In Parnell v. Dean (1900) 31 Ont. Rep. 517, supra, a covenant of this character by a retiring member of a partnership, with the remaining members of the firm and a third person, who was taken into the firm at the time of the transaction, is held enforceable by a joint stock company organized by the new firm to operate the business, and to which the business and good will were transferred. It is also held enforceable by the surviving member of the firm after the other partners had retired. In Fleckenstein Bros. Co. v. Fleckenstein (1903) N. J. Eq. —, 53 Atl. 1043, decree settled in (1904) 66 N. J. Eq. 252, 57 Atl. 1025, in the sale of a one-half interest in a manufacturing business, the covenantor agreed not to undertake to engage in a competing business. This interest and the other one-half interest were subsequently acquired by a corporation, and thereafter the covenantee assigned the covenant to this corporation. It was held to be enforceable in behalf of the corporation. In the opinion as reported in 53 Atl. 1044, the court said that "such covenants have all their vitality and value from their association with the business. They are intended to protect a business, to keep it, and make it valuable to the purchaser; and, even if the transfer by the purchaser to the company was not accompanied by a transfer of this covenant, the corporation might well rely upon their getting the benefit of the covenant as long as it remained in the hands of the purchasers,-the original purchasers. These purchasers became interested in the corporation,undoubtedly took stock in the corporation. I think they took stock in exchange for their interest, or at least in exchange for a part of their interest. The corporation got all the benefit of it without an actual assignment. Subsequently, in my judgment, it was entirely competent to complete the whole transaction by a transfer to the corporation of this covenant; and the covenant was assignable in that way, and for the purpose for which it was assigned, and to the party to whom it was assigned. I am satisfied that that is the correct conclusion." A very similar case is Roper v. Hopkins (1898) 29 Ont. Rep. 580. In this case the sellers of shares in a trading company covenanted with the purchaser that if his employment by the company as manager of the business should be terminated, he would not become connected in any way in a similar business carried on by any person or persons, corporation or corporations. After the termination of the agreement for the employment, it was claimed that he indirectly engaged in a competing business. While it was held that the evidence did not show a breach of the covenant, the question was also raised as to the right of the covenantees to enforce the covenant on the ground that they had disposed of their shares in the company after commencing the action. On this ground the right of the plaintiffs to maintain the action was denied the court apparently favoring the conclusion that the covenant was assignable along with the shares. In Welstead v. Hadley (1904) 21 Times L. R. (Eng.) 165, a covenant not to engage in a similar business, entered into by the covenantors upon selling their business to a limited company, of which they became managing directors, was held to have passed to the purchaser of the company's business and good will upon a receiver's sale thereof. And, upon this point, attention is also called to a class of cases not strictly within the scope of the note, which hold that covenants by persons united to form a corporation, not to engage in a competing business, may be enforced either by the person to whom the covenant runs, or the corporation after it has been formed. Bloom v. Home Ins. Agency (1909) 91 Ark. 367, 121 S. W. 293; Anchor Electric Co. v. Hawkes (1898) 171 Mass. 101, 41 L.R.A. 189, 68 Am. St. Rep. 403, 50 N. E. 509; McCausland v. Hill (1896) 23 Ont. App. Rep. 738. And see McCausland v. Hill (Ont.) supra, which holds that where several persons dealing in a certain class of goods combine to form a company to take over the business of each of them, and they each covenant not to engage in a competing business with this new company when it is formed, the covenant is enforceable against one of the covenantors by the remaining parties thereto. V. Transfer to partnership. A covenant of this character running to a partnership as an incident to the sale of the business of the partnership, either by a third person or by a member of the partnership in transferring his interest therein to other members, has been held to inure to the benefit of the partnership. For example, in Gompers v. Rochester (1867) 56 Pa. 194, a covenant of this character running to a partnership was held to pass to the surviving partner