224 F. 725 | S.D.N.Y. | 1915
I think that the plaintiff may complain of the sale o f any whisky of this kind labeled “Canadian.” It is true that it calls its whisky “Canadian Club,” but it is the largest seller of this kind of Canadian whisky, and when a consumer asks for Canadian whisky, he means either plaintiff’s or one or two other distillers’. To> give him an American whisky is to> divert him from the plaintiff’s trade, not certainly, but-probably. Where the field is so limited and the plaintiff occupies so large a part of it, a diversion of the demand from Catiadian whisky is enough of a risk to the plaintiff’s trade to justify an injunction. Goldberg’s Canadian Pacific label is not so clear; while it probably means a Canadian whisky, it certainly means a kind of Canadian whisky which is not the plaintiff’s, at least to any one who reads. While I dare say that any demand for it may arise from the popularity of the plaintiff’s whiskies, I find it difficult to- suppose that any one could buy it under that name with the idea that he was getting the plaintiff’s
bar they have not been. There is undoubtedly some honest demand for the whisky in retail liquor stores, and the plaintiff’s efforts to show that there was none were not successful. Yet it would have made no difference, in my judgment, if there had been none in fact. A man who wishes to stop another from selling under its true name a commodity he has the right to make and sell must go further than merely to show that at present it is not known. He must show that the proposed seller will not in fact make known that it is an imitation in the way he proposes; that the result will be to pass off the substitute. Even if there were no existing demand for Canadian Type in bottle, I see no reason to say that when sold with an honest label, it will necessarily pass as Canadian Club. I will not say that dishonest dealers may not use such labels to the plaintiff’s injury, but none of the defendants have been shown to do so with the bottled whisky. If the consumer buys of the liquor store bottles with such labels as Coming’s, the chance of his buying it for Canadian Club seems to me one inherent in the right to sell the American whisky at all. Of course, I might insist upon some grotesque exaggeration of the fact that the American article was an imitation, but courts have not done this, and if it should be necessary, it can only be after some proof. Therefore I hold that the defendants may sell Canadian Type whisky in the bottle to the consumer with Coming’s label or its equivalent. -
The upshot of all this is that there probably has arisen a very small and in my judgment an almost negligible bar demand for Canadian Type whisky. Along with it has grown up a fraudulent substitution of which we get some evidence in cases like the Canadian Pacific and Bartels and Pottberg. I am satisfied that bar drinkers will never in any quantity ask for Canadian Type whisky; there will be hero and there some particular person who can be educated to it, but for the great mass of consumers the whisky will pass off as Canadian whisky. The plaintiff’s testimony seems to me to show that, there is nothing of the, sort generally known.
Having found the fact as stated, the first question is whether the whole bar supply becomes illegal. I think not. The whisky is capable of an honest use, and the mere purchase of it by a saloon keeper is not certain evidence that he means to use it dishonestly, though I am convinced that he generally does so use it. The mere possibility of fraudulent use is of course not enough to prevent all sales (Rogers v. Wm. Rogers Manufacturing Co., 70 Fed. 1019, 17 C. C. A. 575 [C. C. A. 2d Cir.]), yet if the inevitable use of the article sold be a tort, or if the buyer announce his purpose of so using it when he buys, then the law, in niy judgment, regards the seller as a contributor ff> the tort. The nearest analogy in the law is the doctrine of contributory infringement of patents. It has long been settled that the selling of part of a patented invention which can be used only in violation of the patentee’s rights is an infringement. Wallace v. Holmes, 9 Blatch. 65, Fed. Cas. No. 17, 100; Heaton Button-Fastener Co. v. Eureka Specialty Co., 77 Fed. 288, 25 C. C. A. 267, 35 L. R. A. 728; Rupp & Wittgenfeld Co. v. Elliott, 131 Fed. 730, 65 C. C. A. 544; Leeds & Catlin v. Victor Talking Mach. Co., 154 Fed. 58, 83 C. C. A. 170, 23 L. R. A. (N. S.) 1027; Id., 213 U. S. 325, 29 Sup. Ct. 495, 53 L. Ed. 805. When the article may be used honestly or in violation of the plaintiff’s rights another question arises. Should knowledge of how the buyer means to use-the goods be enough? That was directly decided in the affirmative in Henry v. A. B. Dick Co., 224 U. S. 1, 32 Sup. Ct. 364, 56 L. Ed. 645, Ann. Cas. 1913D, 880. There while Mr. Justice Eurton agreed that there must be some intent and purpose that the article shall be illegally used, he thought it enough when the only fact certified was that the seller sold with the expectation that the buyer would use it to infringe. Bauer v. O’Donnell, 229 U. S. 1, 33 Sup. Ct. 616, 57 L. Ed. 1041, 50 L. R. A. (N. S.) 1185, Ann. Cas. 1915A, 150, however it may affect Henry v. Dick Co., supra, docs not touch this part of it. This case has been recognized by the Circuit Court of Appeals of this circuit
