Vol. II.] CONSOLIDATED FRUIT JAR Co. v. Dorflinger. [No. 11. 5, after the decision in Smith v. Exeter, supra, it would seem to be removed by the provision of sec. 7, ch. 49, General Statutes. But it is suggested that this three fourths of one per cent. is not to be considered as a tax, but rather a bonus, or royalty paid to the state for the privilege of constructing and operating a railroad in that state. If this were so, and in consequence of this bonus paid to the state it was the real understanding that the property was to be exempted from all taxation in that state, then the stock should be taxed here. But if the property is really taxed there, and all of it is thus taxed, then it should not be taxed again. By the charter of this corporation, granted in 1846, it was required to pay a certain "specific tax to the state, and in consideration thereof, the property and effects of the company were to be exempt from all and any tax .. by virtue of any law of this state." This was a provision that the property, by paying one tax, should be exempt from all other taxes. But by the Act of 1855 (see Compiled Statutes of 1872), it was provided that said specific tax to the state" shall be in lieu of all " other taxes, or a substitute for all other taxes on the capital stock of said corporation, and upon the railroad constructed or used by the corporation. ... But we have already seen that this tax paid to the state upon all the capital expended in the construction or purchase of the roads, whether represented by the capital stock, or bonds, or other indebtedness of the company, amounts to a tax as high as the average rate of taxation upon other property in that state or this, from 1840 up to the time of the war; that it was in substance and in fact a tax, and not a bonus or royalty, and was intended to be, so far as we can see, a fair assessment upon the property of the corporation, including its capital stock. This being so, we cannot doubt that this tax should be abated upon the ground that to tax it again here in this way would be a double taxation of the property. Tax abated CIRCUIT COURT OF THE UNITED STATES. - EASTERN DISTRICT OF PENNSYLVANIA. TRADE-MARK. [ОСТОВЕР, 1874.] REPRESENTING ARTICLE TO BE PROTECTED BY PATENT WHEN PATENT HAS BEEN DECLARED VOID. CONSOLIDATED FRUIT JAR CO. v. DORFLINGER. Complainants used to distinguish jars the designations "Mason's Patent, Nov. 30th, 1858," "Mason's Improved,' ""The Mason Jar of 1858." It appeared that the jars had been protected by a patent that had been adjudged to be invalid. Held, that the designations had a tendency to mislead the public, and could not, therefore, be protected as trade-marks. In respect of the designation" The Mason Jar of 1872," the objection held not to be applicable. THE facts are sufficiently stated in the opinion. CADWALLADER, J. The complainants deduce their asserted right Vol. II.] CONSOLIDATED FRUIT JAR Co. v. Dorflinger. [No. 11. under Mason, who was the patentee of certain alleged improvements in fruit jars. There has been a judicial decision against the validity of his patent; and they do not now assert its validity. But they claim a trademark in what I think is not sufficiently distinguishable from a claim of exclusive right in the patented privilege. In other words, the alleged trade-mark is either deceptively obscure, or purports to be for the subject of the patent, or to include it. These remarks apply, whether the trademark is claimed in the words" Mason's patent, November 30th, 1858," or in the words "Mason's Improved," or in the words " The Mason Jar of 1858," or in any substantially similar form of words. If there had not been a patent, a different import might perhaps be attributable to the second and third of the forms of words which have been quoted. But when the question is considered with reference to the preexistence of a patent to Mason, these expressions are to be understood as applying to it, or as including the subject of it. The patentee of an alleged invention, in consideration of the exclusive privilege granted to him for a limited period, is bound to disclose fully his secret; and is understood as dedicating the supposed invention to the public, subject to the supposed exclusive privilege. If the privilege is invalid, the dedication is immediate and absolute. It has, therefore, been contended that the rights of the public ought to be protected against any subsequent assertion by the patentee of an independent right under the name of a trade-mark. This objection to the complainants' alleged right would prevail, if it covered the whole of the question. But it does not. The answer to the objection is, that a tradesman who has an invalid patent may nevertheless rightfully use the subject of the patent himself, and that he ought, in that case, to be protected against injury by others who falsely impose their goods on the public as his own. Upon this view of the subject the case of Sykes v. Sykes (3 Barn. & C. 541; 5 Dowl. & Ryl. 292) was decided in the year 1824. It is a decision apparently in favor of the complainants here. It was hastily considered on a motion for a new trial, a rule to show cause being refused. But there was no defect in the reasoning on the point upon which, alone, it was decided. Another objection, however, to the complainants' bill, does not admit, in reason, of the same answer. This objection is, that no title can be successfully asserted in a trade-mark, which is of a tendency to mislead or deceive the public. This objection may avail a defendant, notwithstanding what would otherwise be imputable to him as misconduct. The doctrine is, that the complainant must come into a court of equity with clean hands. 