C. H. Batchelder & Co. v. Batchelder

107 N.E. 455, 220 Mass. 42
CourtMassachusetts Supreme Judicial Court
DecidedDecember 31, 1914
StatusPublished
Cited by27 cases

This text of 107 N.E. 455 (C. H. Batchelder & Co. v. Batchelder) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
C. H. Batchelder & Co. v. Batchelder, 107 N.E. 455, 220 Mass. 42 (Mass. 1914).

Opinion

Braley, J.

A corporation chartered as the C. H. Batchelder Company was organized by Charles H. Batchelder, hereafter referred to as the defendant, to take over and carry on the business conducted by him under the same name. Its capital stock was divided into preferred and common shares, although no part of the preferred stock ever was issued. The vote of the board of directors to take over the business and to assume all outstanding liabilities, followed by his acceptance and receipt of the entire common stock of the company in payment, operated as a transfer and sale of the personal property therein enumerated. The presiding judge having found upon evidence not reported that the vendor also intended as part of the consideration to include the good will, the corporation succeeded to a going commercial enterprise, with a recognized line of patronage, as if the transfer had been effected by a formal bill of sale. Tufts v. Plymouth Gold Mining Co. 14 Allen, 407. Beacon Trust Co. v. Souther, 183 Mass. 413.

In less than two years the corporation passed into the hands of a receiver, who under the decree carried on the business for nearly two and one half years more, when he sold the assets including the “business, good will and trade names of the C. H. Batchelder Company.” The purchasers organized the plaintiff corporation [44]*44to which they transferred their purchase and since then it has carried on at the old stand business of the same general nature and character as that which formerly had been conducted by the defendant and the C. H. Batchelder Company.

After the receiver’s sale, but not before, the defendant, having set up at his dwelling house a similar business of making, repairing and storing awnings, solicited the patronage of those who previously had traded with him or with the former company. As a result of the competition the plaintiff, by its bill, asks for injunctive relief, and for an accounting of profits, while in the second bill, which is really in the nature of a cross bill, the defendant seeks to have the plaintiff restrained from the further use of his name and for an accounting of profits or for damages.

The title acquired by the purchasers at the receiver’s sale, which was confirmed by the court, and of the plaintiff who claims under them, is in effect the same as if the corporation had wound up its affairs and made the transfer. Tobin v. Central Vermont Railway, 185 Mass. 337. Eastern Bridge & Structural Co. v. Worcester Auditorium Co. 216 Mass. 426. Duplex Printing Press Co. v. Clipper Publishing Co. 213 Penn. St. 207. And the rights of the parties are commensurate with the scope of the defendant’s contract with the company which he organized. A sale of the good will imposes upon the vendor an obligation to refrain from doing anything which deprives the buyer of the benefit and advantages of the purchase. Foss v. Roby, 195 Mass. 292. But if a competing business is set up by the vendor, whether an agreement not to compete, where none has been expressed, is to be implied, is a question of fact. Old Corner Book Store v. Upham, 194 Mass. 101, 105. The question is before us on the record, which states that this court by agreement of the parties may draw inferences of fact from the findings reported. The purpose of the defendant as the founder and organizer of the corporation, over whose affairs as its president and treasurer he exercised unrestricted control until the receivership, was plainly to enable him to do business in corporate form. The findings of the judge leave no doubt that he treated the business as being essentially the same as if it were his own. The corporation was his creature or instrumentality and in reality the business remained his personal business, which he transacted under the corporate name. Montgomery [45]*45v. Forbes, 148 Mass. 249, 253. Ginn v. Almy, 212 Mass. 486, 505, 506.

The possibility that the company might become insolvent, or the probability that his connection with it might be severed, or that it would go out of business, does not appear to have been contemplated by the contracting parties. It doubtless is true that if by any chance he had retired and the corporation went on, he could not have engaged in a similar business where the circumstances as to locality and the sources of trade showed that it would be in derogation of his grant. Gordon v. Knott, 199 Mass. 173, 178, and cases cited.

What the parties understood and intended, is to be ascertained as of the date of the contract. Smith v. Vose & Sons Piano Co. 194 Mass. 193. The assumption that he ever intended to compete with himself, or that either he or the directors in any way considered whether upon his retirement the business should be sold, is unwarranted. It is fairly to be inferred that the defendant’s implied obligation was never understood or intended to go beyond the business life of the corporation, and the contract cannot be held as embracing an implied restriction which the parties never had in mind. Hanson & Parker, Ltd. v. Wittenberg, 205 Mass. 319, 327, 328. The cases of Marshall Engine Co. v. New Marshall Engine Co. 203 Mass. 410, and Myott v. Greer, 204 Mass. 389, to which the plaintiff refers as supporting its contention that the undertaking was unlimited in time and unrestricted as to persons or locality, are upon their facts plainly distinguishable. If instead of organizing a corporation the defendant had formed a partnership, it is settled, that when the partnership ended upon a winding up by a receiver each partner would have been at liberty to do any kind of business, and could solicit customers of the former firm even if its good will had been sold by the receiver as part of the partnership assets. Hutchinson v. Nay, 183 Mass. 355. Moore v. Rawson, 185 Mass. 264; 199 Mass. 493.

We are unable to perceive any distinction in principle. The corporation as a business concern ceased to exist, although until dissolved it is a technical legal entity. United Zinc Co. v. Harwood, 216 Mass. 474.

Its winding up with this exception does not differ from the winding up of a partnership by a receiver. In either event the [46]*46good will is an asset, which may be sold for the benefit of creditors, and the purchaser acquires the exclusive right to represent himself as the successor in trade of the firm or the corporation. Moore v. Rawson, 199 Mass. 493.

The plaintiff, without the assent of the defendant and against his written protest, has appropriated his name as the principal part of its corporate designation. By R. L. c. 72, § 5, “A person who carries on business in this Commonwealth shall not assume or continue to use in his business the name of a person formerly connected with him in partnership or the name of any other person, either alone or in connection with his own or with any other name or designation, without the consent in writing of such person or of his legal representatives.” And under R. L. c. 8, § 5, cl. 16, the word “person,” as used in our statutes, may be held to include a corporation. Lawrence Manuf. Co. v. Lowell Hosiery Mills, 129 Mass. 325. See St. 1903, c. 437, § 5.

The definitions referred to in R. L. c.

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Bluebook (online)
107 N.E. 455, 220 Mass. 42, Counsel Stack Legal Research, https://law.counselstack.com/opinion/c-h-batchelder-co-v-batchelder-mass-1914.