Sayles Biltmore Bleach. v. Narr. Supply

Full title: SAYLES BILTMORE BLEACHERIES INC. et al. vs. NARRAGANSETT WIPING SUPPLY…

Court: Supreme Court of Rhode Island

Date published: Jul 16, 1957

134 A.2d 57 (R.I. 1957)

134 A.2d 57

Opinion

July 16, 1957.

PRESENT: Flynn, C.J., Condon, Roberts and Paolino, JJ.

1. TRADE-MARKS. Right to Same. Basis for Right. A trade-mark does not exist apart from the particular article or goods. Before there can be any wrong done to one who claims an exclusive right to a mark or name there must have been a use by him of the mark on his goods or of the name in actual conduct of the same or a substantially similar business. This is necessarily so because the essence of the wrong done by the second user consists in the sale of his goods as those of the first user.

2. TRADE-MARKS. Right to Same. Assignment of Right. The exclusive use of a word as a trade-mark and a trade name does not import the right to assign the same apart from the goods or business connected with that mark or name. There is no such thing as property in a trade-mark except as a right appurtenant to an established business or trade in connection with which the mark is employed. The law of trade-marks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another's product as his; and it is not the subject of property except in connection with an existing business.

3. TRADE-MARKS. Assignment. A trade-mark or name may be assigned, but only if it remains associated with the product or business with which it first became associated in the public mind and it appears to be universally held that an assignment, unaccompanied by such characteristics, is void.

4. TRADE-MARKS. Assignment. One of complainants sought to transfer or assign its trade-mark "Lorraine" by consenting to the adoption of its former corporate name by another but it did not transfer any part of its business of manufacturing textile fabrics which it had carried on under that name nor was there any intention shown to manufacture in the future the textile products with which the name "Lorraine" had become associated in the textile trade. Held, that in the face of the facts it was not possible to find that the transferee had acquired any lawful right to the exclusive use of the word "Lorraine" as a trade-mark, or trade name, since one having the right to use a trade name cannot convey to another the naked right to the exclusive use of such name independent of any interest in the property or business to which it had been applied.

5. PARTIES. Equity. Trade Names. Right to Injunction. Misjoinder. Respondents claimed that insofar as Lorraine Manufacturing Company was concerned the trial justice should have dismissed bill of complaint seeking injunction against use of word "Lorraine" since no basis had been shown for relief on the part of that particular complainant. Held, that the trial justice erred in not dismissing the bill as to Lorraine Manufacturing Company, notwithstanding that the word Lorraine is a part of its corporate name, since that fact, without more, was not sufficient to entitle it to the relief which it sought against the respondents.

6. TRADE-MARKS. Unfair Competition. Use of Name by Another. Where one of complainants had first changed its business from the manufacture of textile products to engage solely in the finishing business, and about two years later it sold all its machinery and notified the trade that it would not present new lines of goods and that it had ceased manufacturing and transferred its activities in pursuit of new enterprises to North Carolina and, further there was no present intention on the part of such complainant to resume manufacturing since it no longer had the mills and machinery for doing so, nor did it have on its hands for sale any products which it manufactured under its former name of Lorraine Manufacturing Company, Held, that such complainant was without legal standing to maintain the instant bill of complaint and, based upon the facts, it appeared that there was no basis for complaint nor right to exclude others from using, without any misrepresentation, the name "Lorraine" which had been expressly abandoned.

7. UNFAIR COMPETITION. Right to Trade-mark or Name. Basis for Right. Complainants sought to enjoin respondents from using name "Lorraine" on the ground that it constituted unfair competition. Held, that there was no room to complain that respondents' use of the name constituted unfair competition because complainants were no longer operating in the same competitive business or geographical area and, therefore, could not be injured by respondents' use of the name; further this case differed from one where respondents might be holding themselves out as successors of the former business.

