The Commercial Year Book

ship may be held liable for the whole of a debt owing by his firm. But it has been provided by an Act of Congress that "the individual liability of a shipowner shall be limited to the proportion of any or all debts and liabilities that his individual share of the vessel bears to the whole; and the aggregate liabilities of all the owners of a vessel on account of the same shall not exceed the value of such vessel and freight pending." Under this law our correspondents are exempt from liability for more than their proportionate share of the debt, unless they personally made the contract or adopted it as their own after it was made.

RESTRICTIONS ON THE RIGHT TO ADVERTISE.

If a firm fails and makes a compromise with its creditors, and Mr. A buys goods of the firm, can A use said firm's name for advertising the goods he bought without permission from said firm?

REPLY.-If A buys goods from a firm, which he undertakes to sell again, he is not entitled to advertise in any manner likely to give the impression that the sale is being made by the firm, or in its interest. But the origin or the source of supply of the goods he is selling he is not bound to conceal. It is a fact that he has obtained his goods from a certain firm. It is a fact, the general knowledge of which is not likely to damage the firm, and it is a fact that A has a right to divulge if he chooses.

RIGHT OF ONE TO ADVERTISE AS "SUCCESSOR TO" ANOTHER.

A and B dissolve partnership. They own a building and some other property. They have a cash store and a credit store in the same building. The cash store is run under a different name from the credit, although they really belong to one firm. A and B dissolve; A transfers his entire interest in the cash and credit store to B for a certain sum. B in turn sells the cash store to A, who runs it still as a cash store, while B retains his credit store. B sold the cash store to A just as though a stranger had bought it. B does business as B, successor to A & B." Now, the point is, has A the right to do the same, as A&B"? My opinion is that he has not the right, as he sold his interest in the cash store to B, who, in turn, resells it to him, just the same as if a stranger had bought it.

successor

REPLY.-Any one who buys out the business of another, whether the purchaser is a former partner or an entire stranger, is entitled to advertise himself as successor to the seller. The purchaser of A's business, who takes the business as it stood and continues it, is, in fact, A's successor, and that is a fact which he is not bound to conceal. The partners A and B may own two separate businesses, as in the present case, and may sell one business to one person and the other to a different person. In that case the purchaser of each business, whether he is one of the partners or a stranger, may advertise himself as successor to A & B in that particular business, because he is such successor, and in buying the business he has bought the right to call himself such. In the case our correspondent puts, however, it does not appear that both A and B will wish to hold themselves out as "successor to A & B." Our correspondent says that the two concerns were run under different names. If one was run under the name of A & B and the other under another name, then the purchaser of each has a right simply to describe himself as "successor to" the firm name under which the business he has bought was formerly run.

DEFINITION OF GOOD-WILL.

Kindly tell me the literal meaning of the term good-will," so generally used in business circles. Is there ever more than one construction put upon it, and, if so, what may that be?

REPLY.-We believe the term "good-will" is always used in practically the same sense. Story acquired by an establishment beyond the mere defines it as "the advantage or benefit which is value of the capital stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers on account of its local position or common celebrity or reputation for skill or affluence, or punctuality, or from any other accidental circumstances or necessities, or even from ancient partialities or prejudices." Lord Eldon has defined it more briefly as being "nothing more than the probability that the old customers will resort to the old place." In short, it is the chance of being able to keep the business which has already been established.

VALUATION OF GOOD-WILL.

A, B, and C are in partnership, each sharing alike. B dies, which of course dissolves the concern. The assets of the concern consist largely in good-will. The point in question is, how is the value of this to be arrived at, assuming that the heirs of B do not wish to continue their interest? Could the value of it be computed, taking the past profits as a basis, or is there any fixed rule or precedent by which the said heirs of B could be guided so that the matter could be settled equitably? What redress would the heirs of B have in case the surviving partners did not agree with them?

REPLY.-There is no fixed rule by which to determine the value of a good-will in all cases. One source of the difficulty in attempting to establish any fixed rule to apply in all cases lies in the fact that good-will includes such different and widely varying elements of value in different instances. Sometimes it includes a right to use an old and well-known name; sometimes it carries with it a practical monopoly of an important branch of trade; and sometimes it includes nothing more than a right to continue the business at the old stand. In the case our correspondent puts, the right to continue business under the old name probably continues in the survivors without any obligation on their part to pay anything for the privilege to the estate of the deceased. This is the case with most of the partnerships transacting business under the laws of this State. In any case, it is necessary, in the first place, to ascertain accurately what is included, in the particular case, under the term good-will. Then the most satisfactory method of arriving at its value in most cases is by offering it for sale after due advertisement. If, for any reason, this plan is not advisable in any given case, the best way to arrive at the value of good-will, as in the case of real estate or any other property, is to have it appraised by experts. They should be informed as to the net earnings of the business during the last few years, and their own knowledge of the trade will enable them to estimate more accurately than any one else could do it what proportion of these earnings represents the ordinary profits of the business, and what portion is to be set down to the credit of that special advantage now to be valued as good-will. If the matter cannot otherwise be amicably adjusted, either party to the controversy may ask the assistance of a court in appointing appraisers and seeing that their work is fairly and properly done.

INDEX.

In Two Parts: Foreign Countries and United States.

FOREIGN COUNTRIES.

Abyssinia:

coinage, 340

railroads, 127

FOREIGN COUNTRIES. For UNITED STATES, see pages 618-624.

Aden: area, population, ruler, 141

Adrar: area, population, ruler, 143

Africa, 79-84. See also separate countries of Con-
tinent

commerce with principal countries, 119, 120, 139
copper, 477

debts, public, 138