Schmalz v. Wooley

• Decision Date: 05 February 1898
• Parties: SCHMALZ v. WOOLEY et al.
• Court: New Jersey Court of Chancery

39 A. 539

56 N.J.E. 649

SCHMALZ

v. WOOLEY et al.

Court of Chancery of New Jersey.

Feb. 5, 1898.

Bill by Frederick W. Schmalz, who sues, etc., against Edwin Wooley and others, for an injunction and damages. Heard on demurrer to the bill. Demurrer sustained.

J. A. Beecher, for complainant.

Guild & Lum, for defendants.

STEVENS, V. C. This bill is filed on behalf of an unincorporated association of journeyman hatters known as the Union Hat Makers' Association of Newark, N. J?of which complainant is president. It alleges that the association, on September 16, 1896, caused to be filed for record with the secretary of state duplicate copies of the label, trade-mark, etc., before that time adopted by said association, and that the same has been owned and in actual use by the United Hatters of North America and by the Union Hat Makers' Association, a subassociation, and the other subassociations and local unions of journeymen hatters throughout the United States and Canada, for about 10 years past, "for the purpose of designating, making known, or distinguishing goods, wares, merchandise, or other product of labor, as having been made, manufactured, produced, prepared, packed, or put on sale by such persons or associations or unions of workingmen known as journeyman hatters, or by a member or members of such associations or unions"; and that the class of merchandise to which the label has been appropriated consists of hats and caps upon which the skilled labor required has been done by a member of the United Hatters of North America or of the subassociations or local unions of journeyman hatters belonging thereto. The label consists of a picture or representation of a globe, over which is written the words "Union Made," and around which is written "The United Hatters of North America." The bill alleges (after stating the rules and regulations of the United Hatters and some other particulars, to which it is not necessary to advert) that the defendants Wooley and Crane, of the city of Newark, are and have been for more than three years last past partners in trade, engaged in the business of manufacturing and selling hats in large quantities at their factory in Fair street, Newark, and that they are now, and for the last three years have been, wrongfully and knowingly using a counterfeit or imitation label on all or nearly all hats finished at and sent out from their factory, and that their factory is a "foul shop," not working under the jurisdiction of the said United Hatters of North America. The bill prays for an injunction and damages. The defendants demur.

The complainant puts his title to relief— First, on the principle on which equity ordinarily interferes in such cases; and, secondly, on the provisions of those acts of legislature which provide for the adoption of labels by unions of workingmen.

His first position is clearly untenable, in view of the decision in Schneider v. Williams, 44 N. J. Eq. 391, 14 Atl. 812. That case is, in all its essential features, identical with the case in hand. In both cases a label was adopted which was to be placed upon goods made by members of the association only. In both cases such labels had been used for a considerable period of time, and in both cases the defendants were alleged to be conducting their business in such manner as to deceive those who dealt with them. But in neither case did the bill show that the complainant, or those whom he represented, had any property right in the goods labeled. In referring to the bill then before him, Vice Chancellor Van Fleet said that it was defective in this respect: It did "not show that the complainants have applied their mark or label to a vendible commodity, of which they are the owners or in which they trade, and that they have put such commodity, marked with their mark, on the market." The case in hand discloses the same defect. It is not anywhere alleged that the association of journeyman hatters, on whose behalf complainant sues, are the owners of or that they are trading in the hats or caps to which the label is applied or that they have ever put them on the market. Without overruling this decision, it would be impossible to give complainant relief on the ground of the ordinary practice of courts of equity in dealing with trade-marks or labels. The case of Schneider v. Williams has been followed in Weener v. Brayton, 152 Mass. 101, 25 N. E. 46, and a similar conclusion has been reached in McVey v. Brendel, 144 Pa. St. 235, 22 Atl. 912.

