De Long v. De Long Hook & Eye Co. (7 A.D. 33, 1896)

O’Brien, J.:

Although it was claimed upon the motion that the appellant was in fact conducting the business of the De Long Hook and Eye Company, and that by indirection he was attempting to do for the company that which the latter had been enjoined from doing, still we think that the facts presented show that, having resigned from the company, the appellant, on his own account, for his own benefit and in a manner entirely distinct from the company, is. carrying on the hook and eye business. Unquestionably, if it appeared that the business of the appellant was that of the company, and that it was but another means of carrying on the unlawful competition enjoined, then the fact that it was done in another, way would subject the person thus engaged to punishment. (Morton v. Super. Ct. of Tulare County, 65 Cal. 496.). In that case the act .forbidden was the maintenance of a dam, and an officer of the company enjoined fqj maintaining the structure, who resigned and then erected the dam, was held to have been guilty of a contempt, because manifestly doing the precise act which was. forbidden. 'If, therefore, the appellant here while apparently in his own name, was engaged in the interest of the company in doing 'the very thing which it had been enjoined from doing, then the principle of that case would be applicable. It is all important, therefore, to define precisely what persons and what acts were enjoined; In the suit against the defendant corporation what was enjoined was the use in any manner by that corporation of the name “ De Long.” It was said in the opinion at Special Term :. “ There is no objection to the defendants (the corporation) designating the hooks sold.bythqm as the ‘Oscar A. De Long Hook.’ ” This expression is relied upon by the ap pellant now, as it was by the corporation at the time of settling the decree, as authority for the right of the corporation to sell their wares as the “ Oscar A. De Long Hook.” As it was seen, however, when settling the decree that not only would this introduce confusion, but might prevent the plaintiffs from obtaining the relief to which they were entitled, by permitting the corporation which had fraudulently endeavored to divert the plaintiffs’ business to succeed in that effort, this expression was withdrawn, and the decree as entered enjoined the use by the corporation of the name “ De Long ” in connection with its business in any way whatever. Although the decree at Special Term, and as affirmed by the General Term, was clear - and sweeping in its injunction on the' corporation from using in connection "with the hook and eye business the name 16 De Long,” in the opinions of both courts there was a recognition of the distinction between the use of such name by the corporation and the use by the appellant of his own name in connection with his own business. Thus the General Term -modified the decree of the Special Term by limiting its restraining clause as follows: “ ‘ But nothing herein shall operate to prevent the defendant from manufacturing and selling hooks and eyes put up in any form which shall not violate the trade-mark of the plaintiff, or have the effect to induce the •ordinary purchaser to buy its goods believing them to be manufactured by the'plaintiff-’ ”

It is claimed that, m violation of the terms of the decree, the appellant has made and sold goods of such a character and put up in such a way as to constitute a fraudulent and unlawful competition in business with the plaintiffs, and that the effect will be to induce the public to buy goods sold by him in the belief that they were the plaintiffs’. This claim we do not think is sustained, because, while there are certain features common to the business, such as carding the hooks, etc., which any one engaging in the hook and eye business would have a perfect right to employ, we can find, outside of such general features, no act of the appellant which can be regarded as an attempt to imitate fraudulently the plaintiffs’ goods, or fraudulently to induce the public to believe that they were purchasing the plaintiffs’ goods; it being evident that the confusion in the public mind which has ensued from the appellant’s entering upon the business is due "entirely to similarity in name.

If we eliminate then, because justified, the idea that the appellant was engaged in carrying on the business of the defendant corporation in a manner that had been enjoined, and assume, as we think the affidavits show, that he is now conducting his own business in his •own name, the question really presented is whether, in using the designation “ Oscar A. De Long’s Hook,” he has violated the letter or spirit of the injunction. This did not enjoin Oscar A. De.Long from doing business in his own name, or from selling any kind of kooks and eyes that any other person might lawfully sell, or from designating those made and sold by him and having peculiarities designed by him as “ Oscar A. De Long’s Hook.” Although an officer and practically the owner of the corporation, Oscar A, De Long was not individually a party to the action against the corporation, and his individual rights were not the subject of adjudication ; and while it is true it was therein decided that he could not lend his name to a corporation and thus infringe upon the plaintiffs’ trade mark which they had acquired in the name “De.Long” in connection with the hook and eye business, there ivas no determination that Oscar A. De Long could not do business on his own. account and in his own name.

