Vonderbank v. Schmidt

• Decision Date: 01 March 1892
• Docket Number: 10,853
• Citation: 44 La.Ann. 264,10 So. 616
• Court: Louisiana Supreme Court
• Parties: MATHIEU VONDERBANK v. JOHN SCHMIDT

10 So. 616

44 La.Ann. 264

MATHIEU VONDERBANK v. JOHN SCHMIDT

No. 10,853

Supreme Court of Louisiana

March 1, 1892

Rehearing refused.

APPEAL from the Civil District Court for the parish of Orleans Monroe, J.

Buck Dinkelspiel & Hart, for Defendant and Appellant.

Bernard McCloskey, for Plaintiff and Appellee.

WATKINS J. BREAUX, J., having a personal interest in the question recuses himself.

OPINION

WATKINS, J.

For many years the plaintiff in this suit was engaged in the conduct and management of a hotel, which was kept in a rented building on Magazine street, in the city of New Orleans. It was kept on what is popularly known as the European plan, i. e., rooms and lodging without board. While thus conducted, this hotel was customarily styled and denominated the "Hotel Vonderbank," or "Vonderbank Hotel."

While thus conducting said hotel, the plaintiff was also engaged in a business on Common street, in said city, between Camp and St. Charles streets, under the name and style of "Cafe Restaurant Vonderbank," which consisted of a bar room, or saloon, and restaurant and a few rooms for lodgers.

Plaintiff represents that the theory upon which he conducted the two businesses was that his hotel on Magazine street was to be a boarding place for the patrons of his restaurant -- the two being conducted co-operatively.

That in April, 1889, he made a sale of the place to Charles Dormetzer, who carried on the business for some time thereafter, though unsuccessfully, and assigned it to his creditors. An arrangement was made whereby it was conveyed to the defendant. Under the administration of Dormetzer and Schmidtt, the hotel was operated as it had been by the plaintiff, under the name "Hotel Vonderbank" or "Vonderbank Hotel," and he complains that it was done in plain violation of his rights and much to the detriment and injury of his business as a restauranteur.

Denying that defendant required or has the right to enjoy that privilege, petitioner enjoined his further use of his name, claiming damages, and from an adverse judgment he prosecutes this appeal.

The ground on which the defendant resists the plaintiff's demands is, that by his purchase from Dormetzer he acquired all the right, title and interest of said vendor in and to the "Hotel Vonderbank" or "Vonderbank Hotel," situated on Magazine street, including the good will of the business and establishment, and particularly such good will as said vendor acquired from the plaintiff, including the name or style of said hotel, which he, as a purchaser, is of right entitled to use and enjoy.

Plaintiff admits and claims that he sold to Dormetzer "the shelving, counters, tables, crockery, beds and bedding, and all other movable effects in the building known as the 'Vonderbank Hotel' (or 'Hotel Vonderbank'), situated on Magazine street * * * and used in connection with his business, now the property of said Vonderbank, together with the good will of said Vonderbank in and to said business."

The business of which the plaintiff is now the proprietor, as he was at the time of his sale of the hotel, is styled and advertised as "Mathieu Vonderbank, proprietor of Vonderbank's Cafe and Restaurant," situated at Nos. 126, 128 and 130 Common street.

It is further admitted and conceded that at the date of these transactions, the hotel was a going concern in full operation as the "Vonderbank Hotel," or Hotel Vonderbank," and that is so now.

It is of an interference with his restaurant business that plaintiff complains, on account of defendant's improper and unlawful use of his name in the style of his hotel. Neither in the sale of plaintiff to Dormetzer, nor in that of the latter to defendant, is there any mention of the name "Hotel Vonderbank" as a factor in the contract, it only appearing from the two acts of sale, that there was conveyed all the movable property belonging to the hotel situated in the building known as the Hotel Vonderbank, on Magazine street, together with the good will of said Vonderbank, and subsequently of Dormetzer, in and to said premises.

