Kellogg v. Totten

By the Court.*—S. B. Stroke, P. J. It struck me on the argument that it was a strange suit, and that it had been strangely tried and decided. The counsel were, on the trial, very critical in their objections to the admission of a large portion of the evidence, and imposed upon the learned judge much unnecessary trouble. Many of the objections were wisely abandoned on the argument, and there were some that were warmly discussed, which seemed to me to have but little force. I cannot see the wisdom or even the propriety of thus taking up the time of the court on the trial, or encumbering the case afterwards with such trivial objections. The plaintiff and the defendant were partners in business in San Francisco, in California. They dissolved their partnership by an instrument in writing, dated on the 1st of February, 1852. By that instrument the defendant conveyed all his right, title, and interest to or in the business of the late firm, to the plaintiff for $4,000. The sale and conveyance included all the [40] business connections and patronage belonging to said firm. It was made a question on the trial, whether the transfer included the good-will of the firm. I think that it did. The expression “ the business connections and patronage belonging to said firm ” are strong to show that such must have been the intent of the parties. The original instrument was not produced in evidence, and there was some dispute between the witnesses whether the word “ patronage ” was inserted, but I think the evidence was sufficient to warrant the conclusion that it was. The principal witness, who swore that it was, testified that he had read the instrument so many times that he must have committed it to memory. The plaintiff obligated himself to pay all the indebtedness of the firm in San Francisco by the 1st of March then next, and for all foreign indebtedness which he engaged to pay, he was to have until the 1st day of the following July to settle, at which time he promised that they should be paid, or a discharge procured for the defendant from all liabilities. The complaint states that it was expressly understood and agreed that, as respected any indebtedness to one Johnson, the plaintiff was to have till the 1st day of July to pay it; and that the defendant stated at the time that he had a power of attorney from Johnson, which authorized him to make such agreement. If there was any such understanding or agreement, it was not reduced to writing, and the evidence to prove it was very slender and unreliable. Besides, the arrangement between the parties was committed to writing, which was signed by them, and no simultaneous oral agreement could be received in evidence to vary or add to it. The agreement that the plaintiff was to have until the 1st of July to settle all foreign indebtedness, had reference to him. and the defendants, not to them creditors. The defendant could not contract for any delay as to them ; certainly not as to any but Johnson. There is not sufficient evidence that Johnson’s letter of attorney was broad enough to authorize the defendant to consent to the delay. If it was in as comprehensive terms as the plaintiff’s witnesses suggest, it would not have sanctioned an arrangement in a matter between the constituent and the attorney and the attorney’s partner. The attorney could not act for his principal, on the one side, and himself and his partner on the other; at any rate, such, authority could not be inferred from general terms, [41] but must be strictly expressed, if its existence is claimed and allowed. The plaintiff alleges that an attachment was issued at the suit of Johnson, against the plaintiff and defendant, and levied upon the goods in the plaintiff’s store previous to the said 1st of July, 1852. That it was issued by the advice of the defendant, and that those proceedings ruined the plaintiff’s tiredit, and eventually closed his business. He also complains that the defendant advised some of the former customers of the firm to trade with Johnson, and others in the same business in San Francisco. It is evident, however, that there is not much in "that cause of complaint, and the plaintiff’s principal witnesses swore, upon them examination by his counsel, that the attachment broke up the plaintiff’s business. There is no proof that he suffered to any great extent, if at all, from any previous diversion of his customers. The large verdict of $7,550 damages was doubtless given for the destruction of his business by the attachment, under the supposition by the jury that it was issued through the advice of the defendant. There can be no doubt but that the defendant and Johnson were on friendly terms. Johnson had constituted the defendant his attorney. They roomed together after Johnson’s arrival in San Francisco. The defendant accompanied the officer when he seized the goods under the. attachment, and was a witness on the subsequent trial between Johnson and the plaintiff. Under these circumstances it was reasonable to infer that the defendant had advised the attachment. But if he had so advised, would that have subjected him to an action because the proceedings had been disastrous to the plaintiff’s business ? Johnson’s claim was undoubtedly for money due him at the time. It should have been paid when due by the plaintiff, although the defendant had consented, so far as related to himself, that there might be a delay 'of payment until the 1st of July ; yet that had no bearing upon the rights of the creditor, nor did it relieve the plaintiff from his obligation to pay the debt when it was due. How, if the defendant, under these circumstances, had advised one whom he had indnced to sell goods upon trust, to the firm of which he had been a member, and who had been unable to obtain payment when the money [42] was due, to attach goods which had belonged to the firm, and among others those which had been sold to the firm by the creditor, and which had passed from the control of the adviser into the custody and sole control of the defaulting debtor, would that have subjected the adviser to an action at the suit of such debtor, because the former had sold to the latter the good-will 'of the firm to which they had both belonged ? It would be singular to institute such an action, and still more singular to sustain it. There are cases which decide that, when ■one partner has sold the good-will of their joint concern to the other, the retiring partner cannot engage in the same business, in the same vicinity; and that he will, if necessary, be enjoined from doing so. The good-will refers to both partners, and it might, and probably would, be divided, and the business of the remaining dealer in the late partnership affairs be seriously diminished by the conversion of his former associate into a rival. But although the retiring partner would not be allowed to set up for himself a new similar establishment in the same place, yet he cannot be restrained from giving advice to a friend, which, if followed, might injure the business of the remaining partner. It is not the rule that the seller of any thing may not perform any act which may impair or defeat the arrangement of the purchaser. Thus, one who has sold any property may advise a judgment-creditor of the purchaser to levy upon it, and thereby deprive him of any beneficial enjoyment of what he had bought. The seller may expose the defects of what he has transferred to another, and thus depreciate it in the hands of the purchaser; and although such conduct would be discreditable, yet it would not subject him to an action. The purchaser of the good-will of an establishment has no greater rights than other dealers, except that the seller shall not impair the good-will by any direct action; and if he should attempt to do that, he may be restrained by an injunction. But the seller may do many things -which may consequentially be equally prejudicial, without subjecting himself to an action. The defendant’s counsel objected to the admission of any evidence relative to Johnson’s attachment as irrelevant; but the learned judge overruled the objection, and did not subse [43] quently instruct the jury that they could not take such evidence into consideration. He decided correctly that there was no breach of any contract, but he left to the jury to infer that the defendant’s conduct in advising the attachment was an infringement of the plaintiff’s legal rights. In the view which I take of the case, the evidence should have been rejected; and, at all events, it furnished the jury with an illegitimate element of damages, and was the principal cause of the heavy verdict against the defendant. The judgment, at special term, should be reversed, and there should be a new trial. The costs should abide the event of the suit.* Footnotes [*] Present, S. B. Strong, P. J., and J. A. Lott and John W. Brown, JJ. [*] We are informed that this decision was affirmed by the Court of Appeals, December, 1862.