McAllister v. Stumpp & Walter Co. , 55 N.Y.S. 693 ( 1898 )

Bischoff, J.

The plaintiff’s ownership of the proprietary rights, sought to be protected by injunction in this action, is claimed through an assignment to her by one Matthews, who had, in turn, derived his title by assignment from F. E. McAllister, the originator of the preparations in question.

Subsequent to the assignment by McAllister to Matthews the former transferred, or attempted to transfer, these same rights to the corporation formed under the name F. E. McAllister Company, and, upon the insolvency of this corporation, all the proprietary rights possessed by it were sold by its receiver at public auction to Stumpp, Walter and'Eieke, the parties who thereafter formed the defendant corporation.

Matthews, who was a creditor of the F. E. McAllister Company and thus interested in the proceeds of the sale, was present at this auction and yet made no attempt to assert his alleged rights in the presence of the bidders. At that time he merely asked if the receiver warranted the title offered, but made no further sign and had simply contented himself with serving a notice upon the receiver, before the day of the sale, setting forth his claim under the assignment in his hands.

So far he protected himself only, were any question to arise between himself and the receiver, but, as to the purchasers at the sale, his notice to the receiver did not affect the force of his consent that the property be sold, as evidenced by his standing by at the sale and suffering the bidding to continue, in part for his benefit, without-protest or assertion of his claim.

There was clearly an estoppel, and the dilemma cannot be escaped by resort to the suggested theory that the purchasers, wh® were stockholders of the F. E. McAllister Co., had imputed knowledge of the extent of that corporation’s title.

True, McAllister had knowledge of the facts touching his earlier assignment to Matthews, when he formed the corporation, but the members of the corporation knew only that he had continuously exercised complete and exclusive control over these proprietary rights, unhindered by any word or act of Matthews or of anybody else, and that he had divested himself of this apparently complete ownership in favor of the corporation, which succeeded to the practical enjoyment of these rights, and still without any hindrance from Matthews, who consistently failed to assert his claim.

When making the transfer of these rights to the corporation, McAllister acted only in a private capacity, and the corporation was no more bound by his knowledge of the previous assignment than it would have been had its vendor been any other person. McAllister was certainly not the corporation’s agent when he transferred to Matthews, and there is no principle upon which his personal knowledge could be imputed to his subsequent vendees, who were totally ignorant of the circumstances as a matter of fact.

Therefore, it must be held that the right to vend these proprietary articles passed to the defendant through the purchase at the receiver’s sale, and an injunction cannot be granted which would operate to prejudice this right, but the title which the defendant derived by estoppel, as noted, was not exclusive of Matthews’ right to avail himself of the interest which passed to him by virtue of his assignment from McAllister. The estoppel precluded any question by Matthews as to the defendant’s right to prepare and sell these articles, but this was the limit of its extent, and Matthews still possessed a right to deal in such articles himself, under their familiar names, and to transfer such rights as he had to this plaintiff, his assignee.

This being the situation the plaintiff, who has at least the same rights as has the defendant in the matter of publicly dealing with the preparations, may demand that the defendant be restrained from ■ exploiting and advertising the preparations as being the subject of its sole proprietorship.

Defendant’s acts in styling itself the “ sole proprietor ” of the articles, would amount to an unfair method of trade competition, as against the plaintiff, who is entitled to vend the goods under the same general designations, and the injunction is to issue upon this ground, whether or not the rights were properly to be viewed as rights of trade-mark, and whether or not the respective parties could derive enforcible rights hy their transfers from McAllister. Both parties deal in the preparations, and in any aspect neither has a greater right than the other; hence the public assertion of exclusive control by one is an attempted usurpation of the rights of the other, and clearly to the latter’s detriment.

Judgment for plaintiff for injunction, in form as granted pendente lite, with costs.

Judgment for plaintiff, with costs.