Hall Safe & Lock Co. v. Herring-Hall-Marvin Safe Co., No. 1,192

No. 1,192 | 7th Cir. | Jan 11, 1906

SEAMAN, Circuit Judge

(after stating the facts). The decree appealed from grants completely the injunctional relief sought in the cross-bill filed by the appellee. Neither the prior decree, dismissing for want of equity the bill of the' appellant Hall Safe & Lock Company, nor the prior injunction, restraining that company from using its corporate name in carrying on the safe and vault business» are brought for review. It is substantially conceded—and in any view unquestionable—that the adoption and use by the appellants of the name Hall Safe & Lock Company was wrongful. The undisputed facts—of prior business relation between the parties to this ■controversy, of the use and recognized value of the name “Hall” applied to the appellee’s product, and of the methods of appellants in displaying the name in their competitive business, after severing connection with the appellee—are equally conclusive of the right of the appellee to injunctional relief against both appellants for unfair competition. This decree, however, is exceedingly broad in terms, prohibiting advertisement, display, or sale of any safes or vaults as “Hall’s Safes,” or under the name of “Hall” in any form, unless made by the appellee. As the appellants are engaged in selling the products of the Ohio corporation, operating as the Hall Safe Company, and using the name of Hall upon its safes, the decree perpetually enjoins their continuance in the business of dealing in such products, either under the name of the manufacturer, or with the trade-name which accompanies the goods. The appellants are under no ■obligation, by contract or otherwise, to deal with the appellee or its products, or to abstain from dealing in safes of any make not tending to deceive the public and induce purchase as the appellee’s manufacture.

Unless the rights of the appellee are exclusive, therefore, in the use of the trade-name “Hall,” as applied to their safes and vaults— irrespective of the just limitations in its use on the part of the appellants, arising out of their prior trade relations with the appellee— it is obvious that the decree cannot be upheld without modification. So the issues for review are twofold: First, as to the means of unfair trade practiced by the appellants; and, second, the measure of the appellee’s trade rights thus violated and injured. The evidence upon these issues is formidable in volume and various transactions enter into consideration of the second issue, but the facts which are deemed material for solution of both are established by the testimony without substantial dispute.

1. For the inquiry of the prior trade relations on the part of the appellants and the means employed in the prosecution of their rival business after severing such relation, it is sufficient to mention the uncontroverted facts, without needless details or comment, beyond reference to the well-settled doctrine of unfair competition in trade. As averred in their bill, filed in this action: The manufacture of safes, under the name of Hall’s safes, commenced in Cincinnati, about 1854; the name “acquired the highest reputation in the safe business,” and the safes so labeled are known to the trade and public as “of the highest type of construction, durability, efficiency and character”; and for more than 20 years the appellant •Donnell has continuously sold safes so named, made by the successors of the original Hall. The facts are 'that the operations of the Halls were successively, an individual Hall, then several copartnerships, and finally from 1867 to 1892, under an incorporation of Hall’s Safe & Dock Company; that in 1892 the entire assets and good will ,of that corporation (composed of the Hall family) was acquired by the predecessor in interest of the appellee, Herring-Hall-Marvin Safe Co.; that about 1880 the appellant Donnell became the business representative in Chicago of Hall’s Safe & Lock Company and. was the sole agent up to 1886, when he formed a copartnership with one Dean, and thereafter his firm continued the agency for that corporation and its above-mentioned successors in the business until 1898, when the appellant corporation was organized by Donnell and such agency terminated; and that the copartnership agency referred to operated under an express contract requiring, among other things, prominence of the trade-name Hall in the business. It is established by the admissions of Donnell, in his testimony, that the name Hall Safe & Lock Company was adopted for the appellant corporation, with no member of the name of Hall and for the purpose of retaining the business which was attached, not only to the name of Hall, but to the original corporate name of the appellee’s predecessor, Hall Safe & Lock Company, and to obtain the business mail which was often addressed in that name; also that it was the intention thereafter to deal with the later Ohio corporation, organized by the Hall family, called Hall’s Safe Company. During the continuance of the agency for appellee’s predecessors, the Donnell office and store displayed numerous signs bearing the names “Hall’s Safe & Lock Company,” “Hall’s Safes,” and the trade-name Hall was kept prominently in view therein and on safes and stationery, in conformity with their contract. These signs were kept in equal prominence, at least, under the new organization and rival business of the appellants, and in advertising matter; for instance, advertising “Hall’s Safe & Lock Company” as the largest manufacturer of safes and vaults in the world; also that “The only safes made by the Halls are sold in Chicago at the old stand, 52-54 Wabash Avenue. Beware of imitations.” The corporate name so assumed was changed when enjoined by the trial court, but not the other methods.

