Imperial Ice Co. v. Rossier

18 Cal. 2d 33, 112 P.2d 631 (1941)

 

RULE:

An action will lie for inducing breach of contract by a resort to means in themselves unlawful such as libel, slander, fraud, physical violence, or threats of such action. An action will also lie for inducing a breach of contract by the use of moral, social, or economic pressures, in themselves lawful, unless there is sufficient justification for such inducement. Such justification exists when a person induces a breach of contract to protect an interest that has greater social value than insuring the stability of the contract. Thus, a person is justified in inducing the breach of a contract the enforcement of which would be injurious to health, safety, or good morals. The presence or absence of ill-will, sometimes referred to as "malice," is immaterial, except as it indicates whether or not an interest is actually being protected.

FACTS:


A third party purchased an ice distributing business from the defendant seller. The purchase agreement contained a clause whereby the seller agreed not to compete with the third party or its successors. Plaintiff buyers purchased the business from the third party, including the right to enforce the covenant not to compete. The company began supplying ice to the seller, and the seller, in violation of the agreement, began selling the ice. The buyers sued the seller for violating the agreement and sued the company for inducing the seller to violate the agreement. The lower court entered judgment in favor of the company and dismissed the buyers' complaint without leave to amend. On appeal, the court reversed.

ISSUE:

Did the plaintiff have cause of action against the defendant for inducing a breach of contract?

ANSWER:

Yes.

CONCLUSION:

The company intended to further its own economic gain at the buyers' expense by inducing the seller to breach the covenant not to compete and this constituted a cause of action.  The defendants, by virtue of their interest in the sale of ice in that territory, were in effect competing with plaintiff.  Such conduct is not justified. 

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