Merry v. Hoopes — 19 N.Y. St. Rep. 379

Majority

p. 379

John Merry, App’lt, v. Louis Hoopes et al., as Executors, etc., Resp’ts.

(Court of Appeals,

Filed November 27, 1888.)

Headnote

Contract—Dissolution of partnership—Construction of.

The plaintiff and testator were engaged in business under the name of Merry & Co., and dissolved partnership, by a certain written agreement whereby all the liabilities of the late firm were assumed by the plaintiff and he was to succeed it in the same business at the same place, and for this purpose the defendant’s testator assigned the lease of the premises to plaintiff, and in substance sold the plant to him, and among the articles or property contained in the inventory of such plant were the stencil plates which made the brands in question. Said agreement of dissolution specified exactly what the defendant was to have from the firm, and the good will was not therein included, nor any marks or brands, nor was defendant to succeed to the business or any part thereof. The parties were engaged in the sale and manufacture of galvanized iron, and the plaintiff claimed the exclusive right to use certain brands, made by said stencil plates, which had been used by the said firm for marking galvanized iron manufactured by him. Held, that if these brands were trade marks, so that they indicated that the iron upon which they were placed was of the manufacture of the plaintiff, or of the firm of which he had been a member or that it had been galvanized by him or his firm, or specially sold by him or them, the right to exclusively use them on iron galvanized by plaintiff, passed to him by virtue of the written papers signed by the parties at the time of the dissolution.

Appeal from a judgment of the New York superior court, general term, affirming a judgment of the special term dismissing the plaintiff’s complaint upon the merits. The facts are sufficiently set forth in the opinion, excepting the dissolution agreement, which is given in full.

Agreement, made the 1st day of February, 1884, between Evan T. Hoopes, of the city of New York, and John Merry, of the same place, witnesseth, that the co-partnership heretofore existing between said Hoopes & Merry, is hereby-dissolved upon the following terms:

First. Said Hoopes shall, upon the execution of this agreement, receive of the partnership funds and property the sum of $4,500 in cash, also notes of customers of Hoopes & Merry, now held by said firm, endorsed byHoopes & Merry, to the amount of $7,500, and all interest on said notes, is to be allowed to said Hoopes, also said Hoopes is to receive notes by said Merry to the order of said Hoopes to the amount of $5,000, to wit: Three notes, payable in six, nine and twelve months respectively from this date, with interest; also said Hoopes is to receive and

p. 380

said Merry is to deliver to him merchandise of the value of $5,000, to be delivered as selected by said Hoopes, and at price agreed upon as per memorandum, signed by said Merry this day, and delivered simultaneously herewith, all of said merchandise to be delivered on or before May 15, 1884.

Second. Said Hoopes and Merry are to assign the existing lease of the premises north side- of Fifteenth street, between Tenth and Eleventh avenues, heretofore occupied by said firm, to Evan T. Hoopes, and thereupon said Hoopes is to' execute a lease of said premises to said Merry for the period of twenty-seven months from the first day of February, 1884, at the monthly rent of $650, payable monthly; which said Merry agrees to pay; and said Hoopes. is to execute also a lease to said Merry for the same period aforesaid, of the plant belonging to the business of said firm, as specified in memorandum annexed, including office fixtures, horses and wagons, for the sum of one dollar, with a proviso that on default of compliance by said Merry with the terms of the lease of said premises, the lease of the plant shall, terminate, and said Hoopes may thereupon take possession of all said plant, said Merry to deliver the same to him undiminished.

Third. Upon expiration of said term, said leases having been complied with, and all indebtedness of said Merry to-said Hoopes, arising from the foregoing provisions of this agreement having been paid, said Hoopes shall execute and deliver to said Merry a bill of sale, conveying to said Merry all said plant for the sum of $1,000, which said Merry shall pay therefor.

Fourth. Said Merry is to succeed to and assume all the liabilities of the firm of Hoopes & Merry.

Fifth. Said Merry agrees to pay said Hoopes the sum of $650 monthly, on the last secular day of each month, for the period of twenty-seven months from the first day of February, 1884, and said payments shall be credited when made, on the rent reserved in said lease of said premises; but if said lease shall be hereafter annulled, it shall not affect the covenant herein for payment of said monthly sums, but said covenant shall remain binding notwith standing said lease may be annulled, it being a part of the consideration of this agreement that said Merry shall pay to said Hoopes the sum of $17,550 in instalments of $600 monthly.

Sixth. If said Hoopes should neglect to pay to his landlord the rent of said premises within five days after the same is due, said Merry may pay any such rent so neglected to be paid by said Hoopes and charge the same to Hoopes’' account.

p. 381

Seventh. If the premises shall be destroyed by fire, so> that by the terms of said lease the rent ceases, then said Merry shall be entitled to deduct from the said monthly payments hereinbefore provided, thereafter becoming due, the sum of $183.33, and said Merry shall be entitled to a like reduction in case for any reason rent should cease to be payable under the lease heretofore existing, made by Bradish Johnson to Hoopes & Merry, on said premises this day assigned to Hoopes..

Witness our hands and seals the day and year first above written.

EVAN T. HOOPES.

JOHN MERRY.

Alexander V. Campbell, for app’lt; Jefferson Clark, for resp’ts.

If the brands in question were trade marks, so that they indicated that the iron upon which they were placed was of the manufacture of the plaintiff, or of the firm of which he had been a member, or that it had been galvanized by him or his firm, or specially sold by him or them, we think the right to exclusively use them on iron galvanized by the plaintiff passed to him by virtue of the written papers signed by the parties at the. time of the dissolution.

