Krauss v. Jos. R. Peebles' Sons Co.

• Decision Date: 15 September 1893
• Docket Number: 4,621.
• Citation: 58 F. 585
• Parties: KRAUSS et al. v. JOS. R. PEEBLES' SONS CO. et al.
• Court: U.S. District Court — Southern District of Ohio

58 F. 585

KRAUSS et al. v. JOS. R. PEEBLES' SONS CO. et al.

No. 4,621.

United States Circuit Court, S.D. Ohio, Western Division.

September 15, 1893

This is a motion for a preliminary injunction. Jurisdiction existed by reason of the diverse citizenship of the parties, the defendants being citizens and residents of Ohio, Krauss a citizen of New York, and Krauss, Hart, Felbel & Co. a corporation organized under the laws of West Virginia. The complainants in their bill sought to restrain the defendants from selling bottled whisky under a trade-mark and in a style of bottling alleged to have been originated and to be owned by Jas. E. Pepper & Co., a firm engaged in distilling and bottling whisky at Lexington, Ky. The interest of the complainants in the subject-matter and their right to bring the action was claimed to arise under a contract set forth in the bill, made on January 22, 1892, by Otto A. Krauss and Jas. E. Pepper & Co., in which Krauss agreed, among other things, to purchase at a fixed price from Pepper & Co. 30,000 cases of bottled whisky a year, in equal monthly installments, and as much more as required, on condition that Pepper & Co. should furnish the same promptly, and keep the whisky up to its then standard of quality, and should sell bottled whisky to no one else except to a firm in San Francisco, and should give Krauss 'the entire control of the trade of said bottled whisky [then] now existing, or which may [might] accrue during the term of this contract and any renewal thereof.'

The contract contained stipulations as to payment, credit, etc not important here. Pepper & Co. further agreed to bill all their bottled whisky to Krauss, who obligated himself to fill existing contracts of Pepper & Co. with Peebles' Sons Co., and Meyer & Co., of Cincinnati. The contract continued 'Party of the first part (Pepper & Co.) further obligates himself not to furnish to any person any labels now used except that they may furnish to the Jos. R. Peebles' Sons Co. such labels as they are now using with the firm name of Jos. R. Peebles' Sons Co. on the same. The said party of the first part further agrees to furnish proper desk room to the party of the second part at their distillery or office for the use of agent for the party of second part, their agency books, and all the facilities that are now enjoyed by party of the first part for cartage and general purposes free of cost to the party of the second part. The party the first part agrees to furnish, free of cost, to the party of the second part, all glass and other signs that in the judgment of the party of the first part may be needed for the proper advertising of goods. Party of the first part further agrees that in case of the death of Jas. E. Pepper that it shall be so arranged that the executors of his estate shall be empowered to carry out the provisions of this contract with the party of the second part, and, in case of the sale of the said distillery of the party of the first part, such sale shall be made subject to the provisions of this contract, and with the obligations upon the part of the purchaser to comply with the terms of this contract. Party of the first part further agrees to neither bottle or cause to be bottled whisky under any brand or label except the Old Pepper whisky brand or label, of which whisky so labeled the party of the second part has entire control as hereinbefore set forth.'

Krauss further agreed to purchase from Pepper & Co. 1,000 barrels of bourbon and 500 barrels of rye in bulk each year of the contract, at the option of Pepper & Co. It was further stipulated that when this contract was signed all existing contracts except those before mentioned 'relating to the sale and delivery of said whiskies bottled at' Pepper's distillery should cease. The contract became immediately operative, except as to amount of whisky to be delivered and received, which term was to come into full force March 1, 1893.

