Manhattan Shirt Co. v. Sarnoff-Irving Hat Stores, Inc.

• Citation: 164 A. 246,19 Del.Ch. 151
• Parties: THE MANHATTAN SHIRT COMPANY, a corporation of the State of New York, v. SARNOFF-IRVING HAT STORES, INC., a corporation of the State of New York, and MORRIS MINTZ, defendants, and ROBERT REIS & COMPANY, intervening defendant
• Decision Date: 17 January 1933
• Court: Court of Chancery of Delaware

164 A. 246

19 Del.Ch. 151

THE MANHATTAN SHIRT COMPANY, a corporation of the State of New York, v. SARNOFF-IRVING HAT STORES, INC., a corporation of the State of New York, and MORRIS MINTZ, defendants, and ROBERT REIS & COMPANY, intervening defendant

Court of Chancery of Delaware, New Castle

January 17, 1933

[Copyrighted Material Omitted]

BILL FOR INJUNCTION AND ACCOUNTING filed by the complainant against the defendant corporation and its manager, Mintz, the gravamen of the complaint being that the defendants are selling men's underwear bearing the label "Manhattan" in violation of the complainant's alleged right to the exclusive use of that word as a label on men's wear. The goods sold by the defendants were manufactured by Robert Reis & Company, a corporation of New York, and by it sold to the defendant corporation, a retailer engaged in business in the City of Wilmington. Robert Reis &amp Company has intervened in the cause as a defendant and filed an answer defending the right of the corporation defendant to vend the goods in question as a retailer from it. See 18 Del.Ch. 224, 158 A. 133. The contest in the cause is really between the complainant and the intervening defendant, Robert Reis & Company, which for convenience will be referred to in the opinion as the defendant, over the right of the Reis Company to use the word "Manhattan" as a label on the sort of men's wear it is engaged in manufacturing and marketing and which the Sarnoff-Irving Hat Stores, Inc., has sold.

The mark "Manhattan" has been used by the complainant or its predecessors since 1869. Their first use of the word as a mark was on men's outer shirts, and their use of the word was confined to outer shirts only, up until about the year 1879, when the complainant's predecessor embarked upon the business of manufacturing men's underwear placing thereon the label "Manhattan." The business of manufacturing men's underwear was discontinued by the complainant's predecessor in about 1881 or 1882. Since then until 1912 the business of the complainant and its predecessors was confined solely to the manufacture and sale to the trade of outer shirts only. Their shirts were well and favorably known as "Manhattan" shirts. In 1912 the complainant resumed the business of manufacturing and placing upon the market men's underwear, labelling their product with the same trade name of "Manhattan" under which its outer shirts were known.

In 1905, some twenty-three or twenty-four years after the complainant's predecessors had abandoned the manufacture of men's underwear and seven years before the complainant resumed that business, the defendant commenced the business of manufacturing men's underwear. It used the mark "Manhattan" on its underwear without molestation or protest on the part of the complainant's predecessor.

Thus prior to 1912 both the complainant (or its predecessors) and the defendant were engaged in the business of manufacturing and marketing men's garments bearing the label "Manhattan"; the former using it as a mark on men's outer shirts, and the latter on men's underwear. Each spent considerable sums of money in the way of advertising their respective products as "Manhattan" garments, and both were actively engaged in developing their respective lines of business.

No difficulty between them arose until 1912, when the complainant branched out into the underwear line and placed its underwear on the market under the name "Manhattan." The defendant objected to the complainant's use of that mark on men's underwear as an infringement of its right to the use of the name on such garments. Its objection was emphatically voiced by the bringing of a suit by it against one Lange in the United States District Court for the District of New Jersey charging Lange with the sale of underwear (which was manufactured by the complainant herein) bearing the name "Manhattan" in violation of the Reis Company's right to the exclusive use of the word on such garments, and praying for an injunction and accounting.

The complainant in this cause was cognizant of the attack thus made by the defendant upon the right of a retailer to market men's underwear made by the complainant under the name "Manhattan." That suit was filed August 1, 1913. It was dismissed without prejudice on motion of the solicitor for the complainant therein on October 1, 1913.