8. TRADE NAMES. Unfair Competition. Where Lorraine Manufacturing Company stopped manufacturing, sold its mills, gave up its corporate name which was adopted by real estate company, and engaged in a radically different business in new location in another state, Held, that use of names "Lorraine" and "Lorraine Mill Outlet" by operators of retail store in mill building formerly owned by company in Rhode Island was not unfair competition, in absence of evidence that operators held themselves out as successors of company, used registered trade-mark "Lorraine", or represented their merchandise as being made by company.

BILL IN EQUITY seeking to enjoin respondents from using the name "Lorraine" or "Lorraine Mill Outlet" in their retail store located in a mill building formerly owned by Lorraine Manufacturing Company. After hearing in superior court on bill, answer, replication, and proof, trial justice found that complainants had an exclusive right to the name "Lorraine" as a registered trade-mark and as a trade name, and that respondents would be enjoined as practicing unfair competition. The respondents appealed from a decree entered by superior court. Respondents' appeal sustained, decree appealed from reversed, and the cause remanded to superior court with direction to enter a new decree denying and dismissing the bill of complaint.

Edwards Angell, Edward F. Hindle, Stephen A. Fanning, Jr., for complainants.

Isidore Kirshenbaum, Frank H. Bellin, for respondents.

CONDON, J.

This is a bill in equity to enjoin the respondents from using the name "Lorraine" or "Lorraine Mill Outlet" in their retail store located in a mill building formerly owned by Lorraine Manufacturing Company. After a hearing in the superior court on bill, answer, replication, and proof, the trial justice found that the complainants had an exclusive right to the name "Lorraine" as a registered trade-mark and as a trade name, and further that the respondents' use of it in their business tended "to mislead and confuse the public to the injury of the complainants" and hence they were guilty of unfair competition from which they should be enjoined. A decree granting the injunction prayed for was thereupon duly entered. The case is here on the respondents' appeal therefrom.

The respondents contend that the decree is against the law in that neither complainant had the right to sue and in any event there is a misjoinder of complainants; also that the decree is against the evidence in that there was no proof of infringement of the registered trade-mark, nor of deceit, fraud, and confusion of the public which are the bases of the allegation of unfair competition. The respondents also contend that they were prejudiced by numerous erroneous rulings on the admission of evidence. On the view which we take of the law applicable to the undisputed facts of the case we shall not have occasion to consider all of these points; hence there is no necessity for describing them at any further length.

However, a statement of the undisputed facts at this point may contribute to a better understanding of the ultimate conclusions to which we have come concerning the applicable law. In December 1954 respondents opened a store in a mill building on Mineral Spring avenue in the city of Pawtucket under the name of Lorraine Mill Outlet for the sale of candy, drugs, sundries, remnants, ready-to-wear clothes, shoes, and work clothes. Ready-to-wear garments represented 70 per cent of their trade. They did not sell or represent that any textile goods which they offered for sale were Lorraine goods.

In advertising their business both on signs and in the newspapers they always used the name Lorraine Mill Outlet and never represented directly or indirectly that they were the successors of Lorraine Manufacturing Company. Their store is located in one of the mill buildings which was formerly owned and operated by that company in the manufacture of a variety of textile fabrics from 1881 until 1953 when it went out of that business and sold all of its mill buildings and machinery. The respondents' business is conducted strictly as a retail cash-and-carry store, so called, appealing to customers within a limited local area. The words Lorraine Mill in its name furnish an apt way of identifying the location of the store.

The Lorraine Manufacturing Company was incorporated in 1896 as a Rhode Island corporation and was engaged in manufacturing cotton, silk, woolen and rayon fabrics on Mineral Spring avenue in Pawtucket until October 1953. At that time it processed its last piece of goods. Thereafter on December 15, 1953 it changed its name to Sayles Biltmore Bleacheries, Inc. and is now engaged in bleaching, dyeing, and otherwise finishing cloth and textile fabrics. This change of corporate name was officially recorded in the office of the secretary of state on December 30, 1953 at 10:15 a.m.

