Lewis v. Trinklein

I cannot concur in the opinion of Mr. Justice BOYLES.

The corporation was dissolved, a receiver was appointed and sale of the assets of the corporation authorized by the court. The sale was made in 42 parcels and plaintiff Lewis purchased the registered trade names, trade marks, some patents and signs but none of the other physical assets of the corporation.

A trade name exists as an incident of the business in which it was lawfully acquired and with which it remains identified as a mere abstract right, having no reference to any particular property, commodity, or business. It cannot exist separated from the business to which it belongs and with which it is identified; it is not a species of property, and cannot be sold or transferred as such.

"There is no property in a trade mark apart from the business or trade in connection with which it is employed. United DrugCo. v. Rectanus Co., 248 U.S. 90, 97 (39 Sup. Ct. 48, 50,63 L.Ed. 141); Hanover Milling Co. v. Metcalf, 240 U.S. 403,413-414 (36 Sup. Ct. 357, 360-361, 60 L.Ed. 713). ``The law of trade marks is but a part of the broader law of unfair competition' (idem), the general purpose of which is to prevent one person from passing off his goods or his business as the goods or business of another.

"Whether the name of a corporation is to be regarded as a trade mark, a trade name, or both, is not entirely clear under the decisions. To some extent the two terms overlap, but there is a difference more or less definitely recognized, which is, that, generally speaking, the former is applicable to the vendible commodity to which it is affixed, the latter to a business and its good will." American Steel Foundries v. Robertson,269 U.S. 372, 380 (46 Sup. Ct. 160, 162, 70 L.Ed. 317).

My views are expressed in the following quotation fromChildren's Bootery v. Sutker, 91 Fla. 60, 69 (107 So. 345,348, 44 A.L.R. 698):

"The physical elements or assets of a business may not be sold to one and the good will and trade name thereof to another, for when the good will and trade name is separated from the business to which it applies it is thereby destroyed and cannot thereafter be the proper subject of a sale. As it is sometimes expressed, ``the shadow cannot be separated from the substance.' In re Jaysee Corset Co., 201 Fed. 779;Rodseth v. Northwestern Marble Wks., 129 Minn. 472 (152 N.W. 885, Ann. Cas. 1917A, 257); Weener v. Brayton, 152 Mass. 101 (25 N.E. 46, 8 L.R.A. 640); Witthaus v. Braun Mattfeldt,44 Md. 303 (22 Am. Rep. 44); The Fair v. Jose Morales Co., 82 Ill. App.? 499; Seabrook v. Grimes, 107 Md. 410 (68 A. 833, 16 L.R.A. [N.S.] 483, 126 Am. St. Rep. 400); Skinner v.Oakes, 10 Mo. App. 45; Jacoway v. Young, 143 C.C.A. 152 (228 Fed. 630); 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); 38 Cyc. p. 867; Smith v. Yost,72 Ind. App. 628 (125 N.E. 72).

"Because of these peculiar qualities which inhere in trade marks and trade names as property, it has been held by the courts, with great uniformity, and perhaps may now be said to be the general rule, that, in a voluntary sale of a business as an entirety, trade marks and trade names which have been lawfully established and identified with such business will pass to one who purchases as a whole the physical assets or elements of the business, even though not specifically mentioned in the conveyance. Wilmer v. Thomas, 74 Md. 485 (22 A. 403, 13 L.R.A. 380); Solis Cigar Co. v. Pozo, 16 Col. 388 (26 P. 556, 25 Am. St. Rep. 279); Laughman's Appeals, 128 Pa. 1 (18 A. 415, 5 L.R.A. 599); Morgan v. Rogers, 19 Fed. 596;Kronthal Waters v. Beckham, 137 Fed. 649; Hering-Hall-MarvinSafe Co. v. Hall's Safe Co., 208 U.S. 554 (28 Sup. Ct. 350,52 L.Ed. 616); Snyder Manfg. Co. v. Snyder, 54 Ohio St. 86 (43 N.E. 325, 31 L.R.A. 657); Williams v. Farrand, 88 Mich. 473 (14 L.R.A. 161); Merry v. Hoopes, 111 N.Y. 415 (18 N.E. 714); Feder v. Benkert, 18 C.C.A. 549 (70 Fed. 613); Allegretti v. Allegretti Chocolate Cream Co.,177 Ill. 129 (52 N.E. 487); Corbett Bros. Co. v. Reinhardt-MedingCo., 77 N.J. Eq. 7 (76 A. 243); Macwilliam v. PresidentSuspender Co., 46 App. D.C. 45, 49 (242 Off. Gaz. 255)."

Trade names and trade marks lawfully identified with the business of an insolvent pass to the receiver appointed by the court and thence to one who purchases the business substantially as a whole. The trade name attached to the business but it could not be sold by the receiver as an asset wholly apart from business assets.

We held in Detroit Creamery Co. v. Velvet Brand Ice CreamCo., 187 Mich. 312, 315, relative to trade marks that:

"It is the well-established law of trade marks that a trade mark does not exist as an extrinsic thing, and therefor it is not in any sense property when so considered. Its existence as property and its value as such is created only when it has become associated with and is a part of the business with which it has been connected."

The good will of the defunct corporation did not survive its dissolution. See Grand Rapids Trust Co. v. Haney SchoolFurniture Co., 221 Mich. 487 (27 A.L.R. 1020).

My Brother evidently entertains the view that the trade name follows ownership of the patents. I have endeavored to point out that such is not the case where manufacture under the patents is dead and, by sale and court confirmation, the assets of the dissolved corporation have been divided and sold in 42 parcels and thus the former trade name is a homeless waif. A patent may be sold and, of course, carry rights to operate thereunder, but such a sale as here involved does not carry the exclusive right to the former trade name. The purchaser of the patents did not acquire any of the business equipment of the defunct corporation. The trade name was, though registered, a mere designation by its author and a thing wholly apart from the patents and it cannot be carried in suspense until another business, if any, is established by the purchaser of the property and provides a setting for it.

Under the record in this case Mr. Lewis acquired no exclusive right to the trade name and trade marks of the corporation and the decree granting him exclusive right to the use of the same should be reversed, with costs.

CHANDLER, STARR, and BUSHNELL, JJ., concurred with WIEST, J.