Gaylord Products v. Golding Wave Clip Co.

• Decision Date: 07 February 1958
• Docket Number: Civ. A. 7673.
• Citation: 161 F. Supp. 746,118 USPQ 148
• Parties: GAYLORD PRODUCTS, Incorporated, Plaintiff, v. GOLDING WAVE CLIP CO., Inc., Mac, Kayn Brothers & Band, Inc., Irving Golding and Stanley J. Rosenfeld, Defendants.
• Court: U.S. District Court — Western District of New York

161 F. Supp. 746

118 USPQ 148

GAYLORD PRODUCTS, Incorporated, Plaintiff, v. GOLDING WAVE CLIP CO., Inc., Mac, Kayn Brothers & Band, Inc., Irving Golding and Stanley J. Rosenfeld, Defendants.

Civ. A. 7673.

United States District Court W. D. New York.

February 7, 1958.

Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo, N. Y. (John E. Dickinson, Buffalo, N. Y., of counsel), for plaintiff.

Moule, Miles & Cochrane, Buffalo, N. Y. (Raymond T. Miles, Buffalo, N. Y., of counsel), for defendants.

MORGAN, District Judge.

A Chapter XI (section 722 et seq., Title 11 U.S.C.A.) Proceeding was filed by Mervin Wave Clip Co., Inc., a wholly owned subsidiary and Smith Victory Corporation, the parent company, on May 14, 1956. At that time, a representation was made to the court that a debtor-in-possession proceeding was desirable to preserve a local industry and the jobs of some 200 employees. The debtor-in-possession proceeding was most unpleasant. The details are not pertinent here. Suffice to say, that a revised plan of arrangement was filed in July, 1957, at which time the plaintiff herein and the debtor-in-possession made it plain to the court that the business was not to be continued, but the physical assets transferred to the plaintiff's plant if and when a pending purchase from the debtor-in-possession was consummated. That purchase was not consummated.

On August 5, 1957, the matter having been referred to the Referee in Bankruptcy, the Smith Victory Corporation and Mervin Wave Clip Co., Inc., were each adjudicated bankrupt. Thereafter, an appraisal was made and the duly appointed appraisers of Bankruptcy Court appraised the machinery and equipment, the inventory and the tools and dies (of no value in the event of liquidation) at $75,065.50, and the same items (tools and dies in a going business $25,000) at over $200,000 if the property was sold as a going business. This inventory did not include accounts receivable, orders on hand or good will.

The auctioneer appointed in Bankruptcy Court noticed the sale of the entire operating business and all tangible and intangible assets of the Smith Victory Corporation and the Mervin Wave Clip Co., Inc., including machinery, tools and equipment, office furniture and equipment, all jigs, tools, dies and factors, good will, trade names, trade-marks and patents, finished and unfinished inventories and 100% of the capital stock of the Mervin Wave Clip Co., Inc., subject to the confirmation of the Referee. Included in the detail was the item "approximately $30,000 unfilled customers' orders".

The plaintiff in this case was the purchaser of everything at the bankruptcy sale except the accounts receivable. The defendant, Golding Wave Clip Co., Inc., is a corporation formed on or about August 13, 1957 and the defendant, Irving Golding, is its president and defendant, Stanley J. Rosenfeld, its vice-president. The defendant Mac, Kayn Brothers & Band, Inc., were the distributors for the bankrupt corporations and are the distributors for the defendant, Golding Wave Clip Co., Inc. The evidence is uncontradicted that Golding and Rosenfeld asked Irving Greene, executive vicepresident of plaintiff, during the pendency of the proceeding, if his company had any objection to their formation of a company to manufacture and sell similar items. They made similar inquiry of the Referee in Bankruptcy and this court. No one objected. Such approval, if it could be so termed, did not contemplate unfair competition.

The item of $30,000 of unfilled customers' orders was never verified, nor was any evidence adduced in this proceeding to show the detail of such orders.

Plaintiff brings this action against all the defendants for breach of trust, wrongful interference with contract and other related interests, unfair competition and unfair trade, wrongful appropriation of property and unjust enrichment and conspiracy to commit such acts, alleging a cause of action for compensatory and punitive damages. The plaintiff further demands a premanent mandatory injunction against each of the defendants directing that Golding Wave Clip Co., Inc., terminate its existence and cease doing further business and enjoining the other defendants from wrongfully interfering with the contracts and business relationships of Mervin Wave Clip Co., Inc. and the plaintiff, and from representing that the defendants, or any of them, are successors to Mervin Wave Clip Co., Inc., and from copying, reproducing, using, infringing or imitating plaintiff's cards and boxes, trade-marks, trade names, designs and slogans; and engaging in unfair competition with the plaintiff. Alleging no legal relief possible from the claimed interference with its business, plaintiff seeks a temporary restraining order because of alleged confusion in the trade. The "Mervin Wave Clip" was a recognized article, as were the "Hollywood Hair Rollers". These are sold to beauticians in quantity; and are items, in each case, three on a card, sold to customers of large chain stores merchandising a variety of products. The evidence shows that the defendants Golding and Rosenfeld were planning a similar enterprise to that of Mervin Wave Clip Co., Inc., to commence after the adjudication. Each of these men testified and vehemently denied any planning in advance, or any intentional or colorable imitation of the cards upon which the clips and rollers are displayed, or the boxes in which they are contained. It appears, however, that during the pendency of the debtor-in-possession proceedings, a shipment of aluminum was received at the debtor's plant and purchased by Messrs. Golding and Rosenfeld and later fabricated by them. It also appears that while the quantity or detail is not clear, there were, as Rosenfeld testified, "unfilled orders lying around which had been abandoned." The defendant, Mac, Kayn Brothers & Band, Inc., and the independent agents, who had formerly represented Mervin Wave Clip Co., Inc., in the last sixty days of the existence of that company, were unable to obtain delivery of completed orders. Defendants contend that because of the urgent demand for merchandise from the distributor and agents or factors, they decided to go into business. The individual defendants similarly deny any such thought until August 5, 1957. Despite this claim the dies, cards and boxes represent such a colorable imitation of the Mervin products, purchased by the plaintiff, insofar as the wave clips and hair rollers are concerned, as to constitute unfair competition. No evidence was presented as to trade-marks or patents being in existence and the defendants contend that the original Mervin card to display the hair rollers was copied from a competitor long before the proceedings in this court. Because of questions of fact as to the alleged contract interference, no disposition of that will be made in this proceeding. As was said in Oakite Products v. Boritz, 161 Misc. 807, 293 N.Y.S. 399, citing Celotex Co. v. Chicago Panelstone Co., 49 F.2d 1051, 18 C.C.P.A., Patents, 1504, plaintiff does not appear to be entitled to a monopoly of certain terminology.

However, when corporate officers of a debtor-in-possession adopt and use marks, language and coloring on cards and boxes not sufficiently dissimilar to those of the plaintiff to prevent confusing similarity of such marks, cards and boxes as a whole, plaintiff is entitled to a temporary injunction. An ordinary person would be mislead in the purchase of goods due to the similarity thereof, if they are not displayed side by side. See Martini & Rossi v. Consumers'-People's Products Co., D.C., 57 F.2d 599. Without passing upon the individual defendants' original intention, it is settled law that nobody has any right to represent his goods as the goods...