However, on December 15 before effecting such change and for the purpose of preserving the name Lorraine Manufacturing Company the directors authorized its president and treasurer or secretary to consent in writing to the use of that name by the Sayles Land Company which is controlled by the same interests that control Sayles Biltmore Bleacheries, Inc. Thereupon Sayles Land Company changed its name to Lorraine Manufacturing Company and such change was recorded in the office of the secretary of state on December 30, 1953 at 10:20 a.m. This company is the other complainant in the instant suit.

Later in 1954 Sayles Biltmore Bleacheries, Inc. sold all its mill buildings on Mineral Spring avenue including the one now occupied by respondents. In 1955 it completed the sale of all its machinery and had previously notified the trade that it would present no new lines since it was not manufacturing any more. Prior thereto its trade had consisted of various jobbers and "cutting-up" mills with whom it did a wholesale business. Until 1941 it conducted a retail store in one of its mills where it sold remnants, some of which were "seconds."

Since selling its mills and machinery the company has not manufactured any textile fabrics and has no present intention of doing so. Its sole business, which it now carries on in North Carolina, is dyeing, bleaching, and finishing cloth. It does not use the name of Lorraine Manufacturing Company there. Except for an office which it maintains at Sayles Finishing Plants, Inc. in Saylesville, Rhode Island, it has no business in this state.

Apparently the interests which control Sayles Biltmore Bleacheries, Inc. and the former Sayles Land Company assumed that by transferring to that company the right to adopt the name of Lorraine Manufacturing Company they had preserved for use in the future the name Lorraine both as a trade name and a registered trade-mark. In this we think they were mistaken.

The president of the new Lorraine Manufacturing Company testified that although no corporate action had been taken, it was the intention of such controlling interests to have the company allow the American Bleached Goods Company to use the name "Lorraine" on its products. That company is owned by the Sayles Finishing Plants, Inc. It is located in New York where it is engaged in the converting business. It does not manufacture cloth nor does it dye, bleach or finish. As a converter it buys goods in the grey from various mills, has them finished at finishing plants, and then sells the finished goods. Presumably it is on such goods that the Lorraine trade-mark is to be used.

The same witness testified further that in his opinion it would make no difference whether a formal vote granting such permission had been taken, since precisely the same interests which controlled Lorraine Manufacturing Company also owned Sayles Finishing Plants, Inc. In other words, it appears that those interests felt that they could at will pass around the exclusive use of the name Lorraine to corporations which they controlled regardless of the nature of the business of such corporations or the kind and character of their products. Pursuant to this belief the new Lorraine Manufacturing Company joined in the instant bill of complaint and based its right to do so solely on its adoption of that corporate name with the consent of the former Lorraine Manufacturing Company before it became Sayles Biltmore Bleacheries, Inc.

This new company has never engaged in any kind of business. Under its former name of Sayles Land Company it dealt exclusively in real estate conformably to the purposes set out in its articles of association. It has never used the name Lorraine in either manufacturing or merchandising. For a period of four or five years before the trial in the superior court it had been inactive. It has never used the words Lorraine Mill or Lorraine Mill Outlet in any way and neither has Sayles Biltmore Bleacheries, Inc.

In the circumstances we are of the opinion that this new Lorraine Manufacturing Company has no legal standing as a complainant in this suit. It has acquired no exclusive right to the word Lorraine as a trade-mark, because it has never manufactured or sold any goods to which it has been affixed. And it cannot claim exclusive use of the word as a trade name since it has never engaged in trade under such name.

A trade-mark does not exist apart from the particular article or goods. Mishawaka Rubber Woolen Mfg. Co. v. S.S. Kresge Co., 119 F.2d 316. Before there can be any wrong done to one who claims an exclusive right to a mark or name there must have been a use by him of the mark on his goods or of the name in actual conduct of the same or a substantially similar business. This is necessarily so because the essence of the wrong done by the second user consists in the sale of his goods as those of the first user. Manifestly there must be a first use before there can be an unlawful second use. Elgin National Watch Co. v. Illinois Watch Case Co., 179 U.S. 665.

