Goodwill is, after all, "based upon the prospective profits to result from voluntarily continued patronage of the public." Colton v. Duvall, 254 Mich. 346, 349, 237 N.W. 48 (1931). See also, e.g., Brown v. Weeks, 195 Mich. 27, 39, 161 N.W. 945 (1917) ("Good will is often a valuable adjunct of a ... corporation where the company has long conducted its business, has a reputation for fair dealing, and has by its conduct attracted customers to it.").
It indicates that value which inheres in the fixed and favorable consideration of customers arising from an established and well-conducted business." Colton v Duvall, 254 Mich 346, 349; 237 NW 48 (1931). The opinions of lower federal courts are not binding on this Court, but such opinions may be considered for their persuasive value.
" (Citations omitted.) Colton v Duvall, 254 Mich. 346, 348-349; 237 N.W. 48 (1931). It appears from the facts in this case that the defendant did not have any good will in the Clay-Mar Veterinary Clinic to transfer to the plaintiff.
There can be no doubt that, under Michigan law, the sale of a business along with its accompanying good will gives rise to a covenant precluding the seller from soliciting back to himself that which he has sold. In Colton v Duvall, 254 Mich. 346; 237 N.W. 48 (1931), defendant had sold his truck and trucking business along with a list of customers and the good will of the business to plaintiff. Later, defendant began soliciting freight-handling business from those who had been his customers in the business he had sold.
The implied covenant would be toothless if such a company could sell its entire business and goodwill, and then turn around and set up an identical business so long as it reaches consumers through a different distribution chain. See Getter v. Levine, 24 N.W.2d 149, 152 (Mich. 1946) (noting seller of a business and its goodwill may not start a new business and "represent the new business as a continuation of the old"); Colton v. Duvall, 237 N.W. 48, 50 (Mich. 1931) (explaining that seller is "not at liberty to destroy what he transferred or depreciate what he sold"). Bars's argument that BPI was required to show solicitation of one of the 1973 distributors also assumes that the 1973 agreements transferred only Bars's then-existing foreign business.
" See also Hall Mfg. Co. v. Western Steel Iron Works, 7 Cir. 1915, 227 F. 588; Mouton, Inc. v. Hebert, C.A.La., 1940, 199 So. 172, 174-175; Colton v. Duvall, 1931, 254 Mich. 346, 350, 237 N.W. 48, 50. As the Louisiana court held in Mouton v. Hebert, it is unfair and tantamount to fraud, to sell a business with one hand and attempt to recapture its fruit with the other. This case is analogous to the cases involving payments to protect future earnings by eliminating competition. It has been held that payments to protect earnings are capital expenditures.
A. Harris Co. v. Lucas (5th Cir. 1931), 48 F.2d 187, 189.Colton v. Duvall (1931), 254 Mich. 346, 349, 237 N.W. 48. No rigid and unvarying rule for the determination of the value of good will has been laid down by the courts; therefore, each case must be determined on its own facts and circumstances.
CL 1948, § 445.766 (Stat Ann 1962 Rev § 28.66), permits the making of agreements by sellers of businesses not to compete with the vendees. For cases in which they have been enforced, see: Weickgenant v. Eccles, supra; Wolverine Sign Works v. Powers, 248 Mich. 371; Bottomley v. Brown, 188 Mich. 134. Defendants quote from Colton v. Duvall, 254 Mich. 346, 349, the following: "The rule is that contracts of this nature will be enforced in equity where the restraint is only partial and is limited to a particular place."
In some of these cases, the action, held to be in violation of the covenant not to compete, involved greater direct interference with the customer good will of the business which had been sold. Cf., e.g., S.F. Myers Co. v. Tuttle, 183 Fed. 235, 236-238 (C. C.S.D.N.Y.); C.H. Barrett Co. v. Ainsworth, 156 Mich. 351, 355-356. Cf. also Weickgenant v. Eccles, 173 Mich. 695, 700; Colton v. Duvall, 254 Mich. 346, 349-350. In others, the covenant was interpreted more broadly than we are prepared to interpret that made by the Bikashes.
We have examined all of the cases cited by plaintiff. Lerner v. Stone, 126 Colo. 589, 252 P.2d 533; Milgrim Bros. v. Schlesinger, 168 Or. 476, 123 P.2d 196; George v. Burdusis, 21 Cal.2d 153, 130 P.2d 399; J.L. Cooper Co. v. Anchor Securities Co., supra, 9 Wn.2d 45, 113 P.2d 845; Von Bremen v. MacMonies, 200 N.Y. 41, 93 N.E. 186; Ranft v. Reimer, 200 Ill. 386, 65 N.E. 720; Colton v. Duval, 254 Mich. 326, 237 N.W. 48; Trego v. Hunt, App Cas 7 (Eng). All are clearly distinguishable.