Opinion
January 17, 1933.
Manufacturer seeking to restrain competitor from using label "Manhattan" on men's underwear held precluded by recitals in contracts from denying that public recognized competitor as source of underwear bearing such label.
Confusion in public mind must be established before relief can be afforded to private party for protection of common-law trade-mark.
On question whether manufacturer can be afforded protection for label, determining factor is not primarily whether confusion of public has been occasioned, but whether competitor, because of confusion of public, acquires benefit to manufacturer's injury.
Where controversy arose when complainant, using label "Manhattan" on men's outer shirts, resumed manufacture of underwear same as that on which defendant had been using such label without protest for seven years, contract settling controversy by defining rights of each to use of such label held valid.
BILL FOR INJUNCTION AND ACCOUNTING filed by the complainant against the defendant corporation and its manager, Mintz, the gravamen of the complaint being that the defendants are selling men's underwear bearing the label "Manhattan" in violation of the complainant's alleged right to the exclusive use of that word as a label on men's wear. The goods sold by the defendants were manufactured by Robert Reis Company, a corporation of New York, and by it sold to the defendant corporation, a retailer engaged in business in the City of Wilmington. Robert Reis Company has intervened in the cause as a defendant and filed an answer defending the right of the corporation defendant to vend the goods in question as a retailer from it. See 18 Del. Ch. 224, 158 A. 133. The contest in the cause is really between the complainant and the intervening defendant, Robert Reis Company, which for convenience will be referred to in the opinion as the defendant, over the right of the Reis Company to use the word "Manhattan" as a label on the sort of men's wear it is engaged in manufacturing and marketing and which the Sarnoff-Irving Hat Stores, Inc., has sold.
The mark "Manhattan" has been used by the complainant or its predecessors since 1869. Their first use of the word as a mark was on men's outer shirts, and their use of the word was confined to outer shirts only, up until about the year 1879, when the complainant's predecessor embarked upon the business of manufacturing men's underwear, placing thereon the label "Manhattan." The business of manufacturing men's underwear was discontinued by the complainant's predecessor in about 1881 or 1882. Since then until 1912 the business of the complainant and its predecessors was confined solely to the manufacture and sale to the trade of outer shirts only. Their shirts were well and favorably known as "Manhattan" shirts. In 1912 the complainant resumed the business of manufacturing and placing upon the market men's underwear, labelling their product with the same trade name of "Manhattan" under which its outer shirts were known.
In 1905, some twenty-three or twenty-four years after the complainant's predecessors had abandoned the manufacture of men's underwear and seven years before the complainant resumed that business, the defendant commenced the business of manufacturing men's underwear. It used the mark "Manhattan" on its underwear without molestation or protest on the part of the complainant's predecessor.
Thus prior to 1912 both the complainant (or its predecessors) and the defendant were engaged in the business of manufacturing and marketing men's garments bearing the label "Manhattan"; the former using it as a mark on men's outer shirts, and the latter on men's underwear. Each spent considerable sums of money in the way of advertising their respective products as "Manhattan" garments, and both were actively engaged in developing their respective lines of business.
No difficulty between them arose until 1912, when the complainant branched out into the underwear line and placed its underwear on the market under the name "Manhattan." The defendant objected to the complainant's use of that mark on men's underwear as an infringement of its right to the use of the name on such garments. Its objection was emphatically voiced by the bringing of a suit by it against one Lange in the United States District Court for the District of New Jersey, charging Lange with the sale of underwear (which was manufactured by the complainant herein) bearing the name "Manhattan" in violation of the Reis Company's right to the exclusive use of the word on such garments, and praying for an injunction and accounting.
The complainant in this cause was cognizant of the attack thus made by the defendant upon the right of a retailer to market men's underwear made by the complainant under the name "Manhattan." That suit was filed August 1, 1913. It was dismissed without prejudice on motion of the solicitor for the complainant therein on October 1, 1913.
A short time before the dismissal of the suit, viz., on September 23, 1913, the complainant herein, whose right to the use of the mark "Manhattan" as a label on men's underwear was under attack by the Reis Company in the New Jersey suit, entered into an agreement with the Reis Company, by the terms of which the respective rights of the two companies to the use of the name "Manhattan" on men's garments were defined and limited.