At this point, assuming without deciding that Sayles Biltmore Bleacheries, Inc. had a lawful right to the exclusive use of the word Lorraine as a trade-mark and a trade name, it nevertheless could not assign such right apart from the goods or business connected with that mark or name. The principle has been clearly stated as follows in United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97: "There is no such thing as property in a trade-mark except as a right appurtenant to an established business or trade in connection with which the mark is employed. The law of trade-marks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another's product as his; and it is not the subject of property except in connection with an existing business."

It is true that a trade-mark or name may be assigned, but only if it remains associated with the product or business with which it first became associated in the public mind. Cardinal v. Taylor, 302 Mass. 220. And that court has elsewhere plainly stated: "A trade mark or trade name, indicating that goods are manufactured or sold by a certain business organization * * * can have no existence in gross, unconnected with some business in which it is used." Jackman v. Calvert-Distillers Corp. of Mass., 306 Mass. 423, 426. It appears to be universally held that an assignment unaccompanied by such characteristics is void. La Fayette Brewery, Inc. v. Rock Island Brewing Co., 87 F.2d 489; Molka Wines Co. v. Rosenthal, 160 Misc. 805. aff'd 248 App. Div. 863; Rodseth v. Northwestern Marble Works, 129 Minn. 472.

In the case at bar Sayles Biltmore Bleacheries, Inc. sought to transfer or assign its Lorraine trade-mark by consenting to the adoption of its former corporate name by Sayles Land Company. But it did not transfer any part of its business of manufacturing textile fabrics which it had carried on under that name. Nor did the new Lorraine Manufacturing Company manufacture or intend to manufacture those textile products with which the name Lorraine had become associated in the textile trade. On the contrary, it appears that the only reason such name was made available to this inactive land company was to preserve it for use in the future by the American Bleached Goods Company, which is engaged in a business markedly different from the manufacture of textile fabrics.

In the face of those facts it is not possible to find that the new Lorraine Manufacturing Company has acquired any lawful right to the exclusive use of the word Lorraine as a trade-mark or trade name. In this connection the following language in Rodseth v. Northwestern Marble Works, 129 Minn. 472, 476, well expresses the law applicable to the instant case: "One having the right to use a trade name cannot convey to another the naked right to the exclusive use of such name independent of any interest in the property or business to which it has been applied. * * * Where the bare right to use the name is all that is transferred, the name no longer serves to point out and protect the business with which it has become identified, nor to secure the public against deception, but tends to give to a different business the benefit of the reputation established by the business to which the name had previously been applied; and the courts are unanimous in holding that such transfers are of no effect."

In our opinion the trial justice erred in not dismissing the bill of complaint as to complainant Lorraine Manufacturing Company notwithstanding that the word Lorraine is a part of its corporate name. That fact without more is not sufficient to entitle it to the relief which it seeks against the respondents. Yellow Cab Co. of San Diego v. Sachs, 191 Cal. 238; Good Housekeeping Shop v. Smitter, 254 Mich. 592.

This brings us to the question whether Sayles Biltmore Bleacheries, Inc. is also without legal standing to maintain the bill of complaint as contended by respondents. Merely for the purpose of considering that question we shall assume that said company, under its former corporate name and by reason of its registered trade-mark Lorraine, had acquired the exclusive right to use that mark and that in the textile trade it had come to signify Lorraine Manufacturing Company as the source of the textile products that bore such trade-mark or name.

According to the undisputed evidence its trade was exclusively wholesale, at least after 1941 when it ceased to sell remnants at retail. And its wholesale customers were jobbers and mills engaged in the "cutting-up trade" so called. By identifying its goods with the Lorraine trade-mark and by extensive advertising in newspapers and magazines as well as by radio, that mark became well established among such customers as the symbol that identified Lorraine Manufacturing Company as the source of those goods. This association of the trade-mark and the company continued unbroken at least down to 1955. But on December 15 of that year it sold its last piece of machinery. It had already notified the trade in October 1953 that it would present no new lines of goods and that it had ceased manufacturing.