The extent to which the decree went, and to which it will be: sustained, was in holding that neither directly nor indirectly could, the corporation use the name “DeLong” in connection'with its-business. "We do not think, therefore, because he had so loaned the-use of his name to the corporation, that he has forever lost the use of it in his own business, even though such business might be that: of" hooks and eyes; and even though the use of his name in that business might result in confusion in the public mind. Not only was. there no injunction against the use of his own name in his own business, but the court, in an action to which he was not a party, in his individual character, could not have made any such decree.

As already said, if it had appeared that the business of the defendant corporation was now being carried on by Oscar A. De Long,, who had adopted, a name and employed methods which the .corporation was enjoined from using, such acts would be a defiance of the-decree and would constitute a contempt, and be punishable, for the court, will not permit that to be done indirectly which it has forbidden to be done directly. As stated, however, the facts do not warrant this conclusion, and although the appellant commenced business immediately after the entry of the decree, it does appear that before doing so he resigned from the corporation, and that the: latter is in no way interested in, and. has no voice in, the business, which he is conducting solely for his own benefit.

The result then, if this application is successful, will not be to-punish him for what he did in connection with the corporation, for the proceeding cannot be regarded as against him as an officer or controlling stockholder of that corporation, but as. against, him for using his own name in his own business. "The respondents frankly avow their-right to this relief and insist that in-connection with'the hook and eye business, even though conducted by himself, he could not use the name De Long. As urged by them, “ Oscar A. De Long,.. having applied his name to fraudulent purposes, placed the use-thereof in jeopardy, and the court 'having condemned the use of it in a certain and well-defined direction he must now abide by the. consequences of his improper conduct.” This we think is more sweeping than the decree, and is going further than is sanctioned by reason or authority. What was enjoined was the use of the appellant’s name in connection with a corporation engaged in the same business as the plaintiffs, which use introduced confusion and dishonest competition. Although this was condemned in the opinions and enjoined by the judgments, the former recognized the legal right of every man to úse his own name, and the latter did not go to the extent of preventing the appellant from ever again engaging in the hook and eye or other business in his own name; and, as correctly claimed by the appellant, “ a judgment to that effect would relate directly to the individual rights of Oscar A. De Long, and could not be determined in an action to which he was not a party; No such adjudication has been made or could be legally made. There is no such thing as a forfeiture of a right by civil proceedings. Oscar A. De Long, in a suit brought against himself, might be perpetually enjoined from doing a certain thing, but that would not be a forfeiture of a right, and * * * Oscar A. De Long has not been enjoined from making, selling and advertising hooks and eyes under his own name. * * * Such an adjudication would in effect create a new form of punishment, viz., that a man might be deprived of a right he would otherwise possess of engaging in a lawful business under his own name.”

As there was nothing, therefore, in the decree which-would interfere with the right of Oscar A. De Long to do business in his own name and for his own account, we fail to see why he cannot advertise such business in his own name, or on his letter heads or on the cards containing his hooks.' We do not think he is obliged to do business either anonymously or in the name of some one else, or refrain from placing his own name upon his letter heads or the cards-which contain the hooks and eyes that he is selling in his own business and for his own account.

The distinction between the use. of the, name “ De Long” by a corporation in aily way and by the appellant grows out of the fact that it was assumed fraudulently by the former, and belongs as o£ right to the latter; and while the court could and did prohibit the use by the corporation of the name “ De Long,” it did not and could not in that action, to which appellant was not a party, enjoin him from using his own name. The construction of the judgments for which the respondents contend, if followed to its'logieal consequences, is that because in the suit against the corporation the use by it of the name “De Long” was enjoined as fraudulent, this was an adjudication that no one formerly connected with the corporation, as having knowledge of the judgment, though his name was De Long, could ever thereafter use the same. in connection with his own business, more particularly if that business chanced to be that of hooks and eyes. We do not think that if Oscar A. De Long had used his own name on his own cards in his own business the plaintiffs would have a cause of action against him ; nor do we see that the fact that there -has been a suit brought and all injunction obtained against a company to which he loaned 1ns name militates against his ability to resume his original right, to engage in business on his own account and in-his own name.

It not having been shown, therefore, that the appellant had in any -way violated the decree, the order adjudging him guilty of contempt was erroneous and should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Van Brunt, P. J., and Williams, J., concurred; Patterson, J., dissented.