By this agreement it was stipulated that the complainant should be entitled "to use the word `Manhattan' upon and in connection with `cut and sewn' underwear intended to be normally retailed at One Dollar per garment and upwards"; and the complainant agreed that it would not make use of said word "in any form or manner whatsoever upon, or in connection with either (1) any underwear intended to be normally retailed at less than One Dollar per garment, or (2) any knit underwear of any grade or price whatsoever." The agreement further stipulated as to the Reis Company that it should be "entitled to the exclusive right to use the word `Manhattan' upon and in connection with knit underwear," and that if it should so desire at any time in the future, it should be entitled to use said word "upon and in connection with cut and sewn underwear of any and every grade or price by or for it made." The recitals in this agreement are as follows:
"Whereas, the designation `Manhattan' has heretofore been used and is now being used by the parties hereto, respectively, substantially as set forth in the following chronological statement, that is to say: —
"Continuously since in or about the year ____ by The Manhattan Shirt Company upon dress and negligee shirts.
"Continuously since in or about the year 1905 by Robert Reis and Company upon underwear.
"Continuously since in or about the year 1912 by The Manhattan Shirt Company upon underwear.
"And Whereas, differences and litigation have arisen in connection with the use of the designation `Manhattan' upon underwear, The Manhattan Shirt Company claiming that it is entitled to the exclusive use of said designation for any wearing apparel appropriate to its business or the expansion and growth thereof, and Robert Reis and Company claiming that it is entitled to the exclusive use of said designation in connection with underwear, and the parties hereto are desirous of settling the litigation and differences between them and agreeing upon the future uses of said designation `Manhattan' in so far as concerns its use upon underwear."
The contract provided that all suits or proceedings theretofore instituted on account of the matter thereby settled and adjusted, viz., the use by the parties of the word "Manhattan" as a mark, should be forthwith withdrawn and discontinued. Eight days after the contract was executed, the Reis Company, as already stated, discontinued its suit in the United States District Court in New Jersey.
On May 12, 1920, the complainant and defendant entered into another contract, in which they recognized the contract of September 23, 1913, as a continuing one, more specifically defining their respective rights in the use of the word "Manhattan" as a mark upon the goods of their respective manufacture. That contract is as follows:
"Memorandum of Agreement between The Manhattan Shirt Company, a New York Corporation, and Robert Reis Co., a New York corporation.
"Whereas The Manhattan Shirt Co., and its predecessors in business have been for many years engaged in manufacturing and distributing merchandise under the trade mark `Manhattan', written in script in the form shown in Trade Mark Certificate No. 124019 of December 31, 1918; and
"Whereas said trade mark in said form is today universally and generally recognized by the public as identifying The Manhattan Shirt Co., as the source or origin of any goods upon which the said mark may appear in the line of clothing and furnishings, as well as allied and affiliated lines, whether the particular goods which bear the said trade mark have as yet or have not as yet been placed upon the market by said Manhattan Shirt Co.; and
"Whereas Robert Reis Co. has heretofore used the word `Manhattan' in block letters as a trade mark for underwear and hosiery, and said products when bearing the word `Manhattan' in block letters are recognized by the public as originating with Robert Reis Co.; and
"Whereas the parties hereto are desirous of defining their respective rights in the premises along lines which will prevent any possible confusion in the minds of the public and also to provide means for dealing with any infringers who may seek to take advantage of the `Manhattan' trade mark;
"Now, Therefore, it is agreed as follows:
"1. The Manhattan Shirt Co. agrees that it will use the trade mark `Manhattan' on underwear and hosiery only in script form. But nothing herein is to prevent it from using the word `Manhattan' in block letters in its corporate name on the goods or labels, on stationery or in advertising or publicity matter of any kind, but neither this provision nor any other provision in this agreement shall be construed as giving The Manhattan Shirt Co., the right to use the word `Manhattan' in violation of the provisions of Article 1 of the agreement entered into between the parties on September 23, 1913.
"2. Robert Reis Co. agrees that it will not use the trade mark `Manhattan' in script form in any manner whatsoever on or in connection with any merchandise.
"3. The Manhattan Shirt Co. agrees not to object to the use by Robert Reis Co. of the trade mark `Manhattan' in block letters on hosiery and underwear, and further agrees that this concession will be extended to no other person or concern and that, consequently, with respect to the trade mark `Manhattan' in block letters, the said trade mark shall be exclusively used by Robert Reis Co., in connection with underwear and hosiery and Robert Reis Co., may register the said trade mark `Manhattan' in block letters for hosiery and underwear in the United States Patent Office and Foreign countries.
