Ambrosia Chocolate Co. v. Ambrosia Cake Bakery

• Decision Date: 31 December 1947
• Docket Number: No. 5666.,5666.
• Citation: 165 F.2d 693
• Parties: AMBROSIA CHOCOLATE CO. v. AMBROSIA CAKE BAKERY, Inc.
• Court: U.S. Court of Appeals — Fourth Circuit

165 F.2d 693 (1947)

AMBROSIA CHOCOLATE CO. v. AMBROSIA CAKE BAKERY, Inc.

No. 5666.

Circuit Court of Appeals, Fourth Circuit.

December 31, 1947.

Ira Milton Jones of Milwaukee, Wis., and Thornton H. Brooks, of Greensboro, N. C., (Brooks, McLendon, Brim & Holderness, of Greensboro, N. C., on the brief) for appellant.

William S. Pritchard, of Birmingham, Ala. (Winston B. McCall, of Birmingham, Ala., and D. Edward Hudgins, of Greensboro, N. C., on the brief), for appellee.

Before PARKER and DOBIE, Circuit Judges, and CHESNUT, District Judge.

DOBIE, Circuit Judge.

Ambrosia Chocolate Company, a Wisconsin corporation, brought a civil action in the United States District Court for the Middle District of North Carolina against Ambrosia Cake Bakery, Inc., a North Carolina corporation, in which plaintiff sought to enjoin defendant from infringing plaintiff's registered trade-mark "Ambrosia". Plaintiff has appealed to us from a judgment of the District Court dismissing the complaint.

Plaintiff first registered "Ambrosia" in the United States Patent Office, April 2, 1907, as its trade-mark for Cocoa, Chocolate, Chocolate Candy, in Class 47, Confectionery; it further registered "Ambrosia" July 14, 1931, for Candy, Chocolate, Cocoa, Chocolate Coatings, Hot Chocolate Powder, in Class 46, Foods and Ingredients of Foods; finally, on July 30, 1940, there was a third registration for Sweet and Bitter, Solid and Powdered Chocolate and Cocoa Preparations for Food Beverages, Chocolate, Cocoa, and Candy, in Class 46, Foods and Ingredients of Foods.

While defendant is a North Carolina corporation, it is closely associated in stock ownership and executive management with Ambrosia Cake Company, an Alabama corporation, and Ambrosia Cake Bakeries Corporation, a Florida corporation. It was agreed by defendant here that all three of these corporations should be parties to this case and bound by the judgment herein. Defendant and its affiliates had registered "Ambrosia" as its trade-mark for cakes in 14 states, most of which were in the Southeastern part of the United States.

The business of defendant consists solely in the baking of cakes and the sale of these to bakeries which distribute them along with bread to merchants. These cakes are highly perishable and become stale and unfit for food after about two days; in price they range from 5 cents to 39 cents; plaintiff has never produced, nor is there any evidence that it intends to produce, cakes. Candy constitutes about 10% of plaintiff's sales; its other products are bulk cocoa or chocolate suitable for use in baking, coatings for ice cream and cakes, and for use in beverages. These products of plaintiff are not classified as perishable goods.

Between the years 1901 and 1919, plaintiff's business in North Carolina was utterly negligible. Only one sale, amounting to $25.50, was made. In the years just before this action was instituted (1946), its business in North Carolina materially grew in volume. In 1945, these sales amounted to $44,277.00; but of this sizeable volume of business only one sale, amounting to $65.00, was of candy.

We think the judgment of the District Court should be affirmed on the ground of laches, acquiescence and estoppel, even if there were no other ground for affirmance. In 1938 (more than 8 years before the instant action was filed) a representative of plaintiff called on defendant's president in Florida. This representative disclosed familiarity with operations of the three Ambrosia Cake Companies, commented on the similarity of the names of plaintiff and defendant and tried to sell to defendant's president certain of plaintiff's materials which were to be used in making Ambrosia cakes to be sold under that name. Shortly thereafter came a letter from plaintiff, signed by its vice-president. This letter was addressed to defendant by its corporate name but was sent to E. P. Colby, President, in Jacksonville, Florida.

