Clark Thread Co. v. William Clark Co.

• Decision Date: 29 May 1897
• Citation: 37 A. 599,55 N.J.E. 658
• Parties: CLARK THREAD CO. v. WILLIAM CLARK CO.
• Court: New Jersey Court of Chancery

37 A. 599

55 N.J.E. 658

CLARK THREAD CO.

v. WILLIAM CLARK CO.

Court of Chancery of New Jersey.

May 29, 1897.

(Syllabus by the Court.)

Bill by the Clark Thread Company against the William Clark Company. Decree for complainant.

Randolph, Condict & Black, R. V. Lindabury, and Charles D. Meyer, for complainant.

Edward Q. Keasbey and Henry D. Donnolly, for defendant.

REED, V. C. This bill is filed to enjoin the defendant from using certain trade-marks which are alleged to be the property of the complainant, and also for an accounting for the profits diverted from the complainant to the defendant by reason of the previous illegal use by the defendant of such trade-marks. Both complainant and defendant are manufacturers of spool cotton thread. The complainant insists that, long before the organization of the William Clark Company (the defendant), the Clark Thread Company (the complainant) had, by use, acquired an exclusive right to employ in the sale of its goods, certain words and letters upon the labels upon its spools and boxes. It insists that the defendant has, by the use of the same or similar words and letters printed upon its labels upon its spools and boxes, infringed upon the property right of the complainant in its trade-marks. The questions presented are: First, whether the Clark Thread Company had acquired an exclusive right to use a trade-mark; second, whether this right has been infringed by the defendant; and, third, whether there should be an injunction against the further use of such trade-marks by the defendant and for an accounting for profits arising from the illegal use by the defendant of such trade-marks. An original examination of these questions in this case is excluded, because of a previous adjudication made in the federal courts. This judgment is set up by both complainant and defendant as an estoppel against a relitigation of the points in issue, so far as the former decree circumscribed and defined the extent of the exclusive right of the complainant to use certain words and letters, and as an estoppel so far as the judgment enjoined the use of these words and letters by the defendant This previous adjudication is also set up by the defendant as a final determination against the right of the complainant to an account for profits in this case. The points to be decided are resolved into an inquiry whether the decree in the former suit has put at rest all the questions raised by the pleadings in the present suit. To understand the manner in which the suits are related, it is essential that the purposes of the first suit, the parties to it, and the several decrees made in it shall be set out. It is equally essential that the pleadings in and the progress of the present suit, in relation to the former suit shall also be exhibited. The bill in the first suit was filed in the United States circuit court for the Southern district of New York in January, 1893. That suit was brought by the Clark Thread Company, the present complainant, against one Herbert G. Armitage. Armitage had been, and then was, the general manager of the sales department of the William Clark Company. The William Clark Company openly defended the suit against Armitage. The bill in that suit was filed upon the same facts as is the bill in the present suit. It specifically prayed for an injunction, restraining the defendant from selling thread under the name or designation of "Clarks," or the "William Clark Co.," or under a designation of which the word "Clark" or "Clarks" should be a part, or from using in connection with the thread the collocation of the three letters "N. E. W.," horizontally arranged across a circular spool label or otherwise. The bill also prayed for an accounting for profits. In May, 1895, a decree was made in that case by Judge Coxe in the district court. 67 Fed. 896. By that decree the defendant was restrained from using the words "Clark" or "Clarks" except when those words occurred in the name of the corporation, viz. "The William Clark Co.," and when so used in good faith. The word "Clark" was not to be printed in Gothic type or otherwise so as to be in violation of the injunction. The decree was silent as to the right of Armitage to use the letters "N. E. W.," the court refusing to restrain their use. After this decree by Judge Coxe was made, the bill in the present case was filed, on July 17, 1895, against the William Clark Company, a New Jersey corporation. This bill, as I have already observed, is grounded upon the same facts as the previous bill, and prays for the same relief against the Willlam Clark Company as the former bill had asked against Armitage. To this bill an answer was filed by the William Clark Company on November 14, 1895, in which answer it was set up that the decree made by Judge Coxe in the former suit had established the right of the defendant to use the corporate name of the William Clark Company upon the thread sold by that company. On November 27, 1895, the complainant filed a petition of appeal from a part of the decree made in the circuit court of the United States to the United States court of appeals for the Second circuit, and on the same day the defendant Armitage filed a similar petition appealing from parts of the same decree. These appeals were decided on May 28, 1896. 21 C. C. A. 178, 74 Fed. 936. The court of appeals affirmed the decree below in respect to its order restraining the defendant Armitage from using the words "Clark" or "Clarks," but the court also decreed that the defendant was not entitled to use the collated letters "N. E. W." upon its labels and circulars, and directed an injunction against Armitage accordingly. In the meantime nothing had been done in the present suit subsequent to the filing of the answer. After the adjudication in the court of appeals in the preceding suit, a supplemental bill was filed in this suit on August 1, 1896. This bill set up the decree in the appellate court as conclusively determining between the parties in this suit the effect of, and the extent of, the infringement by the defendant of the trademarks of the complainant. To this supplemental bill an answer was filed on March 3, 1897. The answer admitted that the preceding decree was conclusive upon all matters litigated in that suit, and claimed that inasmuch as the bill in the former case prayed for an accounting for profits, and as the decree in that case was silent upon that point, the matter of accounting was thereby conclusively settled against the right of the defendant to an accounting, and so estopped the Clark Thread Company from now insisting upon a decree for an accounting. It is therefore perceived that by the pleadings in this suit it is assumed and admitted by both parties that in so far as the decree in the federal court fixes the rights of the parties in relation to the use of the words "Clark" or "Clarks," and the use of the letters "N. E. W.," the judgment is to be regarded as a final determination. The mooted point is whether the decree in the preceding case concludes the complainant from a decree for an accounting for profits in this case.

