Bremen v. MacMonnies

• Decision Date: 22 November 1910
• Citation: 93 N.E. 186,200 N.Y. 41
• Parties: VON BREMEN et al. v. MacMONNIES et al.
• Court: New York Court of Appeals Court of Appeals

200 N.Y. 41

93 N.E. 186

VON BREMEN et al.

v.MacMONNIES et al.

Court of Appeals of New York.

Nov. 22, 1910.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Henry Von Bremen and another against Frank MacMonnies and another. From a judgment of the Appellate Division (138 App. Div. 319,122 N. Y. Supp. 1087), affirming, as modified, a judgment for plaintiffs, they appeal, by permission, on certified questions. Questions answered.

See, also, 139 App. Div. 905,123 N. Y. Supp. 1146.

The order granting leave to appeal certified the following questions:

First. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from soliciting the trade of the customers and the persons, firms, and corporations who purchased merchandise from the firm of Von Bremen, MacMonnies & Co., of which the plaintiff Von Bremen and the defendants were copartners. Second. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from soliciting the trade of the persons, firms, and corporations named on the list of trade established by the firm of Von Bremen, MacMonnies & Co., and abstracted by the defendants, as found by the court in its decision. Third. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from dealing with, or selling merchandise to, the customers and the persons, firms, and corporations purchasing merchandise from the firm of Von Bremen, MacMonnies & Co., of which the plaintiff Von Bremen and the defendants were copartners. Fourth. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from dealing with, or selling merchandise to, the persons, firms, and corporations mentioned on the list of trade, compiled by the firm of Von Bremen, MacMonnies & Co., and abstracted by the defendants as found by the court in its decision. Fifth. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from dealing with, or selling merchandise to, the persons, firms, and corporations who were customers of or purchased merchandise from the firm of Von Bremen, MacMonnies & Co., of which the plaintiff Von Bremen and the defendants were copartners, and whose trade was solicited by the defendants since selling their interests in the said firm to the plaintiff Von Bremen. Sixth. Whether, upon the facts found in this case, the plaintiffs are entitled to an injunction against the defendants restraining them from dealing with, or selling merchandise to, the persons, firms, and corporations mentioned on the list of trade compiled and established by the firm of Von Bremen, MacMonnies & Co., abstracted by the defendants, as found by the court in its decision, whose trade has been solicited by the defendants.Gustav Lange, Jr., for appellants.

George W. Titcomb, for respondents.

WILLARD BARTLETT, J. (after stating the facts as above).

On May 10, 1904, one of the plaintiffs, Henry Von Bremen, and the defendants Frank MacMonnies and William Von Elm entered into a copartnership under the firm name of Henry Von Bremen & Co., subsequently changed to Von Bremen, MacMonnies & Co., for the transaction of an importing and commission business in buying, taking on commission, and selling all sorts of fancy groceries, which copartnership by the terms of the agreement was to continue until the 30th day of April, 1909. On February 10, 1909, the defendants sold to the plaintiff Henry Von Bremen ‘all their right, title, and interest in all the assets, good will, trade-marks, and other property of every name and nature wheresoever located of the firm of Von Bremen, MacMonnies & Co., together with all debts and things in action due or owing by or from any person or corporation to said firm.’ The consideration for this transfer was the payment of $44,000, which was $1,500 more than the book value of the property transferred. There was no specific valuation of the good will. The plaintiffs Henry Von Bremen and Herman T. Asche, under the firm name of Von Bremen, Asche & Co., have succeeded to the business thus purchased by the plaintiff Henry Von Bremen individually. Shortly after his purchase, the defendants formed a partnership under the firm name of MacMonnies & Von Elm for the transaction of a similar business in fancy groceries. In the competition which thus arose the defendants have done or threatened to do various acts which the plaintiffs contend have a tendency to lessen or destroy the good will of the business which they acquired from the defendants by means of the transfer which has been mentioned. The present suit was brought to enjoin such acts. The trial court, by its interlocutory judgment, granted a portion but not the whole of the relief for which the plaintiffs prayed. It enjoined the defendants from using the cable address of the old firm, which was ‘MacMonnies;’ from using a list of 2,200 dealers in fancy groceries which had been compiled by the old firm; and from using labels, brands, trade-marks, bottles, tins, and other packages, such as were exclusively owned or controlled by the old firm. The interlocutory judgment also directed an accounting for the profits realized by the defendants and an assessment of the damages sustained by the plaintiffs.

Upon their appeal to the Appellate Division, the plaintiffs obtained some additional relief, but still not as much as they desired. The injunction granted at Special Term was extended so as to enjoin the defendants from soliciting the agency for the sale of articles of which the old firm had the exclusive agency and from soliciting orders for goods packed under special labels, trade-marks, and brands devised for the old firm for special customers. One member of the Appellate Division thought that the defendants should also be restrained from soliciting any of the customers of the old firm, but a majority of the court refused to go as far as this. The principal question presented by the plaintiffs' appeal to this court it whether the injunction should be thus extended.

The answer to this question depends upon the meaning to be given to the term ‘good will’ in the transfer of the business of the old firm of Von Bremen, MacMonnies & Co. to the plaintiff Henry Von Bremen on February 10, 1909. If the law assigns a definite meaning to the term as used or implied in the voluntary transfer of a business, it must be presumed that such was its signification in this contract. We have to inquire, then, what are the restraints which the law imposes upon the assignor of the good will of a business, who transfers the same voluntarily, and not as the result of bankruptcy proceedings or under like compulsion.

The principal definitions of good will were fully stated and discussed by Judge Vann in People ex rel. A. J. Johnson Co. v. Roberts, 159 N. Y. 70, 53 N. E. 685,45 L. R. A. 126, and it is not necessary to repeat that statement or discussion here. Of all the noteworthy definitions the narrowest is probably that of Lord Eldon, who, in 1810, defined good will as ‘the probability that the old customers will resort to the old place.’ Cruttwell v. Lye, 17 Vesey, Jr., 335, 346. On the other hand, one of the broadest definitions is that suggested in 1859 by Vice Chancellor Page-Wood, who declared that good will included ‘all that good disposition which customers entertain towards the house of business identified by the particular name or firm, and which may induce them to continue giving their custom to it.’ Again, he said: ‘Good will must mean either advantage * * * 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.’ Churton v. Douglas, 2 M., D. & De G. 294.

Whatever definition of good will may be adopted, however, it appears to have been uniformly held that in case of a transfer thereof, the assignor, in the absence of an express agreementto the contrary, may carry on a similar business in the same locality. The question which has given most trouble to the courts in such cases has related to the right of the vendor of the good will to solicit business from the customers of the old firm. In England the controversy on this subject extends from the case of Labouchere v. Dawson (Law Reports [13 Equity] 322), decided by Lord Romilly, Master of the Rolls, in 1872, to Trego v. Hunt (Law Reports, 1896 [Appeal Cases] 7), decided by the House of Lords in 1895. Labouchere v. Dawson was the case of a sale of a brewery business upon the death of one of two partners. The surviving partner set up business as a brewer-there being no stipulation to prevent him from so doing-and solicited orders from...