text:
Manufacturing Company v. Trainer/Opinion of the Court

This is a suit in equity to restrain the defendants, D. Trainer & Sons, from using on ticking manufactured and sold by them the letters 'A. C. A.' in the sequence here named, alleged by the complainant to be its trade-mark, by which it designates ticking of a particular quality of its own manufacture; and to compel the defendants to account for the profits made by them on sales of ticking thus marked.

It appears that the complainant, the Amoskeag Manufacturing Company, a corporation created under the laws of New Hampshire, commenced the manufacture of ticking at Amoskeag Falls, in that State, some time prior to 1834, and marked its products with a label or ticket consisting of a certain device, within which were printed, in red colors, the name of the company, its place of manufacture, the words 'Power Loom,' and in the centre the single letter 'A' or 'B' or 'C' or 'D,' according to the grade of excellence of the goods, the first quality being indicated by the first letter and the decreasing quality from that grade by subsequent letters in the alphabet. The device, apart from the words mentioned, was a fancy border in red colors, square outside and elliptical within, and the words in the upper and lower lines of the label were printed in a line corresponding with the inside curve of the border.

In the year 1834, or about the time, the company introduced an improvement in its manufacture, by which it produced a grade or quality of ticking superior to any which it had previously manufactured. For goods of this quality it used in its label or ticket, in place of the single letter 'A,' the three letters 'A. C. A.' The original device, with its colored border and printed words, indicating the company by which and the place where the goods were manufactured was retained; the only alteration consisting in the substitution of the three letters 'A. C. A.' in place of the single letter 'A.' Subsequently the company changed its place of manufacture from Amoskeag Falls to Manchester, in the same State, and a corresponding change was then made in the label. The three letters mentioned were placed in the label or ticket on all goods of the very highest quality manufactured by the complainant, the single letter being retained in the labels placed on other goods to indicate a lower grade or quality. The combination of the three letters was probably suggested, as is stated, by the initials of the words in the company's name, Amoskeag Company,-with the letter 'A' previously used, to denote the best quality of goods it manufactured. It is contended by the complainant that the combination was adopted and used to indicate, not merely the quality of the goods, but also their origin as of the manufacture of the Amoskeag Company. It is upon the correctness of this position that it chiefly relies for a reversal of the decree dismissing the bill.

On the part of the defendants the contention is that the letters were designed and are used to indicate the quality of the goods manufactured and not their origin; that it was so adjudged many years ago in a case to which the company was a party in the Superior Court of the city of New York, which adjudication has been generally accepted as correct, and acted upon by manufacturers of similar goods throughout the country; and that the letters, as used by the defendants on a label or ticket having their own device, and in connection with words different from those used by the complainant, do not mislead or tend to mislead any one as to the origin of the goods upon which they are placed.

The general doctrines of the law as to trade-marks, the symbols or signs which may be used to designate products of a particular manufacture, and the protection which the courts will afford to those who originally appropriated them, are not controverted. Every one is at liberty to affix to a product of his own manufacture any symbol or device, not previously appropriated, which will distinguish it from articles of the same general nature manufactured or sold by others, and thus secure to himself the benefits of increased sale by reason of any peculiar excellence he may have given to it. The symbol or device thus becomes a sign to the public of the origin of the goods to which it is attached, and an assurance that they are the genuine article of the original producer. In this way it often proves to be of great value to the manufacturer in preventing the substitution and sale of an inferior and different article for his products. It becomes his trade-mark, and the courts will protect him in its exclusive use, either by the imposition of damages for its wrongful appropriation or by restraining others from applying it to their goods and compelling them to account for profits made on a sale of goods marked with it.

The limitations upon the use of devices as trade-marks are well defined. The object of the trade-mark is to indicate, either by its own meaning or by association, the origin or ownership of the article to which it is applied. If it did not, it would serve no useful purpose either to the manufacturer or to the public; it would afford no protection to either against the sale of a spurious in place of the genuine article. This object of the trade-mark and the consequent limitations upon its use are stated with great clearness in the case of Canal Company v. Clark, reported in the 13th Wallace. There the court said, speaking through Mr. Justice Strong, that 'no one can claim protection for the exclusive use of a trade-mark or trade name which would practically give him a monopoly in the sale of any goods other than those produced or made by himself. If he could, the public would be injured, rather than protected, for competition would be destroyed. Nor can a generic name or a name merley descriptive of an article of trade, of its qualities, ingredients, or characteristics, be employed as a trade-mark, and the exclusive use of it be entitled to legal protection.' And a citation is made from the opinion of the Superior Court of the city of New York in the case of the present complainant against Spear, reported in the 2d of Sandford, that 'the owner of an original trade-mark has an undoubted right to be protected in the exclusive use of all the marks, forms, or symbols that were appropriated as designating the true origin or ownership of the article or fabric to which they are affixed; but he has no right to the exclusive use of any words, letters, figures, or symbols which have no relation to the origin or ownership of the goods, but are only meant to indicate their names or quality. He has no right to appropriate a sign or symbol, which from the nature of the fact it is used to signify, others may employ with equal truth, and therefore have an equal right to employ for the same purpose.'

Many adjudications, both in England and in this country, might be cited in illustration of the doctrine here stated. For the purpose of this case, and in support of the position that a right to the exclusive use of words, letters, or symbols, to indicate merely the quality of the goods to which they are affixed cannot be acquired, it will be sufficient to refer, in addition to the decisions mentioned in Wallace and Sandford, to the judgment of the Vice-Chancellor in Raggett v. Findlater, where an injunction to restrain the use by the defendants upon their trade label of the term 'nourishing stout,' which the plaintiff had previously used, was refused on the ground that 'nourishing' was a mere English word denoting quality. Law Rep. 17 Eq. 29. Upon the same principle letters or figures which, by the custom of traders, or the declaration of the manufacturer of the goods to which they are attached, are only used to denote quality, are incapable of exclusive appropriation; but are open to use by any one, like the adjectives of the language.

If, now, we apply the views thus expressed to the case at bar, we shall find the question involved to be of easy solution. It is clear from the history of the adoption of the letters 'A. C. A.' as narrated by the complainant, and the device within which they are used, that they were only designed to represent the highest quality of ticking which is manufactured by the complainant, and not its origin. The device previously and subsequently used stated the name of the manufacturer, and no purpose could have been subserved by any further declaration of that fact. And besides, the letters themselves do not suggest any thing, and require explanation before any meaning can be attached to them. That explanation when made is that they are placed in the device of the company when it is affixed to the finest quality of its goods, while single letters are used in the same device when it is attached to goods of an inferior quality. They are never used be themselves, but merely as part of a device containing, in addition to the border in red, several printed terms. Alone the letters convey no meaning; they are only significant as part of the general device constituting the trade-mark. Used in that device to denote only quality, and so understood, they can be used by others for a similar purpose equally with the words 'superior' or 'superfine,' or other words or letters or figures having a like significant.

We are aware that there is in the record the testimony of several witnesses to the effect that they understood that the letters were intended to indicate the origin as well as the quality of the goods to which they were attached, but it is entirely overborne by the patent fact that the label previously disclosed the name in full of the manufacturer and by the history of the adoption of the letters, as narrated by the complainant. As it was pertinently observed in the case in Sandford, if purchasers of the ticking read the name of the company, the letters can give no additional information, even if it be admitted that they are intended to indicate the name of the company. And if they do not read the name as printed, the letters are unintelligible. If an explanation be asked of their purpose in the label, the only reasonable answer which can be given is the one which corresponds with the fact that they are designed merely to indicate the quality of the goods.

But there is another and equally conclusive answer to the suit. The label used by the defendants is not calculated to mislead purchasers as to the origin of the goods to which it is attached. It does not resemble the device of the complainant. Its border has a different figure; it is square outside and inside. It has within it the words 'Omega' and 'Ring Twist,' as well as the letters 'A. C. A.' Neither the name of the complainant, nor of the place where its goods are manufactured, nor the words 'Power Loom,' are upon it. The two labels are so unlike in every particular, except in having the letters 'A. C. A.' in their centre, that it is impossible that any one can be misled in supposing the goods, to which the label of the defendants is attached, are those manufactured by the complainant. The whole structure of the case thus falls to the ground. There is no such imposition practised upon the public and no such fraud perpetrated upon the manufacturers, in attempting to dispose of the goods of one as those of another, as to call for the interposition of a court of equity.

Decree affirmed.

MR. JUSTICE CLIFFORD dissenting.


text: Talk:Manufacturing Company v. Trainer/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Manufacturing Company v. Trainer/Dissent Clifford

MR. JUSTICE CLIFFORD dissenting.

Symbols or devices used by a manufacturer or merchant to distinguish the products, manufactures, or merchandise which he produces, manufactures, or sells, from that of others, are called and known by the name of trade-marks. They are used in order that such products, manufactures, or merchandise may be known as belonging to the owner of the symbol or device, and that he may secure the profits from its reputation or superiority. 15 Am. Cyclopedia, 832.

