216 A.D. 53 | N.Y. App. Div. | 1926
Lead Opinion
The facts upon which this controversy depends are somewhat unusual. Both the plaintiff and the defendants are manufacturing and selling to the trade hair tonics of practically the same color and which for a time were put up in containers similar in form; and the tonics put out by both parties were quite similar in appearance, differing slightly in the perfume used in connection with their manufacture. These hair tonics had their inception many years ago with the coming to this country of a German by the name of Paul Westphal. The elder Paul Westphal was a barber and ran a small shop on the West Side. He appears to have been progressive and ambitious and to have been somewhat of a genius in the preparation of such lotions and tonics as were
The defendant Paul Westphal is a grandson of the original Paul Westphal. After the death of his grandfather and when he became a youth of seventeen years of age or thereabouts, the grandson was given employment by his uncles and grandmother, who were carrying on the business originated ’by his grandfather in the manufacture and sale of the hair tonic known as Westphal’s. He evidently was not satisfied with his opportunities and worked for the plaintiff for only about eleven months. He was given the menial work of cutting up soap for an egg shampoo which the plaintiff was also manufacturing. He also was called upon to attend to the furnace used to heat the little factory where the hair tonic was made. He stated in his evidence that he was given the “ dirty work ” to do. He received twelve or fourteen dollars a week at first and was finally paid twenty dollars a week for his services. He was not satisfied with this and he left the plaintiff’s employ. He first engaged as a ticket agent at a station on Long Island, and afterwards went into the barbers’ supply business, dealing generally in hair brushes, shaving tools, razors, lotions, hair tonics, soap, etc., used by barbers. He did not continue at this for long and finally undertook the manufacture and sale of a hair tonic himself. Sometimes he was in partnership with another and at times he ran the business alone. For some time while in partnership he used the name “ Paul Westphal Company,” and his hair tonic, resembling in color and appearance, and in similar containers to those used by the plaintiff, was sent out under the name of “ Paul Westphal Company.” It was called “ Westphal’s World’s Best Hair Tonic.” On the neck of the bottle used by the plaintiff for distribution of its “ Westphal’s ” there is an oval label upon which appears the words “ Guarantee Paul Westphal.” On the neck of the bottle put out by the defendants under the name of Paul Westphal Company, of their hair tonic, there was an oval label similar in shape to that used on the plaintiff’s bottle, and upon which the words appear “ Guaranteed Paul Westphal Co., New York.” The defendant Paul Westphal, in or about November, 1924, in conjunction with the defendant Honic, incorporated his business under the name of “ Westphal’s World’s Best Corporation,” and upon their containers as used at the time
At first thought it would seem somewhat unusual, at least, that a man should be restrained from using his surname in connection with his business and in advertising wares which he manufactured. Unquestionably, if the evidence indicated that the defendants had acted honestly in adopting the word “ Westphal’s ” to describe their goods, and thereby they had not deprived the plaintiff of a property right in such name and had done nothing to injure the plaintiff, the court would have been compelled to deny the plaintiff injunctive relief. After reading the evidence in the case, we are convinced that the defendants have not acted honestly, but have illegally appropriated the name “ Westphal’s ” and have sought by advertising and by putting out their goods, to destroy the plaintiff and through fraud and deceit to deprive it of a property right which the plaintiff, through long years of hair tonic manufacture and in advertising the same and in dealing with the trade, had acquired. Not only this, but the evidence shows and is uncontradicted that the president of the defendant, young Paul Westphal, has threatened to destroy the plaintiff and to drive it into bankruptcy by appropriating the name “ Westphal’s.” The evidence leaves no doubt in our minds that the defendants have been guilty of a most palpable fraud upon the plaintiff.
