions, rights, rights of way and easements of record."
Assuming that the restriction in the deed constitutes "a restrictive covenant for the sole purpose of restraining trade," appellants contend it violates section 16600, Business and Professions Code, and is void and unenforceable.
 Section 16600 provides that, subject to certain exceptions (not here pertinent) "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." We conclude that the restriction in the deed does not fall within the purview of the statute. The single restriction is imposed, not personally on plaintiffs restraining them from engaging or carrying on any profession, trade or business but, on the use of the land upon which they as grantees are barred merely from selling petroleum products, and then only for a limited period of time. Moreover, under this restriction the grantees are not prevented from dispensing petroleum products and [231 Cal. App. 2d 191] operating a service station at any time at any other place and there directly competing with defendant.
Dispositive of the main issue are Los Angeles Land & Water Co. v. Kane (1929) 96 Cal. App. 418 [274 P. 380], and King v. Gerold (1952) 109 Cal. App. 2d 316 [240 P.2d 710]. In Kane, supra, the conveyance was made "Subject to the condition subsequent that no part of said property shall be used for the manufacture or sale of crushed rock, gravel or sand prior to January 31, 1934 [10 years]." (P. 419.)  The court stated: "It is first contended that the condition is in restraint of trade and therefore void. Appellants claim that any contract which forbids or prevents the manufacturing of crushed rock is in restraint of trade in that particular line of business and void. It will be noticed that the restriction is against the use of the property. There is nothing to prevent the removal of the rock, gravel, or sand from the lot and doing with it whatever he chooses. It is settled law of California that a condition subsequent prohibiting the carrying on of a particular business upon property conveyed is valid and will be upheld where the question of monopoly is not involved or the purpose of the condition is not unlawful, and possibly other exceptions which do not exist here. [Citations.]" (Los Angeles Land & Water Co. v. Kane (1929) 96 Cal. App. 418, 420 [274 P. 380].)  While a declaration of one of the plaintiffs in support of their motion for summary judgment alleges that the restriction was placed on the land solely for the purpose of preventing the use of said property in competition with General Petroleum Corporation in the sale of petroleum products, neither the complaint nor the declaration charges a monopoly or unlawfulness of purpose of the condition imposed (except that it violates § 16600). The mere allegation that the purpose of the restriction is to prevent competition in that area, although uncontroverted, does not itself imply a monopoly (Grogan v. Chaffee (1909) 156 Cal. 611 [105 P. 745, 27 L.R.A. N.S. 395]), nor in this case does it create an issue of fact--this was acknowledged by plaintiffs when they too filed, on the basis of the declaration, a motion for summary judgment which was denied on the same day defendant's motion was granted.
 Moreover, while the cases are uniform in refusing to enforce a contract wherein one is restrained from pursuing an entire business, trade or profession, as falling within the ambit of section 16600 (Callahan v. Donnolly (1872) 45 Cal. 152 [13 Am.Rep. 172]; Pacific Wharf & Storage Co. v. Standard American Dredging Co. (1920) 184 Cal. 21 [192 P. 847]; Summerhays v. Scheu (1935) 10 Cal. App. 2d 574 [52 P.2d 512]; Hunter v. Superior Court (1939) 36 Cal. 2d 100 [97 P.2d 492]), where one is barred from pursuing only a small or limited part of a business, trade or profession, the contract has been upheld as valid. In King v. Gerold (1952) 109 Cal. App. 2d 316 [240 P.2d 710], plaintiff, inventor and designer of a house trailer, agreed to give defendant a license to manufacture it for certain royalties; the contract provided that if there was no renewal at the end of six months defendant would cease to manufacture the trailer. The agreement was not renewed; defendant continued to produce it contending that the restrictive covenant in the contract was void because it was in restraint of trade and violated section 16600. Said the court: "The argument that appellant's agreement to cease manufacturing the trailer at the expiration of six months makes the contract one in restraint of trade and therefore void under the provisions of section 16600, Business and Professions Code, fails to consider the terms of the writing. Appellant is not thereby prohibited from carrying on his lawful business of manufacturing trailers but is barred merely from manufacturing and selling trailers of the particular design and style invented by respondent who in the first instance licensed appellant to use such design for a limited [231 Cal. App. 2d 193] time only. The situation is factually distinct from that in Summerhays v. Scheu, 10 Cal. App. 2d 574 [52 P.2d 512], where the defendant vendor of a patent agreed 'never again to enter into the orchard heater business at any place.' " (P. 318. Italics added.) In the case at bar plaintiffs are not prohibited from carrying on the lawful business of selling petroleum products or operating a service station but, as grantees of this particular piece of property, they are barred merely from doing so on those premises and then only for a limited time.
For the foregoing reasons the judgment is affirmed.
Wood, P. J., and Fourt, J., concurred.

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