Equity courts in all civilized countries have for centuries afforded protection to trade-marks, the object of such protection being not only to secure to the individual the fruits of his skill, industry, and enterprise, but also to protect the public against fraud.

Property in a trade-mark is acquired by the original application to some species of merchandise or manufacture of a symbol or device not in actual use to designate articles of the same kind or class.

Devices of the kind, in order that they may be entitled to protection in a court of equity, must have the essential qualities of a lawful trade-mark; but if they have, the owner becomes entitled to its exclusive use within the limits prescribed by law, the rule being that he who first adopts such a trade-mark acquires the right to its exclusive use in connection with the particular class of merchandise to which its use has been applied by himself or his agents.

Prior use is essential to any such exclusive claim, as the right to protection begins from such actual prior use; nor does the right to protection extend beyond the actual use of the device. Hence the use of it on one particular article of manufacture or merchandise will not prevent another from using it on another and different class of articles, the rule being strictly applied that the right to protection in equity is limited to the prior use of the symbol by the owner.

Sufficient appears to show that the plaintiffs, at an early period in the fourth decade of the present century, engaged in the manufacture of a fabric known as ticking of various grades and quality, and that subsequently they made a valuable improvement in the mode of manufacturing the fabric, which enabled them to produce a very superior articles. Before the introduction of the improvement they had been in the habit of marking their products in that species of manufacture with one of the first four letters of the alphabet, to designate the different grades of their manufacture when offered for sale in the market. Thirty-four years ago or more they introduced the new improvement in the manufacture of the fabric, and adopted the distinctive trade-mark, of which a fac-simile is exhibited in the transcript. When examined, it will be seen that it consists of the corporate name of the complainants, with a rough engraved surrounding, and the letters 'A. C. A.' plainly and conspicuously printed in the centre of the circular outside edge.

Conclusive proof is exhibited that the peculiar combination of letters adopted by the complainants as a symbol of trade originated with them, and that it suggested itself to them as comprising the initial letters of their familiar corporate name, with the addition of the letter 'A' at the close, which had previously been used by them as indicating the best quality of the fabric manufactured by them before they made the alleged improvement.

Single letters of the kind are frequently used as a mark of quality; but the proofs in this case show to a demonstration that the peculiar combination of letters adopted by the complainants at the period mentioned were not adopted to denote quality merely, but as an appropriate and distinguishing trade-mark, symbol, or device, to indicate to the public and to purchasers that the fabric which bears the mark was of the manufacture of the manufacturing company of the complainants. Beyond all doubt, they adopted the symbol or device, and affixed it to the fabric of their trade to indicate the origin and ownership of the article.

Few manufactured products bear in their own external appearance sufficient evidence of their real character to protect the purchaser against fraudulent imitations. Integrity in manufacture and uniformity in quality are high recommendations to purchasers, and manufactured goods falling within that category are much preferred, both by the purchasers and consumers of the same; and when by long experience the public have learned to associate these elements of recommendation with a special symbol or brand, the wide and profitable sale of the articles bearing the same is assured, and the exclusive possession and use of the symbol or brand becomes of great value to the real owner. Purchasers are also interested that such a trade-mark should receive protection, as it is a guaranty of genuineness, and its value is proportioned to the business reputation of the owners of the same and of the excellence of their manufactures. 4 Johns. Cyclopedia, part 2, p. 916.

Infringement by the respondents is charged, and the complainants pray for an injunction and for an account. Service was made, and the respondents appeared and set up various defences, as follows: 1. That the alleged trade-mark was never designed or used as such, but merely to designate one of the grades of the fabric which the complainants manufactured. 2. That the complainants are estopped by a prior decision of a court of competent jurisdiction to set up that the alleged symbol is a trade-mark. 3. They admit that they mark their goods with the letters 'A. C. A.,' but they deny that the mark is fraudulent or that it is calculated to deceive the public. 4. They deny that their conduct is in the slightest degree fraudulent or inequitable, or that the sale of their goods injures the complainants.

Proofs were taken, hearing had, and the Circuit court entered a decree dismissing the bill of complaint. Prompt appeal was taken by the complainants to this court, and they assign the following causes of error: 1. That the Circuit Court erred in entering a decree dismissing the bill of complaint. 2. That the court erred in not granting the injunction as prayed. 3. That the court erred in not decreeing that the complainants are entitled to an account. 4. That the court erred in not sustaining the bill of complaint.

Attempt is made in argument to show that the symbol of the complainants was not adopted by them for any other purpose than to designate the grade or quality of the fabric which they manufacture and sell in the market; but it is a sufficient answer to that proposition to say that it is wholly unsupported by evidence, and is decisively overthrown by the proof introduced by the complainants.

Words or devices, or even a name in certainc ases, may be adopted as a trade-mark which is not the original invention of the party who appropriates the same to that use. Phrases, or even words or letters in common use, may be adopted for the purpose, if at the time of their adoption they were not employed by another to designate the same or similar articles of production or sale. Stamps or trade-marks of the kind are employed to point to the origin, ownership, or place of manufacture or sale of the article to which it is affixed, or to give notice to the public who is the producer, or where it may be purchased. Canal Company v. Clark, 13 Wall. 311, 322.

Subject to the preceding qualifications a trade-mark may consist of a name, symbol, figure, letter, form, or device, if adopted and used by a manufacturer or merchant in order to designate the goods he manufactures or sells, or to distinguish the same from those manufactured or sold by another, to the end that the goods may be known in the market as his, and to enable him to secure such profits as result from his reputation for skill, industry, and fidelity. Upton, Trade-marks, 9; Taylor v. Carpenter, 2 Sandf. (N. Y.) Ch. 603.

Brands or stamps called trade-marks, says Waite, may consist of a name, figure, letter, form, or device adopted and used by a manufacturer or merchant in order to designate the goods that he manufactures or sells, and to distinguish them from those manufactured or sold by another, to the end that they may be known in the market as his, and thus enable him to secure such profits as result from a reputation for superior skill, industry, or enterprise. 6 Waite, Actions and Defences, 21.

Such a manufacturer or merchant who first adopts such a trade-mark, and is accustomed to affix the same to a particular fabric of his manufacture or sale to distinguish it from all others, has a property in it, and may maintain an action for damages if used by another, or he may restrain another from using it by application to a court of equity. Hall v. Barrows, 4 De G. J. & S. 149, 156; s. c. 12 W. R. 322, 323.

Judicial protection is granted in such a case upon the ground that the honest, skilful, industrious manufacturer or enterprising merchant who has produced or brought into the market an article of use or consumption that has found favor with the public, and who by affixing to it some name, mark, device, or symbol which serves to distinguish it as his and from that of all others, shall receive the first reward of his honesty, skill, or enterprise, and shall in no manner and to no extent be deprived of the same by another who to that end appropriates the same or a colorable imitation of the same to his production, so that the public are or may be deceived or misled. Wolfe v. Barnett & Lion, 24 La. An. 97; Newman v. Alvord, 15 N. Y. 189, 196; Lee v. Haley, Law Rep. 5 Ch. Ap. 155; Blackwell v. Wright, 73 N. C. 310, 313.

Nothing can be better established, says the Master of the Rolls, and nothing ought to be otherwise than fully established in a civilized country, than that a manufacturer is not entitled to sell his goods under the false representation that they are made by a rival manufacturer. Singer Manufacturing Co. v. Wilson, 2 Ch. D. 434, 440; Browne, Trade-marks, sect. 385; Osgood v. Allen, 1 Holmes, 185, 194.

When we consider, says Duer, the nature of the wrong that is committed when the right of property in a trade-mark is invaded, the necessity for the interposition of a court of equity becomes more apparent. He who affixes to his own goods an imitation of an original trade-mark, by which those of another are distinguished and known, seeks by deceiving the public to divert to his own use the profits to which the superior skill and enterprise of the other had given him an exclusive title, and endeavors by a false representation to effect adishonorable purpose by committing a fraud upon the public and upon the true owner of the trade-mark. Amoskeag Manufacturing Co. v. Spear, 2 Sandf. (N. Y.) 599, 605; The Collins Company v. Brown, 3 Kay & J. 423, 428.

Thirty years and more before the suit was commenced the plaintiff company adopted the trade-mark in question and affixed the same to their improved manufacture of ticking, and it appears from the evidence that they have continuously from that date to the day the bill of complaint was filed used the same as the symbol to designate that peculiar manufacture, which of itself is sufficient to show, if any thing in the nature of proof can be, that the first defence set up in the answer ought to be overruled.

Much discussion of the second defence cannot be required, as the statement of the proposition that the complainants are estopped to ask relief in this case because they were partially unsuccessful in a prior suit against another party is quite sufficient for its refutation. Neither argument nor authority is necessary to show that it has no foundation in law or justice, and it is equally clear that the supposed analogy between an admiralty decree in rem and a decree dismissing a bill in equity for the invasion of a trade-mark is illusory, unfounded, and without the slightest legal effect.