The defendant Sonic, for several years was employed by the plaintiff as a salesman. While in such employ he secretly and without the knowledge of the plaintiff or its officers, while distributing plaintiff’s product upon a ten per cent commission basis, was distributing and selling a competing hair tonic of his own manufacture. When the term of his original contract ended, Oscar Westphal, the plaintiff’s vice-president and its real head, refused to give Honic a new contract. The plaintiff corporation has had many troublous experiences in connection with carrying on its business — internal as well as external. Repeated attempts have been made by others to appropriate its trade name and good will, and plaintiff has been compelled to resort to the courts and obtain injunctive relief restraining others from infringing upon its rights. Not only this, but about 1910 there was a man by the name of Smaw connected with the plaintiff corporation. Smaw was a lawyer well advanced in years and did some little legal work in connection with the plaintiff’s business, and looked after tax
For many years the plaintiff and its predecessor have been engaged in systematic advertising of hair tonic, known as “ Westphal’s Auxiliator.” This advertising was carried on by means of rather ornate and expensive placards displayed in prominent places, in transparent window advertising, in the distribution of circulars among the barber supply houses, and by advertising in trade publications throughout the country. The evidence is to the effect that in the year preceding the trial the plaintiff spent some $12,000 in such advertising, and that in previous years since the corporation was formed and before, the average expenditure for advertising was $7,000 a year. These sums are not relatively great amounts to be spent for advertising, but it appears therefrom that the plaintiff has consistently and constantly advertised its hair tonic, thereby building up a prosperous business. The evidence shows, moreover, that “ Westphal’s ” is used throughout the
The evidence shows that the defendants have been most unfair in their practices, and that if possible the plaintiff should receive injunctive relief against a continuance of defendants’ practices. That the trial justice was so impressed appears clearly from the verbal opinion rendered by the learned justice near the close of the testimony in the case. In this connection the court said:
“ I will announce right now that I shall give judgment for the plaintiff and an injunction enjoining the defendant corporation from using any preparation that is similar to the plaintiff’s, any preparation that has the shade of color of the plaintiff’s, any container that is similar to the plaintiff’s container, or any container that is as similar to it as those which are exhibits here.
*60 “ Further, the defendant will be enjoined against the general use of advertisements in the conduct of its business such as would deceive not chemists, not lawyers, but such as would deceive barbers and customers who would only incidentally look at a preparation submitted to them.
“ By reason of the fact that it appears that this young man Paul Westphal, who bears the same name as his grandfather, is engaged in this business, and as counsel for the defendant contends that there is no power in the court to stop him in the use of his name, I would say that as I understand the authorities the rulings of the courts are that this cannot be done so long as he honestly uses his own name. The testimony here shows that right from the beginning, even while Louis Westphal was active in the plaintiff’s business, and Honic was a salaried employee of the plaintiff, they were then working against the interests of the plaintiff corporation, because Honic who was their sole salesman was selling the product of another company in which he and Louis Westphal were interested, and when that company was given up then this last new company, which is the defendant in this action, was organized.
“ Nothing impresses me more as to the dishonesty of these people who are conducting this defendant company than the advertisements which defendant’s counsel has introduced in evidence, and it satisfies me that as far as the court has power to do it the whole transaction should be enjoined. As to what words shall be used in the formal injunction order and judgment to be entered on this decision I am somewhat uncertain about. It might be well for counsel to consult on that point. In any event I direct that the decision and judgment be submitted on notice, and include just as much as the court is authorized to give toward stopping these men who dishonestly and with malice aforethought entered into business with the idea of destroying the plaintiff’s business because they did not think they were advanced enough in their methods of business, and instead of honestly getting possession of the corporation they have adopted the name, using the name Paul Westphal, in order to destroy the plaintiff corporation. There is no doubt the court should issue an injunction in this case. * * *
“ The question I have got to decide now is what words that injunction shall contain. Any honest business man could tell without being a lawyer at all that this young grandson thought he saw a mint of money in getting control of that business; he probably felt, being advised by Mr. Honic, an active salesman, _ that if they could only take possession of that business they could*61 make ten times more than they did. This old grandmother, who represents the original Paul Westphal, has got the best right to come into this court to protect her interest as a stockholder in this plaintiff corporation and the court will go as far as it possibly can under the law to do that, in order in addition, to give this young man a lesson that although every young man if he will go into business honestly has a chance to succeed, the courts are here to prevent the very thing that he started to do here in the opening of his business career. And when I saw his father, the president of the plaintiff corporation, sitting beside his son whom he wanted to help destroy the old corporation — why, the court would not allow it. There is no judge that ever listened to an injunction suit and listened to the evasive and uncertain testimony given by this young man and by Honic in reference to important material things in this case that would not right from the bench say Injunction issued. If there is any way of this family getting together let them get together. If there is not, then the injunction has got to issue.”
