Smith v. Davidson , 198 Ga. 231 ( 1944 )

1. A contract for the purchase and sale of "a complete pressing club," consisting of certain articles of personalty, is a contract for the sale of goods, wares, and merchandise, within the meaning of the statute of frauds.

2. The fact that the oral contract included the good will of the business, the purchase price of the whole being $3600, did not take the transaction without the operation of the statute.

3. The part performance referred to in the Code, § 20-402 (3), as forming an exception to the requirements of § 20-401, means part performance of the contract. The doing of an independent thing, even though the act would not have been done but for the contract, is not sufficient.

No. 14918. SEPTEMBER 8, 1944. Furman Smith and Mrs. Furman Smith filed an equitable petition in the superior court of McDuffie County, in which, as amended, they sought specific performance of an alleged oral contract made between them and the defendant, J. A. Davidson, for the sale to the plaintiffs of a complete pressing club, alleged to consist of designated machinery and equipment making it a complete dry-cleaning plant, and including also the good will of the defendant and of said pressing club, and the established business, patronage, and reputation thereof. The plaintiffs allege that on March 3, 1944, the defendant told them that he was being drafted into the armed forces of the United States within the next few days, and that he desired to sell his pressing club; whereupon, on said date, it was agreed between the parties that the pressing club, constituted as aforesaid, would be sold by the defendant to the plaintiffs on March 9, 1944, for the cash price of $3600, the sale to include the equipment, established business, patronage, and reputation of the pressing club. It is further alleged: that, upon making said agreement, the plaintiffs were advised by the defendant that they should learn something about the business before taking it over, and it was agreed by all the parties, under the advice of the defendant, that Mrs. Smith should give up her then lucrative position with The Thomson Company, which she had held for several years, and at the direction of the defendant, and as a part of the oral agreement made between the parties for the purchase of the pressing club by the plaintiffs, Mrs. Smith did give up her said position with The Thomson Company; that the defendant told the plaintiffs they would need certain supplies for the successful operation of the pressing club, and these were bought by the plaintiffs at a cost to them of more than $100, the defendant making out the written order therefor and the plaintiffs signing the same; and that the defendant showed the plaintiffs how to operate the business, arranged with the employees to work for the plaintiffs just as they had been working for him, gave the plaintiffs the social-security numbers of the employees, showed the plaintiffs his books, and instructed them how the books and records should be kept. It is also alleged: that on March 9, 1944, the plaintiffs went to the pressing club for the purpose of completing the transfer and to pay the cash price of $3600, but were then told by the defendant that he had changed his mind about selling, and he refused to proceed further with the transaction; that the defendant owns no property in McDuffie County except said pressing club; that he is subject to be drafted into the armed forces of the United States; that the monthly profits of the business are something between $600 and $800, and plaintiffs are entitled to all of the profits made since March 9, 1944; that damages will result to the plaintiffs from a nonperformance of the contract; that the property contracted to be sold is of a kind that can not be reproduced at this time, on account of the difficulty of procuring the machinery and equipment; that the business and good will can not be bought except from the defendant; that Mrs. Smith, one of the plaintiffs, is without employment as a result of the defendant telling her to quit her job, and then failing to deliver possession of the pressing club as he had agreed; and that all of the acts alleged to have been done by the plaintiffs between March 3, 1944, and March 9, 1944, were done in pursuance and as a part of the oral contract entered into between the plaintiffs and the defendant for the sale of said pressing club.

The prayers were for specific performance of the oral contract; to enjoin the defendant from selling or delivering possession to any other person; and that, if it be impossible to have specific performance, the plaintiffs have judgment against the defendant for $20,000.

The defendant demurred to the petition as amended, on the ground that the same set forth no cause of action, either legal or equitable; and on the further ground that it sets forth an alleged agreement in parol to sell certain personal property, the purchase-price being in excess of $50, in violation of the provisions of so much of the statute of frauds as are embodied in the Code, § 20-401 (7). The trial judge sustained the demurrer, and the plaintiffs excepted. 1. The alleged contract to sell and purchase was oral. Was it for goods, wares, and merchandise to the amount of $50 or more? It is averred in the petition that the subject-matter of the sale was "a pressing club," and "that said pressing club consists of two Hoffman presses; one Tantex press; one 10-horse boiler; one G. E. washing machine; one Hoffman dry terminal; one Butler cabinet; one Hoffman dry cleaner; one Hoffman extractor; one Butler filterer; two fans, one upright and one suction; one tailoring machine; several hat blocks; all fixtures located in the building at No. — Railroad Street in the City of Thomson, Georgia, being a complete dry-cleaning plant; and the good will of J. A. Davidson and of said pressing club; and the established business and patronage and reputation of said pressing club." It will be here noted that the pressing club is alleged to consist of certain articles of personalty "and the good will of J. A. Davidson and of said pressing club; and the established business and patronage and reputation of said pressing club."