Suppose that is so, still the respondents deny that the trade-mark which they use is in the slightest degree fraudulent, or that it is calculated to deceive the public. They admit that they use the letters 'A. C. A.,' but they deny that in any other respect they have used the trade-mark adopted by the complainants.

Manufacturers and merchants have severally the unquestioned right to distinguish the goods they manufacture or sell by a peculiar mark or device, so that the goods may be known in the market as the product or sale of the owner of the trade-mark, or device, in order that they may thus secure the profits which the superior repute of the goods may be the means of giving to the producer or seller. Gillott v. Esterbrook, 48 N. Y. 374, 376.

Confirmation of that proposition is found in all the reported cases, and it is equally true that the owners of such trade-marks are entitled to the protection of a court of equity in the exclusive use of the symbols they have thus adopted and affixed to their goods, the foundation of the rule being that the public interest as well as the interest of the owner of the trade-mark requires that protection. 2 Story, Eq. Jur., sect. 951.

Such a party has a valuable interest in his trade or business, and having appropriated a particular label or trade-mark indicating to those who wish to give him their patronage that the article is made or sold by him or by his authority, or that he carries on his business at a particular place, he is entitled to protection against any other person who attempts to pirate upon the good-will of his customers or of the patrons of his trade or business by sailing under his flag without his authority or consent. Partridge v. Menck, 2 Barb. (N. Y.) Ch. 101.

Redress is given in such cases upon the ground that the party charged is not allowed to offer his goods for sale, representing them to be the manufacture of the first and real owner of the trade-mark, because by doing so he would be guilty of a misrepresentation, and would deprive the real owner of the profits he might make by the sale of his goods which the purchaser intended to buy.

Compensation for such an injury was in early times given to the injured party by an action of deceit at common law, long before the Court of Chancery attempted to exercise jurisdiction to grant relief for such wrongful acts. In such an action it is doubtless true that the plaintiff is required to allege that the party charged infringed the trade-mark with a fraudulent intent, and to prove the charge as alleged, in order to secure a verdict and judgment for redress. Certain early cases in equity may be found where it is held that it is requisite that the allegation and proof in a chancery suit should be the same; but the practice in equity has long been settled otherwise, the rule now being that the injury the owner of the trade-mark suffers by the offering for sale in the market of other goods side by side with his, bearing the same trade-mark, entitles the real owner of the trade-mark to protection in equity, irrespective of the intent of the wrong-doer, it being held that the inquiry done to the complainant in his trade by loss of custom is sufficient to support his title to relief.

Neither will the complainant be deprived of remedy in equity, even if it be shown by the respondent that all the persons who bought goods from him bearing the trade-mark of the real owner were well aware that they were not of the complainant's manufacture. If the goods were so supplied by the wrong-doer for the purpose of being resold in the market, the injury to the complainant is sufficient to entitle him to relief in equity.

Nor is it necessary, in order to entitle the party to relief, that proof should be given of persons having been actually deceived, or that they bought goods in the belief that they were of the manufacture of the complainant, provided that the court is satisfied that the resemblance is such as would be likely to cause the one mark to be mistaken for the other. Edelston v. Edelston, 1 De G. J. & S. 185; McAndrew v. Bassett, 4 id. 380; Sebastian, Trade-marks, 70.

Two trade-marks are substantially the same in legal contemplation, if the resemblance is such as to deceive an ordinary purchaser giving such attention to the same as such purchaser usually gives, and to cause him to purchase the one supposing it to be the other. Gorham Company v. White, 14 Wall. 511; McLean v. Fleming, 96 U.S. 245, 256; Adams, Trade-marks, 107.

Difficulties attend the effort to describe with precision what resemblance is necessary to constitute an infringement, and perhaps it is not going too far to say that the term is incapable of exact definition as applied to all cases. Grant that, and still it is safe to say that no manufacturer or merchant can properly adopt a trade-mark so resembling that of another engaged in the same business as that ordinary purchasers buying with ordinary caution are likely to be misled.

Positive evidence of fraudulent intent is not required where the proof of infringement is clear, as the liability of the infringer arises from the fact that he is enabled through the unjustifiable use of the trade-mark to sell a simulated article as and for the one which is genuine. McLean v. Fleming, supra.

Unless the simulated trade-mark bears a resemblance to that which is genuine, it is clear that the charge of infringement is not made out, and it is doubtless true that the resemblance of the simulated one to the genuine must be such that the former is calculated to deceive or mislead purchasers intending to buy the genuine goods; but it is a mistake to suppose that the resemblance must be such as would deceive persons seeing the two trade-marks placed side by side. Exact definition may not be attainable; but if a purchaser looking at the article offered to him, said Lord Cranworth, would naturally be led from the mark impressed on it to suppose it to be the production of the rival manufacturer, and would purchase it in that belief, the court considers the use of such a mark fraudulent. Franks v. Weaver, 10 Beav. 297.

Apply that rule to the case before the court, and it is sufficient to control the decision; but the Chancellor went much further, and said, that if the goods of a manufacturer have, from the mark or device he has used, become known in the market by a particular name, he thought that the adoption by a rival trader of any mark which will cause his goods to bear the same name in the market, may be as much a violation of the rights of the owner as the actual copy of his device. Seixo v. Provezende, Law Rep. 1 Ch. 192, 196.

When the entire trade-mark is copied, the case is free of difficulty, as the rule is universal that the infringer is liable; but the question is, when may it be said that a trade-mark has been taken by another? Answers to that question are found in several cases, of which no one is more satisfactory than that given by the Master of the Rolls in a recent case. He says that a trade-mark to be taken need not be exactly copied, nor need it be copied with slight variations, but it must be a substantial portion of the trade-mark; to which he adds, that it has sometimes been called the material portion, but that, as he states, means the same thing, and he then remarks that it means the essential portion of the trade-mark, and finally concludes the subject by saying that 'what the court has to satisfy itself of is that there has been an essential portion of the trade-mark used to designate goods of a similar description.' Singer Manufacturing Co. v. Wilson, 2 Ch. D. 434, 443; Cod. Dig., sect. 342.

Argument to show that that rule is applicable to the case before the court is unnecessary, as the proposition is self-evident; and if so, it is impossible to see how any one can vote to affirm the judgment of the Circuit Court. Beyond all question, the letters 'A. C. A.' are the essential feature of the trade-mark adopted by the complainants, and the respondents admit in their answer and in argument that they use the same three letters in the same combination.

Complete imitation is not required by any of the well-considered cases. Instead of that, it is well settled that the proof of infringement is sufficient if it shows even a limited and partial imitation, provided the part taken is an essential portion of the symbol. None of the cases show that the whole must be taken, nor is it necessary to show that any one has in fact been deceived, if the imitation is such as to prove that it is calculated to deceive ordinary purchasers using ordinary caution. Proof of actual intent to defraud is not required, but it is sufficient if the court sees that the trade-mark of the complainant is simulated in such a manner as probably to deceive the customers and patrons of his trade and business. Filley v. Fassett, 44 Mo. 168, 178; Coats v. Holbrook, 2 Sandf. (N. Y.) Ch. 586, 626.

Courts of justice do not always use the same language in defining what is the requisite similarity in the two trade-marks to entitle the complainant to relief, but they substantially concur that if it be such that the public may be led to believe while they buy the goods of the respondent that they are buying an article manufactured by the complainant, the proof of similarity is sufficient. Hirst v. Denham, Law Rep. 14 Eq. 542, 552.

For the purpose of establishing a case of infringement, it is not necessary to show that there has been the use of a mark in all respects corresponding with that which another person has acquired an exclusive right to use, if the resemblance is such as not only to show an intention to deceive, but also such as to be likely to make unwary purchasers suppose that they are purchasing the article sold by the party to whom the right to use the trade-mark belongs. Wotherspoon v. Currie, Law Rep. 5 Ap. Cas. 508-519; s. c. 27 L. T. N. S. 393.

Chancery courts will protect the property rights of a party in his trade-mark, and for its invasion the law will award compensation in damages. Legal redress will be accorded when it is shown that the symbol or device used by the wrong-doer is of such a character that by its resemblance to the established trade-mark of the complainant it will be liable to deceive the public and lead to the purchase of that which is not the manufacture of the proprietor, believing it to be his.

It is not necessary that the symbol or device should be a facsimile or a precise copy of the original trade-mark, or that it should be so close an imitation that the two cannot be easily distinguished by one familiar with the genuine device; but if the false or simulated one is only colorably different, or if the resemblance is such as may deceive a purchaser of ordinary caution, or if it is calculated to mislead the careless and unwary, and thus to injure the sale of the goods of the proprietor of the true device, the injured party is entitled to redress. Colman v. Crump, 70 N. Y. 573, 578; Glenny v. Smith, 11 Jur. N. S. 964.

Trade-marks usually exhibit some peculiar device, vignette, or symbol, in addition to the name of the party, which the proprietor had a perfect right to appropriate, and which, as well as the name, is intended as a declaration to the public that the article is his property. Imitators frequently drop both the name and certain parts of the surroundings, and substitute their own name with a different vignette; but if the peculiar device is copied, and so copied as to manifest a design of misleading the public, the omission or variation ought to be wholly disregarded.