They were brands which had been designed by the plaintiff while a member of the firm of John Merry & Co., and had been used by that firm, and we think had passed to the firm composed of the plaintiff and defendant’s testator. Although the words “ good will ’ were not mentioned in the papers (other than in Exhibit E., which was not signed by the parties and which the defendant does not recollect even to have seen), yet it is evident from an inspection of the papers which were signed by him that it was meant to pass, and when defendant denies it he merely denies a conclusion of law, as the intention to pass it is derived from the documents signed by the parties.

In Shipwright v. Clements ( 19 W. R., 599 ), Malius, V. C., held that where a business was sold, the entire good will and right to trade marks pass to the purchaser without any express mention of them being made in the deed of assignment. See, also, Hudson v. Osborne, 18 W. R. Ch. Dig., 44, paragraph 15 ; S. C., 39 L. J. R. N. S., 19. The effect of the transaction between the parties, as evidenced in the papers executed by them, was a sale of the business, its good will and its trade marks to the plaintiff by the defendants; All the liabilities of the late firm were assumed by the plaintiff, and he was to succeed it in the same business and at the same place, and for this purpose

p. 382

dhe defendant’s testator- assigned the lease of the premises to plaintiff, and in substance sold the plant to him, and among the articles of property contained in the inventory of such plants were stencil plates which made the brands. The agreement of dissolution specified exactly what the -defendant was to have from the firm, and the good will was not there included, nor any marks or brands, nor was defendant to succeed to the business or any part thereof, and what the defendant did not take it was meant the plaintiff should have. After the dissolution it was found, as a fact, by the court that both parties engaged in the business of dealing in galvanized iron in New York, and both parties used these brands, the plaintiff upon iron galvanized by him and the defendant upon iron galvanized for him by other parties pursuant to his order.

The court found as a conclusion of law that the plaintiff .never acquired and never had the exclusive right to use these marks, and that the defendant had the same right which plaintiff had to their use.

There is no express finding that these brands were trademarks, and the evidence on the subject is contradictory. The plaintiff testifies to a state of facts which would leave no doubt that they indicated that the iron upon which they were found was not alone of a certain quality, but that it had been galvanized by the plaintiff, or by a firm of which he was a member, and that such iron thus galvanized had a large sale through the country, and the brands were valuable as a trade-mark. But the defendant, on the contrary, testified, in so many words, that the brands indicated nothing of the sort; that they simply indicated that the iron itself upon which they were found was iron of the first or second quality (according to the brand which was used), and did not in any way indicate or represent that the plaintiff or any other special person or firm had manufactured or galvanized it, or that the galvanizing was of any particular quality; that if the words “best bloom iron” had been used-in the one case, and “good second quality charcoal iron ” had been used in the other, all- the information would have been, imparted to those in the trade that they would have acquired from seeing these brands upon the iron; that it was simply a short way to describe the original quality of the iron 'which had been subjected to the galvanizing process, and the iron itself was not manufactured by plaintiff, nor had he any connection with its manufacture.

If the brands had only this meaning and significance, it is .plain that the plaintiff would have no right to prevent the defendant from using them, for the exclusive right to use them would not pass as part of the good will or us a trade

p. 383

mark, while if the plaintiff’s contention were true, it is equally plain, upon our construction of the dissolution articles, that he would have such right. The court upon this and several other questions was requested to find in accordance with the plaintiff’s contention, and refused to do so, “except so far as they (the requests) are covered by the findings signed on application of defendant.” There is no express and separate finding on this subject signed by the court on application of defendant, or at all. But upon the fact (with others) found by the court that “no mention was made of any trade-mark in any of the papers executed by said parlies upon the dissolution of said firm, and that neither partner expressly conveyed to the other any right to the use of any marks or brands,” the court found as a conclusion of law that the plaintiff never acquired and never had the exclusive right to the use of the marks or brands aforesaid, and that the defendant had the same right which plaintiff had to use such brands or marks.

The result of the finding of the court and its conclusion of law is that assuming these marks to be a trade mark, there is no evidence of an exclusive right to its use by plaintiff, and for that reason the complaint was dismissed. Although it did refuse to find the facts as to the trade mark when specially asked so to do by the plaintiff, other than as was contained in the findings for defendant, yet the finding of fact which it did make for defendant and the conclusion of law therefrom, render it clear that the court assumed the fact as existing (and in the above seventh finding so treated it), that the brands were trade marks, although still deciding that the right to their exclusive use did not vest with the plaintiff. In this we think there was error, and the exception to the conclusion of law reaches it.

Upon a new trial it can be plainly discussed and the fact found one way or the other upon which the question depends whether these brands were trade marks or were mere labels indicative of the quality of iron upon which the galvanizing process had been performed.

The cases of Huwer v. Dannenhoffer ( 82 N. Y., 499 ), and Hazard v. Caswell ( 93 N. Y., 259 ), are not in conflict with the decision of this case. They simply hold that a trade mark used by a firm is an asset of the firm, and upon a dissolution, each partner has the right to use it unless he has vested the other with an exclusive right to do so, and that it is incumbent upon the partner who claims ouch exclusive right, to prove himself vested with it.

In this case we hold that if these were trade marks then the plaintiff has proved such exclusive right, so far as the facts are now presented.

The judgment should be reversed and a new trial ordered, with costs to abide the event.

All concur.