Opinion
June, 1898.
Norris Morey, for plaintiff.
George E. Towne (W.S. Thrasher, of counsel), for defendants.
Simeon Howes was engaged in the business of manufacturing grain cleaners and grain-cleaning machinery at Silver Creek, Chautauqua county, New York, from 1856 until the month of February, 1892, when he died. The greater part of this time he was associated with others as partners in the business, but during the last four years of his life he was sole owner and proprietor. He was one of the pioneers in this industry, and for upwards of twenty years preceding his death he was better known than any other manufacturer of such machinery. The products of his factory were also better known than those of any of his competitors. His reputation as a manufacturer of grain-cleaning machinery extended throughout North America and Europe and reached other parts of the world. The machinery manufactured by him and his associates had a reputation for excellence equally extensive. This machinery was branded or stamped and known as "Eureka," which was a trade-mark, but the place of manufacture and the names of the manufacturers were also stamped upon the machines. The trade-mark name identified the machines to millers and persons interested in the milling business, as the product of this business house. For many years this machinery was also quite generally known and spoken of by dealers and persons using or interested in such machinery as the Howes machinery or the Howes machines.
Until the defendant commenced business Simeon Howes was the only person by the name of Howes who had ever been engaged in manufacturing such machinery. The reputation of Simeon Howes for experience and skill in the manufacture of such machinery, and for fair dealing extended the reputation of the goods of his manufacture beyond the places where they were in use. His executors found that he had left an extensive, valuable business in a prosperous condition and they continued the business under the name S. Howes until January, 1895, when his children and legatees formed the plaintiff corporation and the executors transferred to it the property, trade-marks and good will of the business. From that time on the business was carried on by the plaintiff substantially as before.
On the 13th day of February, 1896, the defendant filed its certificate of incorporation. Five of its seven incorporators, directors and stockholders had, up to within two weeks of that day, been in the employ of the plaintiff. Charles N. Howes, who was one of such executors and who was manager of the business for the executors and continued in the plaintiff's employ until February 1, 1896, was elected president of the defendant. For many years immediately preceding the incorporation of the defendant, covering the period before as well as after the incorporation of the plaintiff, many business letters had been addressed and sent to the plaintiff and its predecessors under a variety of names other than the real corporate copartnership or proprietor's name, and among others, "The Howes Manufactory Company," "S. Howes Machine Company," "The Howes Grain Elevator Company," "The Howes Company," "The Howes Grain Company," and "The S. Howes Grain Cleaner Company."
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 accurately, 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 line 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 incorporators of the defendant doubtless reasoned, as they claim here, that the right to the use of the name Howes not having been expressly transferred by the executors to the plaintiff, the latter could not claim the exclusive use of such name in said business as against them and the defendant corporation which they organized. The other incorporators were undoubtedly influenced by the same considerations. I cannot agree with such contention, and if I did, the facts of this case require the application of other legal principles fatal to the continuance of the use of the defendant's name in this business as heretofore.
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. Matter of United States Mortgage Co., 83 Hun, 572; R.W. Rogers Co. v. Wm. Rogers Mfg. Co., 70 Fed. Repr. 1017; Holmes, Booth Haydens v. Holmes, Booth Atwood Mfg. Co., 37 Conn. 278; Higgins Co. v. Higgins Soap Co., 144 N.Y. 465; Garrett v. T.H. Garrett Co., 78 Fed. Repr. 472; The Richardson Boynton Co. v. The Richardson Morgan Co., 27 N.Y. St. Repr. 808; Church v. Kresner, 26 A.D. 349; Wm. Rogers Mfg. Co. v. Rogers Spurr Mfg. Co., 11 Fed. Repr. 499; Massan v. Thorley's Cattle Food Co., 14 Ch. Div. L.R. 748; Lever v. Goodwin, 34 id. 1; McLean v. Fleming, 96 U.S. 245; Von Mumm v. Trash, 56 Fed. Repr. 833; Fischer v. Blank, 138 N.Y. 244; Fairbanks Co. v. Bell Mfg. Co., 77 Fed. Repr. 869; Coats v. Thread Co., 149 U.S. 566; Pillsbury v. Pillsbury-Washburn Flour Mills Co., 64 Fed. Repr. 841; De Long v. De Long Hook Eye Co., 89 Hun, 399; Tuerk Hydraulic Power Co. v. Tuerk, 92 id. 65; Turton v. Turton, 42 Ch. Div. L.R. 128; Meneely v. Meneely, 62 N.Y. 427.
The damages sustained by the plaintiff prior to the trial, and which can be proved with sufficient definiteness to warrant a recovery are trifling in amount. The plaintiff did not promptly protest against the use of the defendant's corporate name. On these facts and in accordance with well-considered precedents, I refrain from ordering a reference to compute the plaintiff's damages. McLean v. Fleming, 96 U.S. 245; Tuerk Hydraulic Power Co. v. Tuerk, 92 Hun, 69.
Since the granting of the injunction order nearly a year and a half ago, the defendant has conducted its business under the name of "The Invincible Grain Cleaner Co.," substituting "Invincible" for "Howes." Such name accurately describes its business and embraces its trade-mark as well and, without infringing upon the rights of the plaintiff, will enable it to establish a reputation for its own excellent machinery and to transact its business advantageously and profitably.
A permanent injunction is granted as directed in the decision filed herewith.
Injunction granted.