This letter evinced interest in the previous call by plaintiff's representative on President Colby, expressed regret that some of plaintiff's materials used by defendant in making Ambrosia cakes had not proved satisfactory and indicated a desire to sell to defendant more of plaintiff's materials, again to be used in making Ambrosia cakes to be marketed under that name. The following sentence is found in the first paragraph of the letter: "That fact that the name `Ambrosia' of your company was the same as ours increased our interest, you may be sure." This friendly epistle closed with a formula for devil's cake, one ingredient of which was produced by plaintiff, and the hope was implied that this devil's cake would be exploited by defendant.

We must conclude that the District Court correctly decided that here was adequate basis for an absolute defense on the ground of laches and acquiescence by plaintiff, amounting to estoppel. During the years intervening between 1938 (the year the above transactions occurred) and 1946 (when the instant civil action was instituted) defendant and its affiliates, by extensive advertising of the name "Ambrosia" for its cakes and by capable management and salesmanship, built up a large and lucrative cake business; therefore plaintiff is now estopped from destroying that business by an injunction which would forbid the use of the name "Ambrosia" for the cakes of defendant and its affiliates.

The view we have just expressed finds ample support in the cases. French Republic v. Saratoga Vichy Spring Co., 191 U.S. 427, 24 S.Ct. 145, 48 L.Ed. 247; Saxlehner v. Nielsen, 179 U.S. 43, 21 S.Ct. 16, 45 L.Ed. 77; Dwinell-Wright Co. v. White House Milk Co., 2 Cir. 132 F.2d 822; White Rock Mineral Springs Co. v. Akron Beverage & Cold Storage Co., 6 Cir., 299 F. 775.

Counsel for plaintiff attempt (we think with little success) to make much of the cases of Menendez v. Holt, 128 U.S. 514, 9 S.Ct. 143, 32 L.Ed. 526; and Aunt Jemima Mills Co. v. Rigney & Co., 2 Cir., 247 F. 407, L.R.A. 1918C, 1039. The utter inapplicability to the instant case of Chief Justice Fuller's opinion in the Menendez case is aptly shown by Circuit Judge Buffington in Pflugh v. Eagle White Lead Co., 3 Cir., 185 F. 769, 772, certiorari denied 220 U.S. 615, 31 S.Ct. 719, 55 L.Ed. 610:

"We are not unmindful of Menendez v. Holt, 128 U.S. 514, 524, 9 S.Ct. 143, 32 L.Ed. 526, and other cases cited in the opinion below, that mere failure to enforce trade-mark rights will not preclude injunctive relief when it is sought. But those were cases where, as said in Menendez v. Holt, supra, there was nothing `in the nature of an estoppel, nothing which rendered it inequitable to arrest at this stage any further invasion of complainant's rights.' In this case there is. The complainant notified the respondents of its alleged rights; the respondents positively asserted their adverse rights; the complainant acquiesced in the respondents building up their trade under their label for 8 years without further objection; then complainant notified again and again, but respondents stood their ground and continued for 6 years more to build up their adverse trade-mark rights before the complainant again broke its silence by asserting an exclusive right by filing this bill.

"Under such facts it would, in our judgment, be inequitable to arrest at this stage the respondents' trade, and therefore the decree of the court below must be reversed, with costs."

In the instant case, there was much more than the mere acquiescence and silence of the Pflugh case; there was active encouragement and commercial urging by plaintiff to induce defendant to make and vend its cakes under the name "Ambrosia".

In the Aunt Jemima case, supra, plaintiff had adopted this trade-mark for flour. Before defendant filed its application for registration of its trade-mark for syrup and sugar cream, it wrote to plaintiff, informing plaintiff of its intention. Whereupon plaintiff, in reply to defendant's letter, stated that plaintiff presumed that defendant could use the name of "Aunt Jemima" for syrup without violating any law. Said Circuit...