Van Dyk v. Van Dyk & Reeves, Inc.

Headnote

Corporations — trade names — jurisdiction — sale of assets of corporation by order of Federal court — action to restrain new corporation to which assets have been transferred by purchaser from, using old corporate name — complaint dismissed.

Van Dyk v. Van Dyk & Reeves, Inc., 217 App. Div. 781 , affirmed.

Appeal from a judgment, entered July 1, 1926, upon an order of the Appellate Division of the Supreme Court in the second judicial department, which reversed an order of Special Term denying a motion for a dismissal

of the complaint and granted said motion. The action was brought by a stockholder of a New York corporation whose assets, corporate name and franchises had been sold in receivership proceedings under an order of a United States District Court, to restrain the use of the corporate name by a new corporation to which the assets had been assigned by the purchaser from the receiver. Defendants moved for dismissal of the complaint under rule 106 of the Rules of Civil Practice on the grounds that the complaint did not state facts sufficient to constitute a cause of action and that the court did not have jurisdiction of the subject of the action; and also under rule 107 on the grounds that the order of the Federal court, confirming the sale, constituted an existing final judgment or decree of a court of competent jurisdiction rendered on the merits determining the same cause or causes of action between the parties. The Appellate Division held that the Federal court had jurisdiction of the old corporation and its property and of plaintiff, and had power to restrain the old corporation and plaintiff from making any use of the corporate name that would interfere with the good will bought by the new corporation; that under the circumstances shown, no injury could come to the plaintiff through the use of the name by the new corporation and, consequently, plaintiff was not entitled to equitable relief; and that the question whether, so long as the old corporation remained undissolved, the new corporation could lawfully be permitted to incorporate under the same corporate name, was a matter with which the State, and not this plaintiff, was concerned.