Atlas Beverage Co. v. Minneapolis Brewing Co.

• Decision Date: 16 August 1940
• Docket Number: No. 11711.,11711.
• Citation: 113 F.2d 672
• Parties: ATLAS BEVERAGE CO. et al. v. MINNEAPOLIS BREWING CO.
• Court: U.S. Court of Appeals — Eighth Circuit

113 F.2d 672 (1940)

ATLAS BEVERAGE CO. et al. v. MINNEAPOLIS BREWING CO.

No. 11711.

Circuit Court of Appeals, Eighth Circuit.

July 22, 1940.

Rehearing Denied August 16, 1940.

Walter W. Calvin, of Kansas City, Mo. (Herbert J. Jacobi, of Washington, D. C., Bert S. Kimbrell, of Kansas City, Mo., Jacobi & Jacobi, of Washington, D.C., and Calvin & Kimbrell, of Kansas City, Mo., on the brief), for appellants.

Charles M. Blackmar, of Kansas City, Mo., and Ralph E. Williamson, of Minneapolis, Minn. (John C. Benson and Raymond A. Scallen, both of Minneapolis, Minn., Kenneth E. Midgley, of Kansas City, Mo., Faegre, Benson & Krause and Williamson & Williamson, all of Minneapolis, Minn., and Michaels, Blackmar, Newkirk, Eager & Swanson, of Kansas City, Mo., on the brief), for appellee.

Before GARDNER, WOODROUGH, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

The question for determination in this case is the ownership of the trade-mark "White Seal" when used on beer in the markets of Missouri and Kansas. The Minneapolis Brewing Company, plaintiff in the District Court, brought suit claiming ownership and seeking an injunction for infringement, an accounting for profits, and damages for unfair competition. The defendants answered claiming ownership in the defendant Atlas Beverage Company and by way of counterclaim seeking an injunction, an accounting and damages.

After a trial of the issues the court made findings of fact and conclusions of law, and entered a decree for the plaintiff and against both defendants, granting in full the relief prayed by plaintiff and dismissing the counterclaim.

The dispute originated in business relations between the plaintiff, hereinafter called the Brewing Company, and the defendant Atlas Brewing Company, hereinafter called Atlas. The Brewing Company is a Minnesota corporation engaged in the manufacture of beer at the City of Minneapolis, Minnesota. Atlas is a Missouri corporation with its principal place of business at Kansas City, Missouri. It is engaged in distributing beer to retailers. The defendant Columbia Brewing Company is a Missouri corporation engaged in manufacturing beer at the City of St. Louis, Missouri.

The Brewing Company was organized about 1890. Its chief brand of beer was sold through the midwest under the trademark "Grain Belt." Early in 1935 the company decided to market its products in the states of Missouri and Kansas. Its representative then called on Atlas and induced it to "take on the sale" of its products. As a result of these negotiations a contract was entered into between the Brewing Company and Atlas under date of March 11, 1935, by the terms of which Atlas became the distributor for the Brewing Company in Kansas City, Missouri, and in Kansas City, Kansas. The contract provided among other things that Atlas should comply with all requirements of the company as to payments, cooperage, packages and containers; that the acceptance of orders "shall at all times be at the option of the Company"; that all products purchased should be delivered f. o. b. the company's plant; that freight charges should be paid by the distributor; that title to the bottles and cases should remain in the company; and that the distributor should not be an agent of the company.

It was found difficult to build up a market for "Grain Belt" beer in the Kansas City territory. It was made to sell to the consumers for 15 cents a bottle. They were accustomed to 10-cent bottles. The result of the distributor's efforts was unsatisfactory to both parties to the contract. Having learned the requirements of the market by this experience, the parties to the contract entered into an arrangement in the fall of 1935 to introduce a new beer put up in 10-cent bottles with a label carrying the "White Seal" trade-mark. The business continued under the terms and conditions of the contract of March 11, 1935. The new beer was a success almost from the beginning. In 1936, 20,646 cases were sold. The parties to the contract co-operated. Both spent money and used every effort to make it a success, with the result that in 1938 more than 200,000 cases were sold in Missouri and an affiliate of Atlas sold more than 30,000 cases in Kansas. The two distributors in Missouri and Kansas were handling about 10 per cent. of all the beer manufactured by the Brewing Company. With the company's consent their territory had been extended beyond the limits of the original Kansas City territory, and they were opening up new territory in both states.

In the fall of 1938 upon 30 days' notice the Brewing Company discontinued furnishing Atlas and its affiliate in Kansas with "White Seal" beer. Thereafter the Brewing Company continued to sell "White Seal" beer in Missouri under the same trade-mark and label and now uses the mark on beer manufactured by it and sold in the states of Missouri, Kansas, Iowa and Illinois.

