Assignment. Sale. Good Will. Contract, Validity, Construction. Dentist. Equity Pleading and Practice, Injunction, Damages.
A sale and conveyance by the trustee in bankruptcy of a dentist, who had purchased from a former partner and owned at the time of his bankruptcy the good will of the practice of the former partnership, of "all the interest which" the bankrupt "may have in any right of action or any contractual rights against any one at the time of bankruptcy" includes and conveys such good will.
Where one of two partners engaged in the practice of dentistry, having an established practice carried on at an office in a certain city, in consideration of the payment of a sum of money sells to his copartner by a bill of sale in writing his half interest in the fixtures, office furniture and other personal property owned by the partners and used by the partnership "in carrying on the dental business" in the office named "together with the good will of said business," without any express agreement on the part of the seller to refrain from competition, the sale of the good will includes an implied agreement by the seller not to practise dentistry so as to injure the business he has sold.
In a sale for a sum of money by one of two partners to the other of the good will of a practice in dentistry established at an office in a certain city, the implied promise of the seller not to compete in the practice of dentistry within a restricted area is not invalid because unlimited in time.
In a suit in equity by a dentist against his former partner in carrying on the practice of dentistry at an office in a certain city, who had sold his half interest in the good will of the business to the plaintiff for a sum of money, to restrain him from violating his implied contract not to practise dentistry so as to injure the business he had sold, if it appears that, although the former partnership business was carried on wholly at the office in the city, it was not derived wholly from that city but included patients who came to the office from other cities and towns, and that the defendant opened a competing office for the practice of dentistry in the city in which the office of the former partnership was established, sent out printed circulars to former patients of the old firm and solicited their custom, that he thus obtained many of the patients of the old firm and that his business consisted substantially of this patronage, the plaintiff is protected sufficiently by an injunction restraining the defendant from practising dentistry within the limits of the city, and, unless some reason for doing so is shown affirmatively, it is not necessary to enjoin the defendant from practising dentistry anywhere in the entire area within which former patients resided. The plaintiff in such a case is entitled, in addition to his injunction, to a decree for such money damages as he has sustained from the defendant's breach of contract.
BRALEY, J.
The title of the plaintiffs to maintain their bill, although questioned by the defendant, is not affected by the intervening bankruptcy of Foss, for by the conveyances described in the fourth paragraph of the bill the firm has become vested with his interest. Lothrop Publishing Co. v. Lothrop, Lee Shepard Co. 191 Mass. 353. Jenkins v. Eliot, 192 Mass. 474.
The evidence taken by a commissioner not having been reported, the case is before us on the pleadings, the interrogatories and answers, and the findings of fact. It appears that the plaintiff Foss and the defendant were partners engaged in the practice of dentistry at 132 Court Street in the city of Boston, and, upon a dissolution of the firm, the defendant sold to the plaintiff Foss his interest in the office furniture and dental equipment with the good will of the business. The plaintiff Foss having formed subsequently a partnership with the plaintiff Marston, to whom he conveyed a half interest in the personal property, including the good will, they carried on business at 101 Tremont Street. After the lapse of about three years, the defendant opened an office at 88 Boylston Street, where he has since carried on the practice of his profession. By solicitation, he has obtained many of the patients of the old firm, and his business substantially consists of this patronage. The important questions for decision are, whether the defendant is precluded by his agreement from setting up a competing business, and the measure of relief to which the plaintiffs are entitled. By the contract of sale, while the defendant explicitly conveyed his interest in the good will, he did not expressly covenant to refrain from competition either as to time or territory. But the sale being of an established practice, described in the instrument as "the dental business" then carried on at "Court Street in said Boston," it was implied, even if not expressed, that thereafter the defendant would so practise his profession as not to injure and perhaps destroy the business he had sold. Dwight v. Hamilton, 113 Mass. 175. Munsey v. Butterfield, 133 Mass. 492.
In a mercantile partnership the sale of the good will conveys an interest in a commercial business, the trade of which may be largely, if not wholly, dependent upon locality, and the right which the vendee acquires under such a purchase is the chance of being able to retain the trade connected with the business where it has been conducted. Bassett v. Percival, 5 Allen, 345. Hoxie v. Chaney, 143 Mass. 592. Webster v. Webster, 180 Mass. 310, 316. Hutchinson v. Nay, 187 Mass. 262. Trego v. Hunt, A.C. 7. But in a partnership for the practice of dentistry, the personal qualities of integrity, professional skill and ability attach to and follow the person not the place. Dwight v. Hamilton, ubi supra. Austen v. Boys, 2 DeG. J. 626. See Smale v. Graves, 19 L.J. Ch. 157; Palmer v. Mallett, 36 Ch. D. 411.
The object to be obtained was the protection of the vendee, and the agreement is to be construed as if the defendant had expressly covenanted to render the old practice secure by not competing himself under conditions by which it might either be impaired or destroyed. If this were permitted, then, while retaining the consideration, the defendant also might deprive the plaintiffs of the benefit of their purchase by regaining the customers. Neither is the agreement, under this construction, invalid because unlimited in time, for the consideration paid must be treated as having been accepted by the defendant as a full equivalent for a release of his right to compete within a restricted area, if by such competition the good will sold was or might be rendered insecure. Dwight v. Hamilton, ubi supra. French v. Parker, 16 R.I. 219. Bunn v. Guy, 4 East, 190. Nor is any principle of public policy violated by unduly restricting lawful competition. Gilman v. Dwight, 13 Gray, 356. McClurg's appeal, 58 Penn. St. 51. Whittaker v. Howe, 3 Beav. 383. See Rousillon v. Rousillon, 14 Ch. D. 351; Underwood v. Barker, 1 Ch. 300.
Upon resuming practice the defendant sent out printed circulars to former patients, giving the name of the old firm, with the street and number, and announced, that, having opened an office in the city, he solicited their custom. By this scheme of advertising he sought to regain the good will with which he had parted, and, his efforts having been successful, the defendant has deliberately broken his implied covenant by setting up a rival business. While the plaintiffs should be granted adequate relief for this breach of his contract, the remedy, upon the facts found, should not be broader than is reasonably necessary for their protection. Old Corner Book Store v. Upham, 194 Mass. 101. Doty v. Martin, 32 Mich. 462, 468, 469. The business of the old firm was conducted in Boston, which is the only locality referred to in the agreement, although the practice was not wholly derived from the place where patients were treated, but had been acquired from other cities and towns throughout the eastern and interior sections of the State. But, until it becomes affirmatively manifest that the plaintiffs are likely to obtain some substantial advantage or protection from such an extension, the vicinage ought not to be extended by implication to include the entire area within which former patients resided. Doty v. Martin, ubi supra. See Butler v. Burleson, 16 Vt. 176. The preservation of this territorially diversified patronage in the form in which it had been established was the object contemplated by the parties, and with which the defendant agreed not to interfere. By practising dentistry at his present location in the manner described, the defendant competes with the plaintiffs by obtaining former resident patrons, and also those who when coming to the city for dental treatment resort to him, when otherwise they might have employed the plaintiffs. They are, therefore, amply protected by an injunction enjoining the defendant from practising his profession within the limits of the city.
The decree of the Superior Court must be reversed, and a decree awarding an injunction, with costs, is to be entered. And, it being further shown that the larger part of the defendant's present practice has been derived from these patients, if the plaintiffs request, such money damages as they may have sustained from this breach of the contract also may be assessed. Gregory v. Spieker, 110 Cal. 150. Moorehead v. Hyde, 38 Iowa, 382. Taylor v. Howard, 110 Ala. 469.
So ordered.