become assets in the hands of the personal representative of a trader," or it may be mortgaged," in connection with tangibles. 56 It may be of greater value than the stock of goods or plant of machinery with which the business is carried on, or it may attach to the mere name of a publication and have a definite value apart from and in no wise dependent upon any tangible property.57 It can not be sold, by a judical decree or otherwise, apart from the business with which it is connected.58 It may be given, together with the business with which it is connected, in payment for stock in a corporation, so that stock issued solely for such goodwill, will, to the extent of its value, be issued for "property actually received" within the meaning of Section 42 of the stock corporation law of the state of New York.59 The goodwill of a domestic corporation is property which is taxable as part of its capital stock.60 That of a foreign corporation is liable to taxation "at the place where it has a market value." 61 A stockholder (holding less than all of its stock) can not transfer the goodwill of a corporation.62 That of a partnership is properly conveyed by bill of sale from each copartner.62a It is clear that the goodwill of a professional man can not be made the subject of involuntary sale. In the language of the Supreme Court of Tennessee, "certainly there can be no forced sale or transfer in invitum of such (professional) goodwill so far as it is based upon professional reputation and standing, such as arises from the skill of physicians, dentists, U. S. 436-446. But the purchaser of the goodwill need not purchase all of the assets of the business. S. F. Myers Co. v. Tuttle, 183 Fed. Rep. 235. 59-Washburn v. National Wall Paper Co., 81 Fed. Rep. 17. 60-Matter of Hondayer, 150 N. Y. 37. That the goodwill of a newspaper is not taxable see Hart v. Smith, 159 Ind. 182; 64 N. E. Rep. 661; 58 L. R. A. 949; 95 Am. St. Rep. 280. 61-People v. Roberts, 159 N. Y. 70; 53 N. E. Rep. 685; People v. Morgan, 96 App. Div. 110. 62-Spring Valley Water Works v. Schottler, 62 Cal. 69, 118. 62a-Twin City Brief Printing Co. v. Review Pub. Co., 139 Minn. 358; 166 N. W. Rep. 413. attorneys, etc., whatever may be done as to such goodwill as arises out of location."63 It must be remembered that the trademarks and the goodwill of a business are inseparable. We have seen elsewhere that a trademark can have no existence in gross. It is strictly appurtenant to the goodwill of the business in which it is used." And so it has been said of goodwill that "while it is not necessarily local, it is usually to a great extent, and must of necessity, be incident to a place, an established business, or a name known to the trade." 65 In a conveyance of goodwill, however, apt words should be employed. Thus it has been held that the goodwill was not covered by a clause in a contract of partnership relating to the partnership "property, credits and effects," or "stock in trade and effects." 66 And a similar holding has been made in regard to the words "premises, stock in trade, etc.,' as well as where the words "estate and effects" were used in partnership articles.68 9967 On the other hand, Lord Westbury construed the words, "stock belonging to the partnership," to include the goodwill, and other eminent judges have held goodwill to be included in the words "moneys, stock in trade, debts, effects and things," 70 and "property and effects," while ViceChancellor Malins said: "The sale of a business is a sale of the goodwill. It is not necessary that the word 'goodwill' should be mentioned. In the sale of a business a ** trademark passes, whether specially mentioned or not." He 63-Wilkes, J., in Slack v. Suddoth, 102 Tenn. 375. 64-"As an abstract right, apart from the article manufactured, a trademark can not be sold, the reason being that such transfer would be a fraud upon the public." Colt, J., in Morgan v. Rogers, 19 Fed. Rep. 596. And to same effect, Witthaus v. Braun, 44 Md 303; Hoxie v. Chaney, 143 Mass. 592; 10 N. E. Rep. 713; Russia Cement Co. v. Lepage, 147 Mass. 206; 17 N. £ Rep. 304. 65-Vann, J., in People v. Roberts, 159 N. Y. 70-83; 53 N. E. Rep. 685; 45 L. R. A. 126. 66-Hall v. Hall, 20 Beavan, 139. 67-Burfield v. Rouch, 31 Beavan, 241. 68-Steuart v. Gladstone, L. R. 10 Ch. D. 646. 69-Hall v. Barrows, 4 DeG. J. & S. 150. 70-Rolt v. Bulmer, Seb 614. 71-Reynolds v. Bullock, 47 L. J. Ch. 773. 1 accordingly held that goodwill was included in an assignment that conveyed all the assignor's interest in the partnership premises and effects, without specifically referring to the goodwill.72 In a suit for the specific performance of a contract for the purchase of a share in a business, in which the expression "goodwill, etc.," was employed, Lord Romilly was of opinion that "these words are connected together, and unite such other things as are necessarily connected with and belong to the goodwill, many of which are easily pointed out; for instance, the use of trademarks. All these would be included in the words et cetera, and would be included in the conveyance." 