Clark Thread Co. v. Armitage

• Citation: 67 F. 896
• Parties: CLARK THREAD CO. v. ARMITAGE.
• Decision Date: 22 May 1895
• Court: U.S. District Court — Southern District of New York

67 F. 896

CLARK THREAD CO. v. ARMITAGE.

United States Circuit Court, S.D. New York.

May 22, 1895

Rowland Cox and Charles B. Meyer, for complainant.

C. E Mitchell and H. D. Donnelly, for defendant.

COXE District Judge.

This action is brought to restrain unfair competition in trade. Both parties are dealers in spool cotton. The complainant is a New Jersey corporation created in 1865 and engaged in the manufacture and sale of 'Clark's O.N.T. Spool Cotton.' The defendant is the manager of the William Clark Company which is also a New Jersey corporation organized in May, 1891, for the purpose of manufacturing and selling thread. It began the sale of its product in October 1892, under the name of 'Clark's N-E-W-Spool Cotton.' It is conceded that the case is to proceed upon the same principles of law as if the William Clark Company were the defendant. The contention on the part of the complainant is that the defendant's cotton is put up and advertised so that purchasers are led to believe that they are buying a new brand of the complainant's cotton. In other words, the allegation is that the public believes it is purchasing a new brand of an old and well-known manufacturer whose reputation is firmly established by 30 years of honest endeavor, and not the untried product of an unknown corporation with no years, no history and no good will behind it. The complainant prays for an injunction restraining the defendant from using the name of 'The William Clark Company,' or 'Clark,' or 'Clark's N-E-W-' in connection with spool cotton. The defenses are first, that the complainant is guilty of fraud and misrepresentation in advertising its goods and is, therefore entitled to no relief in a court of equity. Second. The William Clark Company was named after its principal incorporator who had a right to give his name to the company. Its use in the trade is therefore, proper and lawful. Third. The complainant is estopped from attempting to enjoin the corporate name for the reason that its officers and agents not only acquiesced in the name but even suggested it. Fourth. The name 'Clark,' in connection with thread, does not belong exclusively to complainant, but for years had been used by persons named Clark to designate their goods. Fifth. The proof fails to establish a case of unfair competition.

It is thought that the defendant has not succeeded in proving the charge of false representation. The code of morals by which the defendant seeks to test the complainant's acts is so strict that, if it were assented to, very few business houses which exploit their goods by advertising-- certainly not the defendant himself-- could escape condemnation. There are doubtless inaccuracies on some of the complainant's boxes and labels. Information is omitted which might have been supplied and assertions are made which, possibly, may convey erroneous impressions. It must be remembered, however, that the complainant was limited as to space. Epigrammatical expressions were unavoidable. When one's statements are confined to the end of a spool it is necessary to be concise. A box cover is not a favorable place on which to trace a pedigree. It is said that there was suppressio veri, if not actual falsehood, in the statement on some of the boxes, 'Manufactory established in 1812.' If the complainant had been in a position to relate the details of its genealogy it is possible that a more accurate idea might have been conveyed. Such a history, in the actual environment, was out of the question. The statement as it was intended to be understood, and doubtless was understood, is sufficiently accurate. A merchant, occupying a modern building in which his customers are heated by steam, lighted by electricity and hoisted and dropped through many stories in express elevators, might truthfully place upon the granite arch over his door 'Established in 1800.' No one would understand this statement literally; no one would for a moment believe that the cloud-piercing structure before him was built in 1800, or that the merchant, or any of his assistants, were doing business there or elsewhere nearly a century ago. The idea conveyed would be that somewhere and by some one a business was established in 1800 and that the merchant in question had succeeded to its good will. So, when the complainant placed upon its boxes, 'Manufactory established in 1812,' a customer, if he attached any importance at all to the statement, would probably conclude that complainant had succeeded in some way to the rights of those who began making thread in 1812, and so it had. He would hardly imagine that complainant was making thread in an antiquated building erected three-quarters of a century ago. If he did entertain this notion he would probably conclude to purchase his thread elsewhere. So, too, it is impossible to predicate fraud of the use of the black and gold label on the three-cord cotton. Complainant uses a black and gold label on its six-cord thread and the label contains the words 'Six Cord.' On the three-cord cotton, of which a relatively insignificant amount is made, the words 'Six Cord' are omitted. The argument is that the public, having been accustomed to see a similar label on six-cord thread, will suppose that the three-cord cotton is six-cord cotton, although there is no statement to that effect upon the label. This will not do. A party cannot be charged with fraud in making a false statement as to part of his goods when the proof is that the statement is made regarding other goods as to which it is absolutely true.