Assuming that the William Clark Company, by openly appearing and defending Armitage, its servant, for acts done within the line of his employment, are estopped from litigating anew any point in issue and decided in that cause (Lyon v. Stanford, 42 N. J. Eq. 411-414, 7 Atl. 869, and cases cited), and assuming that, by the doctrine of mutuality of estoppels, the complainant was also concluded from again litigating in a suit against the master any question so settled in a suit against the servant, the question remains, does the estoppel reach this matter of accounting? The effect of an estoppel by judgment may present two aspects: One, where a second suit between the same parties is brought for the same cause of action; the second, where a second suit between the same parties is brought, not for the same cause of action, but for a cause of action so related to the cause in the preceding suit that some matter the establishment of which is essential to the recovery by the complainant in the last suit was in issue and determined in the preceding suit. In respect to the first phase in which the question of estoppel presents itself, it is entirely settled that, after one judicial determination by a court of competent jurisdiction, a second suit for the same matter, between the same parties or their privies, cannot be relitigated in the same or any other court. Nor does it matter that in the first suit evidence existed which was withheld or undiscovered, or that the law was misconceived by the court or left uncited by counsel, or that no defense was made and judgment went by default, or that only one of several defenses was interposed by the defendant. In spite of any of these defects in the prosecution or defense of the action, the judgment stands as an absolute bar against a second litigation of the same cause of action. When, however, a second suit is brought, not for the same demand, but for a cause which was a part of the same matter, but was not included in the first action, the estoppel is not so sweeping. In such instance, only those issues which are common to both suits, and which had to be or were actually decided in the first suit are regarded as res adjudicata in the second. This distinction between the two kinds of estoppel is lucidly stated by Mr. Justice Field in Cromwell v. Sac Co., 94 U. S. 351. In that case there had been an action upon certain county bonds, in which action the county succeeded. In a subsequent action, by substantially the same parties, upon other coupons on the same bonds, the previous judgment was set up as an estoppel. Mr. Justice Field, after speaking of the absolute estoppel as to every ground which might have been presented in the preceding case when a second action is brought for the same cause, goes on to say: "When a second action is upon a different claim, the...