183 F.2d 914 (7th Cir. 1950), 10047, Stahly, Inc. v. M. H. Jacobs Co.

Docket Nº:10047.
Citation:183 F.2d 914, 86 U.S.P.Q. 131, 86 U.S.P.Q. 426
Party Name:STAHLY, Inc. v. M. H. JACOBS 0co. et al.
Case Date:June 09, 1950
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 914

183 F.2d 914 (7th Cir. 1950)

86 U.S.P.Q. 131, 86 U.S.P.Q. 426



M. H. JACOBS 0co. et al.

No. 10047.

United States Court of Appeals, Seventh Circuit.

June 9, 1950

Rehearing Denied Aug. 15, 1950.

Page 915

Jules L. Brady, John Rex Allen, Chicago, Ill., Schroeder, Merriam, Hofgren & Brady, Chicago, Ill., for appellant.

Albert F. Mecklenburger, Sidney Neuman, Arthur B. Seibold, Jr., all of Chicago, Ill., for appellee.

Before DUFFY, FINNEGAN and LINDLEY, Circuit Judges.

LINDLEY, Circuit Judge.

Plaintiff, an Indiana corporation engaged in the sale of mechanical razors under the trade-marks 'Stahly' and 'Live Blade, ' instituted this suit to enjoin defendants from selling razors with plaintiff's trade-marks impressed thereon, contending that such sales were violative of its trade-mark and fair trade rights. The District Court upon defendants' motion for summary judgment, dismissed the complaint, holding that plaintiff had waived its rights with respect to the razors in the possession of the defendants. Plaintiff contends that the court erred in this conclusion and, further, that, inasmuch as there were, on the face of the pleadings, genuine issues as to material facts, granting defendants' motion for summary judgment constituted additional error.

In the summer of 1948, both plaintiff and Aircraft & Diesel Equipment Corporation, with whom it had contracted for the manufacture of 125, 000 Stahly Live Blade Razors, were in serious financial condition. Aircraft, after delivering approximately 80, 000 razors to plaintiff, refused to make further shipments unless plaintiff would make payment in advance, though the contract provided that it was to have thirty days' credit. When it became evident that plaintiff could not pay in advance, Aircraft advised plaintiff that, in order for it to continue operations, it would have to dispose of the 45, 000 razors. Plaintiff thereupon sought to market them as prizes or premiums, but its efforts in this direction were unsuccessful. It was subsequently informed by Aircraft that the latter desired to pledge the razors as security for a loan it proposed to procure from General Factors Corporation. At the behest of both Aircraft and General Factors, plaintiff signed a letter of consent, addressed to General Factors, as follows: 'We understand that Aircraft & Diesel Equipment Corporation has on hand approximately 45, 000 Stahly Live Blade Razors which are in the possession of said Aircraft & Diesel Equipment Corporation subject to our order as to shipment. In consideration of your making a loan to said Aircraft & Diesel Equipment Corporation, we hereby consent to and agree that we will not assert any rights or claims contrary to your rights to realize upon such security as pledgee thereof in the event of non-payment of the loan.'

After the loan had been made and Aircraft had defaulted thereon, plaintiff learned that General Factors was planning to foreclose upon the razors which had been pledged as security and thereupon submitted a bid of $2.00 per razor. General Factors declined this offer, and eventually sold the razors to defendants for $50, 000, amounting to approximately $1.10 per unit. As soon as it had been advised of the sale, plaintiff warned defendants that sale of the razors without the removal of plaintiff's trade-marks would infringe its legal rights and, further, that sale of the trade-marked goods at prices below those established under the fair trade agreements which had been negotiated by plaintiff in the states which allow them would violate its fair trade rights. As a consequence of defendants'

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failure to reply to this communication and plaintiff's receipt of numerous complaints from its regular dealers that defendants were offering the trade-marked razors to the public at prices below the established fair trade prices, this suit was begun.

Plaintiff contends that there were and are genuine issues as to material matters of fact which, under the provisions of Rule 56(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A.Rule 56(c), prohibit disposition of this case on a motion for summary judgment. This argument rests on plaintiff's assertion that it has alleged, and defendants have denied, (1), that razors involved are in defective condition, (2), that defendants did not, in purchasing them from General Factors, rely on the so-called letter of consent executed by plaintiff, and, (3) that plaintiff was induced to sign this letter by reason of certain false promises made by Aircraft and general Factors, which fact, it is urged, makes that document wholly void and inoperative.

Plaintiff's contention that a factual dispute exists with respect to the condition of the razors is, we think, refuted by defendants' express admission that they are defective. True, defendants' motion to dismiss points out that the complaint fails to aver with particularity wherein the alleged defect resides and asserts that the averment that they are defective 'is a bald conclusion without any allegations of fact to support same, ' and one of the defendants has, by affidavit, stated that the razors are not defective, but, on the other hand, defendants have expressly stated, in their brief and on oral argument, that they 'admit that the 45, 000 razors were just as defective as plaintiff says they were.' Moreover, if the District Court correctly construed the letter of consent as a waiver and abandonment of all plaintiff's rights with respect to the razors, the existence or non-existence of the alleged defect was not a material issue in this case and, consequently, could not, under the provisions of Rule 56(c), render erroneous the District Court's disposition thereof on motion for summary judgment.

Nor is there merit in the assertion that there is an issue of fact as to defendants' reliance on the letter of consent. Tarrson's affidavit, which is, as plaintiff observes the 'only thing in the record with respect to this matter, ' states that he was shown the letter and that, in reliance thereon, he purchased the razors. Plaintiff's failure to controvert this statement, by affidavit or...

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