4 De G., J. & S. 149. This doctrine, if applicable alike at law, was overlooked in the case of Sykes v. Sykes. The direct application of the objection appears when we consider that the alleged trade-mark in question tends rationally to induce a belief that the subject of it is a securely patented invention of Mason, whereas, it has been judicially decided that he never had a valid patent for it as an invention. In cases prior to 1863, before English vice-chancellors, the authority of Sykes v. Sykes, supra, could not be disregarded; and there was great hesitation in holding directly that a trade-mark representing an article as Vol. II.] CONSOLIDATED FRUIT JAR Co. v. Dorflinger. [No. 11. patented, when in fact it was not securely protected by a patent, was invalid in equity. Thus Vice-Chancellor Wood, afterwards Lord Hatherley, in 1853, intimated an opinion that the trade-mark would be invalid where no patent had ever existed; Flavel v. Harrison, 10 Hare, 467; but afterwards, in the same year, when considering the case of a patent which had expired, suggested some qualification of the general doctrine. Edelsten v. Vick, 11 Hare, 86, 87; compare with Morgan v. McAdam, 36 L. J. Ch. 229, 231. But such doubts, or hesitations, were removed in England by the case of The Leather Cloth Co. v. The American Leather Cloth Co., in the house of lords in 1865, 11 H. L. 523, affirming a decree made by Lord Chancellor Westbury, in 1863. 4 De G., J. & S. 137. In this case Lord Kingsdown said: "If a trade-mark represents an article as protected by a patent, when in fact it is not so protected, it seems to me that such a statement prima facie amounts to a misrepresentation of an important fact, which would disentitle the owner of the trade-mark to relief in a court of equity against any one who pirated it;" and added, that he would have great difficulty in assenting to the distinction suggested by Vice-Chancellor Wood, in the case which had been cited. 11 H. L. 543, 544. Lord Kingsdown here succinctly restated the opinion of Lord Westbury, in the court of chancery; and Lord Westbury adhered to it in the court of appeal. Page 548. An exception from this rule of decision had been previously, and has been since, recognized in the case of an article, such as patent leather, or patent thread, whose designation of this kind is in constant use, though no one supposes that it is thereby intended to convey the impression that the subject is protected by any patent. Marshall v. Ross, Law Rep. 8 Eq. 652, 653. So after a patented privilege is long since expired, such a designation may have become a general or special word of art. Hall v. Barrows, 4 De G., J. & S. 155. But such exceptions only confirm the rule of decision in ordinary cases. Lord Westbury in the court of chancery (4 De G., J. & S 138, 139) seems to have had American decisions in view. His opinion appears to have been followed in the Patent Office of the United States. If other American opinions are conflicting, it may, perhaps, be attributable to undue deference to the supposed authority of Sykes v. Sykes. If there be such a conflict, the question is too doubtful for interlocutory adjudication. The above observations may not be applicable to the alleged trademark in the words "The Mason Jar of 1872." The complainant, if so advised, may renew his application as to this mark. But a man is perhaps not at liberty to flood the market with various designations, all including more or less of a common subject, without making the differences very distinct. How this may be as to the particular subject here, I cannot at present decide. As to the other alleged trade-marks a preliminary injunction is refused. Vol. II.] OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11. SUPREME COURT OF NEW HAMPSHIRE. (To appear in 54 N. H.) INSOLVENT CORPORATION. SUIT BY. - DE FACTO ORGANIZATION. -DEMAND. - ULTRA VIRES, ETC. OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING CO. v CANNEY. In an action by an insolvent corporation to collect an assessment for the purpose of paying their debts, the interests of the creditors will be so far regarded that no defence grounded on defects in the organization of the corporation can be maintained, unless it could have been successfully set up in answer to a creditor's bill against the stockholders to enforce their personal liability. The plaintiffs' charter provided that the first meeting of the corporators might be called by publication at least fifteen days prior thereto. Only fourteen days' notice of the meeting was given. Held, that if neither the grantors of the charter (i. e. the state) nor the grantees complained of the defect in the preliminary notice, the objection could not subsequently be raised by a stockholder in a suit by the corporation against him to recover an assessment made under the provision, chapter 136, section 4, General Statutes. A de facto organization of a corporation, formed and operated in good faith, under color of the charter, is an organization under the charter, within the meaning of the statute of 1846, chapter 321, section 7. In a suit brought against a stockholder to recover an assessment made under the provisions of chapter 136, section 4, General Statutes, he will be regarded as having waived the right to object that the whole number of shares fixed and limited by the corporation was not subscribed for, if he has paid for the stock for which he subscribed. The order in which the parties shall exercise the right of challenge of jurors is within the discretion of the court at the trial term, and their ruling on this point is not matter for exception. No particular language is necessary to