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O'Hara v. Lance

Supreme Court of Arizona

March 1, 1954

O'HARA
v.
LANCE et ux.

Rehearing Denied March 23, 1954.

Page 726

[77 Ariz. 86] Bumstead & Linsenmeyer, Phoenix, for appellant.

McKesson & Renaud, Phoenix, for appellees.

TULLAR, Superior Court Judge.

Defendant-appellee General W. Lance owned and operated a business known as the Ace-Lance Refrigeration Company, established in Phoenix in 1942. In 1946, he and plaintiff-appellant Richard C. O'Hara entered into a partnership agreement and continued in the same business as Ace-Lance & O'Hara Refrigeration Company.

On July 21, 1949, an agreement to dissolve the partnership was reduced to writing, Lance selling all partnership assets, including good will, to O'Hara. The former agreed not to compete with the latter for a period of two years, and granted to O'Hara the exclusive right to the firm name, except for a condition that after December 21, 1950, O'Hara might not further use Lance's name without his consent.

[77 Ariz. 87] On May 12, 1951, O'Hara sued to enjoin alleged violation of the agreement not to compete, for damages for breach of the agreement, and to restrain Lance from using the word, 'Ace,' in the firm name of any refrigeration business in Arizona. Lance's wife and the Mountain States Telephone & Telegraph Company were also named defendants.

In a pleading incorrectly called a 'cross-complaint,' but which is a counterclaim, Lance prays to restrain O'Hara from use of 'Ace,' and for damages, on the theory that the sale to O'Hara did not include the right for O'Hara to use 'Ace' after December 21, 1950.

The case was tried to the court,--a jury was impaneled, but discharged by stipulation during the course of the trial,--judgment

Page 727

was entered granting defendant, Lance, the right to use 'Ace,' and denying that right to plaintiff, O'Hara. No damages were awarded. Motion to vacate or modify judgment was denied, and this appeal followed.

From the assignments of error and propositions of law as a whole it may be gleaned that O'Hara feels aggrieved solely by the award of the exclusive use of 'Ace' to Lance instead of to O'Hara. His prayer to restrain a breach of the agreement not to compete has been disposed of by passage of time. No appeal is, or could successfully be, taken from the denial of monetary damages to either party, no proof of any having been made.

The first and primary step is to determine what was brought and sold at the time of the dissolution of the partnership. Happily, the agreement of the parties is explicit. Lance, 'the retiring partner,' is being paid, 'for his share in the business and the capital, stock, equipment, effects and good will thereof.' The agreement recites that valuations and estimates have been placed upon these items, and agreed to, specifically including the good will, and a balance has been struck.

Definitions of good will the legion. This court has said, citing cases, that, speaking generally, good will is a fleeting, intangible something; it is not corporeal property; it is that asset, intangible in form, which is an element responsible for profits in a business; it may be a valuable asset and is a subject of bargain and sale. Jacob v. Miner, 67 Ariz. 109, 120, 191 P.2d 734.

In Ely Lilly & Co. v. Saunders, 216 N.C. 163, 4 S.E.2d 528, 532, 125 A.L.R. 1308, it was said:

'* * * This good will is as much property as is coal or pig-iron or wheat, subject to audit, appraisal, taxation, purchase and sale, and is the most valuable asset of many businesses. * * *'

All courts recognize that the firm's name and its good will are inextricably intertwined. Judge Rutledge said that first among the varied elements that hold out to customers the 'lure to return' is an established trade ...


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