THE

AMERICAN LAW REGISTER.

JANUARY 1875.

GOOD-WILL.

THERE are few subjects in the law which seem to be less thoroughly understood and which have in consequence given rise to more conflicting decisions than that which stands at the head of this article. In nearly every case which has arisen the opinion of the judge has been exclusively shaped by the peculiar facts before him; instead of deducing the result from a comprehensive survey of the whole field, the judicial mind has restricted itself to the narrow limits set by the facts immediately before it, and a strange confusion of ideas, sometimes in the succeeding decisions of the same judge, has been the natural and necessary consequence.

The best definition of good-will is that of Mr. Justice STORY.. "Good-will," says he, "may be properly enough 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, or reputation for skill or affluence, or punctuality, or from other accidental circumstances, or necessities, or even from ancient partialities or prejudices." (Story on Partnership, § 99.) Lord' ELDON'S oft-repeated definition of good-will (Cruttwell v. Lye, 17 Ves. 335) is far too narrow: "The good-will** is nothing more

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than the probability that the old customers will resort to the old place." In Churton v. Douglas, Johnson's Ch. Rep. 174, V. C. Sir W. PAGE WOOD uses the following language: "It was argued that, in Shakle v. Baker, 14 Vesey 468, Cruttwell v. Lye, 17 Id. 335, and Kennedy v. Lee, 3 Meri. 452, Lord ELDON has laid down the principle, that an assignment of the 'good-will' of a trade, simpliciter, carries no more with it than the advantage of occupying the premises which were occupied by the former firm, and the chance you thereby have of the customers of the former firm being attracted to those premises. But it would be taking too narrow a view of what is there laid down by Lord ELDON to say that it is confined to that. Good-will,' I apprehend, must mean every advantage-every positive advantage, if I may so express it, as contrasted with the negative advantage of the late partner not carrying on the business himself-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 of the late firm, or with any other matter carrying with it the benefit of the business. When Lord ELDON is speaking of a nursery garden or a locality which the customers must frequent to look at the flowers and other things, and when Sir THOMAS PLUMER, in another case, in speaking of a retail shop which a person must enter in order to buy the goods. there exposed-they are only, as it appears to me, giving those as illustrations of what good-will is. But it would be absurd to say that, where a large wholesale business is conducted, the public are mindful whether it is carried on at one end of the Strand or the other, or in Fleet street, or in the Strand or any place adjoining, and that they regard that, and do not regard the identity of the house of business-namely, the firm."

So in Wedderburn v. Wedderburn, 22 Beav. 84, the Master of the Rolls, Sir JOHN ROMILLY, says: "There is considerable difficulty in defining accurately what is included under this term good-will;' it seems to be that species of connection in trade which induces customers to deal with a particular firm. It varies almost in every case, but it is a matter distinctly appreciable which can be preserved (at least to some extent) if the business be sold as a going concern, but which is wholly lost if the concern is wound up, its liabilities discharged and its assets got in and distributed."

At one time before clear notions as to the full nature of goodwill had attained the ascendant, this idea that it was purely local seems to have been firmly rooted. Whatever may have been Lord ELDON'S opinions, his loose expression in Cruttwell v. Lye was closely followed both in England and America. In Chissum v. Dewes, 5 Russ. 29, the unexpired term in a house and the goodwill of a business established in it were sold in a creditor's suit, with the consent of a creditor of the lessee with whom the lease had been deposited as a security, and brought a less sum than the amount of the debt: Sir JOHN LEACH, M. R., said: "The goodwill of the business is nothing more than an advantage attached to the possession of the house, and the mortgagee, being entitled to the possession of the house, is entitled to the whole of that advantage. I cannot separate the good-will from the lease." The whole of the proceeds of the sale was ordered to be paid into court. So in Dougherty v. Van Nostrand, 1 Hoff. 68, it was held that the good-will attached to the lease of premises formerly occupied by partners, and that the value of the lease was enhanced by the good-will, which, it seems, Ass't. V. C. HOFFMAN considered to be inseparably attached thereto. So in Williams v. Wilson, Sand. Ch. 379, the Vice-Chancellor ordered the receiver to sell the lease of premises occupied by partners between whom difficulties had broken out, together with the good-will, &c. In Elliott's App., 10 P. F. Smith 161, READ, J., says that "the good-will of an inn or tavern is local, and does not exist independently of the house in which it is kept."

Perhaps the earliest example of good-will in the books is to be found in Gibblett v. Read, 9 Mod. 460 (17 George II.). The question was whether some shares of the profits of a newspaper subsequent to the testator's death were part of the said testator's personal estate. Lord HARDWICKE decided in the affirmative. "This has been resembled to the case of a shoemaker, and in that case, suppose the dealing has been extensive and carried on in partnership and with the father's stock, the son, who is executor, would be accountable. Suppose the house was a house of great

Doubtless all that the Master of Rolls meant to decide in the foregoing case was that the mortgagee had a lien upon the good-will as well as upon the lease, or, in other words, that the lessee had made an equitable mortgage of both. Too general language is always liable to be misunderstood, and it will be seen that in New York the language of this decision was literally followed.