Proof of an intention to defraud is not required; but it is plain that the respondents acted with a design, and it would be absurd to suppose that they had no further object than the mere imitation of the trade-mark which they copied. On the contrary, it is obvious that they expected to gain an advantage in the sale of their goods by attaching their simulated device to fabrics resembling in appearance and quality the fabric of the complainants. Of course they meant to secure to their goods a preference in the market which they otherwise would not have commanded; and it is difficult, if not impossible, to see how any such advantage could be gained unless the simulated trade-mark would enable them to sell their fabrics as that of the injured party. Amoskeag Manufacturing Co. v. Spear, supra; Fetridge v. Wells, 13 How. (N. Y.) Pr. 386.

Proprietors of a trade-mark, in order to bring the same under the protection of a court of equity, are not obliged to prove that it has been copied in every particular by the wrongdoer. It is enough for them to show that the representations employed bear such resemblance to their symbol or device as to be calculated to mislead the public who are purchasers of the article, and to make it pass for the one sold by the true owner of the trade-mark. Walton v. Crowley, 3 Blatchf. 440-447.

Candid men cannot read the record in this case without being forced to the conclusion that the respondents took the essential feature of the complainants' trade-mark, which they had used for forty years to designate the fabric of ticking which they manufactured, and which had become known throughout the United States as the authorized symbol to indicate that description of goods; and if so, it follows to a demonstration that the decree of the Circuit Court should be reversed.


text: Talk:Manufacturing Company v. Trainer/Dissent Clifford


text:
Trust Company v. National Bank

APPEAL from the Circuit Court of the United States for the Northern District of Illinois.

The facts are stated in the opinion of the court.

Mr. Samuel W. Packard for the appellant.

Mr. J. A. Sleeper and Mr. H. K. Whiton, contra.

MR. JUSTICE STRONG delivered the opinion of the court.

title: Trust Company v. National Bank


text: Talk:Trust Company v. National Bank

title: Talk:Trust Company v. National Bank


text:
Trust Company v. National Bank/Opinion of the Court

This case, as made by the bill, answers, replications, and proofs, is as follows: On the twenty-fourth day of September, 1874, the First National Bank of Wyandotte, Kansas, made its promissory note at Chicago, Illinois, in these words:--

'$5,000.

CHICAGO, ILLINOIS, Sept. 24, 1874.

'Four months after date we promise to pay to Cook County National Bank, of Chicago, or order, five thousand dollars, with interest at the rate of ___ per cent per annum after due, value received, all payable at Cook County National Bank.

'B. JUDD,

'Cashier 1st Nat'l Bank, Wyandotte, Ka's.

'$6,000 Wyandotte Co. and City bonds as collateral.'

The note was made and delivered to the Cook County Bank, in pursuance of an arrangement between that bank and Judd, the cashier of the Wyandotte Bank, by which it was agreed the latter should execute a four months' note for $5,000, with security, and have the same discounted by the Cook County Bank, and the proceeds placed to the credit of the Wyandotte Bank, but not to be drawn against so as to reduce the credit for such proceeds below $4,000, such note to remain with the Cook County Bank, and to be surrendered to the maker on the renewal or close of the account. It was distinctly understood between the officers of the two banks when the note was given that it should be held by the Cook County Bank as a memorandum, and not be negotiated or separated from the Wyandotte city and county bonds for $6,000 accompanying it, which were delivered contemporaneously with it as collaterals. Accordingly, the sum of $4,000, part of the proceeds of the discount, was suffered to remain on deposit to the credit of the Wyandotte Bank, until the Cook County Bank failed, became insolvent, and passed into the hands of a receiver. At the time of such failure and the appointment of a receiver there was also an additional credit of $868 due from the Cook County Bank to the Wyandotte Bank. When, therefore, the note matured there was due from the payee to the maker of the note the sum of $4,868. But before its maturity, to wit, on the seventh day of October, 1874, the Cook County Bank, in violation of its agreement above mentioned, passed the note to the New York State Loan and Trust Company, by which it was discounted, without any knowledge of any defence which the Wyandotte Bank had against it, or any knowledge of the origin of the note and of the agreement between the two banks, other than what the face of the note revealed.

The note was protested when it fell due, and it is now held by the Central Trust Company of New York, the receiver of the New York State Loan and Trust Company, and the collaterals, the municipal bonds, are held still by the Cook County Bank.

This bill has been filed to compel its surrender and the surrender of the Wyandotte city and county bonds on the payment of $132, the difference between $5,000 and $4,868, the sum standing to the credit of the Wyandotte Bank against the payee, the claimant offering to pay that sum.

In view of these facts, fairly deducible from the evidence, it is manifest that, as between the complainant and the Cook County Bank, there is a perfect defence against the note to the extent of $4,868, the sum standing to the credit of the Wyandotte Bank due from the payee. On the payment of $132 the maker of the note has a clear equity to have it surrendered, together with the municipal bonds held as collaterals.

But it is claimed that the Trust Company having received the note before its maturity, and having discounted it in the usual course of business without any knowledge of any equities or defence against it, is entitled to hold it free from any defence which the maker could set up against the payee; that is, against the Cook County Bank.

A large portion of the argument before us has been expended upon the questions whether, inasmuch as the note was given by the cashier of the Wyandotte Bank at Chicago, and was made payable at a future day, it was not void under the general banking law. We pass those questions as unnecessary to be considered. If it be conceded that the note was valid at its inception, it is certainly true the maker had a good defence against it while it was in the hands of the payee, and we do not perceive that the manner in which the Trust Company or its receiver obtained it puts them or either of them in any better position than the payee occupied.

The note was not indorsed to the Trust Company, and it was not, therefore, taken in the usual course of business by that mode of transfer in which negotiable paper is usually transferred. Had it been indorsed by the Cook County Bank, it may be that the Trust Company would hold it unaffected by any equities between the maker and the payee. But instead of an indorsement, the president of the Cook County Bank merely guaranteed its payment, and handed it over with this guaranty to the Trust Company. The note was not even assigned. There was written upon it only the following:--

'For value received, we hereby guarantee the payment of the within note at maturity or at any time thereafter, with interest at ten per cent per annum until paid, and agree to pay all costs and expenses paid or incurred in collecting the same.

'B. F. ALLEN, Pres't.'

In no commercial sense is this an indorsement, and probably it was not intended as such. Allen had agreed that the note should not be negotiated, and for this reason perhaps it was not indorsed. That a guaranty is not a negotiation of a bill or note as understood by the law merchant, is certain. Snevily v. Ekel, 1 Watts & S. (Pa.) 203; Lamourieux v. Hewitt, 5 Wend. (N. Y.) 307; Miller v. Gaston, 2 Hill (N. Y.), 188. In this case, the guaranty written on the note was filled up. It expressed fully the contract between the Cook County Bank and the Trust Company. Being express, it can raise no appli cation of any other contract. Expressum facit cessare tacitum. The contract cannot, therefore, be converted into an indorsement or an assignment. And if it could be treated as an assignment of the note, it would not cut off the defences of the maker. Such an effect results only from a transfer according to the law merchant; that is, from an indorsement. An assignee stands in the place of his assignor, and takes simply an assignor's rights; but an indorsement creates a new and collateral contract. 2 Parsons, Notes and Bills, 46 et seq., notes

At best, therefore, the defendants below can claim no more or greater rights than those of the Cook County Bank, and the complainants are entitled to a return of the note and of the collaterals on payment of the sum of $132.

Decree affirmed.


text: Talk:Trust Company v. National Bank/Opinion of the Court


text:
Thomas v. Railroad Company

ERROR to the Circuit Court of the United States for the Eastern District of Pennsylvania.

This was an action of covenant, by George W. Thomas, Alfred S. Porter, and Nathaniel F. Chew, against the West Jersey Railroad Company, and they, to maintain the issue on their part, offered to prove the following facts:--

On the eighth day of October, 1863, the Millville and Glassboro Railroad Company, a corporation incorporated by the legislature of New Jersey, March 9, 1859, entered into an agreement with them, whereby it was stipulated that the company should, and did thereby, lease its road, buildings, and rolling-stock to them for twenty years from the 1st of August, 1863, for the consideration of one-half of the gross sum collected from the operation of the road by the plaintiffs during that period; that the company might at any time terminate the contract and retake possession of the railroad, and that in such case, if the plaintiffs so desired, the company would appoint an arbitrator, who, with one appointed by them, should decide upon the value of the contract to them, and the loss and damage incurred by, and justly and equitably due to them, by reason of such termination thereof; that in the event of a difference of opinion between the arbitrators, they were to choose a third, and the decision of a majority was to be final, conclusive, and binding upon the parties.

On the 10th of April, 1867, the legislature of New Jersey passed an act entitled 'A supplement to the act entitled 'An Act to incorporate the Millville and Glassboro Railroad Company." It was therein enacted that it should be unlawful for the directors, lessees, or agents of said railroad to charge more than the sums therein named for passengers and freight respectively. The plaintiffs claim that at the date of the passage of this act it was well known that they were acting under the said agreement of 8th October, 1863.

