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CHAPTER X.

Nature of good-will.

Must be sold on dissolution.

Distinction between good

sional and mercantile firms.

GOOD-WILL.

THE good-will of the business forms part of the company property, and is sometimes of great value.

It is not easy to give it a definition which should be of much use in considering questions of partnership; but, generally, it may be taken to mean all benefits or advantages arising out of the business connection. Sometimes it attaches to the persons by whom the business has been made or carried on; sometimes to the stock, premises, or locality.

When a company or firm is dissolved, the general rule appears to be, that, in the absence of special agreement, the good-will of the business must, like other company property, be sold for behoof of all concerned (a). To this rule, however, there are exceptions.

If weight is to be given to the English authorities, it would will in profes- appear that a distinction must be made between professional and mercantile firms. In the former, the good-will is almost personal to the partners, and therefore cannot be made the subject of a compulsory sale; for an attorney, a surgeon, or a skilled artisan, cannot be forced into an agreement that he shall not prosecute his business within a certain area. In the latter, the good-will often depends on the fitness of the stock or the premises, or on the possession of a patent; and in such cases it represents a tangible interest which may be valued and sold. This distinction appears founded in reason, and was recognised by Sir John Leach in Farr v. Pearce (b), and Spicer v. James (c).

(a) Wedderburn, 22 Beav. 104; MacCormick v. M'Cubbin, July 4, 1822, 1 S. 496; Marshall v. Marshall,

1816, 19 F. C. 101; M Whannell v.
Dobie, 1830, 8 S. 914.

(b) 3 Madd. 74–78.
(c) Rolls M. T. 1830.

Even in proper mercantile firms, when a dissolution takes place, the good-will, in so far as it can be made the subject of sale, will often be found almost inappreciable.

When the partnership is dissolved, any one or more of the partners may, in the absence of a voluntary agreement to the contrary, carry on the business on their own account; and they are quite entitled to make use of all the advantages incidental to their former connection with the partnership (a). It has even been held, that, in the case of dissolution by death (b), the survivor may make use of the name of the late firm, though it would appear that the executors of the deceased partner have not this right (c). However this may be, it seems settled law, that when the good-will of a business has been sold, the seller may recommence a similar business in the immediate neighbourhood of the old premises (d); the only restrictions on this right being, that in the case of a firm the sellers shall not assume the old name, or represent themselves as the successors of the former concern.

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firms.

Even, therefore, in the case of a mercantile firm, the good-will, Mercantile when a dissolution takes place, will, unless for some voluntary agreement restraining the late partners from prosecuting their business, amount to nothing more than such value as may, in the public mind, attach itself to the possession of the stock, machinery, or premises of the late firm.

death.

When a firm is dissolved by death, it would appear that the Dissolution by good-will, whether it be of real or speculative value, if it is sold at all, must be sold for the behoof of all concerned; that is to say, the surviving partners cannot dispose of it for their own benefit, but must share its proceeds with the representatives of their late partner (e).

When a partner retires from a firm, but without a dissolution Retirement. taking place, he cannot, it should seem, in the absence of express agreement, insist on receiving any consideration from the company

(a) Farr v. Pearce, supra; Davies v. Hodgson, 25 Beav. 177; Hammond v. Douglas, 5 Ves. 539; Wedderburn, supra; Smith v. Everett, 5 E. Jur. N. S. 1332.

(b) Webster, 3 Swanst. 490.
(c) Lewis v. Langdon, 7 Sim. 421.
(d) Davies v. Hodgson, supra; Chur-

ton v. Douglas, 1 Johns. 174; Curtwell
v. Lye, 17 Ves. 335; Kennedy v. Lee,
3 Mer. 455; Shakle v. Baker, 14 Ves.
468; Harrison v. Gardner, 2 Madd.
198.

(e) Smith v. Everett, supra; Wed-
derburn; MacCormick v. M'Cubbin ;
Marshall v. Marshall, supra.

English authorities.

for his share of the good-will. The company, being a separate quasi person, still continues to exist, and retains the good-will as part of its property. The retiring partner has himself to blame if he has left the concern without receiving compensation for this, among other interests, which he thereby resigned. This has been decided in England, though, from the non-recognition of the firm as a separate person, it does not in that system stand upon such an intelligible principle. It has also been decided, that an agreement to take the retiring partner's share at valuation does not entitle him to get his (a) share in the good-will valued. But it may be questioned whether this decision can be taken as fixing a general rule. Even when a partner has received a compensation for retiring, this does not necessarily preclude him from starting a new concern, for the purpose of carrying on the same business (b).

When, however, it has been arranged that a retiring partner's share in the good-will shall be purchased by the company, regard will be had, in fixing the price, to the length of time such partner was entitled to have continued a member of the firm (c).