constitute a demand for payment. It is enough if both parties understand that a demand is made. A corporation brought a suit against a stockholder to recover an assessment made under chapter 136, section 4, General Statutes. The stockholder wrote to the treasurer of the corporation as follows: "I suppose you are somewhat anxious to hear from me, as it is past the time specified for the assessment to be paid. I have the money due me, and shall have it the first of next month, so thought I would not borrow or hire it for so short a time; therefore you will excuse me for being so backward in paying my proportion." Held, that said letter was competent evidence to go to the jury to show an admission by the defendant that payment of all the debts named in the assessment had been demanded of the corporation. If the objection, that some of the debts for which such assessment is made are not binding upon the corporation, is not insisted on at the trial, it will be regarded as waived. Payment only of the debts of a corporation, in the cases and to the extent specified in chapter 135, General Statutes, can be enforced against individual stockholders under chapter 136, section 1. An assessment can be made under chapter 136, section 4, to pay those debts only of which the payment can be enforced by bill in chancery under section 1, and payment of no other can be demanded under section 2. The provisions of chapter 135, section 4, General Statutes, which forbid a corporation to contract debts or incur liabilities exceeding one half of its capital stock actually paid in and unimpaired, and of its other property and assets, are directory; debts contracted and liabilities incurred in excess of that amount are binding upon the corporation. Section 5 of the same chapter gives such creditors an additional remedy against the directors of such corporation. The stockholders may assess themselves to pay such debts under chapter 136, section 4, if they are individually liable to pay the other debts of such corporation. OSSIPEE HOSIERY AND WOOLLEN MANUFACTURING Co. v. CANNEY. [No. 11. Vol. II.] When a creditor of a corporation had no knowledge that the corporation had exceeded the limit beyond which it is forbidden, by chapter 135, section 4, the contract debts, and could not by inquiry have ascertained that fact, the doctrine of ultra vires will not be applied to him. ASSUMPSIT, by the Ossipee Hosiery and Woollen Manufacturing Company against Havillah D. Canney, for an assessment made by the plaintiffs upon the defendant, as a stockholder in the plaintiff corporation, for the purpose of paying the corporate debts, under Gen. Stats. ch. 136, sec. 4. In empanelling a jury, the plaintiffs peremptorily challenged one juror and the defendant one; the plaintiffs then passed the list to the defendant without exercising the right of second challenge; the defendant challenged a second time; the court then allowed the plaintiffs to challenge the juror drawn to take the place of the one set aside by the defendant's second challenge, and the defendant excepted. Writ dated February 14, 1872. The defendant pleaded the general issue, and the following brief statement: The plaintiffs will take notice that at the trial of said suit the defendant will offer evidence that the charter of said pretended plaintiffs was never duly accepted; that the amount of capital stock was never duly fixed and limited, and that the number and the amount of shares in the same were never limited and fixed; that said plaintiffs never organized under their charter within three years from its passage; that said plaintiffs did not at the time said suit was begun, nor at any time before, nor at the time of the assessment in said declaration mentioned, owe any just liabilities; and that no demand for the payment of any liabilities of the plaintiffs in said declaration mentioned has been made; and that there was no legal ground for making said assessment; that said plaintiffs had, at the time of said demand and said assessment, ample funds to pay all their liabilities and all costs thereon, and at said time ample unincumbered personal property to satisfy all claims and all costs thereon; and that the same was duly exposed so that it might have been attached by said creditors of said plaintiffs; and said defendant is not and never has been a stockholder in said plaintiff corporation, and never subscribed for any shares therein; and there are not and never have been any shares in said corporation; and that the defendant never received any certificate of stock in said plaintiff corporation; and that no assessment has been made as by said writ is alleged. The plaintiffs' charter, approved July 7, 1866, is as follows: Section 1 is in the usual form, incorporating Smith, Dorr, and others, their associates, successors, and assigns, by the plaintiffs' name, giving them the powers and privileges, and making them subject to all the liabilities, incident to corporations of a similar nature. Section 2 authorizes the corporation to carry on a manufacturing business, and to hold property. The capital stock of said corporation shall not exceed the sum of $50,000, which shall be divided into shares of $100 each." "Section 3. Any three of the persons named in the first section of this act may call the first meeting of the corporation, by publishing a notice of the time and place of meeting in some newspaper printed in the county of Carroll, fifteen days at least prior thereto, at which meeting or any adjournment thereof a clerk shall be chosen, and by-laws for the regulation and government of said corporation, not inconsistent with the Constitution and laws of this state, may be established." |