On this state of facts, the only question raised is, whether, under Dormetzer's purchase from Vonderbank, and his sale to Schmidt, including specifically the good will of the hotel establishment, the latter acquired, and is entitled to use, the name "Hotel Vonderbank" or "Vonderbank Hotel" as the style of his hotel. This must be determined by the true meaning of the term good will, as it is employed in commercial transactions. We have been referred to only three cases in our own reports in which the subject has been discussed, but in neither of which was discussed the particular question we have here, i. e., what passes by the term good will in an act of sale.

The cases referred to are the following, viz.: Wentz vs. Vogte, 3 An. 16; Succession of Jouron, 21 An. 391; Bergamini vs. Bastian, 35 An. 60.

In treating of the good will of a market stall the court said in the second case, that it is "understood (to be) the run of custom which the transferror had attained by the patronage of his friends resorting to his stand to purchase, and, generally, from the reputation his stand had acquired as one at which good and wholesome meats are sold, and where customers were accommodated and fairly dealt with."

This definition appears to have been paraphrased from that of Judge Story, which is frequently quoted by judges and authors. story on Partnership, Sec. 99; Am. and Eng. Enc. of Law, Vol. 8, p. 1366, in which brief quotations from English adjudications are found.

The third of the three cases above referred to, treated of an act of sale of an eating house at No. 21 Royal street, city of New Orleans, which contained no stipulation of good will having been conveyed, the plaintiff's complaint being that his vendor had soon afterward begun a similar business at No. 18 Royal street, in violation of his contract.

But the court substantially held, that inasmuch as there was no stipulation in the contract that the vendor should not resume business in his own name, the injunction should be dissolved.

We have referred to those decisions for the sole purpose of showing that our own jurisprudence affords no light on the present controversy, and of illustrating the necessity of looking into the decisions of other courts, and the opinions of text writers, for the correct solution of it. And we make the following quotations as conveying a clear idea of what good will is.

For instance, the Michigan court says in Chittenden vs. Whitebeck, 50 Mich. 401: "Good will has been defined by this court to be the favor which the management of a business wins from the public, and the probability that all customers will continue their patronage," or as stated by Lord Eldon in Crutwell vs. Lloyd 17 Veis. 335, says the court, "the probability that old customers will resort to the old place."

The same court say in Williams vs. Farrand, 50 N.W. p. 446:

"Good will may be said to be those intangible advantages or incidents which are impersonal, so far as the grantor is concerned, and attach to the thing conveyed. When it consists in the advantage of location it follows an assignment of the lease of the location."

Or as was previously said by that court in the Chittenden case:

"Good will attaches to the property, and in case of a lease, it belongs to the lessee only during its continuation. * * * The claim to an interest in the good will is inseparable from the claim to an interest in the lease, and when one falls the other falls with it."

To a like effect is the opinion of the same court as expressed in Meyers vs. Kalamazoo Buggy Co., 54 Mich. 215.

A standard author, in his treatise on trade marks, discusses and defines good will as an analogous right, and quotes with approval the expressions of various English judges on the subject.

Thus from Wedderburn vs. Wedderburn, 22 Beav. 84, viz.:

"There is considerable difficulty in defining accurately what is included under the term good will. It seems to be that species of connection in trade which induces customers to deal with a particular firm.

From England vs. Downes, 6 Beav. 269, viz.:

"It is the chance or probability that custom will be had at a certain place of business, in consequence of the way in which that business has been previously carried on."

From Story on Partnership, viz.:

"It may be described 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," etc. Sec. 90.

Browne's Law of Trade Marks, Secs. 525, 526. In further illustration of this principle we have selected the following paragraph from Williams vs. Farrand, as giving a careful analysis, from a commercial point of view, of what passes by an act of sale containing no stipulation of good will, viz.:

"A retiring partner conveys" -- without stipulating good will -- in addition "to his interest in the tangible effects, simply the advantages that an established business possesses over a new enterprise. The old business is an assured success, the new an experiment. The old business is a going business and produces its accustomed profits on the day after its transfer. It is capital already invested and earning profits. The continuing partner gets these advantages. The new business must be built up. The capital taken out of the old concern will earn nothing for months and in all probability the first year's business will show loss instead of profit. For a time, at least, it is capital awaiting investment, or invested earning...