Tuttle v. Blow

| Mo. | Jun 20, 1903

VALLIANT, J.

This is the second appeal in this-case. It is a suit to foreclose a mortgage, and, ancillary to the main object, the equity powers of the court are invoked to preserve the property by placing it in the hands of a receiver pending the suit and enjoining the defendants from taking certain action calculated to impair the value of the security. Upon the filing of the petition a receiver was appointed and an injunction granted; there were motions by defendants to vacate the order appointing the receiver and to dissolve the injunction, which motions were overruled and an appeal taken. Upon the hearing in this court that appeal was dismissed' and the cause was remanded to the circuit court with directions to proceed to final healing on the merits, first affording defendants leave to file an amended answer. This court on that appeal held that the only question presented by the record in its then condition was, did the circuit court have jurisdiction to make the orders complained of1? and the judgment was that it did have such jurisdiction. [Tuttle v. Blow, 163 Mo. 625" court="Mo." date_filed="1901-06-12" href="https://app.midpage.ai/document/tuttle-v-blow-8014017?utm_source=webapp" opinion_id="8014017">163 Mo. 625.]

When the cause was returned to the circuit court defendant answered and a trial on the merits was had, which resulted in a decree for plaintiffs, from which some of the defendants again appeal.

The mortgage which the plaintiffs seek to foreclose was executed by the defendants, the Blows, September 17, 1889, to secure eight notes made by them of that date, aggregating $25,817.64, bearing eight per cent interest, maturing in series running from eighteen months to eight years, payable to the order of Edwin Curd, wha is the plaintiffs’ assignor.

The property mortgaged is thus described in the granting clause of the instrument: “That said parties of the first part for and in consideration [describing- •' the notes] do by these presents, sell, assign and transfer •and set over to the said party of the second part, all their right, title and interest in' a certain trade-mark for eye-salve, which was duly registered in the Patent Office of the United States, by William T. Blow, of St. Lonis, Missouri, and recorded in the Patent Office and declared to be in force for thirty years from 25th February, 1878, which said trade-mark is numbered 1142, and is for the exclusive right for manufacture and sale of T. L. Stephens Chemical Eye-Salve, as also all our right, title and interest in the patent and proprietary right m and to T. L. Stephens Chemical Eye-Salve, provided always this sale, transfer and assignment are upon this express condition, that is to say,” etc. Then follows the condition that the sale is to become void if the notes are paid, otherwise the mortgagee is given the power to sell on ten days ’ notice.

Upon the trial it was shown that William T. Blow in his lifetime owned a secret formula according to which a proprietary medicine called “T. L. Stephens Chemical Eye-Salve” was manufactured and sold iu the market. Although the sale of this article was quite extensive and yielded the proprietor an income of $12,-000 a year, yet the article itself was small and was not of sufficient proportions to require the maintenance of a manufactory, but under the supervision of .one man, Michael Fredericks, employed for that purpose, sufficient quantity of the salve to supply the trade for twelve months was made up and put into condition for sale within six weeks. The salve was put up in small bottles or vials, on each of which was a small label of particular design, and on each box of a dozen vials was a larger label of the same design. This label had been so long used in connection with the salve that it was well known in the market and was a mark by which the article was known to the trade. It thus became the trade-mark of the proprietor of the compound. In 1873, Mr. Blow had this;trade-mark registered in the Patent Office at Washington and received a certificate thereof, 'as was contemplated in the Act of Congress of 1870 relating to trade-marks. That act was afterwards declared -unconstitutional by the Supreme Court of the United States, and the certificate of registration, therefore, became of no legal effect. Mr. Blow died in 1877 and his widow and two sons, defendants originally herein, became owners of the title that he had owned to the secret formula, the trade-mark and the right to manufacture and sell the proprietary medicine. They continued the business as he had done, with some variations in the business methods, and were doing so down to the time that this suit was instituted, when the receiver took ihe business out of their hands. Under the management of the widow and son's the business does not seem to have been as successful in yielding revenues as it had been in the lifetime of Mr. Blow, although it still yielded the proprietors a large income.

On March 1, 1883, Mrs. Blow borrowed of P. W. Mott $2,000, and of Mrs. Lueders $3,500, and to secure the same made an assignment of her right in this eye-salve and trade-mark to them. In that assignment the thing conveyed was described as a patent-right to manufacture and sell the salve under letters-patent issued by the United States. The instrument was drawn by a man who was not a lawyer and who with the certificate of registration of the trade-mark before him interpreted it to be letters-patent and thus described it:

“Whereas letters-patent, bearing date the 25th day of February, A. D. 1873, were granted and issued by the Government of the United States of America, under the seal thereof, to William T. Blow, of St. Louis, Missouri, for a certain trade-mark for eye-salve, styled ‘Dr. T. L. Stephens Celebrated Chemical Eye-Salve, ’ which patent is No. 1142, and registered February 25, 1873, and to which patent reference is hereby made for a full and particular description of said trade-mark and eye-salve, which is annexed to said letters-patent, by which letters-patent the full and exclusive right and liberty of making and using said invention, and of vending the same to others to be used, was granted to the said ¥m. T. Blow, his heirs, executors, administrators and assigns, for the term of thirty years from the date thereof.”