Conceiving that it was the owner of the trade-mark "White Seal" Atlas entered into a contract with the defendant Columbia Brewing Company to manufacture for it a 10-cent beer and to label the bottles with a "White Seal" label almost identical in detail with the label theretofore furnished by the plaintiff. A dispute soon arose as to the ownership of the trade-mark, and this suit was commenced early in 1939.

The evidence shows that the words "White Seal" are a popular brand for many articles of merchandise. They have been registered as a trade-mark for cider, ale, ginger ale, natural waters, whiskey and beers; for wheat flour, refrigerators, paints, varnishes, corn syrup, paper, and white lead; and for castor oil, glue, meats, lard, baking soda, hose, paper bags, and sugar. Prior to the period of national prohibition it had been used on bottled beer manufactured and sold in Missouri by a predecessor of the defendant Columbia Brewing Company. At present and for many years it has been used as a trade-mark on whiskey sold in Missouri and elsewhere by the T. J. Pendergast Wholesale Liquor Company of Kansas City, Missouri, of which Atlas is an affiliate. It had been used on beer sold in Minnesota and the Northwest by breweries at Crookston and Little Falls, Minnesota, for one of which the plaintiff had manufactured it for a short time. At the times herein mentioned it was registered as a trade-mark for beer in Canada by the Kiewel Brewing Company, Ltd., a corporation, of St. Boniface, Canada.

Upon the trial of the case it was recognized by both parties that ownership of a trade-mark is dependent upon priority of appropriation and use, and that there is no property in a trade-mark except as a right appurtenant to an established business or trade, when it becomes an element of good will. Columbia Mill Co. v. Alcorn, 150 U.S. 460, 14 S.Ct. 151, 37 L.Ed. 1144; United Drug Co. v. Rectanus, 248 U.S. 90, 97, 39 S.Ct. 48, 63 L.Ed. 141; Esso, Inc., v. Standard Oil Co., 8 Cir., 98 F.2d 1. Ownership in the instant case depends upon the facts of the arrangement made between the Brewing Company and Atlas when the mark "White Seal" was adopted for use on the label to be put upon the bottles used to contain the new beer when it was determined in the fall of 1935 to market a new 10-cent beer. Unfortunately the terms of the agreement in respect of the label were not reduced to writing. The plaintiff contends that it obtained the consent of the Kiewel Brewing Company, Ltd., of Canada to use its trade-mark, and of the brewery companies at Crookston and Little Falls, Minnesota, to use their trade-mark; and that having obtained the consent of these owners of the trade-mark, it adopted that trade-mark as its own and put it into use on the new beer. Atlas contends that it was familiar with the trade-mark "White Seal" used by its affiliate, the T. J. Pendergast Wholesale Liquor Company, on whiskey sold in Missouri and elsewhere and that it obtained consent of that company to use it on beer; and that it engaged the Brewing Company to manufacture the beer and furnish the labels for its exclusive use in Missouri and Kansas. Both parties introduced evidence in support of their respective contentions. In the course of the trial Atlas moved the court to permit and to make the T. J. Pendergast Wholesale Liquor Company a party defendant on the ground that that company had a joint interest in the trade-mark and was an indispensable party to the suit. The motion was overruled.

On this appeal the appellants rely upon sixteen assignments of error which counsel discuss under nine points. They are (1) that the T. J. Pendergast Wholesale Liquor Company should have been made a party defendant; (2) that the minute book of the T. J. Pendergast Wholesale Liquor Company was incidental only and could not determine ownership of the trade-mark; (3) that the record, disregarding the minute book, shows origination, prior adoption, and use of the trade-mark by Atlas; (4) that the Columbia Brewing Company owned and had not abandoned the trade-mark; (5) that the T. J. Pendergast Wholesale Liquor Company's rights to the use of the trade-mark in Missouri were prior to those of the plaintiff, and that it gave its consent to the use to Atlas; (6) that the Brewing Company is not the owner of the trade-mark and cannot maintain an action for its infringement; (7) that appellants have not been guilty of unfair trade practice; (8) that the question of the genesis of the trade-mark was not the decisive issue in the case; and (9) that the Brewing Company manufactured and sold beer to Atlas under the trade-mark and label of the Canada Company rather than that of the Little Falls, Minnesota, Company.

The trial of the case lasted five days. On the fourth day the defendants moved the court to permit or to make the Pendergast Company a party defendant on the ground that it is an indispensable party, "having a joint interest" in the trade-mark. The motion was overruled as "untimely." There was no error in so ruling. The pleadings did not show that the Pendergast...