Reconstruction Finance Corp. v. JG Menihan Corp.
| Decision Date | 07 February 1938 |
| Docket Number | No. 2174.,2174. |
| Citation | 22 F. Supp. 180 |
| Parties | RECONSTRUCTION FINANCE CORPORATION v. J. G. MENIHAN CORPORATION et al. |
| Court | U.S. District Court — Western District of New York |
Abbott, Rippey & Hutchens and Harold G. Hutchens, all of Rochester, N. Y. (Nims & Verdi, of New York City, of counsel), for plaintiff.
Werner, Harris & Tew and George H. Harris, all of Rochester, N. Y., for defendants.
This is a motion to dismiss the bill of complaint upon the grounds that it fails to state facts sufficient to constitute a cause of action and that it is without equity.
The facts as alleged are substantially as follows: A corporation known as the Menihan Company was engaged in the business of manufacturing shoes at Rochester, N. Y. In connection therewith it began in 1912 to use the trade-marks "Arch Aid," "Menihan's Arch Aid," "The Menihan Arch Aid," and "Menihan." Shoes made by the company and bearing these trade marks were advertised and sold in most of the principal cities of the United States. The business grew, and by 1929 the aggregate net sales of shoes made by this company amounted to more than $3,000,000 annually. Subsequent to 1929 the business began to decline, and several years later the plaintiff loaned the company $250,000 and took as security liens on substantially all of its real and personal property, including the right to use the corporate name, the good will of the business, and all of its trade-marks, two of which were registered in the United States Patent Office. On December 7, 1936, the Menihan Company was adjudicated a bankrupt by order of this court, and in due course the trustee in bankruptcy sold to the plaintiff, as the highest bidder at public auction, substantially all the real and personal property of the bankrupt, the plant and all of the fixtures, furniture, machinery, and all equipment used in connection with its operation, the business and good will, the trade-marks and such rights as the bankrupt had to the use of the name "The Menihan Company" and to the use of the trade-mark "Arch Aid." About thirty days later the defendants J. G. Menihan, Sr., and J. G. Menihan, Jr., organized, or caused to be organized, the corporation, J. G. Menihan Corporation, one of the defendants, which is now engaged in the manufacture of shoes at Rochester, N. Y. It has placed, and is placing, upon shoes made by it, the trade-names and trade-marks which plaintiff purchased from the trustee in bankruptcy with full knowledge of the plaintiff's rights. The defendants have advertised themselves to the public as the successors of the Menihan Company. These acts were done with the fraudulent intent and purpose to appropriate to themselves the good will and business acquired by the plaintiff and to take advantage of the trade-marks and trade-names. The defendants have passed off their goods as those of the Menihan Company and have competed unfairly with plaintiff and have infringed plaintiff's trade-mark rights, are now doing so, and threaten to continue to do so. Plaintiff seeks an injunction, an accounting, and treble damages.
The defendants contend that the complaint does not state sufficient facts to give the court jurisdiction. The complaint alleges that the government of the United States is the owner and holder of all the capital stock of the plaintiff corporation, incorporated under an act of Congress, and that the value of the rights sought to be protected, exclusive of interest and costs, exceeds the value of $3,000. These facts alone are sufficient to give the court jurisdiction. Reconstruction Finance Corporation v. Bell, 4 Cir., 84 F.2d 136.
Another ground of defendants' objection is that plaintiff never had any competing business which could be injured by the defendants. The basis of this contention is that the plaintiff did not purchase from the trustee in bankruptcy a "going business," and therefore there was no trade or business and good will to which the trademarks might attach. Taking the complaint at face value, however, the plaintiff purchased substantially all of the real and personal property of the bankrupt, which included all of the fixtures, furniture, machinery, and all equipment used in connection with its operation;...
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