"4. Robert Reis Co., agrees that whether such registrations are obtained or not, and for the United States and any foreign countries no objection at any time will be raised, urged or enforced against The Manhattan Shirt Co., by reason of the use by the latter of its trade mark `Manhattan' in script on such cut and sewn underwear as it may sell under its `Manhattan' trade mark in accordance with said agreement of September 23, 1913, or on hosiery, or by reason of The Manhattan Shirt Co.'s use of the word `Manhattan' in block letters as part of its corporate name as provided for in Article 1 hereof.
"5. In the field of underwear and hosiery the burden of suppression of infringements upon the trade mark `Manhattan' in this and foreign countries in which Robert Reis Co. may obtain registration of the trade mark `Manhattan' in block letters shall, in the first instance, rest upon Robert Reis Co., who shall have the privilege, according to the advice of their attorneys, to join The Manhattan Shirt Co. as a party-plaintiff in any such suit or action in which, according to the advice of their attorneys, such joinder shall be necessary, proper or advisable, provided that prior to the institution of any such joint suit, Robert Reis Co. give satisfactory assurances to The Manhattan Shirt Co., to save the latter harmless against any costs or expenses, and provided the suit is, in the opinion of The Manhattan Shirt Co., a proper and just suit to be brought. Nothing herein shall prevent The Manhattan Shirt Co. from instituting suit on its own account and at its own expense for the protection of its trade mark `Manhattan', should it be so advised.
"In Witness Whereof the parties have caused these presents to be signed, sealed and delivered by their respective officers, thereunto duly authorized.
"The Manhattan Shirt Co. "By Louis B. Tim, "Vice-Pres. "Robert Reis Company, "By Arthur M. Reis, "President."
"New York, May 12, 1920."
On April 8, 1924, the complainant recognized the obligations of the two contracts as binding upon it as appears from an exhibit in evidence in the form of a letter from it to Richmond Hosiery Mills of Rossville, Ga., which desired the complainant's permission to make use of the word "Miss Manhattan" as a mark upon hosiery to be sold in Argentine.
The present bill was filed on June 30, 1931. While it is directed against the Sarnoff-Irving Hat Stores, Inc., as a retailer of the Reis Company's garments, its real attack is against the latter company; and that company's intervention has drawn before the court the right of the complainant to oust the Reis Company from use of the word "Manhattan" in that field of business which it has enjoyed since 1905 and which the contracts of 1913 and 1920 undertook specifically to assure to it.
The intervening defendant raises the defense, inter alia, that the complainant is estopped by its contracts from complaining against the use by the defendant of the word "Manhattan" within the bounds set by those contracts. At the hearing the parties were afforded full opportunity to bring forward all that they cared to offer in the way of evidence as bearing upon the question of the binding effect of the contracts. Having confined the evidence to that aspect of the case, further hearing was postponed. This was for the reason that if the facts disclosed were such as to make the contracts conclusive against the complainant's right to maintain its bill, it would be a needless expenditure of time and cost to proceed with a hearing upon other and more general phases of the case. Such a course was agreeable to the parties and so was pursued. It was announced by the Chancellor that if he should conclude from the evidence adduced on the issue of estoppel that the bill should be dismissed, he would enter a decree of dismissal; and that if his conclusion on that point was otherwise, the hearing would be resumed and evidence taken upon the case in all of its aspects.
Heard on bill, answers, evidence taken orally before the Chancellor, depositions and exhibits.
William G. Mahaffy and Ellis W. Leavenworth, of the firm of Watson, Bristol, Johnson Leavenworth, and Herbert bert H. Maass, of the firm of Maass Davidson, both of New York City, for complainant.
Hugh M. Morris and G. Burton Pearson, Jr., and Wallace H. Martin, of the firm of Nims Verdi, of New York City, for defendants and intervenor.
THE CHANCELLOR:
The complainant does not deny the execution of the contracts of 1913 and 1920. It makes no contention that the respective rights of the parties, as defined by the contracts, to the use of the mark "Manhattan" as a label on men's wear, the field of its enjoyment and the method of its display, have been in any sense altered by mutual consent. The contracts are conceded to possess today as full a measure of whatever vigor the law allows to them as they possessed when the parties entered into them.
