The Manhattan Shirt Company v. Sarnoff-Irving Hat Stores, Inc.

• Citation: 158 A. 133,18 Del.Ch. 224
• Court: Court of Chancery of Delaware
• Decision Date: 16 December 1931
• 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

158 A. 133

18 Del.Ch. 224

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

Court of Chancery of Delaware, New Castle

December 16, 1931

INJUNCTION BILL to restrain the corporation defendant (the defendant Mintz being its store manager) from selling men's wearing apparel on which the name or label "Manhattan," or other like or similar word appears and from representing orally or otherwise that certain products exhibited for sale by the defendant, bearing said label, are the product of the complainant when in fact they are not, and for an accounting and damages.

The bill alleges that since prior to 1869 the complainant and its predecessors have used the word "Manhattan" to designate the men's wearing apparel manufactured by them and that the name, when so placed on such articles of manufacture, has become known to the public as a mark identifying the complainant as the source of their origin. It is further alleged that the complainant and its predecessors have spent substantial sums of money in associating the name "Manhattan" in the public mind with the complainant as the manufacturer of articles bearing that label; that the articles manufactured by the complainant and marketed under the name "Manhattan" are of superior quality; but that the defendant, to the great injury and damage of the complainant, has been and still is engaged in selling articles of men's wearing apparel (not manufactured by the complainant), of inferior quality with the label of "Manhattan" affixed thereto, whereby goods not manufactured by the complainant are falsely passed on to the purchasing public as goods of the complainant's make.

Robert Reis & Company, a New York corporation, has filed a petition for leave to intervene as a defendant for the purpose of filing an answer and cross-bill.

The complainant interposed no objection to the intervention for purpose of filing an answer; but objects to the granting of leave to intervene for the purpose of filing a cross-bill.

The proposed cross-bill has been exhibited to the court. It sets out that the articles sold by the defendant under the trade-name "Manhattan" are of the intervenor's manufacture; that the intervenor has the right to use that trade name on the articles mentioned, and that in 1913, after some controversy between the complainant and intervenor over the use of the name, they entered into an agreement fixing as between themselves the extent to which each might make use of the name as a label upon goods of their manufacture. The proposed cross-bill alleges further that the complainant has breached the agreement by making use of the name upon articles forbidden to it by the terms thereof to the injury of the intervenor, which has the exclusive right to the use of said name upon those articles and as to which the trade had come to regard the name "Manhattan" as showing the articles to be of the intervenor's manufacture. The intervenor has filed a suit in the Supreme Court, New York County, New York, against the complainant seeking an account of its alleged wrongful use of the name "Manhattan" contrary to the terms of said agreement, which suit is still pending. The proposed cross-bill continues with an allegation that the complainant has made and threatens to continue to make false statements to the intervenor's customers to the effect that the intervenor has no right to the use of the name in question, that the complainant had brought suit against it which the intervenor is not financially able to defend, and that the conduct of the complainant in this regard has been such as to cause serious injury and damage to the intervenor in the estimated amount of five hundred thousand dollars.

Wherefore the cross-bill prays an injunction against the complainant against using the trade-mark "Manhattan" in any manner whatever except as defined in the agreement referred to, and for an accounting and damages in the amount of five hundred thousand dollars.

The cause now came on to be heard upon the intervenor's application for leave to file its cross-bill.

Order entered denying leave to file the proposed cross-bill.

William G. Mahaffy, and Edward S. Rogers, of New York City, for complainant.

Hugh M Morris, for intervenor.

OPINION

THE CHANCELLOR:

The bill in this cause is by a manufacturer against a retailer of goods of the intervenor's make bearing an unregistered trade-mark which the complainant alleges is a mark recognized by the public as indicating goods whose manufacturing origin is with it. The intervenor alleges on the contrary that the mark on the kinds of articles in question is a mark which identifies it and not the complainant as the source of origin.

The intervenor has been allowed without opposition to file an answer in resistance to the complainant's case against the retailer defendant. It seeks by filing a cross-bill to broaden the scope of the suit so as to bring before the court, in addition to the purely defensive rights of the retailer, the whole subject-matter of the relative rights of the complainant and intervenor in the use of the mark "Manhattan." It seeks an injunction against the complainant's using the mark further than the agreement between them allows and an accounting and damages for past infringement of the intervenor's rights. The injunctive phase of the intervenor's cross-bill seeks in an indirect way the specific performance of the contract by which the intervenor and complainant, joint users of the mark, undertook to parcel out to each other the field of its enjoyment.

It is plain that the original defendant could seek no such relief as the cross-bill contemplates, for a...