On the 12th of October, 1867, articles of agreement were entered into between the Millville and Glassboro Railroad Company and the West Jersey Railroad Company, the defendant, whereby it was agreed that the former should be merged into and consolidated with the latter.

In November, 1867, a written notice was served by the Mill and Glassboro Railroad Company upon the plaintiffs, putting an end to the contract and to all the rights thereby granted, and notifying them that the company would retake possession of the railroad on the first day of April, 1868.

On the 18th of March, 1868, the legislature of New Jersey passed an act whereby it was enacted that, upon the fulfilment of certain preliminaries, the Millville and Glassboro Railroad Company should be consolidated with the West Jersey Railroad Company, 'subject to all the debts, liabilities, and obligations of both of said companies.' The conditions required by that act were fulfilled, and the railroad was duly delivered by the plaintiffs to the West Jersey Railroad Company on the 1st of April, 1868.

On April 13, 1868, and again on May 22 of the same year, notices to arbitrate according to the terms of the agreement were served by the plaintiffs upon the Millville and Glassboro Railroad Company, and immediately thereafter upon the West Jersey Railroad Company. The latter company refused to comply with the terms of either notice; but subsequently, on the 21st of December, 1868, an agreement of submission was entered into between the plaintiffs and the latter company, whereby H. F. Kenney and Matthew Baird were appointed arbitrators, with power to choose a third, to settle the controversy between the parties. These arbitrators disagreeing, called in a third, who joined with said Baird in an award, by which the value of the unexpired term of the lease, and the loss sustained by reason of the termination thereof to and by the plaintiffs, was adjudged to be the sum of $159,437.07; and the West Jersey Railroad Company was ordered to pay that sum to the plaintiffs. This award was subsequently set aside in a suit in equity brought in New Jersey.

The plaintiffs further offered to prove their compliance in all respects with the terms of the lease, its value, and the loss and damage they had sustained by reason of its termination as aforesaid. The court excluded the offered testimony on the ground that the lease by the Millville and Glassboro Railroad Company to the plaintiffs was ultra vires, and directed the jury to return a verdict for the defendant. The plaintiffs duly excepted and sued out this writ.

They assign for error that the court below erred,--

1. In excluding from the consideration of the jury the offered evidence of the said agreement between the Millville and Glassboro Railroad Company and the plaintiffs; of the acts of assembly of New Jersey, one an act to incorporate the Millville and Glassboro Railroad Company, approved the 9th of March, 1859, and another an act entitled 'A supplement to the act entitled 'An Act to incorporate the Millville and Glassboro Railroad Company,' passed the tenth day of April, 1867,' and the acts referred to therein; of the fact that it was well known at the date of the last-named act that the plaintiffs were lessees acting under the said contract and agreement; and of all the other acts of the legislature of the State of New Jersey relating to the West Jersey Railroad Company, and to the Millville and Glassboro Railroad Company.

2. In directing the jury that their verdict must be for the defendant.

3. In entering judgment upon the verdict for the defendant.

Mr. George W. Biddle and Mr. A. Sydney Biddle for the plaintiffs in error.

I. The contract of 8th October, 1863, was intra vires of the Millville and Glassboro Railroad Company, because authorized by the act of incorporation.

First, It was expressly authorized by the act of incorporation, the thirteenth section of which declares 'that it shall be lawful for the said company, at any time during the continuance of its charter, to make contracts and engagements with any other corporation, or with individuals, for the transporting or conveying any kinds of goods, produce, merchandise, freight, or passengers, and to enforce the fulfilment of such contracts.'

A supplement to that act, approved April 10, 1867, sustains this position, for it enacts 'that it shall be unlawful for the directors, lessees, or agents of said railroad to charge more than three and a half cents per mile for the carrying of passengers, and six cents per ton per mile for the carrying of freight or merchandise of any description, unless a single package, weighing less than one hundred pounds; nor shall more than one half of the above rate be charged for carrying any fertilizing materials, either in their own cars or cars of other companies running over said railroad: Provided, that nothing contained in this act shall deprive the said railroad company, or its lessees, of the benefits of the provisions of an act entitled 'An Act relative to freights and fares on railways in the State,' approved March 4, 1858, and applicable to all other railroads in this State.'

Second, the contract in question was impliedly authorized by the act of incorporation. It was, in fact, a mere appointment of agents or employes to run the road, making it for their advantage to economize and advance the interests of the road by paying them upon a sliding scale. Although the words 'lease' and 'lessees' are employed, its terms show that the plaintiffs were in no respect lessees in a legal sense. It was confined to twenty years. The company could put an end to it and retake possession upon three months' notice. The contract would terminate by the death of either of the so-called lessees, or by their omission to make the regular payments. They were required forthwith to discharge from their employment any person employed by them whom the company, through its directors, should wish removed. The plaintiffs were to pay to the company one-half the gross amount received, and to secure their covenant to keep the rolling-stock, &c., in good repair, by depositing yearly a sum of $10,000 with a trustee, who acted as agent for the company. This case essentially differs from those in which it has been held that a contract whereby a railroad company engages to employ the corporate funds in a manner not authorized by the charter is void, and that its execution will, upon the application of a shareholder, be restrained by a court of chancery, and from those in which such a contract has by a common-law court been declared to be impliedly forbidden by the legislature, and therefore void as against public policy.

This fund was to be appropriated under the directions of the company for repairing and replacing the track, roadbed, and rolling-stock. Any dispute as to what were current repairs (to which no portion of this fund was to be applied), and what were repairs to perpetuate the road and rolling-stock, was to be settled by an agent of the company. This fund was to be applied by the trustee upon the order of, and only to the purposes designated by, the Millville company.

No definition of a lease can be framed which will comprehend such an agreement. It was, in truth, an appointment of three agents to take charge of a small road a few miles long.

Third, The objection of ultra vires cannot be maintained in this case. The funds of the corporation were not engaged outside of the scope of the object of its charter; and although it devolved some of its administrative duties to others, the supervision of the directors was not withdrawn, and the rights of the shareholders were carefully secured. Robbins v. Embry, 1 Smed. & M. (Miss.) Ch. 268, 269; Llanelly Railway & Dock Co. v. London & Northwestern Railway Co., Law Rep. 8 Ch. 942.

An instrument providing that a railroad shall be run, not directly by the corporation, but by agents appointed by it, has never been declared invalid. Galveston Railroad v. Cowdrey, 11 Wall. 459. It is not a valid objection that the plaintiffs should be primarily liable to the public. Langley v. Boston & Maine Railroad, 10 Gray (Mass.), 103. The corporation remained bound. It has never attempted to evade the duties nor escape from the responsibilities imposed by its charter; and it could not successfully do so. York & Maryland Line Railroad Co. v. Winans, 17 How. 30; Bissell v. The Michigan & Northern Indiana Railroad Co., 22 N.Y. 258.

II. The contract wasauthorized, inasmuch as it was neither directly nor impliedly forbidden; was germane to the object for which the company was formed, and would have been valid at common law, if made by a corporation created bycharter.

A corporate body may (as at common law) do any act whichis not either expressly or impliedly prohibited by its charter; although where the act is unauthorized a shareholder may enjoin its execution;and the State may, by proper process, forfeit the charter.

The realposition being in such cases, Has the charter prohibited the contract sought to be enforced; if it has, has the prohibited portion been completely executed; if it has not, have the partners, the shareholders in the corporation, ratified the act which their agents, the directors, were, as against them, unauthorized to perform? Taylor v. Chichester & Midhurst Railway Co., Law Rep. 2 Ex. 356; The Mayor of Norwich v. Norfolk Railway Co., 4 El. & Bl. 397; East Anglian Railways Co. v. The Eastern Counties Railway Co., 11 C. B. 775; Chambers v. Manchester & Milford Railway Co., 5 B. & S. 588; South Wales Railway Co. v. Redmond, 10 C. B. N. S. 675; Bateman v. ''Mayor, &c. of Ashton-under-Lyne, 3 H. & N. 323; Shrewsbury & Birmingham Railway Co. v. The Northwestern Railway Co.'', 6 H. of L. 113, 136.

The authorities establish the proposition that a contract not forbidden may be enforced, where the shareholders have assented. In this case there was a prior unanimous assent and a subsequent unanimous ratification, and the illegal part, if any, of the contract has been completely executed.

III. The defence of ultra vires is inadmissible to an action against a corporation upon its contract duly made, where (if not wholly executed) all the shareholders have acquiesced in its performance, or where the contract has been wholly performed by the other party without objection on the part of the corporation, or any of the shareholders. Graham v. Birkenhead Railroad Co., 2 Mac. & G. 146; Phosphate of Lime Company v. Green, Law Rep. 7 C. P. 43, 62, 63; The Erie Railway Co. v. The Delaware, Lackawanna, & Western and The Morris & Essex Railroad Companies, 21 N. J. Eq. 283, 289; Riche v. The Ashbury Railway Carriage & Iron Co., Law Rep. 9 Exch. 244.

