Jackson v. Caldwell
| Decision Date | 21 June 1966 |
| Docket Number | No. 10389,10389 |
| Citation | 415 P.2d 667,18 Utah 2d 81 |
| Parties | d 81 A. Rulon JACKSON, Plaintiff and Appellant, v. Grant R. CALDWELL et al., Defendants and Respondents. |
| Court | Utah Supreme Court |
George M. McMillan, Salt Lake City, for appellant.
Pugsley, Hayes, Rampton & Watkiss, Edward M. Bown, Salt Lake City, for respondents.
This is an action in which the plaintiff-appellant claims the defendants-respondents unlawfully and wrongfully appropriated good will inherent in the relationship between a firm of public accountants and their clients, of which he was a member, and, upon dissolution failed to account to plaintiff for his share of two partnership assets, to-wit:
(a) The good will in the client-public accountant relationship, and
(b) Work in process at the time of termination of the firm.
Plaintiff claims alternatively that he is entitled to damages for breach of a written agreement dated March 7, 1960.
The lower court held that the conduct of the defendants toward the plaintiff was not tortious; that defendants were not guilty of any breach of contract; that there was no good will inherent in the relationship between the firm of public accountants known as Messina, Caldwell & Co. and their clients, and the court adopted defendants' theory of allocation of the asset known as work in progress. Plaintiff seeks reversal of the judgment of the District Court.
The record discloses the plaintiff was, during the period relevant to this litigation, a public accountant. He was also an attorney. However the evidence in this case and the matters in issue relate only to his rights and property interests as a partner in the firm of Messina, Jackson, Caldwell & Company, Public Accountants.
Prior to the commencement of this action the plaintiff, defendants and Marco Messina, now deceased, were engaged as a partnership of public accountants under the name of Messina, Jackson, Caldwell & Company. The partnership agreement bore the date of April 1, 1958 and was amended April 1, 1959. This agreement provided that in the event of the death of said Marco Messina, who was then ill, the partnership would nevertheless continue until the close of the second fiscal year after the fiscal year in which such death occurred, and that the estate or heirs of the decedent would be entitled to the same participation in the income and profits between the date of death and the effective date of termination of the partnership as the decedent would have received had he continued to live and participate in the partnership. The said partnership conducted business on a fiscal year basis cmmencing April 1 through March 31 of the following year. Marco Messina died on August 16, 1959.
After the death of Messina, plaintiff and defendants continued to operate the partnership under the name of Messina, Jackson, Caldwell & Company pursuant to the terms and conditions of the partnership agreement of April 1, 1958 as amended April 1, 1959 until the end of the second fiscal year after the fiscal year in which the death of Messina occurred, March 31, 1962.
Subsequent to the death of Messina discontentment arose among the partners and employees regarding management. Beginning in January 1961 meetings were held in an effort to solve the problems, but to no avail. During the meetings plaintiff was advised by Mr. Caldwell that with respect to the partnership he could have any account in the office, or any employee, and he could have the office space then under lease. Plaintiff rejected these offers and continued to devote much of his time to his own personal matters. Thereafter plaintiff gradually on his own volition withdrew from active partnership participation.
Defendants gave plaintiff formal written notice of the termination of the partnership as of March 31, 1962 by instrument dated April 3, 1961. Following receipt of this notice plaintiff and defendant, Grant R. Caldwell, agreed that upon the termination of the partnership on March 31, 1962, the clients and accounts were to be allowed to follow the accountants of their choice; that no solicitation of clients or accounts would be made by any party and that the situation would remain in the status quo until March 31, 1962. The record does not show any solicitation by the defendants.
Mr. Paul J. Maxwell was an employee of the old partnership. He and the plaintiff formed a business relationship during the first part of January 1962, some three months prior to the termination of the old firm. Immediately thereafter Maxwell terminated his employment with the old partnership, took certain clients and accounts and their files and records with him, which he and plaintiff used after formalizing their business relationship into a partnership to function as a public accounting organization in May 1962.
Immediately upon the termination of the old partnership, March 31, 1962, plaintiff and defendant, Caldwell, met and agreed upon a division of the assets of the said partnership. This division was approved by the other defendants. Plaintiff immediately thereafter removed all of those items selected by him, including the files and working papers of those clients and accounts of the old partnership who chose to go with him and not theretofore taken by the plaintiff or Mr. Maxwell, from the offices of the old partnership to the offices of Jackson, Maxwell & Co., Public Accountants.
At the time of the division, plaintiff did not mention or make any reference to any breach of any contract, did not assert, nor was there any showing made that he was permanently disabled.
Defendants, certain employees, and Mr. Nicholas Rhodes, a former individual practitioner, formed a new business relationship to service those clients and accounts of the old partnership who chose to go with them rather than with plaintiff and Maxwell.
