Singer Manufacturing Co. v. Sun Vacuum Stores, Inc.

• Decision Date: 05 April 1961
• Docket Number: Civ. A. No. 135-59.
• Citation: 192 F. Supp. 738
• Parties: SINGER MANUFACTURING COMPANY, a New Jersey corporation, et al., Plaintiffs, v. SUN VACUUM STORES, INC., a New Jersey corporation, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

192 F. Supp. 738

SINGER MANUFACTURING COMPANY, a New Jersey corporation, et al., Plaintiffs, v. SUN VACUUM STORES, INC., a New Jersey corporation, et al., Defendants.

Civ. A. No. 135-59.

United States District Court D. New Jersey.

April 5, 1961.

Riker, Danzig, Marsh & Scherer, by Dickinson R. Debevoise, Newark, N. J., for plaintiffs. William J. O'Hearn, New York City, of counsel.

Mayer & Mayer, by Abraham I. Mayer, Newark, N. J., for defendants.

HARTSHORNE, District Judge.

In October, 1959, a consent decree was entered in this trademark infringement case. Subsequently plaintiff brought civil contempt proceedings against Sun (the corporation) and Lieberman and Cohen, corporate officers, as individuals. Plaintiff alleges that the defendants are in contempt of paragraph 5 of the decree, which reads as follows:

"5. Defendant corporation, its officers and directors, and the individual defendants, and the agents, employees, representatives, privies and confederates of, and all those in active concert or participating with, or holding by, through or under, any of the foregoing, and the successors of each and all of said defendants, be, and the same hereby are, permanently enjoined and restrained from using any of plaintiffs' marks or names in advertising products in newspapers, on radio or television or otherwise where the purpose thereof is not to make a bona fide offer to sell the products advertised under such marks or names, but the purpose is to sell or further the sale of other products. It shall be prima facie evidence that an offer to sell products advertised in association with plaintiffs' marks or names is not bona fide, and that the purpose is to further the sale of other products, that the advertiser follows any practice such as: (1) failing to show or demonstrate such a product; (2) showing, demonstrating or delivering such a product which is inferior to the product as advertised; (3) disparaging such a product, before or after the sale thereof, which, however, shall not include the making of a truthful statement as to the age of the product not inconsistent with any advertisement of such product by any defendant; (4) refusing to sell such a product; (5) claiming undue delay in delivery of such a product; (6) failing to make reasonably prompt delivery of such a product for which an order has been taken; (7) claiming unavailability of replacement parts or repair service for such a product; or (8) misrepresenting any such product as to quality."

Thereupon a hearing was held lasting three days, evidence being offered by both sides. Plaintiff asks this Court to adjudge the corporate and individual defendants in contempt, to award reasonable counsel fees to plaintiff, to assess a fine equivalent to the profits unlawfully made by defendants, and to establish an in terrorem fine to prevent future violations of the decree.

The lengthy evidence presented reveals the following situation:

After the signing of the decree, defendants issued orders to their salesmen employees to abstain from violating the decree, including paragraph 5. However, certain salesmen, in response to inquiries from mail advertisements, paid visits to the homes of several employees of Singer Manufacturing Company. These advertisements told of various bargain prices for rebuilt Singer machines, and, while mentioning the Morse machine, clearly "played up" the Singer rebuilt machine and offered a home demonstration of the Singer. Defendants also advertised extensively in the newspapers to the same effect. The salesmen displayed the rebuilt Singer machines, but disparaged them as to their ability to perform. In the case of one Jackson, the salesman, after disparaging the Singer machine, went to his car and brought back a Morse machine and spoke highly thereof in an effort to sell it rather than the Singer and offered significant price concessions. When Jackson declined the offer of the Morse, the salesman, whose name is Mr. Lange, tried to sell the Universal machine at an even lower price Again Jackson refused and finally purchased the reconditioned Singer at a cost of $19.90.

