Englander v. McKesson-Roeber-Kuebler Co.

• Decision Date: 19 June 1936
• Citation: 185 A. 917
• Parties: ENGLANDER v. McKESSON-ROEBER-KUEBLER CO. McKESSON & ROBBINS, Inc., v. ENGLANDER.
• Court: New Jersey Court of Chancery

185 A. 917

ENGLANDER

v. McKESSON-ROEBER-KUEBLER CO.

McKESSON & ROBBINS, Inc.,

v. ENGLANDER.

Court of Chancery of New Jersey.

June 19, 1936.

Syllabus by the Court.

1. To acquire a trade-mark, one must actually use it in his business, and the right arises with the first use.

2. One who does not deal in alcoholic beverages, and has no good will in business of that nature to protect, cannot acquire a trade-mark applied to such beverages.

3. M procured a distiller to make and bottle gin, labeled Silver Crest and bearing the name of S. The distiller, through M's efforts, sold quantities of the gin to S. Held, that M thereby gained no right to the name Silver Crest.

4. A trade-mark cannot be assigned separate from the good will of the business to which it is attached.

5. The trader's right to a trade-mark does not arise when the goods marked with the mark are manufactured for him or when he buys them, but when he puts them on the market.

6. Adoption of a mark and public advertisement of intention to use it create no right. Until the product is actually on the market, no property right in the mark arises.

7. Words or device may be adopted as trade-mark which are not original inventions of him who adopts and uses them.

8. E learned that W intended to market a product marked Silver Crest. He liked the name, adopted it himself, and got his product to market first. Held, E had a legal right to use the name, and he acquired a valid trademark.

9. Two persons can gain the same trademark for noncompetitive articles, provided the second one to use the mark acts in good faith and the buying public is not deceived.

Suit by Jacob Englander, trading as the Federal Products Company, against the McKesson-Roeber-Kuebler Company, and suit by McKesson & Robbins, Inc., against Jacob Englander, trading under the name and style of the Federal Products Company.

Order in accordance with opinion.

Louis B. Englander, of Newark, for Jacob Englander.

John Drewen, of Jersey City, and Percy E. Williamson, Jr. (of Nims & Verdi), of New York City, for McKesson & Robbins, Inc., and McKesson-Roeber-Kuebler Co.

BIGELOW, Vice Chancellor. The right to use the name Silver Crest as a trade-mark for gin and other alcoholic beverages is the object of the litigation. McKesson & Robbins, Inc., and Englander, each claiming to own the mark, seeks to restrain the other from using it.

McKesson and its predecessors had been manufacturers of drugs for many years. Its subsidiary corporations were scattered throughout the country, doing a wholesale business. With the approach of repeal of the prohibition amendment, it organized Spirits Import Company to engage in the liquor business, especially around New York, and it had its wholesale houses prepare to deal in liquor. McKesson arranged with a distiller, Hiram Walker & Co, for a private brand of gin for which the name Silver Crest was chosen. It was tacitly understood that Walker would furnish this brand to none except the McKesson group. McKesson assumed no liability to Walker except to take up unused bottles, etc, at cost, if it should discontinue the brand. Part of the arrangement between them is stated in a letter from Walker to McKesson: "We mailed you last night a copy of our new price list, from which you will observe that as your purchases will run better than 4,000 cases per month, you will be entitled to an allowance of $1.50 per case on cases containing 3 gallons, and an allowance of $1.20 per case on fifths (2.40 gallons). On bottling done for you under your own private labels, there will be additional discounts of 50 per case and 400 per case respectively for the 3 gallon and 2.40 gallon cases."

The expression "your purchases" in the letter obviously means purchases by McKesson's subsidiaries, since McKesson itself was not making ready to enter the liquor business, and did not engage in it or deal in Silver Crest gin for several months after the transactions recited below. The subsidiaries bought direct from Walker, and paid Walker out of their own funds. The allowances mentioned in the letter were not deducted from the bills sent them; they paid in full, and Walker remitted the amount of the discounts monthly to McKesson. Be it noted that McKesson received a commission, if that is the proper word, not only on sales of private brands, but on all brands.

On the Silver Crest labels was printed "Distilled and bottled for Spirits Import Company," and at the top of the labels were the initials of that company. There was nothing to indicate any connection between McKesson and Silver Crest.

Prohibition repeal became effective December 6, 1933. On January 27, 1934, the first shipment of Silver Crest was made by Walker, namely, a carload to Spirits Import Company at New York. The next shipment was two days later by Walker to the McKesson subsidiary in Minneapolis. The first resale occurred February 5, 1934, and was made by Spirits Import Company. Since then, the business has continued in large volume, widely advertised.

The general rule is that one to acquire a trade-mark must actually use it in his business and the right arises with the first use. Did McKesson acquire the trademark Silver Crest on the sale and shipment January 27 from Walker to Spirits Import Company? McKesson was not a party to the transaction; its position was that of a broker who had procured a customer for Walker. While the owner of a trademark need not be the manufacturer of the goods on which the mark is used, it seems he cannot have a trade-mark save in connection with his own trade. To borrow the language of easements, there can be no trade-mark in gross, or except as appurtenant to the business of the owner of the mark.

"The law of trade-marks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another's product as his; and it is not the subject of property except in connection with an existing business." United Drug Co. v. Rectanus Co, 248 U.S. 90, 39 S. Ct. 48, 50, 63 L.Ed. 141. "A trade-mark only gives the right to prohibit the use of it so far as to protect the owner's good will against the sale of another's products as his." Prestonettes, Inc., v. Coty, 264 U.S. 359, 44 S.Ct. 350, 351, 68 L.Ed. 731. The principle that a trade-mark has no existence apart from the business of its owner is the basis of the decisions that a trade-mark cannot be assigned separate from the business. Falk v. American West Indies T. Co, 180 N.Y. 445, 73 N.E. 239,

1 L.R.A.(N.S.) 704, 105 Am.St.Rep. 778,

2 Ann.Cas. 216, and cases cited in note. Vice Chancellor Van Fleet said in

Schneider v. Williams, 44 N.J.Eq. 391, 14 A. 812, 814: "The principle that no person can acquire a right to a trade-mark except he put merchandise or a vendible commodity on the market, marked or distinguished by his particular mark, has been repeatedly affirmed by judges of the very highest distinction. * * * The bill does not show that the complainants have applied their mark or label to a vendible commodity of which they are the owners, or in which they trade, and that they have put such commodity, marked with their mark, on the market. Such application and user constitute, according to the established law on this subject, the only foundation on which a title can rest. Without them it is impossible to acquire a title."

In Schmalz v. Wooley, 57 N.J.Eq. 303, 41 A. 939, 941, 43 L.R.A. 86, 73 Am.St.Rep. 637, the Court of Errors and Appeals suggested that it is the actual marketing of the article which should be stressed, and not the person by whom it is marketed. The case related to a union label on hats. Justice Dixon wrote that the workman's "aptitude in his trade is his property, and, if by a mark he can have it identified as...