On the other side is unquestionably a decision óf Judge Wheeler in Hostetter v. Van Vorst (C. C.) 62 Fed. 600. Apparently the defendant had assented to the suggestion, though he himself had not suggested, that the imitation might be sold, as an original. The casé-is certainty in point here, but it was decided before Henry v. Dick Co., supra, and besides especially in this field the law has grown much since that time. Another case is the decision of Judge Wallace in Hostetter v. Fries (C. C.) 17 Fed. 620, over 30 years ago. The facts are somewhat hard to ascertain from the report, and certainty a part of the opinion is not now the law'when applied to this subject-matter:
“Even if it could be assumed that they [the defendants] contemplated the-further wrongdoing of the retailers, the law does not visit motives or intent unaccompanied by a wrongful overt act.”
It does not appear that the jobbers to whom the defendants sold themselves in turn sold only to fraudulent retailers. If the defendants are to be understood, as in parts of the opinion seems to be suggested, as having actually shown the jobbers how to disguise the bitters for the plaintiff’s, it goes beyond what I should suppose ever was-permissible. Kalem Co. v. Harper Bros., supra.
Another analogy is in the law of contracts where there is and always has been great confusion. An illustration of the refinements which may arise is to be found in two decisions of the Massachusetts Supreme Court in the same case, Graves v. Johnson, 156 Mass. 211, 30 N. E. 818, 15 L. R. A. 834, 32 Am. St. Rep. 446; Id., 179 Mass. 53, 60 N. E. 383, 88 Am. St. Rep. 355. The seller finally recovered because he only divined that the buyer was to sell the liquor illegally without, being told, and also because he was indifferent to it and did not desire it. Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132, lays down the rule, probably more generally accepted in the United States than any other, that mere knowledge, of the buyer’s illegal purpose will not-defeat action for the price. Comstock, J., on reargument (page 215) suggests that the rule would be different if the purpose was immoral as well as illegal; and it is generally said that if the purpose be a heinous crime, the seller may not sue. Hanauer v. Doane, 12 Wall. 342, 20 L. Ed. 439, was, it is true, a case of treason and on the facts not applicable, but Mr. Justice Bradley made the same distinction as Judge Comstock in Tracy v. Talmage, supra, saying that recovery could be had only when the case involved malum prohibitum, or “inferior criminality.” Ernst v. Crosby, 140 N. Y. 364, 35 N. E. 603, was a case where the purpose
However, I do not think that it is necessary to consider nicely just-what is the law on contracts, because it is quite plain that different considerations control those cases and this. When the seller of an innocent article knows that the buyer means to use it in wrong of a third person, but nevertheless delivers the goods, his delivery is an act the natural consequence of which to his own knowledge will produce injury. It is true that the injury can arise only through the mediation of the buyer’s own will, but that would not ordinarily affect legal responsibility. The sale is the seller’s voluntary act, and he is responsible for its known results, unless he can show an excuse. The only excuse here is liis right to sell, which is of course conditioned upon the general social results of its particular exercise. While it would be an unfair condition to impose upon that right to say that the seller must inquire into, or follow up mere intimations of the buyer’s purposes, there is, in my judgment, nothing unfair in imposing some duty of inquiry upon him when it is reasonably certain that the buyer will commit a tort. On the other hand, to declare a contract void between buyer and seller when the buyer announces his purpose to use the thing illegally certainly does not raise the question of the seller’s responsibility to the injured person." In such cases the law forfeit's the seller’s right to the price because of his misconduct, which may well require a greater degree of participation than would fasten him with civil responsibility to the injured party; Such forfeiture is not in aid of any reparation; it arises from the law’s refusal to give any relief to a wrongdoer. It does not follow that every wrongdoing which creates a civil liability will be grave enough to provoke such a forfeiture. 1 cannot therefore accept the same test as might control if the suit were by the sellers for the price of the liquor, whatever that test may be.