The bill avers that Krauss, with the knowledge and approval of Pepper & Co., conveyed all his rights under the contract to his co-complainants, Krauss, Hart, Felbel & Co., the West Virginia corporation before mentioned. The bill further alleges that since the year 1886, and prior thereto, Pepper & Co. had been continuously engaged in manufacturing, selling, and dealing in hand-made sour mash Kentucky whisky near Lexington, Ky., and that during all said time they had been bottling large quantities of said whisky at their said distillery, and putting the same on the market in cases of a dozen bottles of the character hereafter described; that they had at great expense extensively advertised the same, so that the sales had grown to more than 2,500 cases monthly, and that complainants had also spent large sums in further advertisement of the same. The bill proceeds: 'Your orators further show that said whisky so bottled and sold as aforesaid was bottled in imported, seamless, white flint glass bottles of a very attractive character, of such size that each would hold one-fifth of a gallon, and that the same, on account of their sizes, became known to the trade as 'Fives,' and that these bottles were labeled with the following device and trade-mark, which the said firm of Jas. E. Pepper & Co. adopted in the year 1880 to indicate the origin and quality of said whisky, and that it had been bottled by the said Jas. E. Pepper & Co. at their distillery near Lexington, Ky., to wit.' There is then pasted in the bill a gold label, with words and figures printed thereon, as follows:

(Image Omitted)

The lable is gilt, the letters are white, some with black shading, and the shield or trade-mark proper is red. The bill, after describing the foregoing, states that during the year 1893 Pepper & Co. had added a cautionary mark to the top of the label against refilling the bottle without destroying the label and had inserted in the red shield the words 'Established 1780.'

The bill proceeds: 'Your orators further show that for the purpose of further identifying and distinguishing their whisky so bottled at their distillery as aforesaid said firm of Jas. E. Pepper & Co. pasted diagonally across the back of each of the bottles so labeled as aforesaid a paper slip, on which was printed in black letters the following: 'This whisky is distilled under the same formula and process used by the grandfather and father of our Mr. Jas. E. Pepper more than one hundred years ago. Bottled at the distillery warehouse, and warranted perfectly pure and unadulterated.' Below the lines so printed as aforesaid in black was printed on said slips the following in red color: 'Genuine only when bearing our unbroken facsimile signature across the stopper. Consumers should see that the signature is unbroken, otherwise this bottle may be filled with inferior spirits.' Over the lines so printed in red color was imprinted the chirographical [sic] of said firm, 'Jas. E. Pepper & Co.' In addition to the foregoing, and for the purpose of further marking and identifying the goods of the said Jas. E. Pepper so bottled as aforesaid at their distillery, there was pasted over the cork or stopper of each of said bottles a paper slip or label, with parallel red lines on either side, which extended down upon two sides of the neck of said bottles, on which, between the red lines, was the chirographical [sic] of said firm, 'Jas. E. Pepper & Co.;' that, in addition to the foregoing, and for the purpose of further marking and identifying the goods of the said Jas. E. Pepper & Co. as bottled at their said distillery near Lexington, Ky., there was imprinted upon the cork of each of said bottles that words, 'Jas. E. Pepper & Co., Distillers, Lexington, Ky.,' so placed as to be seen and read through the glass neck of said bottles. They further show that the said bottled whisky is known to the public and to buyers and dealers as 'Old Pepper Whisky,' and is represented and identified as such and as bottled at the distillery by the aforesaid trade-marks, devices, and labels.' After averring that by reason of the popularity of the whisky and the extensive advertisement thereof by Pepper & Co. and complainants, it has acquired a wide reputation and extensive sale, making the trade-marks of great value, the bill alleged that before the Krauss contract, Peebles' Sons Company, defendant, had purchased large quantities of whisky made by Pepper & Co., and had bottled portions of it, but only in quart bottles and flasks, and never in bottles containing one-fifth of a gallon, and that on such quarts and flasks the Peebles Company had been allowed by Pepper & Co. to use the gold label above described, but that it had never been allowed to use any of the other imprints, marks, and devices described; that such use of the gold label had been permitted by Pepper & Co. only as an accommodation, without compensation, and with no obligation on Pepper & Co. to continue such permission; that the Peebles Company had never been permitted to use the label on 'fives,' or with the other marks and the style of bottling adopted by Pepper & Co., to show that the whisky had been bottled at the distillery.

The bill then sets out at length a contract made by the Peebles Company with Krauss, Hart, Felbel & Co., in which the Peebles Company is given the exclusive right to sell the distillery-bottled goods of Pepper & Co. within a certain territory, including Cincinnati and vicinity, and stipulates to maintain a certain price upon them. The bill charges that the Peebles Company violated this contract by selling such bottled goods outside of the agreed territory. The bill further charges that the Peebles Company, knowing complainants' right under the contract with Pepper & Co. and with the purpose of injuring their sole and exclusive...