Haugen v. Sundseth

• Decision Date: 20 November 1908
• Citation: 106 Minn. 129,118 N.W. 666
• Parties: HAUGEN et al. v. SUNDSETH et al.
• Court: Minnesota Supreme Court

106 Minn. 129

118 N.W. 666

HAUGEN et al.

v.SUNDSETH et al.

Supreme Court of Minnesota.

Nov. 20, 1908.

Appeal from District Court, Hennepin County; Frederick E. Brown, Judge.

Action by Tollef K. Haugen and others against Andrew Sundseth and others. Judgment for plaintiffs as against Sundseth, and he appeals. Affirmed.

Syllabus by the Court

Good will is an advantage and benefit gained by business establishments beyond the value of the money and property invested therein, and is ‘property’ in the legal sense of the term, and subject to sale in connection with the business precisely as other personal property is subject to sale.

It is assignable by the purchaser, though the transfer from the original owner does not run to the purchaser, ‘his successors and assigns.’ The use of those words or their equivalent is unnecessary to confer the right of subsequent alienation.

All contracts are to be construed in the light of the rules and principles of law applicable to the subject-matter of the transaction, and those rules and principles control the rights of the parties, except where the contract discloses an intention to depart therefrom.

Applying the rule stated, it is held that the contract in this case by which defendant transferred to plaintiffs' predecessors the good will of a furniture business in Minneapolis theretofore established by him was not intended to confer a mere personal privilege on the purchaser, but, on the contrary, to transfer the full and absolute right to the good will of the business transferred. John N. Berg, for appellant.

Arthur W. Selover and N. D. Bessessen, for respondents.

BROWN, J.

This action was brought to restrain and enjoin defendants from engaging in or conducting a retail furniture and undertaking business in the city of Minneapolis, and for other relief. Plaintiff moved the court for the issuance of a temporary injunction pending the suit, which, after hearing, was granted as to defendant Sundseth, but denied as to defendant Sundseth Furniture & Undertaking Company. Defendant Sundseth appealed.

The facts are as follows: On July 5, 1905, defendant Sundseth was, and for some time prior thereto had been, engaged in conducting the business of a retail dealer in furniture and undertaking in the city of Minneapolis. He had established a large and profitable trade, and was successfully carrying it on. On the day stated, after some negotiations, he sold out his business to Haugen & Meier, a copartnership composed of Thomas Haugen and John Meier, for the consideration in round numbers of $7,000 in money and the execution by Sundseth of the following contract, by which he transferred to his grantees the good will to the business and agreed not to enter into the same in said city for the term of five years thereafter: ‘This agreement, made this 10th day of July, 1905, by and between Thomas A. Haugen and John Meier, co-partners as Haugen and Meier, parties of the first part, and Andrew Sundseth, party of the second part, witnesseth: ‘Whereas the said parties of the first part have taken and purchased from the party of the second part the business and store of said second party in the city of Minneapolis. which said business includes the business of retailing furniture, house furnishings, stoves and ranges; and also general undertaking and embalming business; and also including the good will of said second party, in the said city of Minneapolis, in connection with said business; and whereas said first parties wish to protect the interest of said co-partnership, in the conduct of said business, now therefore, as a part of the consideration of said purchase and sale, the said second party hereby agrees to and with the first parties that he will not engage in the business of selling or retailing furniture, or house furnishings, stoves and ranges; or in the business of undertaking or embalming, either directly or indirectly, in the city of Minneapolis for a period of five (5) years from the date of this contract; that he will not own or control any stock in any corporation engaged in said business, and will not become interested in any co-partnership engaged in said business during a period of said five (5) years, and will not become an employé of any co-partnership, corporation or individual engaged in said business at any time during said period of five (5) years; or will not give or lend his influence, either directly or indirectly to the support or promotion of said business. The term ‘said business' shall include the business or businesses herein above described, and all lines of business usually carried on in connection therewith. [Signed] A. Sundseth.’ The transaction was completed on the 10th of July, 1905, and Haugen & Meier then took possession of the business, and thereafter managed and conducted it until some time in March, 1906, when the firm was dissolved, and the business, including all rights under the contract above set out, sold to the plaintiffs herein, a copartnership composed of Tollef K. Haugen and John Meier, under the firm name of Haugen & Meier Company. Thereafter the defendant Sundseth Furniture & Undertaking Company was organized and opened up a furniture and undertaking business in the neighborhood of the old stand occupied by defendant Sundseth prior to the sale to Haugen & Meier. Plaintiffs allege that this new concern was organized by defendant Sundseth using the name of his wife, and that he has controlled and conducted the same since its organization in his own interest and in violation of the contract under which he sold the good will of the business to Haugen & Meier. After the formation of that corporation, this action was brought by plaintiffs, successors of Haugen & Meier, to restrain both defendant Sundseth and the Sundseth Furniture &...