I therefore conclude that to sell Canadian Type whisky to one who announces that he means to use it for refilling Canadian Club bottles is a tort. Of this tort P. H. Goldberg was guilty tipon his own admissions. His statement that he told them he did not recommend or advise such a practice did not fulfill the measure of his duty. I think he was obliged reasonably to assure himself that they proposed to sell the whisky honestly before he was free to sell. The exact terms of such an assurance it is impossible to fix in advance; the buyer’s merely formal, and obviously colorable, assent would not be enough, but clearly the seller’s duty does not extend to a supervision over the buyer’s trade. On the other hand, I think that, considering the character of the bar demand, the duty of the-seller should not depend
This disposition of the cases makes unnecessary any decision upon the conflict of eyidence between the detectives and the defendants. Against the event, however, that the Circuit Court of Appeals may take a different view from mine regarding the duty of a seller under these circumstances, and in view of the 'fact that I have seen the witnesses, I shall discuss the evidence upon the assumption that the defendants may be enjoined only from actively counseling the substitution of Canadian- Type whisky for Canadian Club. In what cases have they actually done this? At the outset I think we should remember that, as I have said, the great proportion of bulk sales to saloon keepers must be known by the defendants to result in a fraud. When the question arises of the probability of the defendants having counseled substitution, this is, to my mind, a most important consideration. Any indignation at the suggestion that they actually counseled what all knew was most probable seems to me absurd. If in fact they did not quite freely discuss and recommend substitution, it could hardly have been from any genuine scruple, but rather from timidity, or a belief in what they supposed were their exact technical rights. I cannot therefore regard the detectives’ stories as being inherently unlikely; nor does the case come at all as if the defendants did not,at least indirectly, contribute to what they must certainly know to be frauds. Furthermore, that they should deny the,words put in their mouths is not too’ unlikely, because, while sales like these are perhaps not gravely wrong, surely they show a moral obtuseness to fair dealing which cannot be disregarded, especially when the denials are necessary to avoid a criminal exposure.
Coming toi the plaintiff’s evidence, it is certainly strong enough unless it was altogether fabricated. The reports are said to have been written out either upon the day of the talk or the day after; the detectives were out to get evidence of substitution, and it is hardly within the bounds of reason that they should have honestly but mistakenly imagined that the defendants said what they put into the reports. So far as honest forgetfulness may explain the divergence of story, the chances are all against the defendants to whom these
Of the six men themselves, Wright and Brady made the best appearance both for honesty and intelligence. Gleason was next in my judgment, a heavy, dull man, who stuck very persistently to his report, but who nevertheless seemed to me honest. Gates did not carry as much weight as Gleason, but stood much better than Secord and Payne. Upon the latter’s testimony uncorroborated, I should not base a finding, if they were contradicted by honest seeming witnesses.
The combination of these six witnesses, coupled with the inherent probability of their story, leads me to find that the defendants Goldberg did counsel the substitution of Canadian Type for Canadian Club. The defendants object to several details in Wright and Brady’s report. Thus they say that Goldberg could not have told them that he had shipped Canadian Type to Maurer. I cannot see why he should not have seized his last customer for an illustration, and the fact that he did ship to Maurer on the 13th lends color in my mind to the statement that Wright and Brady were there on that day. The Hannah shipment gives such a conclusion much greater certainty. Again, I can find no very good explanation for the bill which reads, “C. Whisky”; nor does the occurrence of Mrs. Carroll’s name in the reports seem to me very well explained. Upon this conflict of testimony I find for the plaintiff, and the finding applies to all nine cases.