The complainant denies, however, that the contracts ever had any validity in law. It contends therefore that the defendant cannot now, any more than originally, take refuge under their provisions as a protection against the complainant's charge that the word "Manhattan" as a mark on men's garments is within the exclusive proprietorship of the complainant. The sole answer which the complainant makes to the defendant's claim that the complainant has expressly agreed that it, the defendant, might use the mark in the manner it does is, that the agreements it made with the defendant were in fraud of the public, were therefore illegal and such as courts of equity will disregard. There can be no estoppel, argues the complainant, based on a contract which is illegal.
It is in order first, then to examine this question of illegality. The first contract was entered into on September 23, 1913. The complainant has introduced evidence tending to show that prior to that date and as far back as 1869, a period of forty-four years, either it or its pre-decessors had used the name "Manhattan" on men's shirts. Except for a brief period of two or three years, to be exact between 1879 and 1881 or 1882, the complainant's label was identified exclusively with men's negligee and dress, or outer, shirts. Except for the short period mentioned, the complainant's word "Manhattan" was in no sense associated by the trade or public with underwear. That the mark when used on outer shirts was identifiable with the complainant and when so used entitled to be protected from encroachment on the part of others, is to be taken as a fact (without deciding it) at this stage of the case, whatever may be the truth of the matter in the light of such further evidence as the defendant may produce in the event of a resumption of the hearing. Now that being so, the complainant argues that the use by another of its well known label of "Manhattan" prior to 1913, when the first contract was entered into, as a mark or label on articles of men's wear which are related to shirts, such as underwear, was a deceptive one, calculated to deceive the public into believing that the related articles were derived from the same source as were the well known "Manhattan shirts," and that the intruding user was subject to be enjoined from further use of the word on such garments. In support of this proposition the complainant cites the following among other cases: Akron-Overland Tire Co. v. Willys Overland Co., ( C.C.A.) 273 F. 674, affirming ( D.C.) 268 F. 151; Wall v. Rolls-Royce of America, Inc., ( C.C.A.) 4 F. (2d) 333; Rosenberg Bros. Co. v. Elliott, ( C.C.A.) 7 F. (2d) 962; Florence Mfg. Co. v. J.C. Dowd Co., ( C.C.A.) 178 F. 73; Anheuser-Busch v. Budweiser Malt Products Corp., ( C.C.A.) 295 F. 306; Hudson Motor Car Co. v. Hudson Tire Co., ( D.C.) 21 F. (2d) 453. These cases sustain the doctrine for which they are cited, viz., that established trade-names and marks are entitled to be protected against exploitation by others even though the precise sort of articles to which they are affixed by such others are not made or dealt in by the original appropriator of the name, provided the articles put out by the offender are so allied or related to those put out by the original appropriator of the name that the public will be likely to be confused and deceived into attributing the new articles to the same origin as the established ones.
This principle constitutes the first step in the complainant's argument by which it seeks to demonstrate the illegality of the contract of 1913. The principle is appealed to as establishing the contention that the defendant had no right to use the mark prior to 1913 when the first contract was made. The next step in its argument is this — that the law pronounces it to be a fraud on the public for the proprietor of a trade mark or name to contract with another that the mark may be used on the goods of such other maker, for such use is tantamount to a false representation that the goods of the other are derived from the source with which the mark is reputed to be identified. A contract which thus results in deception of the public is said by the complainant to be contrary to public policy and therefore illegal and unenforceable. In their effort to persuade the court that this principle is applicable to such a state of facts as the pending case presents, the solicitors for the complainant have cited numerous cases, to which I shall presently make reference and show why in my judgment they are not pertinent as authorities in this case.
Before referring to those cases, the following observations should be made respecting the facts and certain principles of law applicable thereto. From 1869 the "Manhattan" label had been known to the men's furnishing trade. Down to 1905 (during an unimportant interval of two or three years, which ended in 1882) it was associated exclusively with men's outer shirts. Starting with 1905 it came to be associated also, due to the defendant's business, with men's underwear. It continued so to be associated when the contract of 1913 was entered into. During the eight years from 1905 to 1913, therefore, the word denoted a particular source of origin for both outer shirts and underwear. The sources, however, were different. So long as the complainant desired to confine its business to the manufacture and marketing of outer shirts, it appears to have raised no question as to the right of the defendant to use the word as a label on underwear. The defendant's use of the word on underwear had come to indicate a source of origin quite as positively as had the complainant's use of it on shirts. The matter of the name of the maker of goods bearing a well known label which does not disclose the maker's name is not necessarily one of moment. When the courts speak of the public's identifying the source of origin, they do not mean thereby that the purchasing public can identify the maker by his specific name or the place of manufacture by precise location. What they mean by such expression is that the purchaser of goods bearing a given label believes that what he buys emanated from the source, whatever its name or place, from which goods bearing that label have always been derived.