Patterson, J. (dissenting):

This is an appeal from an order made at the Special Term-adjudging that Oscar A. De Long, the appellant, has disobeyed an injunction contained in a decree entered'in the action above entitled, and further adjudging' that such violation and-disobedience- were deliberate and intentional, and that by reason -thereof the said Oscar A. De Long is in contempt of this court and imposing upon him a fine for the indemnity of. the plaintiffs for the loss sustained by reason of the misconduct of said- Oscar A. De Long, and directing a reference to ascertain what damages, costs and expenses the plaintiffs have sustained by reason of the acts of the appellant adjudged to have been in disobedience of the decree referred to. It appeared before the court, on the plaintiffs’ application to punish the appellant for contempt, that on the 8th day of January, 1895,, a decree was entered in the action above mentioned, by which the defendant therein, the De Long Hook and Eye Company, was “ enjoined from using, in selling, or placing upon the market in connection with hooks and eyes the word or name ‘ De Long/ alone or with other words in any manner which may produce deception or confusion in the public mind as to the identity of the goods sold by the plaintiffs and the defendants respectively.” Oscar A. De Long was the president of the defendant, the principal stockholder, the manager of its business, and substantially, according to his own statement, all there was of the corporation. An appeal was taken to the General Term of the Supreme .Court from the decree made at Special Term, and that decree was modified so that its restraining clause was limited by the following words, which were directed to be inserted in the Special Term decree, namely, “ but nothing herein shall operate to prevent the defendant from manufacturing and selling hooks and eyes put up in any form which shall not violate the trade mark of the plaintiffs or have the effect to induce the ordinary purchaser to buy defendant’s goods, believing them to be manufactured by the plaintiffs.” As the action in which the decree was entered was one between the plaintiffs and the corporation, the restraint in the Special Term decree ran also against the corporation, its clerks, servants, workmen, agents, attorneys and all persons claiming under or through the defendant. Of such persons, Oscar A. De Long was one. After the entry of the order of the General Term modifying the decree of the Special Term, Oscar A. De Long ajiparently separated himself from the corporation of which he was the president, and undertook the business of manufacturing and selling hooks and eyes ostensibly on "his own account, and not in connection with the defendant corporation. It does not appear that that corporation really retired from business, but it doés clearly appear that all the acts of Oscar A. De Long brought to. the attention of the court in this proceeding and considered as being in contempt of the decree, are individual acts of Oscar A. De Long. He attempts to justify them on two grounds: First, that as an individual he was not prohibited by the decree from engaging in the business of selling hooks and eyes of the general character of those made for and sold by the De Long Hook and Eye Company; second, that as matter of fact, he has not made and sold goods of such a character, or put up in such a' way as would constitute a fraudulent and unlawful competition in business with the plaintiffs, or induced the public to buy goods sold by him in the belief that they were the product of the plaintiffs’ manufacture.

It must be admitted that the decree of the Special Term-, as modified by the General Term, really-contains no prohibition, upon Oscar 'A. De Long carrying on business in selling hooks and eyes in a lawful way and in his own proper name-. The inhibition contained, in the Special Term decree of the use of the name De Long, in any form or in any combination of words does not go to that extent. It was not,intended by that adjudication to deprive Oscar A. De Long of the right to use his name in the conduct of his own business, whether it be that of selling hooks and eyes or any other legitimate business in which he might be engaged, but it was intended that the defendant corporation and its servants, and those who were acting under or for it should not engage in the manufacture or sale of hooks and eyes put up in any form' which would violate the trade mark of the plaintiffs, or induce the ordinary purchaser to buy such goods, believing them to be manufactured by the plaintiffs. The claim now made on the part of Oscar A. De Long substantially is that, although he was the president of the defendant corporation, and although. he was enjoined as connected with that corporation from doing those things prohibited by the- decree, yet that he may sever his connection with that corporation and continue individually the business which it had conducted and from doing which it had been enjoined, and acquire -absolute immunity for all his acts and compel the plaintiffs to institute a new action and seek a new decree against him for whatever wrong he may personally commit, and thus evade the consequences of his disobedience of the decree of the court, which was plainly intended to reach and operate upon every person who, in any capacity, might be found to have been connected with the wrongful acts of the defendant corporation, and who had caused or contributed to, or profited by, the acts enjoined, and who came, by notice or knowledge, within the operation -of the terms of the decree. Oscar A. De Long, by changing his coat, could not change his condition. He was still bound by the decree. Being enjoined as a corporate officer from perpetrating a wrong he cannot be permitted, as an individual, to continue to perpetrate the same wrong. The purpose of the decree was to act upon every individual who had notice of. the injunction and to stop him as well as the artificial entity, the corporation, which only acted through such individuals. It would open the door to the successful evasion of all injunctions of this character against corporations, if its members or officers were to be permitted by device of any kind to say that'they have separated themselves from the corporation, and as individuals are carrying on the business which they were prohibited from doing under the corporate form. This question was raised and disposed of in the case of Morton v. Superior Court of Tulare County (65 Cal. 496). In that case, by decree of the court, a corporation organized for irrigation purposes, was required to remove a certain dam, and it and its officers, agents and employees and all persons acting under it were enjoined from continuing or maintaining the same. The dam was removed pursuant to the requirements of that mandatory decree. The president, of the corporation enjoined resigned his office, transferred all his. stock and entered into an arrangement with a third party for the purchase of the land upon which the dam had stood, rebuilt it and claimed the right to keep it there because neither he nor the person from which he bought the, land were parties to the suit. This act was held by the court in which the decree was rendered to be a contempt. An application was made by petition to the Supreme Court, for a writ of certiorari to review the decision of the court below,, and it was held by the Supreme Court that the petitioner had full notice and knowledge of the issuance and service of the injunction • that an officer of a corporation undoubtedly has a right to sever' his. connection with the corporation, but he will not be permitted to exercise his right for the mere purpose of treating with contempt the orders and decrees of a court which he is bound to respect. A quotation is made from the case of People ex rel. The Mayor, etc., v. Pendleton (64 N. Y. 622) that “injunction orders must be fairly and honestly obeyed, and hot defeated by subterfuges and tricks on the part of those bound to obey them; that they might be violated by aiding, countenancing and abetting others in violation thereof as well as doing it directly; and that courts would not look with, indulgence upon schemes, however skillfully devised, designed to. thwart its orders.”