The specific tangible articles here mentioned are included within the terms, "goods, wares, and merchandise," as those words are used in the statute of frauds. Many courts have held that those words mean all movable property that is ordinarily bought and sold. See 18 Words Phrases (Perm. ed.), pp. 541 et seq. But we are aware of no decision holding that by the use of the words "goods, wares, and merchandise," the statute contemplates only goods that are usually sold on the market, and that may be easily sold and resold. Cason v. Cheely, 6 Ga. 554, relied on by counsel for the plaintiff in error, does not so rule. There the subject-matter was the whole of a crop of cotton for the year 1846. The contract was made on September 23, 1846. A reading of the opinion, which was by Judge Nisbet, shows that he was answering the argument that, first, the contract was executory, and, as was urged, therefore without the statute; and second, that the contract was in reality one for labor. The court ruled that such contracts are not excluded from the operation of the statute merely because they are executory; that contracts for goods not in esse at the time and of a peculiar character so as to be unsuited to the general market, to be made by the work and labor and with the material of the vendor, at the instance of the purchaser, are not within the statute of frauds; and that cotton prepared for market was goods and merchandise within the meaning of the statute. Bearing in mind the foregoing, the language of the learned judge that "cotton is, beyond any other merchandise in this country, salable in the general market and in prompt demand," does not have the significance which counsel apparently attaches to it. In Walker v. Supple, 54 Ga. 178, it was held that a contract to purchase an account for $50 or more is within the reason and spirit of the statute of frauds and must be in writing. InHightower v. Ansley, 126 Ga. 8 (54 S.E. 939, 7 Ann. Cas. 927), the court ruled that a contract to purchase shares of stock in an incorporated company had to be in writing, and in the opinion it was said: "Besides, it is more in accord with the spirit of the law that personal property which is capable of assignment or transfer should not be distinguished from goods, wares, and merchandise, as taken in their literal sense. If the terms ``goods, wares, and merchandise,' are given their most limited significance, it would exclude, without reason, from the operation of the statute a large class of personal property."

2. There was also purchased and sold, however, the good will of the business, all for the lump sum of $3600. Does the inclusion of "good will" in the sale take the transaction without the statute of frauds? It has been held that "good will," as the term is used when speaking of the good will of a business, is not corporeal property; but it has been often defined as advantage or benefit acquired by an establishment, beyond the mere value of property employed in a business, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers on account of its local position, or for other reasons. See the many cases collected in 18 Words and Phrases (Perm. ed.), pp. 555 et seq. A like definition may be found in the opinion of this court in Armstrong v. AtlanticIce Coal Corp., 141 Ga. 464 (81 S.E. 212). It is difficult to conceive of the good will of a business apart from the tangible properties used in such business, or as a thing of form and substance. It is more like a spirit that hovers over the physical, a sort of atmosphere that surrounds the whole; the aroma that springs from the conduct of the business; the favorable hue or reflection which the trade has become accustomed to associate with a particular location, or under a certain name. As fragrance may add loveliness to the flower from which it emanates, so good will may add value to the physical from which it springs; but could it be said to have a value apart from the corporeal things with which it is associated? It will be conceded that good will may possess some of the attributes of property which will be protected by the courts, and a valid covenant with respect thereto may be enforced. Compare Morris-Forrester Oil Co. v. Taylor,158 Ga. 201 (122 S.E. 680); Valdosta Drug Co. v. Mashburn DrugCo., 183 Ga. 471 (188 S.E. 694). See also 3 Williston on Contracts, § 1640. In Shaw v. Jones, 133 Ga. 446 (66 S.E. 240), this court passed on an exception to a charge as to the measure of damages for breach of a contract for the sale of the good will of a business, on the ground that the correct measure was not given. None of those rulings however are decisions of the question immediately before us.

There is no allegation that the "good will" had a separate value, and it is not to be presumed that in the minds of the parties it was so regarded, the petition being construed most strongly against the pleader. The price was fixed on the tangible properties, whose value may have been increased by reason of the good will attached thereto.