A short time before the dismissal of the suit, viz., on September 23, 1913, the complainant herein, whose right to the use of the mark "Manhattan" as a label on men's underwear was under attack by the Reis Company in the New Jersey suit, entered into an agreement with the Reis Company, by the terms of which the respective rights of the two companies to the use of the name "Manhattan" on men's garments were defined and limited.

By this agreement it was stipulated that the complainant should be entitled "to use the word Manhattan' upon and in connection with cut and sewn' underwear intended to be normally retailed at One Dollar per garment and upwards"; and the complainant agreed that it would not make use of said word "in any form or manner whatsoever upon, or in connection with either (1) any underwear intended to be normally retailed at less than One Dollar per garment, or (2) any knit underwear of any grade or price whatsoever." The agreement further stipulated as to the Reis Company that it should be "entitled to the exclusive right to use the word Manhattan' upon and in connection with knit underwear," and that if it should so desire at any time in the future, it should be entitled to use said word "upon and in connection with cut and sewn underwear of any and every grade or price by or for it made." The recitals in this agreement are as follows:

"Whereas, the designation Manhattan' has heretofore been used and is now being used by the parties hereto, respectively, substantially as set forth in the following chronological statement, that is to say:--

"Continuously since in or about the year -- by The Manhattan Shirt Company upon dress and negligee shirts.

"Continuously since in or about the year 1905 by Robert Reis and Company upon underwear.

"Continuously since in or about the year 1912 by The Manhattan Shirt Company upon underwear.

"And Whereas, differences and litigation have arisen in connection with the use of the designation Manhattan' upon underwear, The Manhattan Shirt Company claiming that it is entitled to the exclusive use of said designation for any wearing apparel appropriate to its business or the expansion and growth thereof, and Robert Reis and Company claiming that it is entitled to the exclusive use of said designation in connection with underwear, and the parties hereto are desirous of settling the litigation and differences between them and agreeing upon the future uses of said designation Manhattan' in so far as concerns its use upon underwear."

The contract provided that all suits or proceedings theretofore instituted on account of the matter thereby settled and adjusted, viz., the use by the parties of the word "Manhattan" as a mark, should be forthwith withdrawn and discontinued. Eight days after the contract was executed, the Reis Company, as already stated, discontinued its suit in the United States District Court in New Jersey.

On May 12, 1920, the complainant and defendant entered into another contract, in which they recognized the contract of September 23, 1913, as a continuing one, more specifically defining their respective rights in the use of the word "Manhattan" as a mark upon the goods of their respective manufacture. That contract is as follows:

"Memorandum of Agreement between The Manhattan Shirt Company, a New York Corporation, and Robert Reis & Co., a New York corporation.

"Whereas The Manhattan Shirt Co., and its predecessors in business have been for many years engaged in manufacturing and distributing merchandise under the trade mark Manhattan' written in script in the form shown in Trade Mark Certificate No. 124019 of December 31, 1918; and

"Whereas said trade mark in said form is today universally and generally recognized by the public as identifying The Manhattan Shirt Co., as the source or origin of any goods upon which the said mark may appear in the line of clothing and furnishings, as well as allied and affiliated lines, whether the particular goods which bear the said trade mark have as yet or have not as yet been placed upon the market by said Manhattan Shirt Co.; and

"Whereas Robert Reis & Co. has heretofore used the word Manhattan' in block letters as a trade mark for underwear and hosiery, and said products when bearing the word 'Manhattan' in block letters are recognized by the public as originating with Robert Reis & Co.; and

"Whereas the parties hereto are desirous of defining their respective rights in the premises along lines which will prevent any possible confusion in the minds of the public and also to provide means for dealing with any infringers who may seek to take advantage of the Manhattan' trade mark;

"Now, Therefore, it is agreed as follows:

"1. The Manhattan Shirt Co. agrees that it will use the trade mark Manhattan' on underwear and hosiery only in script form. But nothing herein is to prevent it from using the word Manhattan' in block letters in its corporate name on the goods or labels, on stationery or in advertising or publicity matter of any kind, but neither this provision nor any other provision in this agreement shall be construed as giving The Manhattan Shirt Co., the right to use the word Manhattan' in violation of the provisions of Article 1 of the agreement entered into between the parties on September 23, 1913.

"2. Robert Reis & Co. agrees that it will not use the trade mark Manhattan' in script form in any manner...