With the trade thus established by Donnell and associates, under their relations to the business and good will acquired by the appellee, the methods adopted by them, in carrying on the competing business, were unmistakably calculated to trade on the good will achieved for the safes which they had so long represented, under the name of “Hall” and “Hall’s Safe & Lock Company.” This course tended to deceive the public and injure the appellee in trade benefits, which were the legitimate fruit of the good will it had acquired and maintained. The doctrine of the uniform line of authorities protecting the injured party from such unfair competition is plainly applicable, and the injunction was rightly granted. That the appellants were bound to recognize the rightful use of the name Hall, as descriptive .of their safes, and did recognize its value in trade, are unquestionable propositions; and their violation of the cardinal rules of fair dealing —in keeping up the old signs and the old prominence of “Hall” as the mark of excellence in the safes, with no evidence to bring home to the public notice that the safes offered were not the Hall safes theretofore sold by them as the appellee’s product—is alike unquestionable, whether the appellee’s right to the use of that name was exclusive, or was either shared by the new principal, the Ohio corporation, or claimed by it as a monopoly in the name rights. If the right to use the name were not exclusive, the appellants’ conduct would be equally wrongful, but in such event the terms of the injunction would require modification to meet such view.

2. The question, therefore, whether the appellee’s rights in the name Hall, as applied to its safes, are exclusive, thus arises for review, under the scope- of the decree. We do not understand from the brief or oral argument of counsel for appellants that it is corn tended that use of this trade-name by the appellee was without right —and certainly the rightful use is not questionable under the terms of the conveyance and the subsequent participation of the Hall family in such use—but the contention'is that the right is not exclusive, and that the Hall family, at least, have unrestricted right to employ the name in their rival trade. In other words, the only issue is whether the conceded like use by the Ohio manufacturer, Hall’s Safe Company, is legitimate. It must be determined as between the parties to this record, for the reason that the contention for modification of the decree rests solely on the assumed rightfulness of the manufacturer’s adoption of the name, so that neither the fact that the Ohio corporation is not present as a party, nor the more embarrassing fact that litigation is pending between that corporation and the present appellee, involving the same issue, will justify evasion of the inquiry. The contention, however, on the part of the Ohio corporation is presented by the testimony of Edward C. Hall and William H. Hall, its president and vice president, respectively, and with their admissions of fact the solution is free from difficulty, as we view the evidence.

The Halls, father and sons, had established a successful business in the manufacture and sale of safes, then called and well known as Hall’s safes, when they -organized in corporate form, in 1867, as Hall’s Safe & Eock’ Company. Under this organization the Halls conducted the business and greatly increased the output and reputation of the safes, under the same name, until 1892, when the assets and business, as a successful going concern, were sold to the Herring-Hall-Marvin Company, a consolidation of sáfe manufacturers. The instrument of sale conveyed all the property of the corporation and expressly mentioned “trade-marks” “trade rights,” and “good will.” In the selling corporation, the Hall family were not only the officers and managers, but owned all or substantially all the stock, and negotiated the sale. Through the sale they became controlling in interest in the purchasing corporation and were ■ the managing officers—of the above-mentioned witnesses, one being president and the other treasurer. The evidence is convincing that the name of Hall was kept prominently in view of the trade and constantly associated with the product, notwithstanding its midway position in the combined names of the new corporation. The engagement of the Halls with this corporation bound them only during the term of their service to enter no rival business. After four years in the management, the above-mentioned witnesses retired from the corporation and were released from their service contract, subsequently organizing the new Ohio corporation—Hall’s Safe Company—and resumed the business of manufacturing safes which they named Hall safes. The Herring-Hall-Marvin Company promptly brought suit to enjoin such use of the name, and the suit is pending on appeal in the Circuit Court of Appeals for the Sixth Circuit—delayed in its course through various •causes without fault of either party.

