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District Court of Appeal, Third District, California.


Civ. 6337

Decided: March 01, 1940

Henry O. Wackerbarth, of Los Angeles, for appellant. William Jennings Bryan, Jr., and Harry C. Cogen, both of Los Angeles, for respondent.

This is an appeal from a judgment rendered in favor of defendant after the trial court had sustained an objection to the introduction of any testimony upon the ground that the complaint failed to state a cause of action. The judgment further provided that defendant recover the sum of $822.75 on his counterclaim for articles manufactured for appellant. Of this amount, only $132.75 is questioned on this appeal.

The complaint alleges that in 1932, plaintiff invented and developed certain mechanical devices for use in the production of moving pictures; that during the month of December, 1932, plaintiff delivered to defendant certain patterns for the manufacture of one of said devices; that prior to the delivery of said patterns, “and as a condition precedent thereto, said defendants agreed that they would only make therefrom such castings as were ordered by the plaintiff, and that they would not make any castings therefrom other than those ordered by the plaintiff”; that at all times during the years 1933 and 1934, defendant made and finished said castings from plaintiff's patterns as aforesaid, for the sum of $25 a set; that plaintiff thereupon refinished and assembled said castings and sold same to the retail trade for the sum of $100 a set; that during the time said patterns were in the possession of defendant, the latter manufactured and sold to the retail trade a number of castings made from said patterns, in violation of his agreement, and circularized the trade to secure orders for said castings, and that he stated to the trade that he (defendant) would sell such castings at a price much less than that established by plaintiff; that plaintiff was thereby damaged in the sum of $5,000. The prayer asks the court to enjoin defendant from selling said castings; that an accounting be had; and that damages be awarded. It was conceded, when the question was presented to the trial court, that the entire agreement was oral.

It is contended that the complaint does not state a cause of action, for the reason that the right of action is predicated upon an oral contract which is invalid because it is within the statute of frauds, which declares invalid “an agreement that by its terms is not to be performed within a year from the making thereof”. Subd. 1, sec. 1624, Civ.Code.

Precisely, respondent contends that the agreement does not specify the time of performance, and that it must be construed to mean that defendant would never, at any time, make any of the inventions for any person other than defendant. In other words, a contract to refrain from doing something, and with no time limitation for performance is of such a nature as to necessarily require more than a year for its performance. The rule in this state is laid down in the case of Long v. Cramer Meat & Packing Co., 155 Cal. 402–406, 101 P. 297. In that case the parties agreed that “under no circumstances would any sheep ever be allowed to range, graze, pasture, or water” upon their ranch. This was an agreement to refrain from doing a certain act, with no time for performance fixed. The court holds that such agreement could not be enforced for two reasons—first, that it was not a covenant running with the land, and hence was not a personal covenant binding upon the grantee of one of the parties who made the agreement; and second, the agreement was by its nature not to be performed within a year, and therefore was within the statute of frauds. It is urged by appellant that the latter rule was dictum, and that it should be disregarded. We cannot agree with that view. The court gave two reasons for its final conclusions. Each was equally necessary to the disposition of the contentions made. A dictum is “a statement in an opinion not necessary to the decision of the case”. 15 C.J. p. 950 § 6. We are of the opinion that what was said with reference to the statute of frauds was necessary to the decision of the case, and that the agreement in the instant case, being substantially the same in purport and effect, must be held invalid.

The cases cited by appellant where certain oral agreements are held not to be within the statute of frauds are all predicated upon the fact that by the terms of such agreements performance within a year was not impossible. None of them involves an oral agreement to refrain from doing some act for all time. Where such agreement is, in effect, to continue forever, a different rule is applied, for it cannot be said that performance within a year is a possibility. Such is the ruling in the Long case, where the nature of the contract showed that it was not intended that it should be performed within a year. We agree with appellant that there is considerable authority on the other side of this question, but the rule in California has definitely been fixed in the Long case.

Defendant filed a counterclaim for $822.75, based upon articles manufactured for plaintiff. The court gave judgment for that amount, and plaintiff now contends that the evidence fails to show that he ordered a portion of said articles—nine speed controls—for which the court allowed $132.75 in the judgment. The balance of the judgment is not questioned. We are satisfied that the evidence is sufficient on this point. It is urged that the court erred in allowing a recovery of the contract price, and that the measure of damages should be “the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted”. Civ.Code, sec. 1784, subd. (3). The testimony, although conflicting, would support a finding to the effect that the articles were ordered by plaintiff. It further appears that plaintiff refused to accept them. We believe that the evidence brings the case within the provisions of section 1725, subdivision (3) of the Civil Code, which reads as follows: “Where the parties purport to effect a * sale of future goods, the agreement operates as a contract to sell the goods and as soon as the seller acquires the goods the property therein shall pass to the buyer without further act if the parties so intend unless the agreement otherwise provides.”

The title passed to plaintiff, the buyer, and the seller was therefore entitled to recover the agreed price of the articles under the provisions of section 1783, subdivision (1) of the Civil Code, which reads as follows: “Where, under a contract to sell or a sale, the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract or the sale, the seller may maintain an action against him for the price of the goods.”

The judgment is affirmed.

Mr. Presiding Justice TUTTLE delivered the opinion of the court.

We concur: PULLEN, P.J.; THOMPSON, J.

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