It is of course always competent for a retiring partner to bind himself that he shall not carry on business in opposition to the firm; and this obligation has in England been held as implied, though not expressed totidem verbis, in the articles of partnership (d).

Such, it is humbly conceived, may be taken as the fair import of the decisions on the subject of good-will, considered as partnership property; but it cannot be denied that the principles of this branch of partnership law are as yet far from being fixed or definite. Few or no decided cases can be found in the Scotch reports having a distinct bearing on the subject; and the English authorities, it must be admitted, are ambiguous, and even conflicting (e).

(a) Hall v. Beav. 139; Kennedy v. Lee, 3 Mer. 452.

(b) M Kirdy v. Paterson, 1854, 16 D. 1013.

(c) Austen v. Boys, 24 Beav. 598; aff. 2 De G. and J. 626.

(d) Cooper v. Watson, 3 Dougl. 413. See also Harrison v. Gardner, 2 Madd. 198.

(e) See, on this subject, Coll. 102 et seq., and Lindley 709 et seq. Tudor's Le. Ca. 313.

CHAPTER XI.

EXTRAORDINARY PRIVILEGES AND AGGRESSIVE POWERS.

observations. Rights of the

subject can

only be affected by Act of the Legislature.

It is the distinguishing badge as well as the fundamental principle General
of constitutional government, that every citizen or subject has the
full and absolute control of his person and property within the limits
defined by the existing laws, and that no alteration can be made on
these laws except by the Legislature, from which they originally
emanated, and from which they derive their existing force. This
principle of constitutional law, which is too well recognised and
accepted to require either argument or illustration, appears to have
received implicit assent in the earliest annals of the Teutonic races,
however much in times of usurpation and political decadence it
may have been obscured or forgotten. That it was recognised in
Scotland as well as in England, in ages when the constitution was
respected, is obvious to the most cursory if unbiassed student of
British history; that it did not accord with the maxims of the civil
and other foreign systems of law, of which the Scottish lawyers
were always too much enamoured, is a proposition that requires
no comment; and that it was often set at nought or ignored
during the reigns of the later Stuarts, is unfortunately but too
well established. At the Revolution, however, and more especially
at the Union, it was again restored to its proper place in the con-
stitution, and has ever since received such increasing prominence,
that it now permeates the whole body not only of our constitutional
but also of our municipal law, and distinguishes the British consti-
tution from the arbitrary rule of a despotism on the one hand,
and the fitful movements of a democracy on the other.

Exclusive privileges and aggressive powers, monopolies, the Exclusive power to appropriate private property, that of making bye-laws aggressive

privileges and

powers can therefore be conferred in this manner

only.

How Legisla

ture may interfere.

Exclusive privileges and aggressive

powers, etc., cannot be

conferred by prerogative.

Inference to be drawn.

binding on the public, and of levying rates, together with other privileges of a similar kind, which are often enjoyed by public companies, are all infringements of those rights of the subject which the common law guarantees, and can therefore be conferred in no other way than by an Act of the Legislature.

It is not necessary, however, that the Legislature should in every case interfere by special statute. It is enough that it gives authority indirectly, provided its having done so be clearly established. Thus, it may pass general statutes conferring certain privileges on all companies formed for certain purposes, and conforming to certain conditions, as e.g. the 27th and 28th Vict. c. 120. Or it may enable the Crown to grant monopolies in certain circumstances, and subject to certain provisions, as in the case of the Patent Acts. But it is observable that aggressive or compulsatory powers are always conferred by special acts.

It has sometimes been supposed that the Crown could in Scotland confer exclusive privileges, and the power of levying rates, by a mere exercise of prerogative; and attempts have been made to trace a difference in this respect between the laws of Scotland and England. When, however, the subject is fairly examined, it becomes difficult to discover any solid foundation for such a doctrine. It is no doubt easy to produce numerous instances in the past history of Scotland where the prerogative has been exerted to confer monopolies, and to invest favoured corporations with the power of imposing bye-laws, and even taxes, on the general public; but the value of such acts as precedents is greatly impaired, when it is considered that they took place prior to the Revolution, and at an era when the rights of the subject were little regarded, and the very principles of the constitution habitually violated. Numerous examples of the same exercise of prerogative occur in England at the same period of the national history; but in both countries they were regarded as grievances, and were even to some extent checked by the Legislature (a).

Now, the natural inference to be drawn from this state of matters appears to be, that in Scotland as well as in England such exertions of prerogative were at all times illegal, and that they ceased in both parts of the United Kingdom as soon as the constitu

(a) 21 James I. c. 3; 1641, c. 76.

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