Where the transaction is complete, and nothing remains to be done by the party seeking relief, the plea of ultra vires is not available by the corporation in an action brought against it for not performing its side of the contract. The Silver Lake Bank v. North, 4 Johns. (N. Y.) Ch. 370, 373; Gold Mining Company v. National Bank, 96 U.S. 640; National Bank v. Matthews, 98 id. 621; Steamboat Company v. McCutcheon & Collins, 13 Pa. St. 13; Oneida Bank v. Ontario Bank, 21 N. Y. 490, 495; Bissell v. Michigan Southern & Northern Indiana Railroad Companies, 22 id. 258, 272, 273; Whitney Arms Company v. Barlow, 63 id. 62, 68, 69; Steam Company v. Weed, § 7 Barb. (N. Y.) 378; Moss v. Mining Company, 5 Hill (N. Y.), 137; Grant v. Henry Clay Coal Co., 80 Pa. St. 208, 218; Oil Creek & Allegheny River Railroad Co. v. Pennsylvania Transportation Co., 83 id. 160; McCluer v. Manchester & Lawrence Railroad, 13 Gray (Mass.), 124; Gifford v. New Jersey Railroad Co., 2 Stock. (N. J.) 177; Galveston Railroad v. Cowdrey, 11 Wall. 459, 476; Smith v. Sheeley, 12 id. 358, 361; Kelly v. Transportation Company, 3 Oreg. 189; Weber v. Agricultural Society, 44 Iowa, 239; Showalter v. Pirner, 55 Mo. 233; Chambers v. City of St. Louis, 29 id. 543; Land v. Coffman, 50 id. 243; Wade v. Colonization Society, 7 Smed. & M. (Miss.) 663, 697; Robbins v. Embry, supra.

IV. If the contract were originally ultra vires, it was ratified, and, for the future, authorized by the act of 10th April, 1867. P. L. of New Jersey of 1867, p. 915; Record, 40.

It is a well-settled principle of law that statutes, by implication, ratify and legalize former unauthorized proceeding of a corporation, where the unlawful act is mentioned or referred to in them as a proper one; and if the act be a continuing one, it is authorized for the future. The Ecclesiastical Commissioners for England v. Northeastern Railway Co., 4 Ch. Div. 845.

Mr. Samuel Dickson, contra.

MR. JUSTICE MILLER, after stating the case, delivered the opinion of the court.

title: Thomas v. Railroad Company


text: Talk:Thomas v. Railroad Company

title: Talk:Thomas v. Railroad Company


text:
Thomas v. Railroad Company/Opinion of the Court

The ground on which the court held the contract to be void and on which the ruling is supported in argument here, is, that the contract amounted to a lease, by which the railroad, rolling-stock, and franchises of the corporation were transferred to plaintiffs, and that such a contract was ultra vires of the company.

It is denied by the plaintiffs that the contract can be fairly called a lease.

But we know of no element of a lease which is wanting in this instrument. 'A lease for years is a contract between lessor and lessee, for possession of lands, &c., on the one side, and a recompense by rent or other consideration on the other.' 4 Bac. Abr. 632.

'Any thing corporeal or incorporeal lying in livery or in grant may be the subject-matter of a lease, and, therefore, not only lands and houses, but commons, ways, fisheries, franchises, estovers, annuities, rent-charges, and all other incorporeal hereditaments are included in the common-law rule.' Bouv. L. D., 'Lease;' 1 Wash. Real Prop.

The railroad and all its appurtenances and franchises, including the right to do the business of a railroad and collect the proper tolls, are for a period of twenty years leased by the company to the plaintiffs, from whom in return it receives as rent one-half of all the gross earnings of the road. The usual provision for a right of re-entry on the failure to perform covenants in addition to the special right to terminate the lease on notice, and the usual covenant for repairs and proper running of the road, equivalent to good husbandry on a farm, are inserted in the instrument.

The provision for the complete possession, control, and use of the property of the company and its franchises by the lessees is perfect. Nothing is left in the lessor but the right to receive rent. No power of control in the management of the road and in the exercise of the franchises of the company is reserved. A solitary exception to this statement, of no value in the actual control of affairs, is found in the sixth clause of the lease, which covenants that the lessees will discharge any one in their service on the request of the corporation, evidenced by a resolution of the board of directors.

But while we are satisfied that the contract is both technically and in its essential character a lease, we do not see that the decision of that point either way affects the question on which we are to pass. That question is, whether the railroad company exceeded its powers in making the contract, by whatever name it may be called, so that it is void.

It is, perhaps, as well to consider this question in the order of its presentation by the learned counsel for plaintiffs, upon whom the burden of showing the error of the Circuit Court devolved the duty of proving one of the following propositions:-- 1. The contract was within the powers granted to the railroad company by the act of the New Jersey legislature under which it was organized.

2. That if this be not established, the lease was afterwards ratified and approved by another act of that legislature.

3. That if both these propositions are found to be untenable, the contract became an executed agreement under which the rights acquired by plaintiffs should be legally respected.

The authority to make this lease is placed by counsel primarily in the following language of the thirteenth section of the company's charter:--

'That it shall be lawful for the said company, at any time during the continuance of its charter, to make contracts and engagements with any other corporation, or with individuals, for the transporting or conveying any kinds of goods, produce, merchandise, freight, or passengers, and to enforce the fulfilment of such contracts.'

This is no more than saying, 'you may do the business of carrying goods and passengers, and may make contracts for doing that business. Such contracts you may make with any other corporation or with individuals.' No doubt a contract by which the goods received from railroad or other carrying companies should be carried over the road of this company, or by which goods or passengers from this road should be carried by other railroads, whether connecting immediately with them or not, are within this power, and are probably the main object of the clause. But it is impossible, under any sound rule of construction, to find in the language used a permission to sell, lease, or transfer to others the entire road and the rights and franchises of the corporation. To do so is to deprive the company of the power of making those contracts which this clause confers and of performing the duties which it implies.

In The Ashbury Railway Carriage & Iron Co. v. Riche, decided in the House of Lords in 1875 (Law Rep. 7 H. L. 653), the memorandum of association, which, as Lord Cairns said, stands under the act of 1862 in place of a legislative charter, thus described the business which the company was authorized to conduct: 'The objects for which this company is established are to make, sell, or lend on hire, railway-carriages and engines, and all kinds of railway plant, fittings, machinery, and rolling-stock; and to carry on the business of mechanical engineers and general contractors; to purchase and sell as merchants, timber, coal, metals, or other materials; and to buy and sell any such materials on commission or as agents.' This company purchased a concession for a railroad in Belgium, and entered into a contract for its construction, on which it paid large sums of money. The company was sued afterwards on its agreement with Riche, the contractor, and the contract was held valid in the Exchequer Chamber by a majority of the judges, on the ground that while it was in excess of the power conferred on the directors by the memorandum, it had been made valid by ratification of the shareholders, to whom it had been submitted.

The House of Lords reversed this judgment, holding unanimously that the contract was beyond the powers conferred by the memorandum above recited, and being beyond the powers of the association, no vote of the shareholders whatever could make it valid. The case is otherwise important in its relation to the one before us, but it is cited here for its parallelism in the construction of the clause defining the powers of the company.

If a memorandum which describes the parties as engaging in furnishing nearly all the materials, machinery, and rolling-stock which enter into the construction of a railroad and its equipments, and then empowers then to carry on the business of mechanical engineers and general contractors, cannot authorize a contract to build a railroad, surely the authority to build a railroad and to contract for carrying passengers and goods over it and other roads is no authority to lease it and with the lease to part with all its powers to another company or to individuals. We do not think there is any thing in the language of the charter which authorized the making of this agreement.

It is next insisted, in the language of counsel, that though this may be so, 'a corporate body may (as at common law) do any act which is not either expressly or impliedly prohibited by its charter; although where the act is unauthorized by the charter a shareholder may enjoin its execution; and the State may, by proper process, forfeit the charter.' We do not concur in this proposition. We take the general doctrine to be in this country, though there may be exceptional cases and some authorities to the contrary, that the powers of corporations organized under legislative statutes are such and such only as those statutes confer. Conceding the rule applicable to all statutes, that what is fairly implied is as much granted as what is expressed, it remains that the charter of a corporation is the measure of its powers, and that the enumeration of these powers implies the exclusion of all others.

This class of subjects has received much consideration of late years in the English courts, and counsel have relied largely on the decisions of those courts. Among the cases cited by both sides is The East Anglian Railways Co. v. The Eastern Counties Railway Co., 11 C. B. 775.

In that case the Eastern Counties Railway Company had made a contract in which, among other things, it covenanted to take a lease of several other railroads whose companies had introduced into Parliament a bill for consolidation under the name of East Anglian Railways Company, and to assume the payment of the parliamentary expenses of this act of consolidation.