In the case at bar it is conceded that if Oscar A. De Long, separating himself altogether from the De Long Hook & Eye Company, and without any intent or design upon his part to carry on as an individual that same business which under the ■ corporate form and guise he had been' substantially carrying on for himself before, went into the market with his manufactured goods, exposed them for sale in such a way as would not lead purchasers to believe they were the manufactures of the plaintiffs, kept himself free from any deception or imposition, and merely used his own name in liis own business, as he had a perfect right to do, there would be no reason for the interference of the court to maintain any right secured to the plaintiffs by the decree. But that'is exactly what Oscar A. ■ De Long, as the court below held, did not do. The learned' justice found, and found upon sufficient. evidence, that the whole of the ■conduct of Oscar A. De Long subsequent to the entry of the order of the General Term .modifying the decree of the Special Term was nothing -but a fraudulent evasion. of the decree; that finding that the door to illegitimate competition with the plaintiffs was closed to the corporation, he resorted to a trick and device to open another, and that through that he entered into the- same forbidden field of unlawful competition. The learned judge below held, as his written opinion states, that the mere inspection of the packages of goods sold by Oscar A. De Long will exhibit the continuance by him of the fraudulent acts perpetrated by the corporation and enjoined by the decree, and that. he still imposed goods upon the public as the manufactures of the plaintiffs, by having them made up in such ftirm and in such a way that they would still appear to be those of the plaintiffs. There was an abundance' of evidence before the court to convict Oscar A. De Long of this wrong. The affidavit of Sidonia 0. Thurn, an importer of children’s cloaks and dresses, who used a great many hooks, bought, after the making of the decree, at Lord & Taylor’s store certain hooks and'eyes which she had sent for as De Long hooks and eyes, intending to purchase those made by plaintiffs. They were brought to her and she sent them to her workrooms for use. Subsequently she was informed by one of her workwomen that the hooks were not the Same as those she supposed she was buying as De Long hooks; that after close inspection she discovered that they 'were not the same, although, they bore the name “ Oscar A. De Long’s Hook.” Mr. Conklin, a buyer for the bouse of Stern Brothers, swore that he had. examined the cards of. Oscar A. De Long hooks with the words “ Oscar A. De Long Hook printed on the cards, and he would say without hesitation that the purchasing public would be deceived into the belief that they were the hooks and eyes manufactured by the plaintiffs. And to the same effect is the affidavit of Wilson, a buyer for Altman & Co., and Soloman, a buyer for Wechsler & McNulty, and Rebecchini a buyer for Ehrich Brothers of New York city. There were,, it is true, affidavits presented on the part of Oscar A. De Long to-the contrary of those just mentioned, but the court below believed the affiants named, and so doing properly found that Oscar A. De Long was still continuing the deception ; was still selling goods, put up and prepared in such a way that even experienced persons, would be led to believe, without the closest inspection, that Oscar A. De Long’s goods were those of the plaintiffs. Here the fraud and the deception are continuous, carried on by a person who was. enjoined and who cannot throw off responsibility by saying, I have changed my form, I have ceased to act for a corporation, I am now an individual and I will defy the court because I have thus changed my outward appearance.

The order of the court below was right and should be affirmed,, with costs.

Order reversed, with ten dollars costs and disbursements, and the. motion denied, with ten dollars costs.