The fact then that "Manhattan" underwear in 1913 came from the factories of the defendant and not from the factories of the complainant where "Manhattan" shirts were made is not of itself of importance if the word whether on underwear or shirts had come to indicate a definite and constant source of origin. Prior certainly to 1912, "Manhattan" on underwear, by reason of seven years of publicity and trade, if traced back to its source would have led as positively to the defendant as the maker as the same word on shirts, if traced back, would have led to the complainant as maker.
The complainant cannot be permitted to deny this in face of the recitals in the contracts of 1913 and 1920. Inskeep v. Shields, 4 Har. 345; Barsky v. Posey, 11 Del. Ch. 153, 98 A. 298; Stevens v. United States, ( C.C.A.) 29 F. (2d) 904. The contract of 1920 expressly commits the complainant to the truth of the fact that prior thereto when underwear was labeled with the word "Manhattan" it was recognized by the public as originating with the defendant; and all the intendments of the contract of 1913 indicate that, as to underwear, the defendant's continued use of the label as indicating a source of origin was more extensive in right than was that of the complainant.
In the light of these contracts it is impossible to take any view of the facts other than this, viz., that a right had been matured in 1913 by practice and continued enjoyment by each of these parties to the use of the word "Manhattan" as a mark on certain distinct types of men's garments. Their rights were founded on user and had not arisen by transfer from one to the other. Each had appropriated for its own particular line of goods this term of geographic description as a designating mark. When the complainant sought to step over upon the defendant's line in 1912, it undertook to appropriate a portion at least of that area covered by the word "Manhattan" with which the defendant had by its activities become identified; and now by its bill the complainant seeks to exclude the defendant from the area entirely.
It is the element of confusion of the public and therefore the public's alleged deception, which the complainant relies upon as establishing the illegality of the contracts. But the complainant, I think, is in error in the significance which it conceives the law to attribute to this element of confusion. It is quite true that confusion in the public mind is an element necessary to be shown before any relief can be afforded to a private party for the protection of a common law trade mark. Such proof is necessary only because otherwise the complainant cannot be said to have suffered any injury. The protection of the public in such case is only an "incident of the enforcement of a private right." It was so stated in Federal Trade Commission v. Klesner, 280 U.S. 19, 50 S.Ct. 1, 3, 74 L.Ed. 138, 68 A.L.R. 838, where the jurisdiction of the Federal Trade Commission was denied to entertain a controversy between individuals over the right to use a trade mark on the ground that the matter was not one of "interest to the public." In American Washboard Co. v. Saginaw Mfg. Co., ( C.C.A.) 103 F. 281, 285, 50 L.R.A. 609, it was said, "the private right of action in such cases is not based upon fraud or imposition upon the public, but is maintained solely for the protection of the property rights of complainant." To the same effect are Royal Baking Powder Co. v. Federal Trade Commission, ( C.C.A.) 281 F. 744; Mosler v. Ely-Norris Co., 273 U.S. 132, 47 S.Ct. 314, 71 L.Ed. 578; Armstrong Cork Co. v. Ringwalt Linoleum Works, ( D.C.) 235 F. 458; Id., ( C.C.A.) 240 F. 1022; National Picture Theatres v. Foundation Film Corp., ( C.C.A.) 266 F. 208; Connecticut Tel. Elec. Co. v. Automotive E. Co., ( D.C.) 14 F. (2d) 957; Rosenberg Bros. Co. v. Elliott, ( C.C.A.) 7 F. (2d) 962; Borden Ice Cream Co. v. Borden's Condensed Milk Co., ( C.C.A.) 201 F. 510.
The courts have not in the interest of the public gone so far as to say that marks and labels can never be used under any circumstances if confusion be thereby occasioned by the rival users. The determining factor appears to me to be, not primarily whether confusion of the public has been occasioned, but rather whether the conduct of the defendant has been shown to be such as to enable him wrongfully to acquire a benefit, because of the confusion, to the injury of the complainant.
