J. G. Mattingly Co. v. Mattingly

JUDGE LEWIS DELIVERED THE OPINION OE THE COURT. In 1879, J. Gr. Mattingly, having become sole owner ■of a distillery in the western part of Louisville, erected by him and his brother in 1874 for manufacturing whisky, entered into partnership with four sons. In 1883 all his sons but B. D. Mattingly retired, though the business was continued under the original firm name of J. Gr. Mattingly & Sons until July, 1888, when the partnership property and business were transferred to a corporation organized and styled “ J. Gr. Mattingly & Sons.” Consideration of that transfer, as expressed in the deed then executed, was stock at face value of one hundred and forty dollars, and bonds for sixty thousand dollars, secured by lien. The property conveyed was a tract of land whereon the distillery was situated; “also all the tools, machinery, implements, — 434 — whiskies and stock in trade, all accounts, notes and. other evidences of indebtedness and good will belonging to said firm, parties of the first part, to have and to hold said property described and set forth, to the party of the second part, its successors and assigns forever, with covenant of general warranty.” On the same day was executed by J. Gf. & B. I). Mattingly, members of the firm of J. Gr. Mattingly & Sons, to J. Gr. Mattingly & Sons, corporation, the following : “For the consideration of six hundred shares Of capital stock of the party of the second part, of the par face value of one hundred dollars per share, this day issued and delivered to the parties of the first part by the party of the second part, * the parties of' the first part have bargained and sold, and do hereby bargain, sell, transfer and convey to said party of the-second part, its successors and assigns, all trade-marks, brands and labels belonging to the parties of the first part, including the brand ‘ J. Gr. Mattingly & Sons,’ long nsed by the parties of the first part in branding-their whisky, to have and hold to said party of the second part, its successors and assigns forever.” The corporation, the capital stock of which was owned by J. GK & B. D. Mattingly, continued in business to September, 1889, and then suspended, and at same time the firm J. Gr. Mattingly & Sons made-assignment to Attilla Cox, trustee, for benefit of' creditors. In pursuance of authority and direction given by the stockholders, Cox, as agent of the corporation, subsequently sold at public auction the entire distillery property, Paul Jones becoming purchaser at. — 435 — one hundred and twenty-five thousand dollars; and February 12, 1890, a deed was executed whereby J. Gr. Mattingly & Sons, corporation, J. Gr. & B. D. Mattingly as partners and individually, and Atfilla Cox, assignee of the firm of J. Gr. Mattingly & Sons, and of the members thereof individually, conveyed to Paul Jones, trustee, the tract of land mentioned and entire distillery property thereon; “also good will of the firm name of J. G. Mattingly & Spns, and all trade-marks, brands and labels belonging to said party of the first part, including the brand of J. G. Mattingly & Sons, long- used by the party of the first part, and its grantors and assignors in branding their whisky.” It was stipulated and agreed that the parties of second and third parts, being J. G. & B. D. Mattingly, members of the firm, and individually, and their assignee, Cox, claimed no right, title or interest in said property, but united in the deed to perfect description of it, and to confirm all former conveyances. That deed having, as recited therein, been made to Paul Jones in trust that he thereafter convey all the property to “ J. G. Mattingly Company,” a corporation recently, and, according to law, organized, he did, February 27, 1890, execute the trust whereby it became legal owner and in possession of all property and rights mentioned in preceding deeds. June 2, 1890, J. G. Mattingly Company brought this action against J. G. Mattingly and B. D. Mattingly for an injunction, which was granted temporarily, restraining them from making or causing made a certain lot of one thousand barrels of whisky or branding it — 436 — with name of J. Gf. Mattingly Company, or receiving and opening any letters or telegrams addressed to J. Gf. Mattingly & Sons, to Palls City Distilling Company, the Dougherty Distilling Company or to J. Gf. Mattingly Company, or interf erring in any manner with said letters and telegrams or with the good will of plaintiff’s business or its use of the brands and trademarks, including name of J. Gf. Mattingly & Sons, transferred and sold in the manner mentioned. The answer of J. Gf. & B. D. Mattingly was made a counter-claim, and injunction asked restraining plaintiff from receiving and' opening mail matter or telegrams addressed to J. G. Mattingly & Sons, Palls City Distilling Company or the Dougherty Distilling Company. Further relief prayed for was reformation of that part of the deed to Paul Jones, which purports to convey good will of the firm of J. Gf. Mattingly & Sons. As to the latter remedy, it may as well be now said defendants are, in our opinion, clearly not entitled to it. They had already transferred beyond recall to the corporation, J. Gf. Mattingly & Sons, and its successors and assigns, good will of the firm of J. Gf. Mattingly & Sons, and, as recited, they were parties in the deed to Jones, merely “to perfect description of said property and to confirm all previous conveyances.” Besides, good will of the firm was as part of the distillery property then owned exclusively by J. Gf. Mattingly & Sons, corporation, publicly and in express terms sold to Jones, and fully paid for by plaintiff. The trade marks or names long used by the firm — 437 — of J. GK Mattingly & Sons, and during its existence also by J. Gf. Mattingly & Sons, corporation, and to which plaintiff acquired title in the ma ner mentioned, are in two forms, viz: “J. Gr. Mattingly & Sons, Standard Bourbon, Est. 1845, Louisville, Ky.,” and “J. Gf. Mattingly & Sons Pure Rye, EsC 1845, Louisville, Ky.” They had also habitually branded on the revenue head of each barrel of whisky manufactured at that distillery, as required by s'atute of the United States, the following: “J. Gf. Mattingly & Sons, Distillers.” And that a trade-mark or trade name, such as the two described, affixed to an article manufactured at a particular place, may be lawfully sold and transferred with the establishment, is