This court in Porter v. Gorman, 65 Ga. 11, used the following language: "Good will is defined by Lord Eldon to be ``nothing more than the probability that the old customers will resort to the old place.' No subsequent definition has changed in any material respect this rendition, and all the writers seem to have recognized and adopted it. See Bouvier's Law Dictionary, title ``Good-will.'" One court has said that the good will of a business is not the business, but one result springing out of it. McGowan v. Griffin, 69 Vt. 168 (37 A. 298). Others refer to it as meaning the advantage or benefit which is acquired by an establishment beyond the mere value of its funds and property employed therein. Still others say that it means the favor which the management wins from the public. Elsewhere it is said to be an attribute of the business. 24 Am. Jur. 807, § 10. See the various references to these holdings in 18 Words Phrases (Perm. ed.), pp. 555 et seq. It appears, however, that some courts have said that a sale of good will is not necessarily accompanied by the tangible assets of a business. 24 Am. Jur. 809, § 12; and the annotations in 3 L.R.A. 254, and 91 A.L.R. 985. We need not, however, enter that field of discussion. The case before us calls for a decision as to whether an oral contract for the sale of certain items of personalty, comprising a certain business at a certain place, and the good will of the owner, all for the sum of $3600, is a violation of the above-referred-to provision of the statute of frauds. In discussing the nature and incidents of good will, in 24 Am. Jur. 805, § 4, it is said: "However, good will is not susceptible of separation from, or being disposed of independently of, that in which it adheres — namely, the business or the assets thereof. Consequently, it can have no existence as property in and of itself, as a separate and distinct entity, but only as an incident of a continuing business having locality or name. Good will has been held to be transmissible by will, but in this connection it should be remembered that it is not separable from other assets of the business."

The added words, "and the established business and patronage and reputation of said pressing club," do not enlarge the meaning of "good will." Whether they mean an advantage, or benefit, or favor; or a probability of continued patronage; or merely the best wishes of the former owner; or are to be regarded as signifying a mere incident adhering to the value of the physical properties of a going concern — we are satisfied, and so rule, that when there is an oral contract to sell for a lump sum of $3600 what is referred to as a business, consisting of certain articles of personalty used therein, which are definitely described, the addition of the words, "and the good will of [the owner]," does not relieve the transaction of its invalidity when attacked on the ground that it is invalid under the statute of frauds, being a contract for the sale of goods, wares, and merchandise to the amount of $50 or more. Under the prior decisions of this court, hereinbefore referred to, the meaning of the words, "goods, wares, and merchandise," is not so restricted as to include only tangible articles.

3. The plaintiffs in error rely upon part performance, and for that reason urge that the Code, § 20-402, is not in their way. The petition alleges that one of the plaintiffs, Mrs. Smith, had a lucrative position with The Thomson Company, and at the suggestion of the defendant she gave that up, in order to consummate the trade a few days later, and as a result, she is now out of employment. It is also alleged that the other plaintiff ordered and paid for more than $100 worth of equipment, under the direction of the defendant, who told Smith that the latter would need these in the new business. The part performance with which the statute deals is "part performance of the contract." Neely v. Sheppard, 185 Ga. 771 (196 S.E. 452). The doing of an independent thing, even though the act would not have been but for the contract, is not sufficient. Graham v. Theis,47 Ga. 479; Lane v. Lodge, 139 Ga. 93 (2) (76 S.E. 874);Giradot, v. Giradot, 172 Ga. 230 (157 S.E. 282); Taylor v. Boles, 191 Ga. 591, 599 (13 S.E.2d 352); Lamons v.Good Foods Inc., 195 Ga. 475 (24 S.E.2d 678). The amended petition did not allege any fact to show that there had been any part performance of the contract.

We do not overlook the fact that the petition, as amended contains an allegation that all the acts alleged to have been done by the plaintiffs between March 3 and March 9, 1944, were done in pursuance of and as part of the oral agreement and contract entered into between the plaintiffs and the defendant. The acts here referred to are mentioned above, to wit, that one of the plaintiffs at the suggestion of the defendant gave up a lucrative position, and that the other plaintiff ordered certain equipment under the direction of the defendant. To allege that these were part of the oral agreement to purchase, if such be the purpose of the amendment, is to allege a conclusion, and an unsound conclusion. The oral agreement set out in the petition was to purchase, on March 9, 1944, for the sum of $3600, the properties mentioned. That these other acts would not have been done but for the contract, may be true, but it can not be true that they were a part of the contract to purchase. The plaintiffs on their part contracted to pay the defendant $3600. The defendant on his part contracted, on that being done, to sell certain property to them, and to deliver possession thereof on March 9, 1944. None of the acts hereinbefore referred to was any part performance of the promise to pay the defendant the $3600, and an allegation to that effect can not so convert it. The demurrer was properly sustained.

Judgment affirmed. All the Justices concur.