From the colloquy of counsel, when the trial court thus announced .its intention, it appears that even the trial counsel for the defendants admitted that plaintiff was entitled to some relief by way ■of injunction.
The only question that remains is as to whether or not the trial -court exceeded its power in granting the injunction contained in the judgment appealed from. We are of the opinion that the injunction granted was none too broad, and that nothing short of the relief granted will afford the plaintiff any protection from the fraudulent practices to which the defendants have resorted in the past, and to which, unrestrained, they would probably ¡resort in the future. The evidence, as we view it, is replete in showing the unfair and dishonest methods adopted by Paul Westphal ■and his associate, Honic, and of the corporation which they organized in carrying on its business. Prior to the organization of the defendant corporation, known as Westphal’s World’s Best Corporation, the defendant Westphal had adopted the name of “ Paul Westphal Company.” On September 15, 1924, the Paul Westphal Company sent out a circular letter known as “ Convention Special,” in which they advertised “ Westphal’s World’s Best Hair Tonic.” Much advertising was done at and about that time by the Paul Westphal Company of New York, the trade name adopted by the defendants. Window display cards were put out by the defendants bearing the inscription, “ Westphal’s ” in large letters and beneath “ World’s Best Hair Tonic, manufactured by the Paul Westphal Company, New York.” The defendants advertised
The law is well settled that even in cases where family names are involved a person may not give his name to a corporation and thereby take from another concern its good will and rights which it has acquired by the use of such name. The case of Higgins Co. v. Higgins Soap Co. (144 N. Y. 462) is in point. In that case the plaintiff Higgins Co. and its predecessors had been engaged for years in the manufacture of soap. The name Higgins had acquired a secondary meaning indicating not only the soap but its maker. Charles S. Higgins was originally connected with the plaintiff under a contract which reserved to him the right to engage in the soap business at such time as plaintiff should terminate his employment at $15,000 a year. His services were terminated and thereupon the said Charles S. Higgins organized the defendant corporation under the laws of the State of New Jersey, and started a rival business in the city of Brooklyn. The name of the plaintiff was Charles S. Higgins Company. The defendant’s name was the Higgins Soap Company. The plaintiff’s soap was known as Higgins soap. On the defendant’s wrappers appeared the words, “ Higgins Soap Company, Original Laundry Soap, Charles S. Higgins, Prest.” And to digress a moment, it should be mentioned that the defendant repeatedly advertised its hair tonic as “ Westphal’s World’s Best Hair Tonic is the original and genuine formula.” Young Paul Westphal explains this by stating that he meant that it was his original formula. His explanation is hardly satisfactory. In the Higgins case the Court of Appeals, reversing the lower courts, held that the plaintiff was entitled to an absolute injunction restraining the defendant from using its corporate name. The case appears to be on all fours with the case at bar. In the course of the opinion the court said (at p. 468):
“ The sole test of Lability is whether the acts done, either in organizing the defendant or in the prosecution of its business subsequently, invaded any right of the prior corporation or exceeded*64 the boundaries of fair competition. On the other hand we think it is equally clear that the defendant derives no additional immunity from the fact that the name of ‘ Higgins ’ in its corporate name, was that of one or more of its corporators, or that Charles S. Higgins, or any one of that name, might engage in the soap business under the family name, or that Charles S. Higgins and the other corporators of the same name had consented to its use.”
The Court of Appeals in the Higgins case wrote a very exhaustive opinion from which it will be drawn that while a person may use his own name in his own business, he may not in bad faith give it to another and thereby deprive one who has obtained the right to use such name and whose goods are identified by the name, from a property right therein. The Court of Appeals further said in the course of the opinion (at p. 471):
“ The inference seems irresistible that the defendant assumed its corporate name so that it should carry the impression that it was the manufacturer of ‘ Higgins Soap,’ so well known to the public.”