no longer an open question in this State. (Dant v. Head, 90 Ky., 255.) For “its subsequent use by the person to whom the establishment is transferred is considered as only indicating that the goods to which it is affixed are manufactured at the same place, and are of the same character as those to which the mark was attached by its original designer.” (Kidd v. Johnson, 100 U. S., 620.) It appears that, immediately after its purchase, plaintiff, The J. G. Mattingly Company, commenced to operate the distillery in question and use as their own the trade-mark or name and brand referred to, J. G. Mattingly being employed as superintendent. But about April 17, .1890, Jones, Munday & Co., whisky dealers in California, and former customers of J. G. Mattingly & Sons, addressed to J. G. Mat-tingly, at Louisville, the following telegram: “Quote lowest net cash price for Standard Mattingly in Kentucky and California cooperage to be made next week.” — 438 — There is no pretense the telegram referred to any other whisky than that manufactured according to the established and long used formula at the distillery in question; and “good will” of the firm name and business of J. Gf. Mattingly & Sons, which plaintiff had purchased and paid for, entitled it, according to even the narrowest definition of that term, to the telegram, and whatever advantage' would result from the business transaction thus proposed by a customer of the firm. But instead of delivering to plaintiff, as it was his moral and legal duty to do, J. G. Mattingly permitted B. D. Mattingly, not then engaged in manufacturing whisky, but doing business as a mere broker, to get possession of and attempt to use it for their own benefit. The mode they adopted was to get some corporation or firm to manufacture the quantity desired by Jones, Munday & Co. at a price that would allow a margin of profit for themselves, and after having failed to induce plaintiff to make the whisky, they entered into a contract with another manufacturer to fill the order, the telegram being in the meantime kept concealed. • That their intention was by some device, if not by actual use of the trade name of J. G. Mattingly & Sons, to induce belief the whisky they contracted for had been made at the distillery in question and according to the formula long used there, and thus defraud and injure plaintiff, is shown by a letter B. I). Mattingly,' April 21, 1890, wrote to Jones, Munday & Co., in which he proposed a secret contract for manufacture on joint account of whisky having the Mat-tingly brand on it. In that letter is this significant — 439 — language: “We can use all the Mattingly'thunder •we want, save the exact brands.” About the same time he gave notice to the postmaster at Louisville, and also to those in charge of the telegraph office there, to deliver to plaintiff no letter or telegram addressed to J. G. Mattingly & Sons, to Palls City Distillery Company or to the Dougherty Distilling Company. As appears from the evidence, whisky manufactured by J. G. Mattingly & Sons at that distillery had, by reason of the formula used and long continuance of the business, become extensively and favorably known. It is, therefore, manifest the trade-mark or name associated in the public mind with the place of manufacture, coupled with good will of the original firm, constituted a very great inducement for purchase of the property by plaintiff. But a trade-mark and good will of a manufacturing establishment can not long be of much value, if the designer and former owner is permitted, as defendants have attempted, by imitating trade-marks and brands or other fraudulent devices, to cause the public to associate with that establishment goods manufactured at a different place and probably of an inferior quality. Nor is the good will .of a retiring firm worth much' to a purchaser, if the seller may, with impunity, cut off communication with customers by intercepting business letters and telegrams, or other fraudulent practices. It seems to us plaintiff, upon the state of facts alleged and proved, is clearly entitled to have the injunction perpetuated., and that defendants have no cause of counter-claim whatever. And the only ground upon — 440 — which the injunction was dissolved and action dismissed by the lower court is, that plaintiff had, prior to commencement of it, been in the habit of branding-on the revenue head, as distinguished from commercial-head of each barrel of whisky manufactured at that place, the words, “J. Gf. Mattingly & Sons, Distillers /” and being- thereby guilty of fraud, could not be-heard in a court of equity, although before final determination of the action that practice had been discontinued, and instead the brand of “J. Gf. Mattingly Company, Distiller,” was used. We need not now inquire or decide whether as a-fact the public was thus defrauded, or the practice-was intentionally deceptive, because plaintiff was unquestionably entitled to benefit and advantage of the-trade-marks described and good will of the firm, and the simple issue involved in this case is whether such right shall be infringed or violated by defendants in the manner they have threatened and attempted to do it. And to turn plaintiff out of court because it has done an act having no necessary connection with use and enjoyment of the trade-marks and good will that defendants are illegally attempting- to deprive it. of, would, in our opinion, be an unreasonable appli cation of a rule of equity practice for sole benefit of wrong-doers. It appears that at different times lots of whisky were manufactured at that distillery and variously branded with trade-marks or names adopted by that firm, such as “Palls City Distilling Co.,” “Dougherty Distilling Co.,” &c. At date of sale and conveyance of the distillery property, barrels of whisky so branded — 441 — were in bond in warehouses attached thereto, the possession and control of which passed by the deed to plaintiff, and letters and telegrams in regard thereto were also attempted by B. D. Mattingly to be improperly intercepted and diverted from plaintiff. In our opinion the injunction temporarily granted ought to have been perpetuated, and it was error to either dissolve it or dismiss the action, though the counter-claim was properly dismissed. Wherefore, the judgment on appeal is reversed, and on the cross-appeal by defendants affirmed, and the case remanded for proceedings consistent with this opinion.