196 N.E.2d 109 | Ohio Ct. App. | 1964
This appeal comes to this court on questions of law from a judgment entered for defendants on defendants' demurrer to plaintiff's petition by the Court of Common Pleas of Cuyahoga County. The action is one for money damages for breach of plaintiff's rights under a contract whereby the plaintiff purchased the wholesale vegetable business of the defendants Russell H. and Anna L. Beck for the wrongful interference with plaintiff in the conduct of the business purchased.
The petition alleges that in December of 1959 plaintiff purchased from the defendants Anna L. Beck and Russell H. Beck under the terms of a written agreement, the Becks' wholesale *232 vegetable business which they (the Becks) were then operating. It alleges further that, as an inducement to persuade the plaintiff to enter into the purchase of the going business, the Becks promised that if the plaintiff would agree to employ Russell H. Beck during the summer of 1960 that he (Russell H. Beck) would retire from the wholesale produce business. It is alleged that except for such assurance the plaintiff would not have entered into the purchase agreement.
In 1961, it is alleged, Russell H. Beck made a demand to the plaintiff that it re-employ him for the summer of 1961, the demand including the threat that if such employment was not agreed to on Beck's terms he would accept employment from the defendant The Cleveland Growers Market, whose place of business was next door to the plaintiff's business address. (The Cleveland Growers Market is a competitor, transacting like business with that of the plaintiff.) It is alleged also that upon plaintiff's refusal to re-employ Beck on the terms he demanded, the defendant Russell H. Beck, in violation of his obligations under the sale, entered into employment with the defendant The Cleveland Growers Market, the latter being fully informed of the fact that Beck, in entering its employ for the year 1961, was violating his obligations to the plaintiff. It is alleged that for the benefit of his new employer, who was fully advised of plaintiff's rights to the good will of Beck's former business for its benefit, Russell H. Beck solicited his former customers, informing them that he was to be and was affiliated with defendant The Cleveland Growers Market, thereby attempting to induce the customers with whom he once had done business when operating the business he sold to plaintiff, and, as a consequence, a great many of plaintiff's customers transferred their business to Russell H. Beck and his new employer, The Cleveland Growers Market, to plaintiff's damage.
The defendants Beck demurred to plaintiff's amended petition, stating as ground for the demurrer that the petition did not state a cause of action. It needs no citation of authority to declare that the demurrer admits for the purposes of the demurrer all of the well pleaded allegations of the petition. By giving the allegations their most favorable interpretation in favor of the pleader, it must be concluded that the sale of the "business" *233 must have included the "good will" it had generated under the management of the Becks. The sale was of the business as a going concern.
The inducement to enter into the contract, as pleaded, was made on behalf of the present owners, for their benefit. It was not an employment contract. We are not, therefore, concerned with the law dealing with restrictive covenants as a part of employment agreements. Nor is the question here presented, as argued in the briefs, one concerning a restrictive covenant not to compete with plaintiff after the sale of a business. No such claim is pleaded. The legal claim presented is whether or not the defendant Russell H. Beck and his new employer may attempt to destroy or purposely minimize the value of the good will of a business which he has sold, by aggressive competition within a time necessarily needed by the plaintiff to obtain the benefits of the good will purchased under the assurances pleaded. There is no time alleged within which the defendants Beck agreed (by his promise to retire) not to interfere with the good will of the business sold. It must be concluded that a reasonable time within which to possess the advantages of the commercial relationship between the plaintiff and the former customers of the defendants Beck must pass before Beck can seek, without violating plaintiff's rights in the good will purchased, to do business with his former customers.
The meaning of the term "good will" is clearly set out in Black's Law Dictionary and is, in part, as follows:
"* * * The advantage or benefit which is acquired by an establishment, beyond the mere value of the capital, stocks, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from the constant or habitual customers, on account of its local position * * *."
In the case of Snyder Mfg. Co. v. Snyder,
"* * * Without attempting an accurate or exhaustive definition of the good will of a business, it may be said that it practically consists of that favorable reputation it has established creating a disposition or inclination of persons to extend their patronage to the business on that account; and, as the business *234 is always associated with the name under which it is conducted, the name becomes a part, and often an important part of its good will."
Also, in the case of Lima Telephone Telegraph Co. v.Public Utilities Commission,
It must be concluded that the good will transferred to a buyer is a property right that must be respected by the seller for a sufficient time to permit the buyer to make the business customers his own. In the case of Ice Storage Co. v.Mulvihill,
"3. Seller of ice business, including good will, cannot impair good will by soliciting business of old customers before the buyer has time to make them his own."
And in the case of Soeder v. Soeder,
"While the vendor of a business with goodwill included in the sale cannot impair the goodwill by directly soliciting the old customers of the business before the buyer has had time to make them his own, nevertheless, a period of three years must be considered a sufficient time to attach goodwill to the buyer and make it his own."
The time which must be allowed a purchaser to make the customers of the purchased business "his own" is a question of fact for the determination of the jury or the court in the event a jury is waived on the allegations set out in the petition. Certainly to accept employment by a competitor who joins with him in active solicitation of his former customers that he had developed when he owned the business sold to the plaintiff, thus diminishing the value of the good will of such business, requires the defendant to show as a defense that sufficient time had elapsed under the surrounding circumstances for the plaintiff to make the customers his own unless the time elapsing between the sale and defendant's subsequent acts can be said as a matter of law to be sufficient to protect the plaintiff to the extent necessary in the enjoyment of that which he purchased. The facts *235 coming within "the circumstances to be considered" — in addition to the sale of a going business — are that the defendant Russell H. Beck continued as an employee of plaintiff during the summer of 1960, striving to maintain the good will of plaintiff's business and then attempted to destroy it by accepting employment with plaintiff's next door competitor in 1961 by soliciting the same customers for his new employer.
The judgment of the trial court is, therefore, reversed as contrary to law and the cause is remanded to the trial court with instructions to overrule the demurrer and for further proceedings according to law.
Judgment reversed.
SILBERT and WASSERMAN, JJ., concur.