One Nardone, answering an ad in the newspaper, arranged for a salesman to display the rebuilt Singer. When Mr. Lange arrived, he did not have the Singer with him, saying that he only had vacuum cleaners to sell and that evidently there had been a mix-up. However, he did have a Morse machine in his car and proceeded to give a demonstration. Lange began to disparage the Singer and praise the Morse, stating, among other things, that Singer machines were not made in the United States. Later testimony of Mr. Kard refuted this.

On another occasion a Miss Froden answered a mail advertisement for a demonstration of the rebuilt Singer. The salesman began to disparage the competence of the Singer machine while demonstrating it. Miss Froden persisted in her desire to purchase the rebuilt Singer and gave the salesman a check for the machine. The salesman then demonstrated the Morse and praised it in an effort to persuade Miss Froden to change to the Morse. Subsequently he returned the check, saying he could not part with the Singer machine as it was his only demonstrator. He stated that the corporation would deliver another similar rebuilt Singer shortly thereafter and payment could be made then. The machine did not arrive as scheduled and Miss Froden telephoned Sun, and the promise was made that it would be delivered the following week. However, the machine was never delivered.

These were the three instances presented by plaintiff to pinpoint alleged violations of paragraph 5. The defendants offered no evidence contradicting these three instances. They did not offer testimony from their salesmen to rebut the plaintiff's witnesses. The main thrust of the defense was that the individual defendants, acting for the corporation, had ordered compliance with the decree and that the actions set forth above did not constitute a violation of paragraph 5 by virtue of a careful reading and interpretation thereof. With this contention the Court cannot agree. Both on the law and on a careful reading of paragraph 5, this Court concludes that the corporate defendant must be held in contempt. The evidence, while indicating some activities which appear consistent with an effort to violate the decree, does not appear sufficient to warrant a finding of contempt as to Lieberman and Cohen. The fact that they did issue orders to their employees outweighs the rather sketchy evidence presented by the plaintiff in this regard. The evidence did indicate that Morse was involved with Sun in the advertising campaign, but the facts therein are not such as would warrant a finding of contempt as to Lieberman and Cohen. Holding someone in contempt of a Court's order calls for the exercise of careful discretion by the Court and that discretion should be based on clear and convincing evidence. See Fox v. Capital Co., 3 Cir., 1938, 96 F.2d 684; Bigelow v. RKO Radio Pictures, D.C.N.D.Ill.1948, 78 F.Supp. 250. As to the corporate defendant, the law is quite clear. A corporation is responsible for the acts of its employees and Judge McLaughlin, speaking for the Third Circuit, in the case of United States v. Armour & Co., 3 Cir., 1948, 168 F.2d 342, made it clear that the corporation was in criminal contempt resulting from the acts of its employees. Although the defendant corporation was much larger than Sun, the Third Circuit nevertheless held the corporation accountable. Certainly, if the corporation is accountable in criminal contempt, it would follow that its degree of responsibility for employee actions is no less severe in civil contempt proceedings. Other authorities are to the same effect. Gillette Safety Razor Co. v. Wolf, C.C.S.D.N.Y.1910, 180 F. 776; United States v. Van Riper, 3 Cir., 1946, 154 F.2d 492; Admiral Corporation v. Price Vacuum Stores, D.C.E. D.Pa.1956, 141 F.Supp. 796. Defendants cite the case of United States v. Taystee Baking Company, D.C.N.D.Tex.1944, 55 F.Supp. 490. That case is distinguishable since the United States there was seeking an injunction, not contempt for the violation of a prior injunction. However, in dictum the Court seemed to indicate that a corporation should not be held in contempt as a matter of discretion in seeking an equitable result where the corporation issues orders for compliance, but its employees violate such orders. The Third Circuit rule is not only controlling in this Court but appears to be a far wiser course. The orders of the Court must be obeyed, and to absolve a large or small corporate defendant from its responsibilities simply because the corporation has ordered compliance...