But it is said that the statute has conferred a new right upon these associations. The first act was passed in March, 1889, the year after the decision in Schneider v. Williams, and presumably in view of that decision. It authorizes the court to enjoin the manufacture, use, or display of labels made to counterfeit the labels adopted by associations or unions of workingmen. This act is attacked as being contrary to that provision of the constitution of this state, which prescribes that the legislature shall not pass private, local, or special laws "granting to any corporation, association or individual any exclusive privilege, immunity or franchise whatever." The argument is that the legislature has conferred upon associations or unions of workingmen a right of property in labels or trade-marks which it has not conferred upon other citizens. What is the nature of the right conferred? Section 1 (3 Gen. St. p. 3678) enacts that it shall be lawful for associations and unions of workingmen to adopt, for their protection, labels, trade-marks, and forms of advertisements announcing that goods manufactured by members of such associations or unions are so manufactured. By section 2 it is enacted that persons counterfeiting these labels, etc., shall be guilty of a misdemeanor punishable by fine and imprisonment; and by section 5 it is further enacted that every association or union adopting a label may proceed by suit in the courts of this state "to enjoin the manufacture, use, display or sale of any such counterfeits, and that all courts having jurisdiction thereof (1) shall grant an injunction to restrain and prevent such manufacture, use, display or sale"; (2) shall award the complainant damages; (3) shall require the defendants to pay to the party injured the profits derived from such use; and (4) shall order the counterfeit destroyed.

Now, it seems to me, by these provisions, the legislature has sought to convert what was only an imperfect right—that is, a right incapable of being asserted in a court of justice against those who violate it into a complete and perfect one, —a right protected by both criminal and civil sanctions. Before lis passage the right of property in a label or trade-mark could only be asserted by those who owned or traded in the goods to which it was applied. After its passage it was to become a species of property per se. without any reference to whether the owner of the label or trade-mark owned or traded in the goods to which it was applied or not, or to whether it had ever been applied to any goods or not. This new property right was, however, by the act of 1889, given only to associations or unions of workingmen. No doubt these words apply to unincorporated as well as to incorporated associations and unions. Giving to them this, their widest, signification, it is self-evident that they embrace neither associations nor unions other than associations or unions of workingmen, nor individual citizens. What, then, the legislature has done is this: It has sought to give to some associations and to some individuals a right or privilege which it has not given to other associations and to other individuals. On this two questions arise: Is the right in question a "privilege," within the meaning of the constitution? and, if a privilege, is it one which may be given solely to associations or unions of workingmen?

There are two cases which seem to me to have an important bearing on the first question: Alexander v. City of Elizabeth, 56 N. J. Law, 71, 28 Atl. 51, and State v. Post, 55 N. J. Law, 264, 26 Atl. 683. In the former case it was held that an act which conferred upon the owners of certain race tracks then existing a right to obtain licenses on conditions more favorable than were accorded to persons who might thereafter wish to obtain them was a special law, granting an exclusive privilege. This privilege was a right conferred upon some persons to acquire, on more favorable terms, what all other persons might acquire on less favorable terms. If it had been given exclusively to those who were more favored and withheld altogether from others, the vice entering into the legislation would have been still more apparent. In State v. Post it was held that a right to plant oysters, given only to those citizens of the state now using any grounds lying under the tide water of the state for the planting of oysters, was also a privilege, within the meaning of the constitution, and that, inasmuch as the class to which this right was given was a class less extensive that the whole class of citizens who might thereafter wish to plant oysters, subject to such general regulations as the legislature might prescribe, it was special, and therefore unconstitutional. These cases seem to me to be in point. If the rights there accorded were privileges, within the meaning of the constitution, then it appears to follow that the exclusive right to use the words, figures, and designs contained in labels or trade-marks, given to unions of workingmen, must be equally a privilege, and a privilege, too, of considerable value. The right to the absolute ownership of a distinguishing mark or design, protected by all the sanctions of the law, which may indicate either the origin of the article made, aside from ownership, or the bodies or persons who may have examined or approved it, is undoubtedly a valuable right, to many persons, under any circumstances. It being clear that this right so...