AMERICAN DECISIONS.

THE GENERAL RULE WITH RESPECT TO REENTERING THE BUSINESS.The general rule is that the vendor of a business, including the good will thereof, may, in the absence of express contract to the contrary, reenter the same line of business, in the same locality, in competition with the purchaser. Thus, where one of the members of a partnership engaged in the manufacture of printing presses purchased his partner's interest in the assets and good will of the business it was held that he could not restrain the vendor from setting up a competing business. Similarly, it has been held that one who purchased his partner's interest in a confectionery factory was not entitled to an injunction restraining the vendor from engaging in a similar business in the same town. And where the manager of the New York branch of a Paris house bought the business and good will and frequently thereafter referred to his business by the name of the Paris firm only, it was held that he could not prevent the successors of the latter concern from opening a branch in New York and using the name of the old firm in connection with their business. A number of other opinions are in accord with those set forth above regarding the right of a vendor merely to establish himself in business in competition with the purchaser.1

business would yield little or no fruit. It is the whole advantage, whatever it may be, of the reputation and connection of the firm, which may have been built up by years of honest work or gained by lavish expenditure of money." Trego v. Hunt L. R. (1896), A. C., 7, 23, 24. Wood, vice chancellor, in Churton v. Douglas, 1 Johnson's Chancery Reps., 174, 188 (High Court of Chancery, 1859), said: "Good will, I apprehend, must mean every advantage-every positive advantage, if I may so express it, as contrasted with the negative advantage of the late partner not carrying on the business himself that has been acquired by the old firm in carrying on its business, whether connected with the premises in which the business was previously carried on, or with the name of the late firm, or with any other matter carrying with it the benefit of the business." The Supreme Court of Wisconsin, in Rowell v. Rowell, 122 Wis., 1, 17-18 (1904), observed: "Just what good will' includes is not easy of definition. Nay, it varies with the customs of the general trade and the character or methods of the particular business. An early definition by Lord Eldon is the probability that the old customers will resort to the old place.' This involved the ancient idea that good will inhered in the premises where the business was conducted, which had some justification when considering an inn, tavern, or theater, as in most of the early cases. This, however, is too limited for modern kinds or methods of business. The habit of people to purchase from a certain dealer or manufacturer, which is the foundation for any expectation that purchases will continue, may depend on many things besides place. Confidence in the quality of the goods, in the facilities of the establishment to fill orders promptly, or in the personal integrity or skill of a dealer or manufacturer, familiarity of the public with a designating name for the product, and probably many other circumstances, might be mentioned as illustrative. The good will is a sort of beaten pathway from the seller to the buyer, usually established and made easy of passage by years of effort and expense in advertising, solicitation, and recommendation by traveling agents, exhibition tests or displays of goods, often by acquaintance with local dealers who enjoy confidence of their own neighbors, and the like."

1 Cottrell v. Babcock Printing Press Mfg. Co., 54 Conn., 122 (1886).

* White v. Trowbridge, 216 Pa. St., 11 (1906).

Knoedler et al. v. Broussod et al., 47 Fed., 465 (C. C., 1891); affd., 55 Fed., 895 (C. C. A., 1893).

Ranft e. Reimers, 200 III., 386 (1902); Williams e. Farrand, 88 Mich., 473 (1891); Von Bremen r. MacMonnies, 200 N. Y., 41 (1910); Snyder Pasteurized Milk Co. v. Bur ton, 80 N. J. Eq., 185 (Ct. of Err. and App., 1912); Faust r. Rohr, 81 S. E., 1096 (N. C. Sup: Ct., 1914); Wessell et al. v. Havens et al., 91 Nebr., 426 (1912).

THE MASSACHUSETTS RULE.-A different doctrine is announced by the Massachusetts courts, however, which hold that the vendor of a business, together with its good will, may not set up in competition with the purchaser if by so doing he depreciates the good will which he sold, or, in the language of the courts, if to permit him to do so will be in derogation of his grant of the good will. Under this rule it must be determined on the facts of each particular case whether the new business established by the vendor does lessen the value of the good will for which he has received a valuable consideration. The rule is thus stated in a recent decision of the Supreme Court of Massachusetts:

In each case where the good will of a business is sold and the vendor sets up a competing business it is a question of fact whether, having regard to the character of the business sold and that set up, the new business does or does not derogate from the grant made by that sale.1

And the same court in a subsequent case says:

In Massachusetts no competing business can be set up if it derogates from the grant of the good will of the old business."

