Sawilowsky v. Brown

• Decision Date: 21 March 1923
• Docket Number: 4023,4024.
• Citation: 288 F. 533
• Parties: SAWILOWSKY v. BROWN. SAWILOWSKY et al. v. BROWN et al.
• Court: U.S. Court of Appeals — Fifth Circuit

288 F. 533

SAWILOWSKY v. BROWN.

SAWILOWSKY et al. v. BROWN et al.

Nos. 4023, 4024.

United States Court of Appeals, Fifth Circuit.

March 21, 1923

Rehearing Denied April 6, 1923.

George C. Bedell, of Jacksonville, Fla. (Sabel & Reinstine, of Jacksonville, Fla., on the brief), for petitioners.

Sam R Marks, of Jacksonville, Fla. (Johnson & McIlvaine, and Marks Marks & Holt, all of Jacksonville, Fla., on the brief), for respondents.

Before WALKER, BRYAN, and KING, Circuit Judges.

KING Circuit Judge.

The above-stated petitions have been presented and argued together. Involuntary proceedings in bankruptcy against Samuel Sawilowsky were pending in the United States District Court for the Southern District of Florida, and on September 20, 1922, the referee in bankruptcy by order authorized the trustee to offer for sale the stock of merchandise consisting of ladies' and children's shoes, and fixtures of the bankrupt, located in a store in Jacksonville, Fla.; said business and store being conducted under the name of 'The Children's Bootery.' Said trustee advertised said stock and fixtures as those of said bankrupt trading as 'Children's Bootery,' and announced to prospective bidders that the purchase of the stock and fixtures would carry with it the good will and trade-name of the business, and that the purchaser could obtain a three-year lease on said store.

Previously, at the first meeting of creditors, it had been unanimously resolved that the trustee was authorized to sell the assets of the bankrupt at private sale, subject to the approval and confirmation of the referee, without further meeting of creditors or notice of sale. The stock and fixtures were purchased by Thomas C. Sutker. The sale was confirmed by the referee, reciting that it was of the entire stock and fixtures, with the good will and trade-name of said bankrupt, and a bill of sale conveying said stock, fixtures, good will, and trade-name was executed by the trustee to said Sutker.

The bankrupt filed a petition to review said order of confirmation, and subsequently said bankrupt and two others, who recited that with him they were at the time of said sale seeking to form a corporation under the laws of Florida as 'The Children's Bootery,' filed a petition asking that said Sutker be required to surrender said bill of sale and accept a new one, omitting said good will and trade-name.

The District Court on review affirmed the referee's order confirming said sale, and refused to direct the surrender and cancellation of the bill of sale including said good will and trade-name, holding that they were assets which possessed value and which therefore passed to the trustee and were subject to sale by him; that the price obtained was sufficient, and that the bankrupt was not entitled to retain the same as his own property not affected by the bankruptcy. The petitioners have filed in this court petitions to superintend and revise in matter of law the orders of the District Court.

That good will is a thing of value in many cases, and that it is susceptible of being transferred in connection with a business having locality or name and not independently, has been decided by the United States Supreme Court. It says:

'Undoubtedly, good will is in many cases a valuable thing, although there is difficulty in deciding accurately what is included under the term. It is tangible only as an incident, as connected with a going concern or business having locality or name, and is not susceptible of being disposed of independently. Mr. Justice Story defined good will to be 'the advantage or benefit, which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessity, or even from ancient partialities or prejudices.' Story, Part. Sec. 99. As applied to a newspaper, the good will usually attaches to its name rather than to the place of publication. The probability of the title continuing to attract custom in the way of circulation and advertising patronage, gives a value which may be protected and disposed of, and constitutes property. ' Metropolitan Bank v. St. Louis Dispatch Co., 149 U.S. 436, 446, 13 Sup.Ct. 944, 948 (37 L.Ed. 799).

It has been decided to be an asset in bankruptcy subject to be sold by the trustee. S. F. Myers Co. v. Tuttle (C.C.) 183 F. 235, 236.

Good will and trade-names or trade-marks connected with a business are destroyed by a sale of the business without the good will and trade-marks, and the...