as an incident of the business, where he purchased the interest of the other part ners. In Jenkins v. Eliot (1906) 192 Mass. 474, 78 N. E. 431, a covenant of this character in the sale of a business to a partnership was held not defeated by a subsequent sale by one partner to the other, and the assignment of the covenant was limited to the provision that if the purchaser should cease to carry on the business at the place designated, the covenantor might then re-engage in such business. In Smith v. Hawthorne (1897) 76 L. T. N. S. (Eng.) 716, a covenant not to carry on a school within a desig nated distance of a school carried on by the covenantee entered into at the time of the employment of the covenantor by the covenantee, was held enforceable in behalf of the surviving partner of a partnership subsequently formed by the covenantee with a third person, although the surviving partner was such third person. A covenant by a retiring partner not to engage in a competing business was held to pass to a subsequent purchaser of the partnership business in Townsend v. Jarman [1900] 2 Ch. (Eng.) 698, 69 L. J. Ch. N. S. 823, 83 L. T. N. S. 366, 49 Week. Rep. 158. In Bauwens v. Goethals (1914) 187 Ill. App. 563, such a covenant made to a partnership and the sale of the business to it were held to pass to the sur viving partner upon his purchase of the business from the other partners. To the same effect is Beard v. Dennis. (1855) 6 Ind. 200, 63 Am. Dec. 381. In Hillman v. Shannahan (1871) 4 Or. 163, 18 Am. Rep. 281, one partner, in selling out his business to a third person, executed a bond to such third person conditioned against his re-engaging in a similar business within a designated period of time. Some time thereafter, this third person sold out his interest to the remaining partner, and it was held that the latter could not enforce the covenant, since it was executed for the personal protection and indemnity of the original purchaser while carrying on the business in person. And see upon this point Linn County Abstract Co. v. Beechley (1904) 124 Iowa, 146, 99 N. W. 702, holding that where a contract for the sale by one partner of his interest in the partnership business, and also an abstract business, contained a covenant by the seller that he would not enter into making and selling of abstracts in and nated time, either in person or indifor a certain company within a desigrectly, by or through or in connection whatsoever with any third party, firm, or corporation, a partnership was subsequently formed by the purchasers, and this was thereafter merged in a corporation, and stock therein was corporation was held not to be entitransferred to third persons. This tled to enforce the covenant. It was pointed out that the original seller had not been shown to have violated the covenant by re-engaging in the abstract business. But it was also held that the covenant related to an engagement for personal servces which required skill and science, and peculiar qualifications, hence, the contract was not assignable. The court also stated that when the partership discontinued the abstract business, the consideration for their exclusive employment by the defendant failed and the plaintiff took nothing by the assignment. In Bagby & R. Co. v. Rivers (1898) 87 Md. 400, 40 L.R.A. 632, 67 Am. St. Rep. 357, 40 Atl. 171, one partner pur chased the partnership business, including the right to use the partnership name and also the good will. He subsequently sold the business to a corporation of which he became a member, and it was held that the covenant did not pass to the benefit of the corporation. The covenant in this case, however, was limited in its scope, providing merely that the covenantor should not engage in a similar business so long as the purchaser continued such business. The court said that when the corporation was formed and there were assigned to it all rights of the old firm, the old business was no longer conducted and continued within the meaning of this covenant. So in Barron v. Collenbaugh (1901) 114 Iowa, 71, 86 N. W. 53, where the covenant not to engage in a competing business was limited to the time during which the purchasers of the partnership were engaged in such business, it was held that where one of the partners sold out his business to the other partners, the identity of the firm was thereby destroyed and the covenantor was released from the obligation of his covenant. VI. Where sale of property and business not contemporaneous. A covenant follows the business and good will rather than the property used in carrying on the business to which the covenant relates. For example in Francisco v. Smith (1894) 143 N. Y. 488, 38 N. E. 980, the original buyer of a business, good