The complainant is also accused of fraud because years ago, to a very limited extent, it put up and sold cotton on black spools with the name of 'J. & J. Clark & Co., Paisley,' on the box cover, indicating that it was manufactured by that firm at Paisley, Scotland. Only one box of this thread was found and introduced in evidence, the complainant admitting that it and similar boxes were at one time put up and sold by it. There is testimony to show that in former years thread was sent here by the Paisley firm in an unbleached condition and was bleached and spooled by the complainant. This 'Blackwood' thread constituted such an insignificant part of the complainant's business that it is impossible to assume that anything was done malo animo regarding it. If the complainant believed that it was the legitimate successor of J. & J. Clark & Co. in this country, and the thread was made, though not completed for the market, at Paisley, it is difficult to see how the complainant is guilty of fraud in this connection. Fraud cannot be presumed. The question is not what was the technical, legal effect of all the transfers and changes in the business of the various firms and corporations but what the complainant believed, and had a right to believe, regarding them. If its officers asserted only what they honestly believed to be true, with no intent to mislead the public, there is no fraud. So far as the court is able to understand the complicated history of the succession from the old Paisley firm, it is thought that no material statement made by the complainant is unfounded. But even though the complainant took too sanguine a view as to its derivative rights, it cannot be convicted of fraud if it honestly believed that it possessed them. The court understands that the complainant had none of the 'Blackwood' thread on hand and discontinued its sale some time prior to the commencement of this action.

Again, the complainant is charged with fraud in saying that its thread is 'sold everywhere.' No sane man would understand this literally. If 'everywhere' when so used is synonymous with 'the earth,' the complainant can be convicted of falsehood by proof that Clark's thread is unknown in Tasmania or Siam. The statement is on a par with the equally modest suggestion of the defendant that his thread is 'the latest and the best.' This harmless exaggeration is understood and discounted by all. It is not fraud, but merely 'trade talk.' No one is deceived. No one is injured.

It is unnecessary to pursue this subject further. All of the alleged frauds can be explained upon a theory compatible with honesty. Some of the most serious accusations relate to representations which were discontinued long before the commencement of this action and had reference to matters so trivial as to preclude absolutely the idea of fraud. One who is honest as to millions is not likely to develop into a petty thief. If the statements complained of had been made animo furandi, it is hardly possible that they would have been confined to a part of the business so infinitesimal. In short, the record fails to show any motive for the alleged false statements. There is no proof that ny one ever was defrauded and it is impossible to perceive how any one could be defrauded thereby.

The defendant's company was first incorporated as 'The William Clark Thread Company' on the 7th of May, 1891. The complainant objected to this name and an interview took place between the officers of the two companies for the purpose of arranging the difficulty. At the suggestion of the complainant's managing director and treasurer the corporate name was changed by striking out the word 'Thread,' leaving it as it is to-day, 'The William Clark Company.' This is sworn to by two witnesses and is denied by the complainant only in the most general way, if at all. Witnesses who were present at the interview in the interests of the complainant were not called to contradict the testimony. The weight of evidence and the presumptions from the complainant's silence are all overwhelmingly to the effect that the complainant consented to the use of the present corporate name. This must be regarded as an established fact. Corporations usually act...