The next case is Cook & Bernheimer’s. This depends upon the testimony of Secord and Payne for the first interview, and of Secord, Gleason, and Gates for the second. It is in my judgment corroborated by the exchange of letters. The defendants of course realized that these letters, taken as they read, left no room for an innocent interpretation, and they explained it upon the theory that it was a
The next case is Kahn’s, which depends wholly upon Secord and Payne’s testimony, together with such corroboration as is to be found in two circumstances: First, the label of his Canadian Style whisky, and the name of his gin; second, his unwillingness to complete the sale. As to the first, I am satisfied that the label was intended as an imitation of Gooderham & Worsts’. No explanation is suggested, and the use of “G. W. W.” in such a connection is hardly explainable upon any other theory. I cannot regard as honest the name, “Douglas & Son Brand” when applied to gin sold in bulk. Gordon gin has the greatest market, and there can, to my mind, be no reason for selecting that arbitrary name except with the hope of confusion. I do not say that one infringes the other, but I do think the motive is apparent.
Kahn’s refusal to complete the sale or give back the money without the bill is more perplexing. His explanation and Poliak’s is not prob
There remain the two. cases of Smyíhe and Plahn. Upon these the testimony of Secord and Payne is not corroborated at all, except as to the defendant Punke in Hahn’s case. The only circumstance which influences me to. accept their story is that, having found them to have been truthful in so many of the cases, it seems hardly proper to disregard them when they chance to be unsupported. I can only say in answer that while my guess would be that they were right in both these cases, I have too much question to make a finding upon the uncorroborated testimony of Secord and Payne. The plaintiff may, however, take a decree against Punke, if it wishes, because I shall accept the report of Gleason and Gates added to that of Secord and Payne. It seems to me most unlikely that only Payne and Gleason should have called upon what was obviously a “follow-up” visit. The purpose of such visits was to obtain cumulative testimony, and the four always went together except once.. Payne was away on the “follow-up” visit to Cook & Bernheimer, but that fact was mentioned in the report made 'of that visit, which was not the case here. Gleason and Gates always
The decree will be substantially as follows, subject to any modification on submission by the parties of proposed decrees:
This cause came on to be heard at the March term of this court and was argued by counsel, and thereupon, upon consideration thereof, it is
Ordered, adjudged, and decreed that the defendants, A. B. and C., be and they hereby are, each and all, enjoined from selling Canadian Type whisky in the wood to saloon keepers, unless they receive reasonable assurance from the buyers that they will not use it in substitution for the plaintiff’s whisky; and it is further
Ordered, adjudged, and decreed that-, Esq., take and state an account of the profits of all such Canadian Type whisky sold by each and all of the defendants during the past 6 years, the defendants having the burden of showing, either that such whisky was not in fact used in substitution for the plaintiff’s whisky, or that they had, at the time o'f sale, received reasonable assurance that it would not be so used; and it is further
Ordered, adjudged, and decreed that, the said defendants having recommended said Canadian Type whisky when sold in the wood to saloon keepers for the purpose of substitution, they are, each and all, hereby enjoined from so recommending the said whisky in any manner ; and it is further
Ordered, adjudged, and decreed that the defendants are hereby enjoined from using as labels on Canadian Type whisky when sold in the bottle the label annexed at the foot hereof, or any other label, substantially like the same; and it is further
Ordered, adjudged, and decreed that the plaintiff do recover its costs of the defendants to be taxed by the clerk.
The third paragraph will be omitted from the Smythe and Hahn cases, except as to Funke; the foúrth paragraph will appear only in the Goldberg and Smythe cases with the proper label annexed.
The plaintiff must not use this decree or opinion for advertising purposes beyond a fair statement of its contents and moderate comment therein. If such advertisements appear as have appeared in other cases, I will entertain a motion to vacate these decrees and hold open the cases undecided.