Deister Concentrator Co. v. Deister Mach. Co.

• Decision Date: 22 May 1916
• Docket Number: No. 8979.,8979.
• Citation: 63 Ind.App. 412,112 N.E. 906
• Parties: DEISTER CONCENTRATOR CO. v. DEISTER MACH. CO. et al.
• Court: Indiana Appellate Court

63 Ind.App. 412

112 N.E. 906

DEISTER CONCENTRATOR CO.

v.DEISTER MACH. CO. et al.

No. 8979.

Appellate Court of Indiana, Division No. 2.

May 22, 1916.

Appeal from Circuit Court, De Kalb County; Frank M. Powers, Judge.

Suit for injunction by the Deister Concentrator Company against the Deister Machine Company and others. Judgment for defendants, and plaintiff appeals. Affirmed.Elmer Leonard, James H. Rose, Fred E. Zollars, Robert S. Taylor, and Edwin M. Hulse, all of Ft. Wayne, for appellant. Barrett, Morris & Hoffman, of Ft. Wayne, for appellees.

MORAN, J.

This was a suit by appellant, Deister Concentrator Company, against Deister Machine Company, Emil Deister, William F. Deister, and Charles G. Williams, appellees, seeking injunctive relief and damages for unfair competition in trade.

No error is predicated as to the rulings upon the pleadings; therefore it is sufficient to state that the complaint is in one paragraph, to which was addressed a general denial and an affirmative paragraph of answer, to which affirmative paragraph of answer a reply in general denial was filed.

The facts were found specially by the court, and conclusions of law stated thereon, which were adverse to the appellant, and from a judgment upon the conclusions of law that appellant take nothing by its suit, and that appellees recover costs, an appeal has been taken by appellant, assigning as error the action of the court in stating the conclusions of law on the facts specially found, and in overruling appellant's motion for a new trial.

The facts specially found by the court material to an intelligent presentation of the questions arising thereon may be summarized as follows: Appellee Emil Deister for several years prior to the bringing of this suit had been engaged in designing a machine called a concentrator for the separation of gold, silver, copper, and other materials from foreign substances, which, in general appearance, resembles a wooden table inclosed on three sides, with retaining boards, and when in operation has a vibrating movement by which the minerals, on account of their specific gravity being greater than that of foreign substances accompanying the same, drop into riffles or pools in the table, and the foreign substance or refuse is discharged at the lower inclination of the table. Up to May 21, 1906, he had obtained certain patents from the United States government, and on this date incorporated appellant company with a capital of $200,000 for the purpose of manufacturing and selling such machinery, the patents of which he assigned to the company in consideration of 51 per cent. of the stock, retaining the right to manufacture the same in the United States for sale in foreign countries. One-fourth of the stock was assigned to William H. Bensman and Walter G. Burns, who had rendered him valuable assistance financially. The balance of the stock other than a small amount that had been issued to secure additional funds was held as treasury stock and thereafter sold. Appellee Emil Deister through his inventive genius designed new and valuable mining machinery after the incorporation of the company, and assigned the patents therefor to the company without further consideration. By a process of advertising in trade journals and catalogues the business developed so that on December 15, 1911, the company had transacted business to the amount of $500,000. The numerous patents all bore in some manner the word “Deister,” so that the name became a valuable property right. On account of a dissension that arose between appellee Emil Deister and other stockholders he and his brother, appellee William F. Deister, sold all of their stock in the company to the other stockholders about the first of the year of 1912, appellee Emil Deister receiving for his stock the sum of $92,000, but neither of the Deister brothers were in any way restricted from using the name “Deister” thereafter, nor from engaging in the manufacture and sale of mining machinery under this name. About the time of the organization of appellant company appellee Emil Deister sold the same patents assigned to appellant company to certain parties for the republic of Mexico, and appellant company sold to Emil Deister from time to time a large number of catalogues to be used in advertising his trade beyond the borders of the United States. The Deister brothers, after withdrawing from appellant company, continued in business at Ft. Wayne in selling mining machinery in foreign countries, and on June 15, 1912, they organized a corporation with a capital stock of $200,000 under the name of “Deister Machine Company,” and in the meantime they procured new patents for improved mining machinery, which they assigned to the new corporation, which latter company proceeded to manufacture for the trade throughout the world, and proceeded to manufacture machinery under the old patents for the trade beyond the United States and Mexico. The new machine used the name Deister in connection with other characters and words, and were made on the same general principle as those manufactured by appellant company, differing, however, as to the construction and method of operation. The business was advertised in trade journals and catalogues, designating wherein the machinery manufactured and sold differed from all other similar machinery for this purpose. The catalogues were of different color than that used by appellant company, and the advertising matter contained nothing to mislead or deceive the public, and bore the further statement, “Note carefully the new name.” That since the commencement of this suit appellees have advertised that the “Deister Machine Company” was a separate and distinct company from appellant company. That appellee company was organized in good faith, and with no intention of injuring appellant company, and has not attempted to sell any of its machines as the product of appellant company. The machinery made and sold by both companies is not sold through retailers generally, but, as a usual thing, direct to the operators of mines. Slight confusion has resulted in the correspondence of the respective companies, and this was due principally by reason of appellee Emil Deister purchasing catalogues of appellant company and circulating the same in the Dominion of Canada to advertise his foreign business.