"The purpose of the law in the protection of trade-mark rights is to conserve the good will of the owner's business, indicated by the use of the mark, rather than to protect the purchasing public against the imposition of buying goods believed to be of an origin different from their actual origin." Joseph Schlitz Brewing Co. v. Houston Ice B. Co., ( C.C.A.) 241 F. 817, 820.
In the following cases confusion of the public was apparent, but the courts deciding them found no warrant, in the interest of the public, to remove it. Delaware H. Canal Co. v. Clark, 13 Wall. 311, 20 L.Ed. 581; Andrew Jergens Co. v. Woodbury, Inc., ( D.C.) 273 F. 952, affirmed, ( C.C.A.) 279 F. 1016; White Rock Mineral Springs Co. v. Akron Beverage Cold Storage Co., ( C.C.A.) 299 F. 775; Joseph Schlitz Brewing Co. v. Houston Ice B. Co., supra; French Republic v. Saratoga Vichy Co., 191 U.S. 427, 24 S.Ct. 145, 48 L.Ed. 247; France Milling Co. v. Washburn-Crosby Co., ( C.C.A.) 7 F. (2d) 304. Not only so, but a contract between parties who had previously been making use of the same word as a mark on competing or related products, whereby the respective rights of the parties to the use of the common word were defined, has been recognized as binding on the parties, notwithstanding the public may be confused thereby. Waukesha Hygeia, etc., Co. v. Hygeia, etc., Co., ( C.C.A.) 63 F. 438; American Crayon Co. v. Prang Co., ( C.C.A.) 38 F. (2d) 448. In principle those cases are similar which hold that rights in a name may be acquired by a rival because of the first user's acquiescence, and the courts will recognize them notwithstanding they may cause confusion in the public mind. French Republic v. Saratoga Vichy Co., supra; White Rock Mineral Springs Co. v. Akron B. C.S. Co., supra; France Milling Co. v. Washburn-Crosby Co., supra. The defendant's right to use "Manhattan" on its men's underwear is fortified not only by contract since 1913, but as well by acquiescence for eight years prior to that date.
I can see nothing in the facts of this case as they existed both before and after the contracts which the law condemns as so offensive to public policy as to justify the declaration that the contracts are void on the ground of illegality. Originally purchasers may have thought that "Manhattan" underwear was made by the same people who made shirts bearing that name. The complainant, if it felt itself aggrieved by the Reis Company's use of the name, could have acted to enjoin it. Whether it could have succeeded at the outset in establishing its right to an exclusive appropriation of that geographic term in connection with all men's wear, whether on outer shirts or on articles related to or associated with shirts as well, is a question which need not now be considered. The important thing is, it did not object. On the contrary, as time went on it not only admitted the defendant's right but agreed that as against the defendant its own right to use the word on men's underwear was limited, for it is to be noted that the first contract, while conceding the defendant's right to use the name in effect upon all such garments, confined the complainant's right to its use to a restricted class of such garments.
I now take up for brief review the cases cited by the complainant in support of its proposition that the contracts are illegal as in fraud of the public and therefore void.