This covenant was held void as beyond the power conferred by the charter. 'They cannot,' said the court, 'engage in a new trade, because they are incorporated only for the purpose of making and maintaining the Eastern Counties Railway. What additional power do they acquire from the fact that the undertaking may in some way benefit their line? Whatever be their object or prospect of success, they are still but a corporation for the purpose only of making and maintaining the Eastern Counties Railway; and if they cannot embark in new trades because they have only a limited authority, for the same reason they can do nothing not authorized by their act and not within the scope of their authority.' This case, decided in 1851, was afterwards cited with approval by the Lord Chancellor in 1857 in delivering the opinion of the House of Lords in Eastern Counties Railway Co. v. Hawkes (5 H. L. Cas. 331); and it is there stated that it was also acted on and recognized in the Exchequer Chamber in McGregor v. The Deal & Dover Railway Co., 22 Law J. N. S. Q. B. 69; 18 Q. B. 618. Both these cases are cited approvingly in the opinion of Lord Cairns in the Ashbury Company, on appeal in the House of Lords.

This latter case, as decided in the Exchequer Chamber (Law Rep. 9 Exch. 224), is much relied on by counsel for plaintiffs here as showing that, though the contract may be ultra vires when made by the directors, it may be enforced if afterwards ratified by the shareholders or if party executed.

But in the House of Lords, where the case came on appeal, this principle was overruled unanimously in opinions delivered by Lord Chancellor Cairns, Lords Selborn, Chelmsford, Hatherly, and O'Hagan, and the broad doctrine established that a contract not within the scope of the powers conferred on the corporation cannot be made valid by the assent of every one of the shareholders, nor can it by any partial performance become the foundation of a right of action.

It would be a waste of time to attempt to examine the American cases on the subject, which are more or less conflicting, but we think we are warranted in saying that this latest decision of the House of Lords represents the decided preponderance of authority, both in this country and in England, and is based upon sound principle.

There is another principle of equal importance and equally conclusive against the validity of this contract, which, if not coming exactly within the doctrine of ultra vires as we have just discussed it, shows very clearly that the railroad company was without the power to make such a contract.

That principle is that where a corporation, like a railroad company, has granted to it by charter a franchise intended in large measure to be exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which disables the corporation from performing those functions which undertakes, without the consent of the State, to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burden which it imposes, is a violation of the contract with the State, and is void as against public policy. This doctrine is asserted with remarkable clearness in the opinion of this court, delivered by Mr. Justice Campbell, in The York & Maryland Line Railroad Co. v. Winans, 17 How 30. The corporation in that case was chartered to build and maintain a railroad in Pennsylvania by the legislature of that State. The stock in it was taken by a Maryland corporation, called the Baltimore and Susquehanna Railroad Company, and the entire management of the road was committed to the Maryland company, which appointed all the officers and agents upon it, and furnished the rolling-stock. In reference to this state of things and its effect upon the liability of the Pennsylvania corporation for infringing a patent of the defendant in error, Winans, this court said: 'This conclusion [argument] implies that the duties imposed upon the plaintiff by the charter are fulfilled by the construction of the road, and that by alienating its right to use, and its powers of control and supervision, it may avoid further responsibility. But those acts involve an overturn of the relations which the charter has arranged between the corporation and the community. Important franchises were conferred upon the corporation to enable it to provide facilities for communication and intercourse, required for the public convenience. Corporate management and control over these were prescribed, and corporate responsibility for their insufficiency provided as a remuneration to the community for their grant. The corporation cannot absolve itself from the performance of its obligations without the consent of the legislature. Beman v. Rufford, 1 Sim. N. S. 550; Winch v. B. & L. Railway Co., 13 L. & Eq. 506.'

And in the case of Black v. Delaware & Raritan Canal Co., 22 N. J. Eq. 130, Chancellor Zabriskie says: 'It may be considered as settled that a corporation cannot lease or alien any franchise, or any property necessary to perform its obligations and duties to the State, without legislative authority.' p. 399. For this he cites some ten or twelve decided cases in England and in this country.

This brings us to the proposition that the legislature of New Jersey has given her consent by an act which amounts to a ratification of this lease.

That act is entitled 'A supplement to the act entitled 'An Act to incorporate the Millville and Glassboro Railroad Company," approved April 10, 1867; and its only purpose was to regulate the rates at which freight and passengers should be carried. It reads as follows:--

'That it shall be unlawful for the directors, lessees, or agents of said railroad to charge more than three and a half cents per mile for the carrying of passengers, and six cents per ton per mile for the carrying of freight or merchandise of any description, unless a single package, weighing less than one hundred pounds; nor shall more than one-half of the above rate be charged for carrying any fertilizing materials, either in their own cars or cars of other companies running over said railroad: Provided, that nothing contained in this act shall deprive the said railroad company, or its lessees, of the benefits of the provisions of an act entitled 'An Act relative to freights and fares on railways in the State,' approved March 4, 1858, and applicable to all other railroads in this State.'

It may be fairly inferred that the legislature knew at the time the statute was passed that plaintiffs were running the road, and claiming to do so as lessees of the corporation. It was not important for the purpose of the act to decide whether this was done under a lawful contract or not. No inquiry was probably made as to the terms of that lease, as no information on that subject was needed.

The legislature was determined that whoever did run the road and exercise the franchises conferred on the company, and under whatever claim of right this was done, should be bound by the rates of fare established by the act. Hence, without undertaking to decide in whom was the right to the control of the road, language was used which included the directors, lessees, and agents of the railroad.

The mention of the lessees no more implies a ratification of the contract of lease than the word 'directors' would imply a disapproval of the contract. It is not by such an incidental use of the word 'lessees' in an effort to make sure that all who collected fares should be bound by the law, that a contract unauthorized by the charter, and forbidden by public policy, is to be made valid and ratified by the State.

It remains to consider the suggestion that the contract, having been executed, the doctrine of ultra vires is inapplicable to the case. There can be no question that, in many instances, where an invalid contract, which the party to it might have avoided or refused to perform, has been fully performed on both sides, whereby money has been paid or property changed hands, the courts have refused to sustain an action for the recovery of the property or the money so transferred.

In regard to corporations, the rule has been well laid down by Comstock, C. J., in Parish v. Wheeler (22 N. Y. 494), that the executed dealings of corporations must be allowed to stand for and against both parties when the plainest rules of good faith require it.

But what is sought in the case before us is the enforcement of the unexecuted part of this agreement. So far as it has been executed, namely, the four or five years of action under it, the accounts have been adjusted, and each party has received what he was entitled to by its terms. There remains unperformed the covenant to arbitrate with regard to the value of the contract. It is the damages provided for in that clause of the contract that are sued for in this action. Damages for a material part of the contract never performed; damages for the value of a contract which was void. It is not a case of a contract fully executed. The very nature of the suit is to recover damages for its non-performance. As to this it is not an executed contract.

Not only so, but it is a contract forbidden by public policy and beyond the power of the defendants to make. Having entered into the agreement, it was the duty of the company to rescind or abandon it at the earliest moment. This duty was independent of the clause in the contract which gave them the right to do it. Though they delayed its performance for several years, it was nevertheless a rightful act when it was done. Can this performance of a legal duty, a duty both to stockholders of the company and to the public, give to plaintiffs a right of action? Can they found such a right on an agreement void for want of corporate authority and forbidden by the policy of the law? To hold that they can, is, in our opinion, to hold that any act performed in executing a void contract makes all its parts valid, and that the more that is done under a contract forbidden by law, the stronger is the claim to its enforcement by the courts.

We cannot see that the present case comes within the principle that requires that contracts which, though invalid for want of corporate power, have been fully executed shall remain as the foundation of rights acquired by the transaction.

We have given this case our best consideration on account of the importance of the principles involved in its decision, and after a full examination of the authorities we can see no error in the action of the Circuit Court.

MR. JUSTICE BRADLEY did not sit in this case.


text: Talk:Thomas v. Railroad Company/Opinion of the Court


text:
Page:Folk-lore - A Quarterly Review. Volume 2, 1891.djvu/358

 302 I find that she adheres to her statement with all firmness. I distinguish two or three points in her evidence: 1. I have no doubt that she saw, as she was passing by a certain field on the borders of Andreas parish, a live sheep being burnt on old May-day. 2. But her statement that it was son oural, or as a sacrifice, was probably only an inference drawn by her, possibly years afterwards, on hearing things of the kind discussed. 3. Lastly I am convinced that she did hear the May-day sacrifice discussed, both in Manx and in English: her words, "for an object to the public", are her imperfect recollection of a phrase used in her hearing by somebody more ambitious of employing English abstract terms than she is; and the formal nature of her statement in Manx, that it was customary on May-day to burn as a sacrifice one head of sheep (Laa Boaldyn va cliaghtey dy lostey son oural un baagh keyrragh), produces the same impression on my mind, that she is only repeating somebody else's words. I mention this more especially as I have failed to find anybody else in Andreas or Bride, or indeed in the whole island, who will now confess to having ever heard of the sheep sacrifice on old May-day.