Following such notice, in December 1953 it engaged solely in the finishing business. Thereafter it sold all of its mills and machinery in Pawtucket and transferred its activities in pursuit of its new enterprise to North Carolina. Except for a so-called Lorraine division office which it maintained in the Sayles Finishing Plants, Inc. in Saylesville, Rhode Island, for the purpose of liquidating its Rhode Island property, the name Lorraine in the Pawtucket area and among the textile trade generally became but a memory of things that used to be.

The undisputed evidence is that since 1953 Lorraine fabrics have not been manufactured; that there is no present intention on the part of Sayles Biltmore Bleacheries, Inc. to resume manufacturing them; that it no longer has the mills and machinery for doing so; and that it does not now have on its hands for sale any products which it manufactured under its former name. In our opinion it has not only abandoned the name of Lorraine Manufacturing Company but it has also completely abandoned manufacturing and merchandising the special products with which the name Lorraine was so long associated in the textile trade and in the Pawtucket area where respondents are presently conducting their retail business. In our opinion there can be no doubt in the public mind that the old Lorraine Manufacturing Company and its Lorraine fabrics have ceased to be.

In view of that fact we are constrained to hold that complainant Sayles Biltmore Bleacheries, Inc. is also without legal standing to maintain the instant bill of complaint. If there were evidence that it intended within a reasonable time in the future to return to the manufacture of fabrics and that it desired to preserve its trade-mark rights to the use of the name Lorraine for that purpose, we would be inclined to view its claim to relief more favorably. But clearly there is no need of further inquiry on that score since its responsible representative has testified that it has no such intention. Indeed on the contrary he has testified that it is the intention of the interests which control the complainant company to transfer the name Lorraine to another company which does not manufacture cloth but is merely a converter that buys and sells cloth manufactured and finished by others.

Fairness to the consuming public requires that a trade-mark or trade name may not be assigned to one whose business or products have no connection with the business or products of the first user. Jackman v. Calvert-Distillers Corp. of Mass., 306 Mass. 423. This principle is generally stated as follows: "A trade-mark or name cannot be assigned except in connection with an assignment of the particular business in which it has been used, with its good will, and for continued use in conjunction with or on the same article or class of articles which it was first applied to, and used on, by its original adopter." 87 C.J.S., Trade-Marks, Etc., § 171 c, p. 501.

When the old Lorraine Manufacturing Company stopped manufacturing, sold all its mills and machinery, notified the trade that no more lines of Lorraine fabrics would appear on the market, gave up its corporate name and expressly consented to its adoption by another company not engaged in the manufacture of cloth, and thereafter actually engaged in a radically different business exclusively in a new location far removed from Pawtucket, it surrendered its rights to exclude others from using without any misrepresentation the name Lorraine which it had thus expressly abandoned.

There is no room for it to complain that the respondents who are now using such name are engaging in unfair competition, because it is no longer operating in the same competitive business or geographical area and therefore could not be injured by respondents' use of the name. If respondents were holding themselves out as the successors of the Lorraine Manufacturing Company, the case would be different. Armington v. Palmer, 21 R.I. 109. The respondents in that case were holding themselves out as "successors to Armington Sims Engine Company" and were rightly enjoined from so doing, since that company was still in existence even though it was not actually doing business.

Whether the public would be deceived if respondents in the case at bar represented that the merchandise which they are offering for sale at the old Lorraine Mill was made by Lorraine Manufacturing Company we need not consider at this time since there is no evidence to that effect in the transcript. And there is no evidence that they ever used the registered trade-mark Lorraine. As long as respondents confine their use of the name Lorraine Mill Outlet merely to identifying the location of their store in the old Lorraine Mill, which in our opinion is the most that the evidence shows, and do not represent that they are the successors of Lorraine Manufacturing Company, or that the products they are offering for sale were made by that company, they cannot reasonably be deemed guilty of competition which is unfair to Sayles Biltmore Bleacheries, Inc.

For the above reasons the respondents' appeal is sustained, the decree appealed from is reversed, and the cause is remanded to the superior court with direction to enter a new decree denying and dismissing the bill of complaint.

FLYNN, C.J., did not participate in the decision.