J. B. Liebman & Co. Inc. v. Leibman

• Decision Date: 10 July 1944
• Citation: 38 A.2d 187
• Parties: J. B. LIEBMAN & CO. Inc., v. LEIBMAN et al.
• Court: New Jersey Court of Chancery

38 A.2d 187

J. B. LIEBMAN & CO. Inc.,

v.LEIBMAN et al.

Court of Chancery of New Jersey.

July 10, 1944.

COPYRIGHT MATERIAL OMITTED.

Action by J. B. Liebman & Co., Inc., against Lester Leibman and others for an injunction to enjoin alleged unfair competition in business, wherein the defendants filed a counter-claim.

Decree advised in accordance with opinion.

1. The law guards the good will of a business and will protect the owner-and the public-against unlawful injury through unfair competition.

2. One who adopts a trade-name for use in his business and builds upon it public good will acquires a property interest in both the trade-name and the good will which equity will protect.

3. Although an individual may have some right or title to the use of a name, he is not justified in adopting it for business use if the probable effect of so doing will be to lead the public to suppose that in purchasing his goods they are purchasing those of another.

4. Whether or not the challenged use of a name is calculated to mislead the public must be resolved from the standpoint of ordinary purchasers from whom a nice discrimination is not expected.

5. In order to warrant restraint of the use of a name, neither actual confusion nor actual fraudulent intent to confuse need be shown where the necessary and probable tendency of a defendant's conduct is calculated to deceive the public and to pass off his merchandise or business as and for that of complainant.

6. Similarity, not necessarily identity, of names is recognized as a basis of injunctive relief.

7. The consequences of a defendant's conduct, not the motive for it, determines whether equity should interfere to protect a complainant in the custom and patronage which he has built up by and around the use of his name.

8. In the instant case, complainant corporation established a valuable merchandising business and good will upon and around the surname of its founder and president, Joseph B. Liebman; the latter's cousin Lester, a defendant and a former employee of the complainant, had always spelled his surname Leibman. Lester Leibman quit his employment with the complainant and engaged in a merchandising enterprise on his own account, but unsuccessfully; thereafter, he changed the spelling of his surname to make it conform exactly with the name upon which complainant had built its business reputation and good will and, with another former employee of complainant, engaged in business in competition with the complainant in a district in which he had represented it; later, Lester Leibman and the other defendants started their present business in another locality where complainant had an established trade and good will; in this business the defendants have employed the name Liebman, using it on signs and advertising in such manner as to constitute a colorable resemblance to complainant's signs and slogans: Held, that this conduct of the defendants was and is calculated to mislead the public, is a violation of a property right which the complainant acquired in and to the use of the name Liebman in the merchandising business in the area in which it operates, and should be enjoined.

S. Mortimer Hirshorn and Louis B. LeDuc, both of Camden, for complainant.

W. Louis Bossle, of Camden, for defendants.

WOODRUFF, Vice Chancellor.

Complainant, alleging unfair competition in business, seeks an injunction.

J. B. Liebman & Co., Inc., the complainant, operates a large department store at 726-728 Market Street, Philadelphia, Pennsylvania. It also operates branch stores in Wilmington, Delaware, and in Reading, Allentown, Lebanon, and Easton, Pennsylvania. For many years it has solicited customers and business in the City of Camden and generally throughout Southern New Jersey. Each month its salesmen-collectors contact from 10,000 to 12,000 of its active and inactive customers in Camden and South Jersey. Its regular yearly expenditure for advertising in newspapers circulating in Philadelphia and throughout the South Jersey area is from $75,000 to $85,000 and, eight times a year, it has distributed 100,000 special sale circulars in the same district. In recent years it has annually sold $600,000 worth of merchandise from its Philadelphia store alone, half of which has been purchased by Camden and South Jersey customers.

The founder of complainant's business, and its president since a corporation was formed, is Joseph B. Liebman. The defendant Lester Leibman is his cousin. It should be here observed that not only do they spell their surnames differently but that the names are differently pronounced. They are both citizens of the United States by naturalization; the former applied for and obtained citizenship using the name Liebman, was drafted for military service in 1917 as Joseph B. Liebman and has used that name ever since; the latter became a citizen thru the naturalization of his father Max Leibman. Lester Leibman was registered by that name as a citizen and a voter, was married by that name, and was registered by that name in the draft for the second World War; his parents and his brother bear the name Leibman, and Lester used that name continuously and exclusively until he was thirty years of age.

Max Leibman was a grocer and he and his two sons, Lester Leibman and Roy Leibman, operated grocery store in Philadelphia until they failed in business; Joseph B. Liebman then advanced them six or eight thousand dollars to pay their business debts and secured employment for all three of them in complainant's Philadelphia store. Max Leibman and Roy Leibman are still employees of the complainant.

Lester Leibman worked as a saleman-collector for the complainant for about five years, then quit, without notice, to sell merchandise on his own account similar to that sold by the complainant and in the district where he had represented the complainant. His venture not succeeding, Lester Leibman formed a partnership with another ex-employee of complainant under the trade-name Quality Sales Company. The partnership was formed April 20, 1936, and Lester than arbitrarily changed the spelling of his name from Leibman to Liebman. The partnership continued to operate in the district where Lester had represented J. B. Liebman & Co., Inc., until three years ago when Lester opened a store under the name of Quality Sales Company at 1225 Broadway, in the City of Camden. The defendants L. Rose and E. Rose, his brothers-in-law, became his partners in this business. They sold furniture and furnishings on credit in competition with the complainant.

In October, 1942, defendants rented 1227 Broadway, at the corner of Liberty Street and Broadway, and stocked it with toys and novelties for the Christmas trade. Lester Leibman (now calling himself Liebman) took charge of that store; he posted signs in the display windows advertising it as ‘Liebman's Toyland.’ This slogan had been used by the complainant for several years to advertise its annual Christmas sale of toys and novelties and to designate an entire floor of its Philadelphia store, set aside for that purpose. The signs ‘Liebman's Toyland’, as displayed by the defendants, strikingly resembled in size and lettering the words as printed and displayed by the complainant. In November, 1942, Joseph B. Liebman advised defendants that complainant objected to their use of his name ‘Liebman’ and to their use and display of the words ‘Liebman's Toyland’. Complainant then filed a bill in this court seeking an injunction, and a subpoena to answer was served upon Lester Leibman. The offending signs were then taken down and the equity suit was discontinued by consent.

Some time after the toyland sign was removed from the show windows of the store at Broadway and Liberty Street, the defendants caused to be erected over those show windows very large signs reading ‘L. Liebman Co.’ The new signs face both Broadway and Liberty Street. They are particularly noticeable because they are made up of separate cut-out letters painted white. Complainant charges that the defendants, in using the name ‘Liebman’ and the signs ‘L. Liebman Co.’, are unfairly competing with it in its merchandising field.

Defendants admit the essential allegations of the bill and seek to justify the use of the name ‘Liebman’ and of the sign ‘L. Liebman Co.’ by asserting the right of Lester Leibman to change the spelling of his name to Liebman and to use that adopted name in their business. They filed an answer and a counterclaim: The answer states that Lester Leibman ‘changed the spelling of his name to correspond with that of his cousin, Joseph B. Liebman’; the counterclaim states that defendants posted ‘Liebman's Toyland’ signs in the display windows of their store in October, 1942; that on November 25, 1942, Joseph B. Liebman ‘telephoned the defendant Lester Leibman and complained that the use of ...