130 N.Y.S. 755 | N.Y. Sup. Ct. | 1911
On the BJth day of August, 1908,- the receiver in bankruptcy of the corporation known as the R. B.
It appears that, for many years prior to his death in the, year 1906, Robert B. Reilly was engaged in the tea business. His business was conducted for some years under the name of C. E. Reilly, his brother; then under the name of Robert B. Reilly and, after 1900, by a' corporation known as the Robert B. Reilly Company of which he was president. For many years the defendant Herbert St. Clair Heroy was in his employ and in the employ of the corporation. There seems to be no dispute that Heroy was the active manager and had sole charge of all the details of the business, and under his management the business developed and increased until, instead of having only one small office over a saloon, it conducted twenty-one retail stores.
During this period it advertised very, largely and, though the business was conducted under the name of Robert B. Reilly and the Robert B. Reilly Company, it advertised its products as “ Reilly’s ” teas and “ Reilly’s ” coffees; and I find that the word “Reilly’s” was used as the trade-name of Robert B. Reilly and the Robert B. Reilly Company. About the time of Robert B. Reilly’s death, dissensions arose in the corporation, and the defendant Heroy was deposed from the management on October 30, 1907. The corporation went into bankruptcy in the summer of 1908, and its assets and good-will were sold
As soon as the defendant Heroy was deposed from the management, he organized a new corporation known as the E. V..Reilly Company; and that corporation has, both prior and subsequently to the sale in bankruptcy, advertised its products as “ Reilly’s ” teas and coffees, in stores owned by it, and, subsequently to the bankruptcy, in the three stores owned by the. defendant Osborne.
The case presents three questions:' (1) Have the plaintiffs the sole and exclusive right to the name. “ Reilly’s ? ” (2) Have the defendants wrongfully infringed the right? (3) Do the plaintiffs come into equity with clean hands ?
The courts in this State recognize a distinction in the rights obtained by a voluntary conveyance of. the good-will of a business and those obtained by a forced sale as in bankruptcy. There is, however, no doubt but that the good-will of a business in its narrow sense is transferable in bankruptcy proceedings. Von Bremen v. MacMonnies, 200 N. Y. 41, 51. A somewhat careful examination of the authorities would seem to show that -the real distinction between the rights transferred is that a voluntary transfer of the good-will estops the transferrer from interfering by his own acts with the value of the good-will transferred while, in the case of a transfer in invitum«, the former owner of the good-will may compete with the transferee exactly as if he were a stranger. As far as third parties are concerned, a transfer of the good-will of a business upon a forced sale confers practically the same rights as a voluntary transfer. The name and style under which a business has been conducted by a partnership firm for a long series of years necessarily becomes attached to and part of the good-will and inseparable from it. Slater v. Slater, 175 N. Y. 143, 148. I see no distinction between the name under which a partnership has conducted its business and the name under which a corporation has conducted its business. Both' have voluntarily selected a name under which to conduct their
The defendants, however, claim that, if the receiver transferred to James Van Dyk Company the right to use the trade name “ Reilly’s,” then by parity of reasoning a transfer by it to E. M. Osborne & Co. of three of the stores, “ together with all the right, title and interest heretofore acquired by the said James Van Dyk Company from William H. Henkel, Jr., as temporary receiver of Robert B. Reilly Company, an alleged bankrupt, in and to the fixtures contained in and good-will of (except the name Robert B. Reilly Company) the stores, business and premises formerly leased by the Robert B. Reilly Company,” etc., passed to Osborne and his assignees the right to use the name Reilly’s ” in connection with these stores. If the bill of sale contained no express reservation, then this contention would obviously be sound. A consideration of the entire bill, however, has led .me to the conclusion that it .was the intent of the parties to retain not only the right to use the name Robert B. Reilly Company, but also the name “ Reilly’s.” I have reached this conclusion because the bill also contains the following clause: “ Hothing herein shall be construed to mean that the party of the first part (James Van Dyk Company) has agreed to or does in fact assign or transfer to the party of the second part its right to use the name Robert B. Reilly Company, the party of the first part hereby especially reserving te itself the right to use said name, and the party of the second part hereby agrees to remove any signs from said premises if required on. which shall be printed said name of Robert B. Reilly Company.” It is to be noted that this constitutes not only a reservation of the right to use the name Robert B. Reilly Company, but also an exception of the right to use that name from the transfer of the good-will of the stores. It is undisputed that, while the stores contained large signs bearing the
The second, question is whether these defendants have unlawfully infringed the plaintiff’s property rights. It seems to me beyond question that Heroy and the F. V. Beilly Tea Company have infringed these rights:
As soon as Heroy was deposed, he organized the F. V. Beilly Tea Cdmpany. He interested F. V. Beilly, a brother of the deceased Bobert B. Beilly, in the corporation, though Beilly’s practical acquaintance with the tea business was slight and he has apparently taken no personal part in the business. Though over three years have passed, he is still
It is urged, however, that the plaintiffs are not, entitled to such an injunction, because they do not come into equity with clean hands. There is no doubt in my mind ljut that, until the deposition of the defendant Heroy, the teas and coffees sold by the Robert B. Reilly Company were mixed by Heroy and the standard fixed by him. He was not held out to the world as the basis of the reputation of these goods, nor was his skill in mixing their peculiar attribute, for he also mixed and bought the teas and coffees sold under the name of “ Heroy’s ” by another company; Moreover, it is conceded that any expert could arrive at practically the
The defendants also urge that the bankruptcy of the Robert B. Reilly Company was caused, at least in part, by the wrongful acts of James Yan Dyk, representing the plaintiffs. I find-no evidence of any such wrongful acts. Yan Dyk was asked by the corporation to assume its management. His acquiescence in that request was not wrongful, and the bankruptcy was precipitated shortly thereafter by the attach
I have rather reluctantly reached the conclusion -that the injunction should issue, also, against the defendant Osborne. It seems to me that the stores purchased by him were undoubtedly run for his account for some months and that, by reason of that fact and his failure to remove the signs from his store, he is not in a position to ask that the complaint be dismissed as against him.
Settle form of interlocutory judgment.
Judgment accordingly.