Culligan, Inc. v. Rheaume
| Citation | 68 N.W.2d 810,269 Wis. 242 |
| Parties | CULLIGAN, Inc., a corporation, Respondent, v. William RHEAUME, Appellant, William W. Granger et al., Defendants. CULLIGAN, Inc., a corporation, Respondent, v. William RHEAUME et al., Defendants, William W. Granger, Appellant. CULLIGAN, Inc., a corporation, Respondent, v. William RHEAUME et al., Defendants, Soft Water Supply Co., a corporation, Appellant, CULLIGAN, Inc., a corporation, Respondent, v. William RHEAUME et al., Defendants, Soft Water Service, Inc., a corporation, a/k/a Culligan Soft Water Service, Appellant. |
| Decision Date | 08 March 1955 |
| Court | Wisconsin Supreme Court |
Four closely related actions are pending between the parties to this appeal. Plaintiff obtained an injunction restraining certain activities of the various defendants. Appeals were duly taken but as the same questions are common to all four actions the parties have treated the appeal as a single one, in which the Supreme Court concurs.
The material facts will be stated in the opinion, and the decision and mandate apply to each of the separate actions.
Muchin & Muchin, Manitowoc, Welsh, Trowbridge, Wilmer & Bills, Green Bay, for appellants.
Clark, Rankin & Nash, Manitowoc, for respondent.
These actions were before us on an appeal from an order allowing an inspection of documents, reported in 268 Wis. 298, 67 N.W.2d 279. The present appeal is by the defendants from an order granting a temporary injunction which restrains them from continuing certain activities in which they have engaged. The pleadings and numerous supporting affidavits disclose the following facts which we consider material.
One Culligan developed a process or technique of softening water on the premises of a water-user. To exploit this method of water softening Culligan organized a corporation which has had several names but is now known as Culligan, Inc., the plaintiff. He turned over to it his discovery or invention and for a consideration Culligan, Inc. licenses individuals or corporations to soften water commercially, as Culligan Plan operators, using the Culligan name and method and employing in the process Culligan's approved materials and equipment. Such a license was issued by Culligan to one Isbell on April 1, 1941 which, with Culligan's consent, Isbell assigned to defendant Rheaume January 5, 1944. Defendant Soft Water Service, Inc., also known as Culligan Soft Water Service, was incorporated by Rheaume to conduct the business permitted by the license and pursuant to it, the corporation operates the Culligan Plan in Manitowoc county. Rheaume is an officer, director and stockholder of this corporation.
This license, or contract, or franchise as it is variously termed, provides that the licensee shall have the exclusive right to distribute Culligan type water softeners in the county of Manitowoc for twenty-five years beginning April 1, 1941. The licensee agrees to buy from Culligan all his requirements of water softening equipment, parts and materials. Culligan contracts to sell these to him and to guarantee their quality and to give the licensee technical advice, assistance and laboratory service. The licensee covenants and agrees, further, 'that he will not engage in any way, directly, or indirectly, either as an individual or by, or through any corporation, or partnership, in any phase of the water softening service business during the life of this agreement except under and pursuant to this agreement.'
In 1948 Rheaume organized another corporation, the defendant Soft Water Supply Company, and was an officer, director and principal stockholder of that. Defendants' answer alleges this company was formed to sell water softening supplies for resale to the ultimate consumer and engages in no other activity.
Defendant Granger, like Rheaume, is an officer, director and principal stockholder in both the Soft Water Supply Company and Soft Water Service, Inc.
The complaint and supporting affidavits allege that the defendant Soft Water Supply Company sells to the operators of water softening businesses, including the defendant Soft Water Service, Inc., materials and equipment which imitate those put out by Culligan and on which appear labels, and emblems imitating Culligan's, so that the public is deceived. Sales by the Soft Water Supply Company to holders of Culligan franchises throughout the country form a large part of the Supply Company's business. The merchandise so sold is alleged to be frequently marked and advertised in imitation of the genuine Culligan product and because Culligan has no control over its quality the deception thus practiced on the purchaser causes irreparable damage to the plaintiff.
The complaint and plaintiff's affidavits allege, and the answer denies, that the defendant Rheaume makes false and slanderous statements to service operators concerning the Culligan process and merchandise to divert their purchases from Culligan to his own Soft Water Supply Company. In so far as many of these customers hold licenses from Culligan restricting their purchase of material and equipment to that sold by Culligan, it is alleged that this conduct by Rheaume induces the breach of their contracts with Culligan.
The court granted the following temporary injunction:
'Ordered, that pendente lite and until the further order of the Court:
'The defendants William Rheaume, William W. Granger, Soft Water Service, Inc., a Wisconsin corporation, and Soft Water Supply Company, a Wisconsin corporation, all of the city of Manitowoc, Wisconsin, their directors, officers, agents, employees and representatives, do absolutely desist and refrain henceforth from directly or indirectly selling, offering for sale or soliciting the sale of any of the items of merchandise of the description listed on Exhibit 'A' attached hereto, used or useful in the Culligan Plan, Culligan water conditioning system or in the Culligan soft water servicing business, to any of the persons, firms, partnerships, corporations or associations, which now or hereafter may constitute the so-called Culligan Soft Water Service operators doing business in the municipalities shown on the list attached hereto as Exhibit 'B'; and that
'The defendants William Rheaume and Soft Water Service, Inc., a Wisconsin corporation, both of Manitowoc, Wisconsin, do absolutely desist and refrain henceforth from directly or indirectly purchasing any of the items of merchandise listed on Exhibit 'A' attached hereto from the defendant Soft Water Supply Company, a corporation, its directors, officers, agents, employees or representatives and/or from any other source except Culligan, Inc., the plaintiff in this action, and that said defendants William Rheaume and Soft Water Service, Inc., do desist and refrain from reselling any of said items which may be purchased by them from Culligan, Inc., except to the soft water service customers of Soft Water
'The defendants William Rheaume, William W. Granger and Soft Water Supply Company, a Wisconsin corporation, all of Manitowoc, Wisconsin, their directors, officers, agents, employees and representatives, do absolutely desist and refrain henceforth from directly or indirectly selling, offering for sale or soliciting the sale to anyone of any articles bearing the Culligan name, trade mark, insignia or emblem.
'Further Ordered, that this Injunction Order shall become effective upon the plaintiff herein giving and filing an undertaking, as required by law, in the amount of One Hundred Thousand Dollars.'
Sec. 268.02(1), Stats., provides as follows:
'When it appears from his pleading that a party is entitled to judgment and any part thereof consists in restraining some act, the commission or continuance of which during the litigation would injure him, or when during the litigation it shall appear that a party is doing or threatens or is about to do, or is procuring or suffering some act to be done in violation of the rights of another party and tending to render the judgment ineffectual, a temporary injunction may be granted to restrain such act.'
The power of the court to grant a temporary injunction is a discretionary one. The court which is to exercise the discretion is the trial, not ...
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