will, etc., the property used in connection therewith, together with a covenant by the seller not to engage in a competing business, sold the property without the business, and the purchaser subsequently resold it. The latter purchaser later acquired from the original purchaser an assignment of the business and good will, and he was held entitled to enforce the covenant. The court said in effect that since the right was conceded to the original buyer to sell the property and business together and assign the covenant, there was nothing in reason or principle to preclude him from disposing of the property and place of business, and afterwards selling and assigning It is clear that a covenant not to engage in a competing business may be so framed as to be personal to the covenantees. In such case it is not assignable and is enforceable only by the covenantees. Hence, a sale by them of the business to which the covenant relates does not have the effect of carrying with it the covenant. For example, in Bagby & R. Co. v. Rivers (1898) 87 Md. 400, 40 L.R.A. 632, 67 Am. St. Rep. 357, 40 Atl. 171, the covenant provided merely that the covenantor should not engage in similar business so long as the purchaser continued in such business. This covenant was held limited in its scope to the time during which the covenantee was personally engaged in business in his own behalf. And in Barron v. Collenbaugh (1901) 114 Iowa, 71, 86 N. W. 53, a very similar covenant not to engage in a competing business during the time the purchasers of the business, a partnership, were engaged in such business, was held limited in its scope to the time during which this partnership was actually engaged in the business, and not to continue after the identity of the partnership was destroyed by the sale by one of the partners to the other partners of his interest in the business. In Guerand v. Dandelet (1872) 32 Md. 561, 3 Am. Rep. 164, as part of the lease of a dyeing and scouring establishment and the sale of the custom and good will thereof, a covenant was entered into by the lessor and seller not at any time thereafter to exercise or conduct the trade or profession of dyer or scourer, nor directly or indirectly to compete with the business of the lessee and purchaser. This covenant was held enforceable, notwithstanding that the purchasers entered into a partnership and subsequently one of the partners retired, selling and conveying his interest in the partnership and property to his copartners. Upon the specific question as to the effect of the dissolution of the original partnership it was held that such dissolution did not release the covenantor from his obligation to observe the covenant. The court said that the persons continuing the business were entitled to the benefit of the covenant both by virtue of the articles of copartnership and the subsequent assignment by the one partner of his interest therein. In Davies v. Davies (1887) L. R. 36 Ch. Div. (Eng.) 359, 56 L. J. Ch. N. S. 962, 58 L. T. N. S. 209, 36 Week. Rep. 86, the covenant was in effect that the covenantor would not engage in any trade, company, or deal which would either directly or indirectly affect the covenantees. This was held to be a purely personal covenant and limited in its scope to the covenantees, and, hence, it would not pass upon the sale by the latter of the business and good will to which the covenant related. Cotton, J., pointed out that the covenant was not absolute, and it apparently pointed to the personal benefit of the covenantees rather than to the protection of the good will of the business to which it related. VIII. Effect of retransfer of covenant to original covenantee or covenantor. The revesting of the business in the original purchaser also revests in him the covenant. This is the holding in Swanson v. Kirby (1896) 98 Ga. 586, 26 S. E. 71. The facts were that in transferring a business, a covenant was entered into not to engage in a similar business; the business was subsequently transferred, and the subsequent purchasér again transferred it, and the later purchaser transferred a one-half interest therein to the original purchaser. A partnership having been formed between the two, it was held that the covenant was enforceable in behalf of this partnership. But the revestment of the business and covenant in the original covenantor merges and defeats the covenant, and it is no longer enforceable against the covenantor. This is the holding in Townsend v. Jarmen [1900] 2 Ch. (Eng.) 698, 69 L. J. Ch. N. S. 823, 83 L. T. N. S. 366, 49 Week. Rep. 158. In this case it appeared that, upon the formation of a partnership to carry on a designated business, one of the partners covenanted not to engage in a similar business should he