GOOD WILL The benefit which arises from the establishment of a particular trade or occupation. The• advantage or benefit which is acquired by an establishment, be yond the mere value of the capital, stocks, funds, or property employed therein, in con sequence of the general public patronage and encodragement which it receives from con stant or habitual' customers; on account of its local position, or common celebrity,, or reputation for skill or affluence or punctual ity, or from other accidental circumstances or necessities, or even from ancient partial ities, or prejudices. Story, Partn. § 99. See 16 Am. Jur. 87 ; 22 Beay. 84 ; Elliot's Ap peal, 60 Pa. 161; 5 Russ. 29 ; Vonderbank v. Schmidt•44 -La. Ann. 264, 10 South. 616, 15 L. R. A. 462, 32 Am. St Rep. 336.
The advantages which may inure to the purchaser from holding himself out to the public as succeeding to an enterprise which has been identified in the past with the name and repute of his predecessor. Knoedler v. Boussod, 47 Fed. 465.
"The term good will can hardly be said to have any precise signification. It is general ly used to denote the uenefit arising from con nection and reputation ; and its value is what can be got for the chance of being able to keep that connection and improve it. Upon the sale of an established business its good will has a marketable value, whether the business is that of a professional man or of any other person. But it is plain that good will has no meaning except in connection with a continuing business ; it may have no value except in connection with a particular house, and it may be so inseparably connect ed with it as to pass with it, under a will, or deed, without being specially Lindl. Partn., Wentworth's ed. 440.
"The, good will . . . is nothing more than the probability that the old customers will resort to the old place." Per Eldon, C., in 17 Ves. 335 ; but this is said to be too nar row a definition by Wood, V. C., who said that the term meant every 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 o• the late firm, or with any other matter car rying with it the benefit of the late business. Johns. (Eng. Ch.) 174 ; and similar views were expressed in 2 Madd. 198. Many def initions are collected in People v. Roberts, 159 N. Y. 70, 80, 53 N. E. 685, 45 L. R. A. 126, by Vann, J., who concludes: "Good will em braces at least two elements, the advantage of continuing an established business in its old place, and of continuing it under the old style or name. While it is not necessarily local, it is usually to a great extent, and must, of necessity, be an incident to a place, an established business or a name known to the trade." In that case the good will of a foreign corporation engaged in business in New York was held to be taxable as capital employed in that state.
The point of the opinion of Lord Eldon in the case above cited, so much referred to, that there is no implied covenant or promise on the part of the vendor or assignor of the good will of a business, not to set up the same trade, in opposition to the purchaser, In the neighborhood'; accordingly an injunction to prevent him from doing so was refused ; 17 Ves. 335. Since this case, the English deci sions, after passing through a period of vacil lation, seemed recently to have established the implied contract of one who simply sells the business and good will upon a much more substantial basis. It was held by Lord Ro milly in Lahouchere v. Dawson that an out going partner; may • not solicit the old cus tomers privately by letter or by a travelling agent if he has sold the good will to his for mer partners. This went upon the principle
that a grantor may not derogate from his grant. This was considered to have gone be yond any previous case and was overruled in Pearson v. Pearson, 27 Ch. D. 145, where Cot ton, L. J., said: "It is admitted that a per son who has sold the good will of his business may set up a similar business next door and say that he is the person that carried on the old business, yet such proceedings manifest ly tend to prevent the old customers going to the old place." See 74 L. T. 343. Between the rendering of these judgments Jessel, M. R., had enjoined the solicitation of old cus tomers but not the dealing with them ; 14 Ch. D. 603 ; in that case good will is defined as "the formation of that connection which has made the value of the thing that the late firm sold," and is frequently the only thing saleable. This definition was quoted with ap proval by Lord Herschell in Trego v. Hunt, infra. Another decision of Jessel, M. R., re straining a former partner from dealing with old customers was reversed by the court of appeal, but the order in this case, restraining the solicitation, was not appealed from ; the court said that "to enjoin a man against deal ing with people whom he has not solicited is not only to enjoin him, but to enjoin them, for it prevents them from having the liberty which anybody in the country might have of dealing with whom they like ;" 15 Ch. D. 306. But the court of appeal, affirming the same judge, held that on the compulsory sale of a good will in bankruptcy proceedings, the bankrupt would not be restrained from solici tation; 19 Ch. Div. 355; anu this distinction has been characterized as inconsistent ; 9 Harv. L. Rev. 480. All the decisions based upon Labouchere v. Dawson were overturn ed by the ease in 27 Ch. D. 145, which was followed by 44 Ch. D. 616. But in Trego v. Hunt, [1896] App. Cas. 7, reversing [1895] 1 Ch. 462, the later decisions were overruled and the doctrine of Labouchere v. Dawson, was approved. There the good will remained with the old concern and the out going partner who had sold it to his former partner employed a clerk in the firm to keep the names and addresses of the firm's cus tomers so that he might solicit their business on his own account. This the house of lords restrained him from doing. Lord MacNagh ten designated the good will as "the very sap and life of the business, without which the business would yield little or no fruit," the result "of the reputation and connection of the firm which may have been built up by years of honest work or gained by lavish ex penditure of money." The vendor or retiring partner "may not the custom and steal away the customers. It is not an honest thing to pocket the price and then to recapture the subject of sale, to decoy it away or call it back before the pur chaser has had time to attach it to himself and make it his very own." But "he may do everything that a stranger in the ordinary course of business would be in a position to do. He may set up where he will. He may push his wares as much as he pleases." In the same case it was said by Lord Davy, "that the idea of good will and what is com prised in the sale of business has silently been developed and grown since the days of Lord Eldon." In Curl v. Webster, [1904] 1 Ch. 685, the rule of Trego v. Hunt was applied to all per sons previously customers of the old business, even including those who without solicitation became customers of the vendor.