140 F. 938 | U.S. Circuit Court for the District of Southern New York | 1905
The bill is in equity for an accounting to enjoin the defendants from using in the sale of bitter waters labels in imitation of the labels used by complainant in the sale of waters commonly known as “Hunyadi Janos.” The elicited facts and circumstances are unusual, and the propositions of law novel and interesting. Pending this bill Joseph Mendelson died in the year 1903, and the suit was revived in the name of the executrix. The object and purpose of the bill is to establish the personal liability of the defendants Moritz Eisner, the president, and Plattie Mendelson, as executrix of Joseph Mendelson, deceased, who was the treasurer, of the Eisner & Mendelson Company, a corporation of the state of West Virginia. As managing officers and directors, Eisner and Mendelson (hereinafter for convenience called the defendants) exclusively managed and controlled the affairs of the corporation. A judgment recovered in a
The material matter alleged and in issue is that the defendants are individually liable as joint and several trespassers, and as such are concluded upon the facts in controversy by the decree of the court in the action against the company. It is undeniable that the defendants aided in the defense of that action, and, acting together, were the principal force in the unlawful preparation of the peculiar bottles and labels which infringed those used by the complainant in the sale of the waters above mentioned. The evidence shows that', knowing of Mrs. Saxlehner’s prior rights, the defendants intentionally devised and profited by the infringing label and trade-mark. Judge Shipman, who heard the original proceeding in the Circuit Court, in his opinion reported in 88 Fed. 61, substantially holds that Moritz Eisner intentionally imitated the infringing label for the express purpose of obtaining, by means of the simulation, part of the good will which the Janos water had gained. The Supreme Court, in commenting upon the acts of the company, declared that its adoption of the simulated labels “seems to have been an act of undisguised piracy.” The defendants were not joined as parties in the original proceeding. The bill alleges that, when the principal action was brought, the complainant was without knowledge of the active participation of the defendants in the fraudulent and wrongful acts adjudged to have been committed. In the bill it is not claimed that the company is insolvent, or that there •is any reason for believing that complainant cannot obtain complete relief in the principal action. The answer avers that all the acts in relation to bottling and selling the Hunyadi waters were done by the defendants solely in their official capacity, and that they never owned, or had any interest personally in, the labels or sale of the bitter waters by the company. The defenses relied upon are lack of jurisdiction; that no accounting can be had in equity, as the defendants have not individually violated any rights of complainant; and that the testimony introduced regarding the company’s insolvency subsequent to filing the bill is incompetent and irrelevant.
The objection to the jurisdiction of the court will first be considered. The proofs show that the company discontinued the use of the in
I do not think that the Root Case is a controlling authority here upon the question of jurisdiction. It was there held in relation to an expired patent, a patent in which the monoply had ceased, that the injured party had an adequate and complete remedy at law. It is true the enunciated principle was not confined to the specific subject-matter of the suit, and it apparently includes all classes of cases in which a cause of action is cognizable at law. Alger v. Anderson (C. C.) 92 Fed. 696. This controversy, however, for infringing a trade-mark or labels by which complainant’s goods are distinguished from those of. other dealers — a vested property right, which in fact can be used and transferred and sold as any other property — is not. within the enumerated classification. It has been held that there is very little analogy between trade-mark property rights and patents for inventions. Canal Co. v. Clark, 13 Wall. 322, 20 L. Ed. 581. The rule invoked, as already intimated, is to hold the defendants individually accountable to pay the judgment recovered against the company, because of their personal contribution to the fraud, and their, privity with the party defendant in the former litigation. As said in Peters v. Union Biscuit Co. (C. C.) 120 Fed. 679:
“The executive officers of a corporation, who necessarily inspire all its acts, cannot shield themselves behind an artificial, and sometimes Irresponsible, creation from the consequences of their own acts, even though, performed in the name of an artificial body.”
Although that case was reversed upon appeal by the Circuit Court of Appeals, Eighth Circuit (125 Fed. 601), upon another point, the principle stated is thought to be the law. See, also, Glucose Co. v. St. Louis S. & P. Co. (C. C.) 135 Fed. 540.
In Walter Baker & Co. v. Sanders, 80 Fed. 889, 26 C. C. A. 220, it was decided that, where a decree for infringement is merely interlocutory, it ii not conclusive in a suit by the same parties against an agent for the principal. This conclusion was an evident acquiescence in the general rule above stated.
In Tootle v. Coleman, 107 Fed. 41, 46 C. C. A. 132, 57 L. R. A. 120, it was held that:
“One who instigates another to do a wrongful act, and, when the wrongdoer is sued, takes upon himself and conducts the defense of the case, is concluded from again litigating with the plaintiff in that action the issues there decided.”
In Estes v. Worthington (C. C.) 30 Fed. 465, it was held by Judge Wallace that:
“In torts of misfeasance, like the violation of a trade-mark, agents and servants are personally liable to the injured party. Bell v. Josselyn, 3 Gray, 309, 63 Am. Dec. 741; Richardson v. Kimball, 28 Me. 463; Mitchell v. Harmony, 13 How. 115, 14 L. Ed. 75; Phelps v. Wait, 30 N. Y. 78. All persons procuring or assisting in the commission of a trespass are principals in the transaction, and both the master who commands, and the servant who does, the act of trespass may be made responsible as principals, and may be sued jointly or severally for damages, as the injured party may elect.”
The enunciated doctrine applies to stockholders of a corporation who are held privy to a proceeding touching the body of which they are members. Glenn v. Liggett, 135 U. S. 544, 10 Sup. Ct. 867, 34 L. Ed. 262. Such being the law, it follows that the final decree of the Supreme Court of the United States in Saxlehner v. Eisner & Mendelson Company was binding upon the defendants, and the evidence relating to their participation in the acts of infringement is res adjudicata.
The important inquiry is whether the infringements of the company were inspired and committed by the defendants jointly or severally, with the object of concealing their acts behind the corporation. Were the defendants joint tort feasors with the company? Are they liable to account for profits; it not being claimed in the bill that the company was insolvent or irresponsible ? These questions are not free from dif
A discussion of the evidence upon this point suggests the third objection urged in behalf of the defendants, namely, that such proof is not within the scope of the pleadings; no supplemental bill having been filed. This objection, however, is thought untenable. Giving consideration to the later evidence on the accounting in connection with that appearing in the principal action, the misconduct of the defendants and their motive are clearly shown. The facts would seem to directly bring this case within the exceptions pointed out in the following cases: Mergenthaler Linotype Co. v. Ridder (C. C.) 65 Fed. 853; Howard v. St. Paul Plow Works (C. C.) 35 Fed. 743; Bowers v. Atlantic Co. (C. C.) 104 Fed. 887; Greene v. Buckley (C. C.) 120 Fed. 955; Boston Woven Hose Co. v. Star Rubber Co. (C. C.) 40 Fed. 167; Hutter v. De Q. Bottle Stopper Co., 128 Fed. 283, 62 C. C. A. 652; Glucose Sugar Refining Co. v. St. Louis Syrup Co., supra.
Upon the accounting it was further shown that in 1892, when the business began, the defendants were joint owners of 40 per cent, of the capital stock of the company, which was gradually increased until the year 1900, when they owned 66 per cent. The record shows that dividends amounting to 10 per cent, were declared annually from 1892 to 1900, and that the defendants were each paid a salary amounting to $6,000 per annum, which later was increased to $7,500 per annum. In 1892 the capital stock of the company was $287,000; in 1893. $342-
As a result of the consideration of the authorities and the evidence in its entirety, I am of the opinion that complainant is entitled to the relief demanded in ,the bill, with costs.