There is not the slightest doubt from the evidence but what Paul Westphal adopted and exhibited the name “ Westphal’s ” with a view of creating the impression that his preparation was the original preparation of his grandfather. The defendant’s preparation is sold in bulk, and the evidence showed that it was put out at a much less price than the plaintiff’s bottled goods. The evidence also indicated that the bulk packages of hair tonic sent out by the defendant were sold and distributed by unscrupulous agents under the claim that it was the original Westphal’s, and that empty bottles which had contained the original Westphal’s were refilled from the gallon cans of defendant’s hair tonic. To like effect is the case of Ajax Tool Co. v. Buchalter Tool Co., Inc. (125 Misc. 752).
Mr. Justice Laughlin, sitting at Special Term in Chautauqua county, in Howes Co. v. Howes Grain Cleaner Co. (24 Misc. 83) held under circumstances almost identical with those in the case at bar that the defendant should be restrained from the use of the word “ Howes ” in connection with its business. There appears to have been no appeal from the decision of Mr. Justice Laughlin in the Howes case, and we think that his opinion correctly states the law. In the opinion, Mr. Justice Laughlin, among other things, said (at p. 85):
“ These facts were known to a majority of the incorporators of the defendant. The plaintiff’s corporate name gives no indication of the nature of the business it was organized to carry on. The defendant’s corporate name indicates its business quite accu*65 rately, but it as accurately indicates the business done by the plaintiff and its predecessors.
“ The incorporators of the defendant deliberated on the selection of a name for the new company. Their attention was at that time drawn by one of their number to the question as to their right as against the plaintiff to use the name finally adopted. Some of the other incorporators of the defendant possessed as great a knowledge and experience in the business and had as extensive a reputation and acquaintance as Charles N. Howes, whose surname they used in their corporate title, after purchasing the right so to do from him.
“ The facts established give rise to the inference that these incorporators knew and realized that the name Howes was valuable in that fine of business on account of the reputation given to it by said Simeon Howes, and not on account of the reputation of Charles N. Howes, and that in thus using that name, they expected to profit by the reputation of the former. * * *
“ The evidence shows some confusion of business directly attributable to the similarity of these corporate names. Business letters of inquiry as to prices of machinery, preliminary to placing orders, have been addressed to and received by the defendant when they were intended for the plaintiff. In some such instances the defendant, in addition to replying that it did not manufacture the particular machinery concerning which inquiries were made, took occasion to recommend its own machinery.
“ The use of the name Howes, in the defendant’s corporate name, under these circumstances, has resulted in unfair competition, and amounts, at least, to a constructive fraud upon the rights of the plaintiff, and upon principle and authority authorizes and requires the granting of a permanent injunction.” (Citing numerous cases.)
A temporary injunction had been granted previously and sustained on appeal, restraining defendant from using its name. (Howes Co. v. Howes Grain Cleaner Co., 19 App. Div. 625.)
The case of DeLong v. DeLong Hook & Eye Co. (10 Misc. 577; affd. as mod., 89 Hun, 399) is a leading case upon the subject. In that case the court held that “ the right of a person to use his own name in his business does not authorize him to give his name to a corporation with a view to make it similar to that employed by other persons in the same business, to their injury or that of the public.” The trial court, Mr. Justice O’Brien writing, among other things, said (at p. 582), concerning the right of a person to use his own name in his own business, that “ The right, however, of one to use his own name in his own business is something very
In the case at bar the record is replete with evidence showing not only an attempt to deceive, but that a great confusion resulted in the trade generally from the use of the name Westphal’s in connection with the defendant’s business and advertising. The General Term, First Department, affirmed Mr. Justice O’Brien in the DeLong Case (89 Hun, 399). In the course of the opinion of the General Term, written by Mr. Justice Parker, the learned justice said (at p. 402):
“ The real test in such cases is whether the thing offered for sale is so arranged and exhibited that when it strikes the eye of an intending purchaser, possessed with ordinary intelligence and judgment, a false impression is likely to be produced that the goods of another are being offered for sale. And when that inquiry must be answered in the affirmative, as it has been in this case, ‘ it is the province of equity to interfere for the protection of the purchasing public as well as of the plaintiffs, and for the suppression of unfair and dishonest competition.’ * * *
“It is the appellant’s contention that, notwithstanding the determination of the court that defendant’s conduct in the use of the word ‘ DeLong,’ was intended to deceive the public and enable it to sell its goods as if they were plaintiffs’ goods, and, therefore, fraudulent, still it cannot be visited with the consequences which ordinarily flow from such action, because of the fact that one of its incorporators and stockholders bore the name of DeLong. * * *
“ But that is not this case, for the promoters of this corporation could have given to it the name of either of the other incorporators, or any other name they liked, provided the designation was honestly made and without injury to others. But the circumstances surrounding the creation of the defendant, and the name of it, satisfy us, as they did the trial court, that the selection of the name was not an honest one, but a part of the original scheme of Oscar A. DeLong to make such use of his own name as would enable him to profit by the name which the plaintiffs had given to their hooks and eyes, and which they had made valuable by much labor and -a liberal expenditure of money.