The right of these succeeding Halls to enter the business and manufacture safes of the structure and quality thus undertaken, for any market, is not questioned. So their use of the name Hall in the connection stated was within their right, unless barred by contract or •estoppel, or the use is deceptive and fraudulent. Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U.S. 118" court="SCOTUS" date_filed="1905-04-24" href="https://app.midpage.ai/document/howe-scale-co-v-wyckoff-seamans--benedict-96282?utm_source=webapp" opinion_id="96282">198 U. S. 118, 25 Sup. Ct. 609, 49 L Ed. 972. The general rule for which the appellants contend— that the family surname is “incapable of exclusive appropriation by any one, as against others of the same name who are using it legitimately in their own business”—is too well settled to require citation or review of the authorities. But the exceptions above mentioned, which make the use illegitimate, are equally well settled, and we are of opinion that the general rule is not applicable to the trade-name “Hall” thus applied to the product of the new corporation, and that the use was both fraudulent and in derogation of the rights acquired by the appellee under the conveyance by the original Hall corporation. The fact that such conveyance was not executed by the Halls as individuals cannot absolve them from the obligations of a •contract, made in the corporate name, wherein they were individually the beneficiaries. As stated in McKinley v. Wheeler, 130 U.S. 630" court="SCOTUS" date_filed="1889-05-13" href="https://app.midpage.ai/document/mckinley-v-wheeler-92504?utm_source=webapp" opinion_id="92504">130 U. S. 630, 636, 9 Sup. Ct. 638, 640, 32 L. Ed. 1048" court="SCOTUS" date_filed="1889-05-13" href="https://app.midpage.ai/document/mckinley-v-wheeler-92504?utm_source=webapp" opinion_id="92504">32 L. Ed. 1048: “The court, when necessary, will look beyond the name of a corporation to the individuals whom it represents.” See opinion of Judge Baker, speaking for this court, in Siemens-Halske Electric Co. v. Duncan Electric Mfg. Co. et al. (decided October 3, 1905) 142 F. 157" court="7th Cir." date_filed="1905-10-03" href="https://app.midpage.ai/document/siemens-halske-electric-co-v-duncan-electric-mfg-co-8759220?utm_source=webapp" opinion_id="8759220">142 Fed. 157. The corporate form of the ■transfer will not be permitted “to distort or hide the truth” (Anthony v. American (Glucose Co., 146 N. Y. 407, 413, 41 N. E. 23) but a court of equity will treat the contract in conformity with its true meaning.

The organizers and owners of this new corporation were not only • the Halls who managed the original business, who established and maintained the reputation of the Hall safes, but they personally negotiated the sale of that business and good will to the purchasing corporation, for a large price, and received (as stockholders) a large share of the proceeds; they became managers of the purchasing corporation and so continued for four years, maintaining and enlarging, the business and good will so acquired, in the product known as Hall safes; and, thus participating and profiting in the transfer of that valuable asset—which they have given to the selling corporation, through acquiescence, at least, in the use of the family name—-their efforts to repossess themselves of its essence, destroying or impairing the value of the property rights granted to the purchaser, are plainly inequitable, and, as we believe, violative of their contract obligations.

In any view of the doctrine of unfair trade, we are of opinion that •the appellee is entitled to protection against the sale by these appellants of safes so made and marked as Hall safes, as representatives ■of the so-called Hall’s Safe Company, or otherwise. The recent decisión in Howe Scale Company v. Wyckoff, Seamans & Benedict, supra, is relied upon by the appellants for support of their contention that the Halls were not deprived of right to use the family surname by these transactions, but we are satisfied that the case is plainly distinguishable; that the contract elements above mentioned in the case at bar were not there present, and the decision was expressly grounded upon the absence of such obligations, together with the absence of deception or confusion in the use of the name Remington; and that the elements thus appearing in the present case are unmistakably recognized as excepted from the rule thus upheld.

Without reference to the question discussed in the briefs, whether the name Hall has been so long identified with the business as to acquire a secondary meaning, within the authorities cited, we are of opinion that the uses of the name upon the safes represented and sold by the appellants are plain violations of the doctrine of fair trade, and that the appellees are entitled to the protection granted by the decree of the Circuit Court.

The decree accordingly is affirmed.