Case ID: nys_7/html/0518-02.html
Source: Caselaw Access Project
Author: {"author": "Brady, J. Daniels, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Rice v. Baggot.
    
      (Supreme Court, General Term, First Department.
    
    November 7, 1889.)
    1. Partnership—Dissolution—Accounting.
    On dissolution of a partnership, the fact that the retiring partner undertakes to carry on a similar business near by, and to divert the former customers of the firm, is proper to he considered in estimating the amount to be allowed him for the goodwill of the business.
    2. Same—Receivers.
    Where the partners had agreed as to the disposition and control of the property, except as to one item, which, as well as the whole question, had been placed in the power of the court by the evidence, a motion to appoint a receiver to sell the goodwill and lease was properly denied.
    Appeal from special term.
    
      Action by William H. Rice against Atmore L. Baggot for dissolution of a partnership, etc. Plaintiff appeals.
    Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
    
      G. 8. Hastings, for appellant. W. K. Hall, for respondent.
   Brady, J.

This action was commenced in February, 1888, for the dissolution of a copartnership theretofore existing between the plaintiff and defendant, and for an accounting. Subsequently, and after issue joined, the parties signed articles of dissolution, by which all matters between them were settled, except as to whether the plaintiff should pay to the defendant any sum for the good-will of the business, in addition to the sum already paid, according to the articles of dissolution. The learned justice, before whom the action was tried found in favor of the defendant on this subject, determining the goodwill to be reasonably worth $4,000, and this presents the only question of any importance on the appeal. The testimony with regard to it was conflicting, although that in favor of the defendant was more affirmative in character, and better in quality, than that given on behalf of the plaintiff; in addition to which it appeared that the defendant had offered to pay to the plaintiff the sum of $2,000 for the good-will, or to accept that sum. And this offer, in connection with the testimony already alluded to, clearly justified the learned judge in holding that it was worth $4,000. The counsel for the appellant thinks that this amount is erroneous, for the reason that the evidence established that the defendant endeavored to divert the trade from the old concern by opening a store on the opposite corner, and by securing the eye and ear of the old customers as far as possible; which meant that he had distributed circulars to the old customers, advising them that he had opened such a store,—a circumstance which no doubt was taken into consideration by the learned justice, inasmuch as the fact mentioned was one which had appeared in the evidence. If the testimony had not been considered.it would doubtless have been an error, upon the proposition which seems to be correctly stated in Bindley on Partnership, as follows: “The value of the good-will of any business to a purchaser depends, in some cases entirely, and in all very much, on the absence of competition on the part of those by whom the business had been previously carried on. ” Page 440. This rule is predicate of the character of the good-will, which is the favor the management of a business wants from the public, and the probability that old customers will continue their patronage. Chittenden v. Witbeck, 50 Mich. 401, 15 N. W. Rep. 526; Myers v. Buggy Co., 54 Mich. 215, 19 N. W. Rep. 961, and 20 N. W. Rep. 545. Or, as was said by Chief Justice Daly in Hegeman v. Hegeman, 8 Daly, 4: The goodwill in a business may be. acquired from its being established in a particular place, from which the person conducting it has derived profit, and where there is attached to the business a name indicating to the public where or in what manner it is carried on. The judge doubtless took into consideration the fact that the store which was secured by the defendant was small, was the only one suitable to his business that he could find, and was already a shoe-store, and had been during the business of the copartners herein; and, as their business was prosperous, it was fair to presume there was little injury from the competition thus existing. It is also supposed that the conclusion in reference to the value of the good-will was erroneous, because there was no finding of fact showing that the lease had any value in excess of the rental charged. But this proposition does not embrace another element, and that is the existence of the business, and its success, which formed necessarily a part of the goodwill.

It is also supposed by the learned counsel that his motion, made upon the trial and after the evidence was in, for the appointment of a receiver to sell the good-will and lease, should have been granted. And his proposition rests upon the case of Marten v. Van Schaick, 4 Paige, 479, which simply decides, what is perfectly familiar, that upon a bill filed by one partner to close up a partnership concern it is a matter of course to appoint a receiver, if the parties cannot agree between themselves as to the disposition and control of the property, and the motion, therefore, is generally made before the issues are tried. Here the whole subject had by the evidence be,en placed in the power of the court. Hot only that, but the parties had not been unable to agree as to the disposition and control of their property; for they had arranged that by their articles of dissolution, except as to the one item, which had been fully investigated before the motion was made. The judgment should be affirmed, with costs.

Daniels, J.

The amount allowed by the judgment for the good-will of the business seems to be more than its probable value, inasmuch as the stock was taken at a valuation of 90 per cent. But as the court at the trial had the advantage, not existing on the appeal, of personally seeing and hearing the witnesses, the conclusion there adopted must be accepted as final. There is no such preponderance in the evidence as will justify any interference with the judgment, and it should therefore be affirmed; but considering the large amount allowed, it should be without costs of the appeal.

Van Brunt, P. J., concurs.