Daumit Stores, Inc. v. Brown

Decision Date27 April 1964
Docket NumberNo. 43021,43021
Citation249 Miss. 528,163 So.2d 466
PartiesDAUMIT STORES, INC. v. R. C. BROWN, d.b.a. 'Kaybee'.
CourtMississippi Supreme Court

Courtney & Echols, Jackson, for appellant.

Bernard W. Chill, Jackson, for appellee.

RODGERS, Justice.

DeJay Stores, Inc. was doing a retail credit clothing business in the City of Jackson, Mississippi, under the trade name of 'Kaybee'. This corporation leased its store fixtures from the Boothe Leasing Corporation. It assigned its notes and credit accounts receivable to James Talcott, Inc. for loans and advances to operate the business. The DeJay Stores went into involuntary bankruptcy on December 11, 1962. The New York Credit Men's Adjustment Bureau, Inc. was appointed Trustee in the bankruptcy proceedings, and, as Trustee, liquidated the stock of goods belonging to the bankrupt corporation, including the store in Jackson, Mississippi. Thereafter, the owner of the fixtures conveyed them to Harry Neider, the former manager of the Jackson Kaybee Store. He, in turn, on March 8, 1963, conveyed the fixtures to R. C. Brown. This conveyance included the neon sign of the trade name Kaybee and purported to sell 'the use of the name Kaybee.' On March 7, 1963, James Talcott, Inc. sold the accounts receivable to Daumit Stores, Inc. The latter corporation is doing business in Jackson on the Corner of Capitol and Amite Streets under the trade name of 'Shaws.' R. C. Brown rented the building under the neon sign Kaybee and opened a business under the trade name 'New Kaybee.' The Daumit Stores, Inc. put up a sign at their Shaws store notifying the public that 'Attention Kaybee Stores' Customers your credit record is here, your account is established here' and 'To Kaybee customers, your credit is good at Shaws.' Thereafter, on March 22, 1963, the Referee in Bankruptcy authorized the Trustee, New York Credit Men's Adjustment Bureau, Inc., to execute a bill of sale to the Daumit Stores, Inc. The Trustee in Bankruptcy executed a bill of sale which was also signed by James Talcott, Inc. to the Daumit Stores, Inc. covering 'A.B.C.' accounts receivable, ledger cards, sales contracts, notes and other records, and 'all trade names, fictitious names and good will associated with said (No. 35) store.' There was no new consideration paid, although the original sum paid the owner, James Talcott, Inc. was shown therein. The bill of sale was signed by the Trustee and James Talcott, Inc.

Thus, it is seen that R. C. Brown bought the fixtures and the Kaybee neon sign from the owner and went into business in the same building, using the trade name 'New Kaybee.' The owner of the fixtures had attempted to sell him the trade name Kaybee. On the other hand, the Daumit Stores had purchased the accounts receivable belonging to James Talcott, Inc. and had not used the Kaybee trade name, except to direct the attention of the Kaybee customers to pay accounts at Shaws Credit Department Store. Neither of these parties had purchased any assets of the bankrupt from the Trustee in Bankruptcy.

After having obtained the bill of sale from the Trustee in Bankruptcy, the Daumit Stores filed this suit against R. C. Brown. The case was tried, and at the close of the evidence for the complainant (appellant here), R. C. Brown made a motion for a decree on the testimony of the complainant. The chancellor sustained the motion and granted a decree dismissing the original bill.

We have reached the conclusion that the chancellor was correct in dismissing the complainant's original bill and denying the relief sought, for the reasons hereinafter set out.

I

There are several assignments of error presented to this Court by the brief of appellant, but the real issue is whether or not 'the Chancery Court erred in refusing to enjoin appellee from the use of the trade name Kaybee,' because, it is said, the appellant had become the owner thereof by virtue of a bill of sale from the Trustee in Bankruptcy.

Appellant argues, and we agree, that the trustee in a bankruptcy proceeding takes the title to all nonpersonal trade names which have been previously acquired by the business. This rule is stated in 8 C.J.S. Bankruptcy Sec. 181, p. 951, that 'Under a specific provision of Bankruptcy Act Sec. 70 a(2), 11 U.S.C.A. Sec. 110 a(2) the trustee takes title to all interests of the bankrupt in patents and patent rights, trademarks, and copyrights, and in applications therefor. * * * A nonpersonal trade name, lawfully identified with the business of the bankrupt at the time of his adjudication, passes to the trustee as an asset of the bankrupt's estate.'

One of the leading cases seems to be that of Children's Bootery v. Sutker, 91 Fla. 60, 107 So. 345, 44 A.L.R. 698. The Court said: 'In this case, the physical assets, including the fixtures, were purchased as an entirety by the appellee, Sutker, the sale being made, as advertised, at the bankrupt's former business location. In addition to the entire physical assets, the trustee expressly sold, and by the bill of sale in terms conveyed to the purchaser, the good will and trade-name identified with the bankrupt's former business, which sale was confirmed by the referee in bankruptcy, in an order expressly reciting the sale of the good will and trade-name, and such sale was subsequently approved by the United States District Court, Southern District of Florida, in which the matter was pending.' The Court then held that the bankrupt, as an individual, by his adjudication in bankruptcy, was divested of all interests in or right to the use of the trade name in question, and that the appellee, Sutker, acquired the former right of the owner to the exclusive use of the trade name in connection with the business with which it was identified. This rule has now been accepted generally, as will be seen from the Annotation in 44 A.L.R. 706. See also Sunseald Products, Inc. v. Domino Canning Ass'n, 147 Fla. 700, 3 So.2d 377. See Reconstruction Finance Corporation v. J. G. Menihan Corporation, D.C., 22 F.Supp. 180; 9 Am.Jur.2d, Bankruptcy, Sec. 884, p. 665; 9 Am.Jur.2d, Bankruptcy, Sec. 1222, p. 901; Isaacs v. Hobbs Tie & Timber Co., 282 U.S. 734, 51 S.Ct. 270, 75 L.Ed. 645; United States Ozone Company v. United States Ozone Company of America, 7 Cir., 62 F.2d 881.

We also agree with the contention of the appellant that a trade name of a bankrupt business may pass to the purchaser of the bankrupt business, where the business is sold intact by the trustee. This rule is pointed out in the Ozone, Sutker and Sunseald cases above-mentioned. On the other hand, it has been accepted as a general rule that the right to use the trademark or trade name cannot be sold or transferred alone, but must be accompanied by the other assets of the business. See Anno. II, 44 A.L.R. 710. This rule has been applied to a sale by assignee in bankruptcy...

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  • T.M.T., LLC v. Midtown Mkt. Wine & Spirits, LLC
    • United States
    • Mississippi Court of Appeals
    • 19 Enero 2021
    ...Id . § 75-25-23. ¶12. A trademark right develops through the use of the mark, "not from mere adoption." Daumit Stores Inc. v. Brown , 249 Miss. 528, 163 So. 2d 466, 470 (1964) ; see Russell v. Caroline-Becker Inc. , 336 Mass. 161, 142 N.E.2d 899, 902 (1957). A person may create an unregiste......
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    ...(2nd Ed.), Sec. 78.5(a), p. 1332.5 See 6 Am.Jr.2d Assignment For Benefit of Creditors, Sec. 25, pp. 340, 341; Daumit Stores, Inc. v. Brown, 249 Miss. 528, 163 So.2d 466 (1964); Leventhal v. Ollie Morris Equipment Corp., 184 Cal.App.2d 553, 7 Cal.Rptr. 911, 914 (1960); 3 Callman Unfair Compe......
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