Dr. David Kennedy Corp. v. Kennedy

• Decision Date: 22 January 1901
• Citation: 165 N.Y. 353,59 N.E. 133
• Parties: DR. DAVID KENNEDY CORP. v. KENNEDY.
• Court: New York Court of Appeals Court of Appeals

165 N.Y. 353

59 N.E. 133

DR. DAVID KENNEDY CORP.

v.KENNEDY.

Court of Appeals of New York.

Jan. 22, 1901.

Appeal from supreme court, appellate division, Third department.

Action by the Dr. David Kennedy Corporation against David Kennedy. From a judgment of the appellate division (55 N. Y. Supp. 917) reversing a judgment dismissing the complaint, defendant appeals. Modified.

John W. Searing, for appellant.

Howard Chipp, for respondent.

BARTLETT, J.

This is a suit in equity, where the plaintiff corporation seeks to secure the delivery of mail matter to its proper officers, and to enjoin the defendant from interfering therewith. The complaint also asks a judgment for damages. About the year 1875, the defendant, who was a practicing physician in the city of Kingston, Ulster county, established the business of making and selling proprietary remedies. He advertised extensively. The business was almost entirely conducted through the mails, and became ultimately very profitable. Advertisements and pamphlets were sent out which referred to some eight distinct remedies that were compounded by Dr. David Kennedy of Rondout, N. Y., and each was alleged to cure some particular disease or diseases. In this manner it was suggested to the public that a sample of the particular remedy desired would be sent to any person on application; and also that letters might be addressed to Dr. Kennedy describing the condition of the patient, and he would prescribe without making any charge therefor. The effect of this mode of advertising was that the defendant received a large number of letters from different parts of the country, wherein the writers described their physical condition, and thereupon the defendant would recommend some one of the remedies as appropriate to the case. This system of free consultation was a device to enable the defendant to sell his remedies. The defendant conducted this business for about 15 years, his mail matter being addressed to him as ‘Dr. David Kennedy,’ or ‘Dr. D. Kennedy, Rondout, N. Y.’ In the year 1890 the defendant concluded to turn his business into a corporation, and thereupon the plaintiff company was organized. The defendant executed and delivered to the corporation a bill of sale of all the personal property in his former business, including the good will, which was transferred by the following provision of the instrument: ‘Also the good will of the business of Dr. David Kennedy now carried on by me at Rondout, N. Y., with the sole and absolute and only right to use the names ‘Dr. David Kennedy, of Rondout, N. Y., or Dr. D. Kennedy, Rondout, N. Y.,’ in connection with the manufacture of proprietary medicines, hereby granted and sold by me to the said corporation; and also all articles of office furniture and implements used in the manufactureof the Favorite Remedy and the other preparations as aforesaid; and I do hereby agree, in consideration of such payment of one hundred and fifty thousand dollars, as aforesaid, to execute and deliver any other or further paper the said corporation may be advised is necessary and requisite to convey and vest more fully in the said corporation all my right, title, and interest of, in, and to any or all of the said property or business hereby sold or intended to be sold to the said ‘Dr. David Kennedy Corporation.” For about seven years after the organization of the corporation the defendant was its president, and the owner of one-third of its stock. The mail matter of the company, which came addressed to Dr. David Kennedy of Rondout, N. Y., or Dr. D. Kennedy, Rondout, N. Y., was placed in the post-office box of the corporation. When this mail was delivered at the office of the company, the private letters of the defendant were opened by him, and the balance of the mail matter, which included the medical or patients' letters, was dealt with by the corporation in the due course of business. In January, 1898, the defendant was deposed as president of the plaintiff company, and thereupon he removed his office, which had been located in the general offices of the corporation, and practically severed his personal relations with the business. Some two weeks after this event the defendant directed the superintendent of the Rondout post office to deliver the entire corporate mail addressed as already stated to him. This was done for two or three weeks, when the post-office department at Washington countermanded the order of the local official, and the former mode of delivery to the corporation was restored. A little later the department at Washington reversed this last order, and directed that the entire corporate mail addressed as aforesaid should be delivered to the defendant. Thereupon this suit was commenced. The case was tried before a referee, and resulted in a dismissal of the complaint. The report of the referee, after quoting from the bill of sale, states as follows: ‘Here the express terms of the instrument limit or extend no further than a grant of the right to plaintiff to use the title ‘Dr. David Kennedy’ and ‘Dr. D. Kennedy of Rondout, N. Y.,’ in connection with the manufacture (and, by fair construction, with the advertising and sale) of the eight enumerated remedies. The plaintiff thereby acquired the right, according to the manifest intent of the agreement, to use these titles in their manufacture and sale of the remedies acquired by them as an assurance to the public that they were genuine preparations of the defendant, and thus to avail themselves of the success and pecuniary value which attached to these remedies as the genuine productions as known and as theretofore sold by the defendant. In every other connection and for all purposes the defendant retained a full and perfect right to the use of his own name and address as if no transfer had been made to the plaintiff.' Under this construction of the bill of sale and the dismissal of the complaint the referee practically held that the corporation never acquired the right to take from the post office the mail matter directed to Dr. David Kennedy of Rondout, N. Y., or Dr. D. Kennedy, Rondout, N. Y., which was one of the most important factors in conducting its business. The result was that the plaintiff company could only receive such portion of its mail matter as the defendant determined was proper after his personal inspection,-this being the position of the parties under the final ruling of the post-office department. The appellate division...