Thus, where one of the partners in a bookstore, one department of which was devoted to books used by or in connection with the Episcopal Church, sold his interest to the other and three years later, in association with others of the Episcopal faith, some of them customers of the old establishment, opened a rival store, an injunction was granted at the instance of the purchaser of the old business restraining the vendor from working for, holding stock in, or otherwise being connected, directly or indirectly, with the competing business." So also it has been held that a company which purchased the business of manufacturing engines used in the manufacture of paper, together with a patent and the good will and trade names connected with the business, could restrain the vendor from manufacturing, selling, or repairing engines similar to those

1 Old Corner Book Store v. Upham et al., 194 Mass., 101, 105 (1907).

2 Marshall Engine Co. v. New Marshall Engine Co. et al., 203 Mass., 410, 422 (1909). Old Corner Book Store v. Upham et al., 194 Mass., 101, 105 (1907). Per Loring, J.: "The good will sold included the good will of a department carried on for at least 36 years, and for the last 30 years under the immediate personal direction and control of the defendant Upham; and that department was a department for the sale of books used in and in connection with the Episcopal church and was the most prominent department or store for the sale of such books in Boston during that period. The business it should be remarked had a limited class of customers, for the customers are of necessity limited to those belonging to or interested in the Episcopal church. The defendant under whose direction this department in the old business was conducted was and is prominent in and among Episcopalians. It was under these circumstances that this defendant sold the good will of the business which included that department.

"The new business is primarily to sell church books to Episcopal church people. It was started at the solicitation of the defendant Upham, who is prominent in Episcopal church circles. Its stockholders are all of them men of the Episcopal church, and its store is within five minutes' walk of the plaintiff's store."

made by the purchaser of the old business.1 And where a dealer in rubber goods in London, England, sold his business, including the leasehold and the good will, to a Boston company, and the purchaser accounted to the vendor for everything but the good will, for which it refused to pay, it was held that the personal knowledge of the vendor, his experience in the business, and his acquaintance with the probable purchasers, amounted to a good will which might have been used effectively in competition with the purchaser and that having sold it to the purchaser the vendor could not continue to use it, and therefore must be compensated for it. But where an insurance broker sold her business to another, without, however, conveying a right to use the names under which it had been conducted, it was held that the vendor could engage in the insurance business in competition with the purchaser.3

Exceptions to the rule that the vendor may reenter the business.— While, as stated above, the rule in States other than Massachusetts is that the vendor may, in the absence of express contract to the contrary, reenter the field in competition with the purchaser, there appears to be an exception made to this rule in the case of the sale of the practice of a professional man. The courts appear to regard the good will of an established professional practice as based almost entirely on the ability, character, and personality of the practitioner, and it has been held in several jurisdictions that the vendor of such a practice will not be permitted to follow his profession in the same community in competition with the purchaser. Thus where a partner in a dental business in Boston sold his interest to another, but subsequently opened an office there and sent out circulars to his former customers announcing the fact, it was held that an injunction should issue restraining him from practicing dentistry in Boston. It was also held that the purchaser of the old business was entitled to damages, since it was proved that the larger part of the former partner's new practice was derived from patients

1 Marshall Engine Co. v. New Marshall Engine Co.. 203 Mass., 410, 420, 423, 424 (1909). Per Loring, J.: “If the decree below is to stand it must stand on the ground that the business set up by Marshall under the name of the New Marshall Engine Co. does in fact derogate from the grant made by him in the sale to the plaintiff of the good will of the business sold by him to it.

"The good will of the business of selling engines to reduce pulp to paper is manifestly one not dependent on the place where it is carried on. A paper manufacturer is not concerned where he buys his machinery. What he wants is the best-made machine at the cheapest price. We cannot doubt that the business set up by the defendant is a competing business which injures the rights bought by the plaintiff when it bought the good will of Marshall's business."

2 Gordon r. Knott et al., 199 Mass., 173 (1908). See also Bachelder & Co. v. Bachelder, 220 Mass., 42.

Fairfield v. Lowry and another, 207 Mass., 352 (1911).

of the old firm. And where a physician purchased the dwelling and medicines of another, who represented that it was a good community for a physician and that he was removing from the State, it was held that the purchaser was entitled to rescind the contract when the vendor returned shortly afterwards and resumed the practice of medicine in competition with him. Similarly the Maryland Court of Appeals enjoined a surgeon-chiropodist who sold her business in Baltimore under the representation that she intended to leave the city and give up the business, from practicing in the locality over which the purchaser's business extended, although this might not cover the entire city. In like manner, where a physician purchased a residence from another who contracted to retire from the practice, it was held that the purchaser could restrain the retiring physician, who resumed the practice after the lapse of a year and a half, from following his profession in the county where the property was located. Expressions are to be found in other decisions which appear to support the doctrine that the sale of the good will of a professional man's practice precludes his resuming the practice in competition with the vendee."