73 * The words "business connections and patronage" have been held to convey the goodwill.74 In this connection it is to be noted that there are two general classes of goodwill-general and local. The distinction is welldrawn in an English case, as follows: "In some classes of business, when the trade has long been carried on in a profitable manner in a particular house, and a new tenant comes in and continues to carry on the same business there, it is found by experience that many, if not all, of the customers resort there as before. This is found so regularly to happen that it has become usual to pay money value for it, which is commonly called 'goodwill.' It may be that there may be a species of goodwill which may be the subject of bargain and sale, although not dependent on the business being carried on in any particular place; for instance, in the case of what are called 'quack-medicines.' But when we come to speak of the goodwill of a public-house, it is obvious that it is a thing 72-Shipwright v. Clements, 19 W. R. 599. But a mortgage of the entire assets of a business does not necessarily include the goodwill. Sante Fe Electric Co. v. Hitchcock 9 New Mex. 156; 50 Pac. Rep. 332. 73-Cooper v. Hood, 26 Beavan, 293. 74-Kellog v. Totten, 16 Abb. Pr. 35. A bill of sale of a "livery outfit" with a covenant not to engage in the livery business in opposition * which is attached to a locality." 75 In accordance with this rule, whenever the goodwill is local, in the sense of being attached to a particular house or store, it will pass with a sale of the lease of the trading premises, 76 or the sale of a public house, or even a tailoring establishment. 78 § 97. Goodwill subject to proceedings in eminent domain. -Where the goodwill of a business transacted on particular premises has been injured by the invasion of the realty in eminent domain proceedings, the Massachusetts court has said. that such goodwill of a lessee or owner "is not property for which damages can be included, and is to be considered only so far as it tends to embrace the market value of the estate that is injured." 79 § 98. Goodwill in its relation to firm and other names.While the unity existing between goodwill and trademarks is clearly defined, the subject of tradenames or firm-names in their relation to goodwill is attended with some difficulty. The general rule has been well stated by Vice-Chancellor Wood, as follows: "The name of a firm is a very important part of the goodwill of the business carried on by the firm. A person says: 'I have always bought good articles at such a house of business; I know it by that name, and I send to the house of business identified by that name for that purpose.' There are cases every day in this court with reference to the use of the name of a particular firm, connected generally, no doubt, with the question of trademark. But the question of trademark is in fact the same question. The firm stamps its name on the articles. It stamps the name of the firm which is carrying on the business on each article, as a proof that they emanate from the firm; and it becomes the known firm to which applications are made, just as much as when a man enters a shop in a particular locality. And when you are parting with the goodwill of a business, you mean to part with all that good disposition which customers entertain towards the house of business identified by the particular name Ch. D. 226; Elliott's Appeal, 60 Pa. St. 161. 75-Llewellyn v. Rutherford, L. R. 10 C. P. 456. 76-Daugherty v. Van Nostrand, 1 Hoff. Ch. (N. Y.) 68; Williams v. Wilson, 4 Sandf. Ch. 379. 77-Ex parte Punnett, L. R. 16 82 or firm, and which may induce them to continue giving their custom to it. You can not put it anything short of that. That the name is an important part of the goodwill of a business is obvious, when we consider that there are at this moment large banking firms, and brewing firms, and others, in this metropolis, which do not contain a single member of the individual name exposed in the firm.'' 80 This dictum, however, is flatly opposed to the rulings of the American courts, that the sale of the goodwill of a business carries with it no right to the use of the vendor's name as the name of the establishment,81 although the purchaser may properly advertise himself as being "successor to" his vendor.s And the later English cases indicate that the rule has been somewhat modified in England, Justice Stirling saying, "the defendant is entitled to use the plaintiff's name in the business so long and so far as he does not by so doing expose him to any liability, but no further.' The American courts have very properly gone to the length of holding that, upon the withdrawal of a partner, the remaining partners will be enjoined from continuing the use of a firm name which indicates that the withdrawing partner is still a member of the firm.84 Where the name is not a proper name, its subsequent use by the vendor of the goodwill, will, of course, be enjoined.85 11 83 § 99. Rights of vendor. The vendor of the goodwill of a business may, in the absence of any agreement to the contrary, re-engage in a competitive business. But this rule is subject to the following qualification. "Nor did such sale deny to (the vendor) the right to use his own name in a competing business, so long as his name was not used in a manner calculated to deceive the public and in that manner gather the fruits of the business he had sold. 86a |