Bloss Adams v. Bloomer, 23 Barb ( N.Y.) 604, 610. In that case the plaintiff sued for damages on a contract which it made with the defendant whereby the defendant was to put seeds of good quality in paper bags bearing the plaintiff's label and market them to the public in that dress. The court refused to recognize the contract as legal because it was a contract which sought to work an "imposition upon the public to palm off spurious goods under cover of genuine labels and devices," and therefore against public policy. The case of Warshow v. A. Elwood Son, 83 Conn. 430, 76 A. 531, is of the same type. In that case it was sought to recover on a contract, the object of which was to cheat the public by a scheme whereby the plaintiff was to supply the defendant with paints, etc., and the defendant was to label the same with the names of well known manufacturers and then auction them off as pretended "bankrupt stock." Materne v. Horwitz, 101 N.Y. 469, 5 N.E. 331, is of the same type. So also are Church v. Proctor, ( C.C.A.) 66 F. 240, and Manhattan Medicine Co. v. Wood, 108 U.S. 218, 2 S.Ct. 436, 27 L.Ed. 706; and allied thereto in principle is Amalgamated Furniture Factories, Inc., v. Rochester Times-Union, Inc., 128 Misc. 673, 219 N.Y.S. 705, in which the court refused to assist the plaintiff in its effort to compel the defendant to publish advertisements containing untrue and deceptive statements. In § 577 of Volume 2 of Restatement of the Law of Contracts, American Law Institute, is found the following — "A bargain, performance of which would tend to harm third persons by deceiving them as to material facts, or by defrauding them, or without justification by other means, is illegal." See, also, 3 Williston on Contracts, § 1738. The foregoing cases are illustrative in one way or another of the application of this principle. Other cases cited by the complainant in the present connection are cases in which it is held that an attempt by contract to assign a trade mark in gross or an attempt to license the use of a trade mark by another unaccompanied by a transfer of the assignor's business, is held to be violative of public policy; the reason being that a trade mark cannot be treated as a property right separate and distinct from the business and good will with which it has grown to be associated. The complainant's cases to this effect are Falk v. American West Indies Trading Co., 180 N.Y. 445, 73 N.E. 239, 1 L.R.A., ( N.S.) 704, 105 Am. St. Rep. 778, 2 Ann. Cas. 216; Seeck Kade, Inc., v. Pertussin Chemical Co., Inc., 235 App. Div. 251, 256 N.Y.S. 567; Lea v. New Home Sewing Machine Co., ( C.C.) 139 F. 732; Macmahan Pharmacal Co. v. Denver Chemical Mfg. Co., ( C.C.A.) 113 F. 468; Detroit Creamery Co. v. Velvet Brand Ice Cream Co., 187 Mich. 312, 153 N.W. 664; Kellogg v. Kellogg Toasted Corn Flake Co., 212 Mich. 95, 180 N.W. 397.
Such are the cases cited by the complainant as authority to sustain its contention of illegality. That they are not applicable to the situation which the facts and the agreements in the present case present is apparent. There has been no attempt by contract in this case to deceive the public. That happened which is not at all uncommon, namely, two manufacturers found themselves using a common geographical name as a mark or badge for their respective goods, each of the same general class but of different species. This was without concert or agreement between them. It continued over a space of at least seven years, and no objection was raised. When in the eighth year the complainant enlarged its use of the name to cover goods of the species that the defendant had theretofore marketed under the name, a controversy arose, litigation ensued and the first contract was then entered into in settlement of the controversy. That contract, as well as the one of 1920, was not an instrument intended to serve the parties as a scheme for confusing the public, as in some of the cited cases. The whole purpose of the two contracts was to obviate as much as possible any confusion in the public mind by setting boundaries to the limits of the use which each should observe. Such was plainly the purpose of the original agreement of 1913; and the contract of 1920 sought further to obviate possible confusion by defining with yet more definiteness the respective rights of the parties in the use of the name, and at the same time providing that when the Reis Company used the word it should be used only in block letters and not in script form, which was the complainant's manner of displaying it. The cases cited at an earlier place in this opinion, when they do not expressly endorse such agreements as honest and commendable, impliedly give them an approving countenance.
Further distinguishing this case from the cases cited by the complainant, it should be said that this one is not a case where there has been an attempt to assign a trade name without a transfer of the business and good will to which it is appurtenant; nor is it a case where a trade mark, name or label is being used on goods whose origin is totally disconnected with the source with which the mark, name or label is commonly associated, and is thus being used to cheat the public.
I can find nothing in the authorities cited by the complainant which denounces the contracts as illegal and therefore not binding on the complainant. On the contrary, the authorities found cited at an earlier point in this opinion and the discussion upon them there indulged in, are convincing that the contracts are valid and that the complainant cannot be permitted to prevent the defendant from enjoying its rights thereunder. I conclude therefore that the complainant is estopped by its contracts from maintaining its bill.
Some evidence was introduced tending to show unfair competition on the part of some of the retailers of the "Manhattan" underwear put out by the Reis Company. This consisted of a manner of advertising in such way as, it was argued, was calculated to make the public believe that the Reis underwear bearing the name "Manhattan" was manufactured by the complainant. The advertisements appeared in newspapers. But neither the defendant nor the intervenor sponsored the advertisements. The intervenor had no knowledge of them. It is therefore unnecessary for me to comment further with respect to this aspect of the evidence.
The bill should be dismissed, costs on the complainant.