The $2,000 secured by that instrument was after-wards paid, but the $3,500 was unpaid. The parties interested in that mortgage were made parties defendants. When Mr. Curd took the mortgage under which the plaintiffs claim, he knew of the existence of the mortgage in favor of Mr. Mott and Mrs. Leuders. Upon the execution of the mortgage to Curd, and as a part of the transaction, the secret formula under which the eye salve was compounded was given to him in a sealed package. Up to August 16, 1894, the mortgagor had made payments on the Curd debt amounting to $8,-498.94; since that date nothing has been paid on it. There were averments in the petition to the effect that the mortgagors in possession were conducting the business in a manner to indicate that they were endeavoring to realize as much as possible at once and impair the value óf the property, and it was upon that showing that the court appointed a receiver and granted the injunction. The evidence at the trial tended to sustain those averments. When the receiver was appointed the package containing the secret formula was delivered to him and by order of the court he opened it and continued to conduct the business as nearly on the plan that it had theretofore been conducted as good judgment for the interest of all concerned seemed to dictate. Pending the suit William T. Blow, Jr., died, and his administrator has entered his appearance, and also since the suit was begun Benj. E. Blow has transferred to S. H. King his interest in the mortgaged property and Mr. King has answered. It also appeared that since the commencement of the suit Isaac Curd had by purchase become the owner of all the notes covered by the plaintiffs’ mortgage.

By the finding of the court there is due Mrs. Leuders $3,741.67 on her mortgage and there is dne the plaintiff, Isaac Curd, as purchaser from Tuttle, assignee of Edwin Curd, on his mortgage, $55,409.34.

The decree takes the form of a judgment for $3,-741.67 in favor of Mrs. Leuders against Mrs. Blow, and for $55,409.34 in favor of Isaac Curd against Mrs. Blow, Benjamin E. Blow and the administrator of "William T. Blow, Jr., deceased, and in default of payment of the judgments a foreclosure of the mortgage is decreed and a sale of the secret formula, the trade-mark and the exclusive right to manufacture and sell the salve mentioned in the name of “Dr. T. L. Stephens Chemical Eye-Sálve, ” and out of the proceeds after paying costs, one-third, or a sufficient part of one-third, is to be paid to Mrs. Leuders on her mortgage, and the rest to the extent of his debt to plaintiff Isaac Curd, and the balance, if any, to be returned into court to be disposed of as the court may thereafter order.

The learned counsel for defendants has favored us with an elaborate brief in which he has given us the result of an exhaustive research into the books and has discussed the case from several standpoints, but all the propositions laid down may be grouped into two, viz.: first, that the court had no authority under the showing made to appoint the receiver and issue the injunction when and as it did; second, that the thing or the right attempted to be mortgaged was not susceptible of being incumbered by a mortgage.

I. Upon the former appeal in this case it was decided, Brace, P. J., delivering the opinion, that notwithstanding the fact that the proceeding to foreclose a mortgage under the terms of our statute' (sec. 4342, R. S. 1899) was an action at law, yet the circuit court as a court of equity still retained the same jurisdiction to foreclose mortgages and adjust the rights of the parties thereunder which was originally exercised by .courts of chancery. Whether in this case the court had properly exercised its judicial discretion in making the appointment of the receiver and issuing the injunction, the record then before us did not warrant us in deciding. But as the record is now here with all the showing made by the plaintiffs, the question is one for decision. The jurisdiction of the court on proper showing to make such orders is not questioned* but it is insisted that the proper showing was not made, and it is complained that the court acted without notice to the defendants, taking their property from them without giving them a hearing.