*67 “ The recent case of Higgins Company v. Higgins Soap Company (144 N. Y. 462), decided since the entry of the judgment appealed from, is conclusive upon the proposition that a corporation will not be permitted to make use of a name thus acquired and for such purposes. * * *
“ In this case Oscar A. DeLong, the original promoter of defendant, knew all the facts. * * * And further than that, the facts before us are such, as we have already said, as to require the inference that he brought about the naming of the defendant with the intent that the public should receive the impression that it was the manufacturer of 1 DeLong’s Hooks and Eyes,’ so well and favorably known to the public.
“ The court further decided in Higgins’ case that the defendant derived no additional immunity from the fact that the name of ■' Higgins,’ in its corporate name, was that of one or more of its incorporators, or that one of its members might have engaged in .the same business under his own name, or had consented to the .use of the name by the defendant. The decision in Higgins’ case .answers the contention of the appellant as to that point. The ¡same proposition was recently asserted in William Rogers Mfg. Co. v. R. W. Rogers Company (66 Fed. Rep. 56).
“ In view of the comment which the court made in Higgins’ Case (supra) upon Meneely v. Meneely (62 N. Y. 427), it is sufficient to say in this case that it is not in point.
“ While fully concurring with the main features of the judgment, we, nevertheless, think the complaint of the appellant, that the judgment is too broad, is well founded. It is certainly more comprehensive than either the decision or the opinion of the trial court. We find no authority in this record for holding that the defendant may not manufacture and sell hooks and eyes of the character which it was manufacturing. Nor are we able to find ¡any basis for the claim that the plaintiffs have the exclusive right to the use of cards to hold hooks. In so far as the judgment restrains the defendant from using the word ‘ DeLong ’ the judgment should be affirmed, but it should not embarrass the defendant in any honest effort which it may hereafter make to put its goods upon the market in a manner which shall not have the effect of persuading customers that the defendant’s goods are the manufacture of the plaintiffs.”
This court is unanimously of the opinion that the plaintiff is entitled to injunctive relief, but a minority of the court feel that the injunction granted by the court below is too broad, and cite, in support of their contention, the case of Merritt Burial & Cremation Co. v. Merritt Co. (155 App. Div. 565; mod. in Court of Appeals
It is apparent, therefore, that the Meneely case, upon which Presiding Justice Ingraham relied, is clearly distinguishable from the case at bar, and is an authority in support of the granting of the injunction in the judgment appealed from. In the case at bar the evidence is overwhelming that the defendants, and young Paul Westphal in particular, did resort to artifice and fraud for the very purpose of producing the impression that they and the defendant corporation were manufacturers of the original Westphal’s hair tonic. In the record there is abundant evidence showing an intention on the part of the defendants to mislead the public, and that the public was misled by the defendants’ acts. In the second case relied upon by Presiding Justice Ingraham (World’s D. M. Assn. v. Pierce, 203 N. Y. 419) the Court of Appeals said (at p. 424): “ It is a general principle of law that one’s name is his property, and he has the same right to its use and enjoyment as he has to that of any other species of property. [Citing authorities.] It is, however, also a general principle of law that no man has the right to sell his products or goods as those of another. He may not through unfairness, artifice, misrepresentation or fraud injure the business of another or induce the public to believe his product is the product of that other. The law
In the third case cited in the dissenting opinion of Presiding Justice Ingraham in Merritt Burial & Cremation Co. v. Merritt Co. (Donnell v. Herring-Hall-Marvin Safe Company, 208 U. S. 267) the United States Supreme Court said (at p. 272): “ The good will sold was that of Hall’s Safe and Lock Company. There is nothing to show that while that company was going the sons of Joseph L. Hall could not have set up in business as safe makers under their own name and could not have called their safes by their own name, subject only to the duty not to mislead the public into supposing when it bought from them that it was buying their father’s safes.” (Italics are the writer’s.)