RIGHT OF THE VENDOR TO SOLICIT HIS FORMER CUSTOMERS.-While, with the exceptions already noted, the vendor may set up a similar business in the same community, the courts will enjoin him from soliciting the patronage of customers of the old business. Thus, where one of the partners conducting an importing and commission business in fancy groceries purchased the interest of the other partners, including the good will, the New York Court of Appeals held that an injunction should issue restraining the vendors, when they opened a similar business, from soliciting the trade of the customers of the old firm. And the Supreme Court of Illinois has held that the vendor of a business of manufacturing soft drinks

1 Foss v. Roby, 195 Mass., 292 (1907). Per Braley, J.: "In a mercantile partnership the sale of the good will conveys an interest in a commercial business, the trade of which may be largely, if not wholly, dependent upon locality, and the right which the vendee acquires under such a purchase is the chance of being able to retain the trade connected with the business where it has been conducted. But in a partnership for the practice of dentistry, the personal qualities of integrity, professional skill and ability attach to and follow the person not the place."

2 Townsend v. Hurst, 37 Miss., 679 (1859).

3 Brown v. Benzinger, 118 Md., 29, 36 (1912). Per Pattison, J.: "In some jurisdictions, however, a distinction is made, in the application of the law, between the sale of the good will of a trade or business of a commercial character where the location is an important feature of the business, and the sale of an established practice and good will of a person engaged in a profession or calling where the income therefrom is the immediate or direct result of his labor and skill and where integrity, skill, ability, and other desirable personal qualities follow the person and not the place. In the first of these sales the principle above laid down that in the absence of an express covenant the vendor of a business can enter a similar business in competition with the vendee] applies while in the latter it does not."

Beatty v. Coble, 142 Ind., 329 (1895).

Yeakley v. Gaston, 111 S. W., 768 (Texas Ct. of Civil Appeals, 1908); Dwight v. Hamilton, 113 Mass., 175 (1873); Warfield v. Booth, 33 Md., 63 (1870).

• Von Bremen v. MacMonnies et al., 200 N. Y., 41 (1910).

should be restrained, on reentering the business in competition with the purchaser, from soliciting the custom of those who patronized the business at the time of sale.1 Similarly, where a grocery and cigar business was sold, and the vendor, together with several former employees, organized a competing company, the Federal circuit court enjoined the new company from soliciting trade from customers of the business which had been sold; 2 and a similar ruling was made by a Federal circuit court in 1910.3 In like manner where the vendor of a business and good will agreed not to engage in a similar business within 1,000 miles of the city in which the business was located, without the written consent of the purchaser, the court, although refusing to enforce the contract, because it was not shown that an agreement covering such a wide area was necessary, enjoined the vendors from soliciting the trade of the customers of the old business. So, also, the Court of Errors and Appeals of New Jersey held that one who had sold the good will of a milk business, together with the personal property used in connection therewith, should be restrained, when he subsequently engaged in a competing business owned either by himself or his wife, from soliciting the custom of those who, prior to the sale of the property, had been his customers, and from serving any such customers whose business had been secured by solicitation. Similarly, the Supreme Court of Pennsylvania held that one who contracted to sell all of his right, title, and good will in a newspaper route violated his contract by calling on subscribers on the route with a view to inducing them not to buy papers from the purchaser of the route, but to patronize him instead. Decisions in Maryland, Massachusetts, New Jersey," and

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1 Ranft v. Reimers, 200 Ill., 386 (1902).

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2 Acker, Merrall & Condit Co. v. McGaw et al., 144 Fed., 864, 865 (C. C., 1906). Per Morris, J.: "It would be a reproach to the law if no adequate remedy could be afforded for the protection of a property so valuable as such a good will against the attacks of the vendor who had sold it, and who afterwards attempts to regain it to the damage of his vendee.

"As the continued patronage of the customers of such a business is what makes the good will of value, and as it is utterly repugnant to the contract by which it was assigned that the vendor should be allowed to seek to regain it by soliciting the customers to come back to him, and as the damage thus inflicted is irreparable and is dithcult, if not impossible, in such a business as this to compute, I think a court of equity should not hesitate to grant a remedy by injunction."

Myers r. Tuttle, 183 Fed., 235 (1910).

4 Althen v. Vreeland, 36 Atl., 479 (N. J. Ch., 1897).

5 Snyder Pasteurized Milk Co. v. Burton, 80 N. J. Eq., 185 (Ct. of Errors and Appeals, 1912).

Wentzel v. Barbin, 189 Pa. St., 502 (1899). Per Curiam: "When the defendant agreed to sell to the plaintiff all his right, title and good will to the Oakland paper route, until now, controlled by the said R. M. Barbin,' he became bound in honor and in law to carry out his contract in good faith. He was certainly not at liberty, especially after receiving a large part of the purchase money, to filch away from the plaintiff the veritable substance of that which he had sold. It was not like the setting up of another business of the same kind, but it was the taking away of the very thing he had sold that was complained of by the plaintiff.

Brown v. Benzinger, 118 Md., 29 (1912).

Foss r. Roby, 195 Mass., 292 (1907); Fairfield v. Lowry et al., 207 Mass., 332 (1911). 9 Snyder Pasteurized Milk Co. v. Burton, 80 N. J. Eq., 185 (Ct. of Errors and Appeals,