Morand Bros. v. Chippewa Springs Corporation , 2 F.2d 237 ( 1924 )

2 F.2d 237 (1924)

MORAND BROS., Inc.,
v.
CHIPPEWA SPRINGS CORPORATION.^[*]

No. 3383.

Circuit Court of Appeals, Seventh Circuit.

July 16, 1924. Rehearing Denied November 6, 1924.

George A. Chritton, of Chicago, Ill., for appellant.

A. C. Paul, of Minneapolis, Minn., and Edward S. Rogers, of Chicago, Ill., for appellee.

Before ALSCHULER, EVAN A. EVANS, and PAGE, Circuit Judges.

ALSCHULER, Circuit Judge (after stating the facts as above).

It is contended for appellant that under that part of the contract which conveyed absolutely the storage and bottling plant at Chicago, and with it the good will of the business there, any trade-mark of the goods would pass as an incident to the conveyance of the business. It is true generally that a trade-mark in and of itself, and apart from any business or product to which it is appurtenant, is not a subject of conveyance, and that the conveyance of good will of a business in connection with the business itself will carry with it trade-names under which said business is carried on, and marks whereby its product is known. The business which appellant here purchased was that of distributing this water in Chicago and suburbs for a limited time. The good will it acquired was the going business, which appellee had established, of selling this water in this limited territory, and appellant purchased for about $1,500, all tanks, horses, wagons, and leasehold for carrying on the business. If paid for at a price in excess of their then value, it would indicate the premium Morands were willing to pay for the advantage of having this business for the limited time fixed in the contract. While the contract does not specify that at the end of that time appellant should cease using appellee's trade-name, under which it was selling its water from its spring of the same name, such we regard is a necessary inference from the contract itself.

We are satisfied that the court correctly found appellee entitled to the trade-mark or trade-name, "Chippewa," for waters and beverages, and that under all the circumstances it was proper to award an injunction restraining appellant from further employing that name in any such connection.

Respecting the figure of the Indian maiden, however, we do not find that a proper conclusion was reached. Pictures of usually impossible Indian maidens are employed in wide variety in trade as well as in the arts, and, if, when appellant became the contractual distributors of the Chippewa waters, they undertook to increase the trade by depicting an Indian maiden in proximity to a spring or waterfall, about to quench her thirst, they were clearly within their rights, and might then and thereafter employ this emblem, notwithstanding that appellee, without objection by appellant, also used the device on some of its advertising matter. We find nothing in this figure that suggests the name, "Chippewa," or the springs bearing that name.

Appellant's counterclaim against appellee for the use by appellee of this same Indian maiden in its advertisements of Chippewa water is not well founded. The evidence is conflicting as to when the figure was designed, but the court was warranted in finding that the use was with Morands' knowledge and consent before and long after the contract expired, and did not err in denying appellant's counterclaim for use by appellee of the Indian maiden in its advertisements.

Appellant contends that in any event the decree is erroneous in fixing the accounting period. After February 1, 1909, when the contract expired, the company was at liberty itself to enter the Chicago field. Morands continued to buy water, and to manufacture and sell beverages made from it, and under the Chippewa label, until August, 1914. Thereafter Morands ceased entirely buying the water, but continued using the name on its beverages manufactured from other water. To meet the persuasive contention of laches in permitting the Morands unopposed to continue the use of this name over 12 years after the expiration of the contract, and nearly 7 years after its last purchase of water and the time of beginning suit, it is urged that early in 1913 the company which had made the contract sold its property and good will and trade-names to appellee, a Minnesota corporation, in the management of which entirely new persons were interested, who did not learn of this use of the name by appellant until 1919, until which time appellee made no attempt to enter the Chicago field, and had no occasion to ascertain what appellant was doing. It appears that in January, 1913, a letter was written to Morands calling attention to the change and to finding in the files the expired contract with privilege of renewal, and inquiring whether the water then being taken by Morands was in pursuance of a contract. To this they replied, saying that they had permission to purchase the water on same terms as expired contract without binding themselves in any way.

Appellee, after acquiring the springs, for reasons best known to itself, completely abandoned the Chicago market, and deliberately kept out of it for at least 6 years. Appellant's conduct respecting the use of this trade-name in this field is not suggested as having remotely influenced appellee's course in this respect. Its very defense of ignorance of what appellant was doing raises the conclusion that it deliberately and of its own volition refrained from entering the Chicago field: Indeed, its officers testified that when, about 1919, they decided to compete for Chicago trade in water and in beverages, they were at once confronted by the obstacle of appellant's use of the name, "Chippewa," a fact which would have become apparent at any time during this period, had they sought to enter the territory. If it be assumed, therefore, that during all this time appellee was so little interested in the Chicago territory that it did not know of appellant's operations there, it could hardly be said that it sustained any damage there for that time; and, if during all that time they did not learn that appellant's conduct at Chicago injuriously affected its trade, or the reputation of its water and product, in any territory outside of Chicago, it cannot be said that appellant damaged them in this respect during that time.

But when, early in 1919, appellee entered the Chicago market, a different situation arose. It became a competitor in a market theretofore intentionally avoided by it, and thereby sustained damage through the use of the trade-name by appellant. The record does not disclose just when this entry was, but the first definite date is March 12, 1919, when they shipped a carload of water to Chicago, and we believe that under the very unusual circumstances here presented it would be more equitable as between these parties if the accounting begin at that time.

The decree should be affirmed in all things, save in the matters pointed out, and as to these it should be modified as follows: The injunction should not extend to the use by appellant of the picture of the Indian maiden when not used in any way in connection with the name, "Chippewa." The accounting period should begin March 12, 1919, instead of August 15, 1914, as in the decree provided. For the purpose of entering a decree modified in accordance with the views above stated the cause is remanded to the District Court. Each party shall pay one-half the costs of the appeal.

NOTES

[*] Certiorari denied 45 S. Ct. 229, 69 L. Ed. ___.