Thus, in Donnell v. Herring-Hall-Marvin Safe Company, the facts are distinguishable from those in the case at bar, and the decision there supports the judgment appealed from here. All that the judgment appealed from restrained the defendants from doing was from the manufacture, sale or dealing in hair tonics or other barbers’ supplies, within this State or elsewhere, under the name of Westphal, Paul Westphal, Westphal’s, Paul Westphal Co., Westphal’s World’s Best Corporation, or any of the said names, or using said name of Westphal either alone or in conjunction with other words or symbols, or in any manner, within the State of New York or elsewhere, in connection with the hair tonic or barbers’ supply business. The judgment appealed from merely enjoins the defendants from the use of the name “ Westphal’s ” in connection with the hair tonic or barbers’ supply business. They may engage in any other business using that name, or they may manufacture and sell hair tonic, but if they do they must not use the name “ Westphal’s ” in connection with such business. In the case of Merritt Burial & Cremation Co. v. Merritt Co. (supra), upon which a minority of this court bases its dissent, the injunction granted at Special Term was upheld in so far as it restrained the defendant corporation from using the name “ Stephen Merritt Company ” in connection with the undertaking business. Presiding Justice Ingraham said (at p. 575): “ I think there is evidence to justify the court in enjoining the defendant corporation from using its name in the undertaking business, as showing that it was used with the intention of unfairly competing with the plaintiff’s business and an injunction to that extent was justified by the evidence.”
In the Court of Appeals (214 N. Y. 676, at p. 677) the judgment in the Merritt case was modified in the following memorandum: “ Judgment modified on the dissenting opinion of Ingraham, P. J., below, by striking out all the injunctive provisions thereof except
All that the defendants are restrained and enjoined from doing in the case at bar is from manufacturing, selling or dealing in hair tonics or barbers’ supplies under the name of Westphal, or any other name where the name “ Westphal ” is used alone or in conjunction with other words or symbols. The dissenting opinion of Presiding Justice Ingraham in the Merritt Case (supra), adopted by the Court of Appeals, and the authorities relied upon by the learned presiding justice in support of a modification of the injunction there granted, short of requiring any modification of the judgment in the case at bar, amply justify the injunctive relief granted the plaintiff herein.
We are of the opinion that, under the circumstances of the case at bar as revealed by the record, the court below properly restrained the use by the defendants of the name “ Westphal ” in connection with the manufacture and sale of hair tonic, and that where, as in the case at bar, it clearly appears that defendants’ use of that name was for the dishonest purpose of obtaining from the plaintiff that for which it had labored for long years and for which it had spent a large amount of money in advertising, and for the purpose of deceiving the public into the belief that the defendants were engaged in the manufacture and sale of plaintiff’s well-known preparation, the defendants should be restrained. The past conduct of young Paul Westphal and those associated with him has been such as to convince us that by nothing short of the injunction contained in the judgment appealed from will the plaintiff receive adequate protection.
The judgment should be affirmed, with costs to the plaintiff, respondent, against the defendants, appellants.
Dowling and Martin, JJ., concur; Clarke, P. J., and Finch, J., dissent.
Dissenting Opinion
The injunction is too broad. It absolutely restrains the use by defendant Westphal of his own name. This may not be done. (Merritt Burial & Cremation Co. v. Merritt Co., 155 App. Div. 565; mod. on dissenting opinion of Ingraham, P. J., 214 N. Y. 676.)
Finch, J., concurs.
Judgment affirmed, with costs.