Certain work in process remained unfinished as of March 31, 1962, with respect to certain clients and accounts who chose to go with defendants, which has been completed. As soon as this was accomplished Grant R. Caldwell prepared a detailed accounting and furnished the plaintiff said accounting. Concurrently with such report, defendant Caldwell requested plaintiff to furnish defendants with an accounting with respect to those accounts and clients which belonged to the old firm and who had chosen to go with plaintiff. Plaintiff has failed to furnish such accounting.
At the time of the trial the plaintiff was ill and incapacitated as a witness.
The foregoing is a recitation of the facts as found by the trial court.
Upon such findings the District Court found for the defendants as hereinbefore stated.
Plaintiff bases his argument for a reversal of the trial court judgment on five points. The first four may be combined into one inclusive question. Did the trial court commit error in holding the plaintiff failed to establish by a preponderance of the evidence that the partnership of Messina, Jackson, Caldwell & Company had an asset of good will, in which plaintiff would be entitled to share?
In answering this question we must first determine the meaning of the term 'good will.' It is generally understood that good will is a transient intangible something connected with a business. It is not corporeal property, but rather an asset without physical form, an element responsible for profits in the business. 1
The 'good will' value of any business enterprise is that value which results from the probability that old customers will continue to trade or deal with the members of an established concern. It is the probability that old customers will resort to the old place or seek old friends, and the likelihood of new customers being attracted to well advertised and favorably known services or goods. 2
Good will is 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 patronage and encouragement which it receives from constant or habitual customers on account of its location, or local position or reputation for quality, skill, integrity or punctuality. 3 It is something in business which gives reasonable expectancy of preference in the race of competition.
Good will is property, so recognized and protected by law. As such it is subject to bargain and sale. There has been a rather general acceptance by the courts that good will exists as property incidently to other property rights and is not susceptible of being owned and disposed of separately from property rights to which it is an incident. 4
The case at bar presents questions which may call for a variation or modification of the rules as stated. It appears that the substantial weight of authority in this country is to the effect that no value can be attached to the good will of a professional partnership, although there are cases to the contrary based upon particular facts and circumstances.
This court has heretofore held that simply because each of the parties had the right to continue separate businesses after dissolution it did not mean that...
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Sorensen v. Sorensen
...The Division of Professional Goodwill Upon Marital Dissolution, 11 Harv. Women's L.J. 147, 149 (1988); and Jackson v. Caldwell, 18 Utah 2d 81, 415 P.2d 667, 670 (1966).6 Dugan v. Dugan, 92 N.J. 423, 457 A.2d 1, 4 (1983) (quoting J.M. Smith and K.F. Skousen, Intermediate Accounting 283 (7th ......
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...continue to trade or deal with the members of an established concern."'" 238 Neb. at 759, 472 N.W.2d at 399 (quoting Jackson v. Caldwell, 18 Utah 2d 81, 415 P.2d 667 (1966)). We have recognized that where the sale of goodwill is involved in the sale of a business, such as in the instant cas......
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Stonehocker v. Stonehocker
...the enterprise and would vanish were the individual to die, retire or quit work." Stevens, 754 P.2d at 956 (citing Jackson v. Caldwell 18 Utah 2d 81, 415 P.2d 667, 670 (1966)). Although we agree with the trial court's decision to exclude goodwill from the calculation of Stoney Motor's value......
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Peterson v. Jackson
...on account of its location, or local position or reputation for quality, skill, integrity or punctuality.” Jackson v. Caldwell, 18 Utah 2d 81, 415 P.2d 667, 670 (1966). “It is the probability that old customers will resort to the old place or seek old friends, and the likelihood of new cust......
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Dead or Alive? Territorial Restrictions in Covenants-not-to-compete in Nebraska
...v. Vodra, 222 Neb. 480, 487, 385 N.W.2d 73, 78 (1986). 50. American Sec., 222 Neb. at 487, 385 N.W.2d at 78 (quoting Jackson v. Caldwell, 415 P.2d 667, 670 (Utah 1966)). 51. 225 Neb. 662, 407 N.W.2d 751 (1987). 52. Polly v. Ray. D. Hilderman & Co., 225 Neb. 662, 668-69, 407 N.W.2d 751, 756 ......
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Dead or Alive? Territorial Restrictions in Covenants-not-to-compete in Nebraska
...v. Vodra, 222 Neb. 480, 487, 385 N.W.2d 73, 78 (1986). 50. American Sec., 222 Neb. at 487, 385 N.W.2d at 78 (quoting Jackson v. Caldwell, 415 P.2d 667, 670 (Utah 1966)). 51. 225 Neb. 662, 407 N.W.2d 751 (1987). 52. Polly v. Ray. D. Hilderman & Co., 225 Neb. 662, 668-69, 407 N.W.2d 751, 756 ......
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Article
...for quality, skill, integrity or punctuality.'" Peterson v. Jackson, 2011 UT App 113, ¶ 35, 253 P.3d 1096 (quoting jackson v. Caldwell, 415 P.2d 667,670 (Utah 1966)). As to protecting the goodwill of a company via a non compete agreement, the Utah Supreme Court has held "a covenant not to c......