As to the assignment of error based upon the exceptions to the conclusions of law, appellant takes the position that Emil Deister, the patentee of the mining machinery made and sold by it, after selling his stock to the stockholders of appellant company and severing his relations therewith, could not without making himself amenable to the law use the word “Deister” as a part of the name of the competing company, as this was a part of the corporate name of appellant company; and especially would the law forbid him to do so without sufficient explanation that the two companies were separate corporations, in order that the public be not deceived, and, further, that it was not necessary that fraud was intended or that the public or any person was actually deceived; that, if appellant's machinery was imitated by appellees' by name, word, or symbol, so as to produce confusion in the trade and injure appellant's business, such conduct would constitute unfair competition.

On the other hand, appellees take the position that a person's name is his property, and he has the right to use it in any legitimate way that he sees fit, and that when Emil Deister disposed of his stock he did not agree that he would not again engage in the invention, manufacture, and sale of mining machinery, nor that he would not use the name “Deister” in connection therewith; that the essence of the wrong in unfair competition consists in the sale of goods of one vendor for those of another, and appellees, in placing their product upon the market, designatedthe same in such a manner that a purchaser could readily trace the source of its manufacture; that the character of the mining machinery under consideration is such that it is purchased through experts skilled in the business, and not at retail, which greatly diminishes, if not entirely removes, the likelihood of a purchaser being deceived.

[1][2] It may be stated as a general proposition that a man's name is his own property, and he has the right to its use and enjoyment the same as any other property right, and so long as such use be a fair and reasonable exercise of such right he cannot be held liable for incidental damages to a rival in business using the same name, but he must make an honest use of his name, and not injure the good will and reputation of a rival by palming off his goods or business as that of such rival. Nor will he be permitted to use his name fraudulently so as to appropriate the good will of an established business of his competitor. Penberthy Injector Co. v. Lee et al., 120 Mich. 174, 78 N. W. 1074;Rogers v. Rogers, 53 Conn. 121, 1 Atl. 807, 5 Atl. 675, 55 Am. Rep. 78; 38 Cyc. 809; Brown Chemical Co. v. Meyer, 139 U. S. 540, 11 Sup. Ct. 625, 35 L. Ed. 247;Howe Scale Co. v. Wycoff, Seamans & Benedict, 198 U. S. 118, 25 Sup. Ct. 609, 49 L. Ed. 972;International Silver Co. v. Rogers, 72 N. J. Eq. 933, 67 Atl. 105, 129 Am. St. Rep. 722;L. E. Waterman Co. v. Modern Pen Co., 235 U. S. 88, 35 Sup. Ct. 91, 59 L. Ed. 142.

In Howe Scale Co. v. Wycoff, Seamans & Benedict, supra, Chief Justice Fuller, speaking for the court, said:

“But it is well settled that a personal name cannot be exclusively appropriated by any one as against others...