The time assigned to the sheep sacrifice, namely May-day, leads me to make some remarks on the importance of that day among the Celts. The day meant is, as I have already said, old May-day, in Manx Shenn Laa Boaldyn, This was a day when systematic efforts were made to protect man and beast against elves and witches; for it was then that people carried crosses of rowan in their hats and put May flowers on the tops of their doors and elsewhere as preservatives against all malignant influences. With the same object also in view crosses of rowan were likewise fastened to the tails of cattle, small crosses which had to be made without the help of a knife. Early on May morning one went out to gather the dew as a thing of great virtue, as in other countries. One woman who had been out on this errand years ago told me that she washed her face with


text:
Empire v. Darlington

ERROR to the Circuit Court of the United States for the Southern District of Illinois.

Under the provisions of an act of the legislature of Illinois, approved Feb. 28, 1867, and in conformity to the result of a popular election duly called, and held on the 3d of June, 1867, the township of Empire in McLean County, in that State, made a subscription of $50,000 to the capital stock of the Danville, Urbana, Bloomington, and Pekin Railroad Company, a corporation created under the laws of Illinois. That company had by its charter power to locate, construct, and complete a railroad from Pekin, through, or as near as practicable to, certain designated towns, to the eastern boundary of the State.

In payment of the subscription, bonds of the township, of like amount, were issued and delivered to the company.

On the twentieth day of August, 1869, that company consolidated with the Indianapolis, Crawfordsville, and Danville Railroad Company, an Indiana corporation, the consolidated company assuming the name of the Indianapolis, Bloomington, and Western Railway Company. The consolidated railroad formed a continuous line of road from Indianapolis, Ind., to Pekin, Ill.

On the 12th of October, 1869, an election was held in the township of Empire for the purpose of ascertaining the sense of its people upon the proposition to subscribe, upon certain conditions, the sum of $25,000, as additional stock in aid of the construction and completion of the Indianapolis, Bloomington, and Western Railroad. The election resulted in favor of the subscription, which being made, bonds to that amount were issued in the name of the township and delivered to the company.

The bonds were in the customary form, dated March 20, 1870, and signed by the township supervisor and clerk. Each one contained a recital that it was issued 'under and by virtue of a law of the State of Illinois, entitled 'An Act to amend the articles of association of the Danville, Urbana, Bloomington, and Pekin Railroad Company, and to extend the powers of and confer a charter upon the same,' approved Feb. 28, 1867, and in accordance with the vote of the electors of said township, at the special election held Oct. 12, 1869, in accordance with said act. And the faith of the township of Empire is hereby pledged for the payment of the said principal sum and interest as aforesaid.'

Darlington, who is the holder of some of the bonds and coupons issued March 20, 1870, brought this action against the township to recover thereon. It was admitted in the court below that on April 29, 1878, the Circuit Court of McLean County, Illinois, upon the application of certain tax-payers of the said township, enjoined the further payment of the principal or interest, or any part of the bonds or coupons issued in payment of the said subscription of $25,000; that the bondholders were made parties to that suit by the name of unknown owners and holders; that they were notified of its pendency by publication only; and that subsequently a decree was rendered declaring said bonds and coupons void, and perpetually enjoining the assessment and collection of taxes for the purpose of paying them.

The defences set up by the township are stated in the opinion of the court.

A jury having been waived, the court below rendered a judgment in favor of the plaintiff for $8,178.05 and costs, whereupon the township sued out this writ of error.

Mr. Lawrence Weldon for the plaintiff in error.

Mr. Shelby M. Cullom, contra.

MR. JUSTICE HARLAN, after stating the facts, delivered the opinion of the court.

title: Empire v. Darlington


text: Talk:Empire v. Darlington

title: Talk:Empire v. Darlington


text:
Empire v. Darlington/Opinion of the Court

The present action involves the validity of the bonds and the coupons thereto attached of the $25,000 issue, some of which are held by the defendant in error.

Their validity is assailed upon several grounds, each of which will be briefly examined.

It is contended that the election held on the 3d of June, 1867, under the charter of the Danville, Urbana, Bloomington, and Pekin Railroad Company, whereby the subscription of $50,000 was made and bonds issued in payment thereof, exhausted the power of the township under that charter, and that any additional subscription was without authority of law.

This position is clearly untenable. The twelfth section of the charter of the railroad company furnishes a conclusive answer to this proposition. That section declares that 'to further aid in the construction of said road by said company, any incorporated town or townships in counties acting under the township organization law, along the route of said road, may subscribe to the capital stock of said company in any sum, not exceeding $250,000.' That the plaintiff in error belongs to the class of townships described in that section, is not disputed. Its right, consequently, to make subscriptions, from time to time, until they reached the prescribed limit, seems to be too clear to require argument in its support. The charter contains no word, clause, or section indicating that the authority of the township to make subscriptions ceased after the first subscription. The legislature fixed a limit beyond which the township could not go in its subscriptions to the company in question, but left it free-the people consenting by popular vote-to make subscriptions in such sums and at such times as it deemed necessary or proper, within the aggregate amount named in the section which has been quoted. People v. Town of Waynesville, 88 Ill. 469.

The next proposition urged upon our attention is that by the consolidation to which we have referred a new corporation was created by the name of the Indianapolis, Bloomington, and Western Railway Company, and the original companies dissolved; that there was no power vested in the electors, the corporate authority of the township of Empire, under the charter of the Danville, Urbana, Bloomington, and Pekin Railroad Company, to hold an election, to subscribe stock and issue bonds to that new company. This proposition is equally untenable with the first.

By a general statute of Illinois, passed Feb. 28, 1854, and in force as well at the date of the charter of the Danville, Urbana, Bloomington, and Pekin Railroad Company, as when it was consolidated with the Indianapolis, Crawfordsville, and Danville Railroad Company, express authority was conferred upon all railroad companies then organized or thereafter to be organized, which then had or might thereafter have their termini fixed by law, whenever their road or roads intersected by continuous lines, to 'consolidate their property and stock with each other, and to consolidate with companies out of this [that] State, whenever their lines connect with the lines of such companies out of this [that] State.' That statute further provided that the consolidated company, by the name agreed upon, should be a body corporate and politic, and 'shall have all the powers, franchises, and immunities which the said respective companies shall have by virtue of their respective charters, before such consolidation passed, within the State of Illinois.' Ill. Rev. Stat. Gross (3d ed.), pp. 537, 538.

It thus appears that whatever powers, franchises, and immunities were enjoyed by the Danville, Urbana, Bloomington, and Pekin Railroad Company, under its charter, passed, upon the consolidation, to the consolidated company. The power of the township of Empire to make, as we have held it could, an additional subscription, beyond the original of $50,000, was, in its essence, a right and privilege of the railroad company which, under the general law of the State, passed to the consolidated company. County of Scotland v. Thomas, 94 U.S. 682; County of Henry v. Nicolay, 95 id. 619. It was evidently so understood by the parties concerned; for while the bonds very properly refer to the act of Feb. 28, 1867 (which is the charter of the Danville, Urbana, Bloomington, and Pekin Railroad Company), as the statute which specifically authorized their issue, the petition of citizens asking an election, and the notice of the election of Oct. 12, 1869, distinctly show that the additional subscription of $25,000 to be voted on was for additional stock in aid of the construction and completion, not of the Danville, Urbana, Bloomington, and Pekin Railroad, but 'of the Indianapolis, Bloomington, and Western Railroad.' If the popular vote had been, in terms, in favor of a subscription to the capital stock of the Danville, Urbana, Bloomington, and Pekin Railroad Company, and the subscription had been made in that form, there would be some reason to contend that the subscription would have been a nullity, since no such company then had a distinct separate existence. But when, as here, the vote was taken, and the subscription made, with direct reference to the construction and completion of the original line by the consolidated company, which had previously succeeded to all the powers, franchises, and immunities of the Danville, Urbana, Bloomington, and Pekin Railroad Company, there would seem to be no ground whatever to question the validity of the bonds issued and delivered to the company in payment of the subscription.

It is scarcely necessary to say that the decree in the Circuit Court of McLean County, Illinois, rendered in 1878, perpetually enjoining the assessment and collection of taxes for the purpose of paying the bonds and coupons in question, and declaring said bonds and coupons to be void, did not conclude the rights of the defendant in error. The bondholders were proceeded against by constructive service, as 'unknown owners and holders.' The defendant in error was not served with process, nor did he appear. If the decree was binding upon the citizens and courts of Illinois, as to which we express no opinion, it was ineffectual as to bondholders residing in other States, who were proceeded against only by constructive service. Brooklyn v. Insurance Company, 99 U.S. 362.

Judgment affirmed.


text: Talk:Empire v. Darlington/Opinion of the Court


text:
Bast v. Bank

ERROR to the Circuit Court of the United States for the Eastern District of Pennsylvania.

The facts are stated in the opinion of the court.

Mr. F. W. Hughes for the plaintiff in error.

Mr. R. M. Schick and Mr. G. R. Kaercher, contra.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

title: Bast v. Bank


text: Talk:Bast v. Bank

title: Talk:Bast v. Bank