withdraw from the partnership, or should it be terminated by lapse of time, death of one of the partners, or in any other manner; subsequently the business and good will were transferred to a corporation, and thereafter upon the winding up of the corporation, the covenantor repurchased the business and re-engaged therein. It was held that he was entitled to continue in the business as one of the partners to whom the original covenant ran, the court taking the view that the covenant was not personal to the covenantee, but passed as an incident to the successive transfers of the business so that it finally became vested in the covenantor. In Gompers v. Rochester (1867) 56 Pa. 194, a covenant not to engage in a competing business was made as an incident of sale of the business to a partnership composed of three members, two of whom subsequently sold to the third, and the latter afterwards resold the property to the original seller and released him from the covenant "so far as he had power to do it." Under these circumstances it was held in an action for the use of the two members of the firm that the covenantor did not violate the covenant by continuing the business. The court pointed out that there was no covenant to prevent the partners selling back to the covenantor, and since none existed as to them, none existed as to their assignee; and it is said that the fallacy of a position to the contrary consisted "in regarding the covenant as attaching, or incident to, them personally; whereas it was alone an incident to property which they had parted with and the business also. It would not have been binding for want of a consideration, unless as incident to the property sold at the time of the relinquishment covenanted for. I doubt if any case can be found in which such a covenant has been en forced, where it had no effect to protect the business or trade of the covenantee. Indeed it would be against public policy, and every principle up- GERRY L. BROOKS V. VOLUNTEER HARBOR, NO. 4, AMERICAN ASSOCIATION OF MASTERS, MATES, AND PILOTS. Massachusetts Supreme Judicial Court-June 18, 1919. (- Mass. 123 N. E. 511.) Attorney and client-right to recover for services — right to practise. An attorney admitted to practise in one state is not precluded from recovering for services performed in another state where he was not admitted, because of a statute imposing a penalty for unlawfully holding oneself out as qualified to practise in the courts of that state, if he informed his clients that he was not entitled to practise in that state and for court proceedings would have to secure local counsel. [See note on this question beginning on page 1087.] EXCEPTIONS by defendant to rulings of the Superior Court for Suffolk County (McLaughlin, J.) made during the trial of an action brought to recover for legal services rendered by plaintiff to defendant, which resulted in a verdict for plaintiff. Overruled. The facts are stated in the opinion of the court. Mr. Clarence W. Rowley, for defendant: In an action for services as an attorney at law no recovery can be had for services in conducting a case in court rendered by one who is not admitted to the bar, unless he is specially authorized. Browne v. Phelps, 211 Mass. 376, 97 N. E. 762; Ames v. Gilman, 10 Met. 239. The charge that plaintiff was a member of the bar of the state of Maine and that he rendered certain legal services failed to cover the subject-matter of the requests, and was erroneous. Browne v. Phelps, supra; Creditors Nat. Clearing House v. Bannwart, 227 Mass. 579, 116 N. E. 886, Ann. Cas. 1918C, 130; Whitney v. Wellesley & B. Street R. Co. 197 Mass. 495, 84 N. E. 95; Maxwell v. Massachusetts Title Ins. Co. 206 Mass. 197, 92 N. E. 42. Messrs. Blodgett, Jones, Burnham, & Bingham and Charles L. Favinger, for plaintiff: Plaintiff is entitled to recover. Ordway v. Newburyport, 230 Mass. 306. 119 N. E. 863. Carroll, J., delivered the opinion. of the court: The plaintiff, a member of the bar of the state of Maine but not admitted to practise in the courts of this commonwealth, sued to recover for legal services rendered to the defendant. There was evidence that he had acted, to a limited extent, as attorney of the National Association of Masters, Mates, and Pilots, and while so acting had business relations with the defendant, local harbor or chapter of the National Association. The plaintiff testified that, at the request of the defendant's secretary, he came to Boston and met some of its officers, who sought his advice respecting a suit brought against the defendant and some of its members, pending in the superior court for the county of Suffolk; that he informed the defendant he was not admitted to practise in the courts of this state and it |
