Webster v. Webster, 180 Mass. 310

Webster v. Webster

180 Mass. 310 | Mass. | 1902

Knowlton, J.

The decision of this case depends on the construction to be put upon the sale that was made under that part of the articles of copartnership which provides for a conveyance of the partnership property by the defendant to the plaintiffs on the termination of the partnership by its own limitation. It is contended by the plaintiffs that the defendant has sold to them the good will of the firm and that a solicitation of trade by him from former customers of the firm is an unlawful interference with their rights of property. '

The decisions in different jurisdictions touching the rights of the vendor and of the purchaser resulting from the sale of a business with the good will belonging to it, are somewhat in conflict. In England the rule now established seems to be that on a sale of a general mercantile business with the good will belonging to it, the vendor is not precluded from establishing a new business of the same kind, which may come in competition with that which he sold, so long as his efforts are not directed against those activities and projects which, in a sense, may be said to belong to the business for which he has been paid. In a late case (Trego v. Hunt, [1896] A. C. 7), it was held, overruling Pearson v. Pearson, 27 Ch. D. 145, that a copartner about to leave a firm under a previous arrangement that the good will should belong to his copartners who remain, had impliedly agreed to do nothing to deprive the others of the benefit of the good will, and that taking the names of the customers of the *315firm from the books, with an avowed purpose to solicit their trade for a new business of the same kind which he was about to establish, called for an injunction against such solicitation. At the same time, his right to establish a new business in competition with the other, so long as he did not attempt direct interference with the customers of the firm, or with the particular business then being done by it, was recognized. The decisions in America are far from uniform. The cases of Cottrell v. Babcock Printing Press Manuf. Co. 54 Conn. 122, Williams v. Farrand, 88 Mich. 473, Ward v. Ward, 15 N. Y. Supp. 913, Close v. Flesher, 8 Misc. (N. Y.) 299, and Vonderbank v. Schmidt, 44 La. An. 264, tend to show that after having sold the good will of a firm, a former partner in it may endeavor to obtain trade of its old customers, not only by public advertisement, but also by direct and personal solicitation. Cases in New Jersey and in Ohio hold that such solicitation is in violation of his implied contract to do nothing directly to imperil the value of that which he has sold. Newark Coal Co. v. Shangler, 9 Dick. 354. Burckhardt v. Burckhardt, 36 Ohio St. 261.

Looking at the reasons that underlie the different decisions, the principal practical questions to be determined in such cases are, What is the nature of the property that has been sold and what is the intention of the parties as manifested by their contract. The good will to which the contract relates may mean more or less, according to the nature of the business and the relations of the parties. In this Commonwealth it was held in Bassett v. Percival, 5 Allen, 345, that a sale of the stock and good will of a grocery store in Boston did not impose any personal restraint on the vendor, nor restrict his right to transact a similar business in another place at a subsequent time. In the report of this case it does not appear that there was any personal solicitation of former customers, although the new store was very near the old one.

In Angier v. Webber, 14 Allen, 211, the business whose good will was sold was that of carriers between Boston and Somerville, who occupied stands in certain streets, and whose business was done with their customers at their houses and shops and on the streets. It was held that the establishment of a new carrying business over the same route was a direct interference *316with the good will of that which had been sold. It was a quite different act from opening a rival shop on the same street in a large city like Boston. The same principle was applied in Dwight v. Hamilton, 113 Mass. 175, when the defendant’s “ practice and good will as a physician ” was sold, and in Munsey v. Butterfield, 133 Mass. 492, when the good will of a milk route was sold. In Hoxie v. Chaney, 143 Mass. 592, the subject of the sale was the good will of a manufacturing business, and it was held that the case fell within the rule in Bassett v. Percival, ubi supra. The effect of personal solicitation of former customers by the proprietor of a new business, who has sold the good will of his previous business, when the former business was of such a kind that the sale would not preclude him from establishing a competing business, has not been determined by this court, and we do not find it necessary to determine it in this case. See Holbrook v. Nesbitt, 163 Mass. 120.

Looking at the articles of co-partnership we find a provision for a sale of the property and assets of the firm upon the termination of the partnership, at the value of the “ property and assets as it appears by the books of the firm.” This sale was to be made by the defendant who furnished all the capital, and who would own the property after a division of the profits. It was to be made to these plaintiffs or to such of them as might wish to purchase. If they should fail to give notice of their desire to purchase, their rights were to cease and determine. In this provision there is no reference to good will. The price to be paid includes nothing for good will. On the other hand, in the provision in reference to a settlement upon the death of a partner before the end of the term, there is an express reference to good will.

The contract of sale, which follows the articles, makes no reference to good will, but purports to be a sale of goods and chattels at a valuation shown by the books. The parties provided for a disposition of the property, not of a continuing partnership, but of a partnership whose term has come to an end. Of the kind of good will that is dependent on the continuance of the firm name, or of an identified proprietorship or management, it is plain that the plaintiffs by their purchase acquired nothing. They could not continue the use of the defendant’s *317name or of the firm name. Whether there was any good will in reference to the place, depends upon a question about which the record shows nothing, namely, the question whether the firm, at the time of the sale, owned rights in the place where its business had been conducted. The bill fails to show any good will of this kind that would pass as incident to a sale of the property. If there was anything of good will that pertained to the ownership of the goods and assets of the firm, certainly no good will pertaining to the personality of its members was kept alive or conveyed by the contract of sale. We think that the parties must be deemed to have understood that, the partnership having come to an end by its own limitation, they were all at liberty to do any kind of business, and to gain such advantages as they could from their relations to the former business. This was not a sale of good will beyond that, if any, which pertained to the ownership of the goods. The contract makes no reference to the continuance of the business. If the plaintiffs by their purchase, gained advantages in reference to the business which they wished to do under the new firm name, these were not obtained by any transfer from the defendant of rights in a continuing business; but only by a transfer of his rights in property, which did not include a right to continue the existing business without change.

Decree affirmed.