There were averments in the petition going to show that the property, or the incorporeal right conveyed in the mortgage, was insufficient in value to pay the debts for which it was pledged, and that the defendants, the mortgagors, not 'only disputed the validity of the mortgage, which was a fact in itself tending to depreciate its value, but they were so using the subject of the mortgage as to anticipate and discount its income, and one of them at least threatened to disclose the secret formula and thus destroy the value of the business. A chancellor could not under those circumstances have rightfully refused the prayer of the plaintiff for the preliminary orders looking to the safe custody and preservation of the property in dispute. The court may, under a proper showing, appoint a receiver and issue an injunction without notice to the other side, and it should do so whenever it is made to appear that an act ruinous to the plaintiff’s rights is contemplated, and notice given to the defendant would enable him to accomplish it before the court could prevent it. But the appointment of a receiver without notice is the exercise of an extraordinary power and should be done only in cases of great emergency, and even then the defendant should be afforded a speedy hearing on a motion to vacate the order. [Railroad v. Wear, 135 Mo. 230" court="Mo." date_filed="1896-06-30" href="https://app.midpage.ai/document/st-louis-kennett--southern-railroad-v-wear-8012191?utm_source=webapp" opinion_id="8012191">135 Mo. 230; High on Receivers (3 Ed.), sec. Ill, and following.] The only notice required by our statute of an application for injunction is in case the injunction is sought to stay proceedings at law. [Sec. 3633, R. S. 1899.] But the court in any case may and ordinarily should require reasonable notice before issuing an injunction of any kind. The record in this case shows that the defendants were afforded an opportunity to be heard without delay on a motion to vacate the orders and they were granted an appeal on the overruling of their motion and every opportunity was afforded them to right any wrong that was done them. There is nothing in the action of the court in relation to-the appointment of the receiver or issuing of the injunction of which the defendants now have any cause to complain.

II. Appellant’s main insistence, however, is that the mortgage of plaintiffs is of no force or effect because the thing or the right attempted to be mortgaged is not susceptible of being so encumbered.

The mortgage of plaintiffs describes the trade mark as “a certain trade-mark for eye-salve which was duly registered in the Patent Office of the United States by William T. Blow, of St. Louis, Missouri, and recorded in the Patent Office and declared to be in force for thirty years from the 25th day of February, 1873, which said trade-mark is numbered 1142 and is for the exclusive right for manufacture and sale of T. L. Stephens Chemical Eye-Salve,” etc. The act of Congress under which that registration was authorized was afterwards declared to be unconstitutional; therefore, no right was acquired by it. But whilst the registration and the certificate imparted no new right to the holder of the trade-mark, it did not detract from the right he already had. The terms of the mortgage do not purport to convey to the mortgagee a right acquired under the act of Congress by the registration, but what it does convey in the clause just quoted is the trade-mark; that is, that trade-mark which he had before owned and which he registered.

But in addition to the trade-mark the mortgage conveyed “also all oar right, title and interest in the patent and proprietary right in and to T. L. Stephens Chemical Eye-Salve.” And with the mortgage they gave the mortgagee a sealed parcel containing the secret fórmala to be ased in case it became necessary to foreclose the .mortgage. So that the mortgage conveyed the trade-mark, the exclusive right to make and sell the eye-salve and to use the trade-mark in connection therewith and in order to enable the mortgagee to realize the right conveyed, the formula was also given him.

It may be conceded to appellants that a mere trademark dissociated from the trade or basiness is not susceptible óf sale or transfer. As such it is of no use and the law will take no account of it. Bat a trademark as an accessory of property or as a thing to be ased in connection with one’s basiness and applicable to the product of his manufactory or to his, goods in trade, is a subject of the law’s care and is assignable. [Brown on Trade-Marks (2 Ed.), sec. 57.]

As a general rale any thing or any right that is capable of passing by saecession or descent to the personal representatives or heirs of an intestate, or that is capable of passing by absolute sale, is capable of being incumbered by mortgage. The mortgagors themselves claim to own this trade-mark and the proprietary medicine by succession from William T. Blow, deceased. The administrator of William T. Blow, 'Jr., is here claiming his interest by succession as assets of the estate, and Mr. King is here also claiming a one-third interest by assignment. How, then, can they be heard to say that the right is not assignable?

Whilst some of the authorities cited in their brief bear oat the appellants’ contention that a trade-mark unconnected with any property or trade is a mere abstract right of which the law will take no account, none of them sustain the proposition that a trade-mark connected with the right to make and sell the thing which it indicates is not susceptible of being transferred by a mortgage.

As to the Lueders mortgage, the only question in its way is in regard to the description of the right or thing mortgaged. The scrivener had before him the certificate of the registration of the trade-mark; he saw that it emanated from the Patent Office, and he concluded that it was a patent-right.' But the facts all appear on the face of the instrument to show what it really was in spite of the misnomer. It is the same trademark described in the plaintiff’s mortgage, and in attempting to state its legal effect the scrivener says: “by which letters-patent [meaning the certificate of registration] the full and exclusive right and liberty of making and using said invention [meaning the eye-salve] and in vending the same to others to be used, was granted to William T. Blow, his heirs, executors, ’ ’ etc. No such right was by that certificate granted to Mr. Blow, but he had that light independent of the certificate, and the plain meaning of the mortgage in spite of its clumsy verbiage, is that that right, together with the trade-mark, is pledged for the payment of the $5,-500 which the mortgagor then borrowed on the faith of it. No other construction can be put upon it without impugning the good faith of the mortgagor, which we have no right to do.

The circuit court took the correct view of this case, and the judgment is affirmed.

All concur.