Stephen Merritt Burial & Cremation Co. v. Stephen Merritt Co.

Scott, J.:

We are all agreed that the decree appealed from is right and should be affirmed in so far as it restrains the defendant corporation, and it is unnecessary to recount the reasons for so much of the decree further than to say that it clearly falls within the rule laid down in Higgins Co. v. Higgins Soap Co. (144 N. Y. 462) and other similar cases.

It remains only to consider those provisions of the decree which affect the two defendants, grandfather and grandson, who bear the name of Stephen Merritt.

The whole controversy turns upon the right to the use of the name Stephen Merritt as a trade name.

The elder Stephen Merritt, known as the Bev. Stephen Merritt, was an undertaker on Eighth avenue near Twenty-third street in the city of New York as long back as 1875, having succeeded his father of the same name, and had acquired a large share of public reputation and notoriety, especially in that thickly populated part of the city in which his place of business was located. In 1897 he turned his business into a corporation, called the Stephen Merritt Burial Company, in which two of his employees were associated with him. He thereupon ceased to carry on his business individually, devoting all of his time and energies to the business of the corporation, of which he always owned a majority of the stock, and at all times controlled. To this corporation he transferred everything theretofore used by him in the conduct of his business. He did not in terms convey to the corporation the good will of his former business and the right to use his name as its trade name, but we can entertain no doubt that it was his intention that the corporation should enjoy the use of his name as the distinctive trade name of the business, and all of his acts were consistent only with that intention. In 1899 he organized the present plaintiff corporation of which he became president. To this corporation the Stephen Merritt Burial Company, by an instrument executed by Stephen Merritt himself, as president, assigned “the entire good will, stock in hand, fixtures, outstandings, merchandise and all manner and kind of assets and property of the said party of the first part [the burial company] in anywise belonging or appertaining,” except the franchise and treasury stock and a lease.

The case is replete with evidence that the Bev. Stephen Merritt intended that his own name should be the trade name of the corporation first organized by him. No sooner had that corporation been organized than it began, under said Merritt’s direction, a vigorous selling campaign, by the issue of circulars and other so-called literature, in which the public was invited to subscribe because the business was to be an enlargement and continuation of that formerly carried on by him, and because he was to be its president and director. It was expressly declared that Mr. Merritt had conferred upon the company “ Ms name, his life, his fortune, his time and influence, his all. ” The very certificates of stock, which were sold as freely as possible, bore his name and likeness. A man may not incorporate his business under his own name, invite the public to invest in it because it does bear his name and, therefore, is identified with him, and entitled to whatever benefit may accrue from the use of his name and reputation, and then, having obtained their money, sell the use of his name to another and competing concern. “It is not right to profess and to purport to sell that which you do not mean the purchaser to have; it is not an honest thing to pocket the price and then to recapture the subject of sale.” (Trego v. Hunt, L. R. [1896] App. Cas. 7.)

The legal effect of Merritt’s action, as no doubt was his intention, was to confer upon the first corporation, the burial company, the benefit of the use of his name as a trade name, and it undoubtedly constituted an item, and a very important item, of the good will of that company, which was expressly included in the sale to the plaintiff corporation.

The defendant corporation was organized in 1910 by the younger Stephen Merritt, a grandson of the Bev. Stephen Merritt, who associated himself with one Wynkoop, then an employee of plaintiff, and one Buckingham, who had been in the employ of another undertaker. The charter of this corporation was exceedingly broad, and sufficient to cover the transaction of almost any business, but it carefully avoided any specific mention of the undertaking business, rather emphasizing the business of dealing in real estate. The younger Merritt had been in the employ of plaintiff for a short time in a clerical capacity, but seems to have had little experience on the practical side of the business. This corporation opened a small establishment in One Hundred and Twenty-sixth street, about five miles from plaintiff’s principal place of business, and so continued until August, 1911.

In that month the trustees of the plaintiff failed to re-elect the Bev. Stephen Merritt as president, but adopted a resolution granting him an honorarium of fifty dollars per week, provided he would take steps to secure an indebtedness he owed to the company. The legality of this action is not called in question. Merritt declined to accept this provision for his benefit and at once allied himself with the defendant corporation, from whom he received a salary of twenty-five dollars per week, for which he seems to have done little except sit around the office and give color to the impression that the business was identical with that with which his name had been so long associated. The defendant corporation at once took a place of business on Eighth avenue, near the plaintiff’s place of business, and exploited in every possible way the name and picture of the elder Merritt, with the evident and successful purpose of diverting plaintiff’s trade by leading the public to believe that it and not the plaintiff was the original and well-known Stephen Merritt Undertaking Establishment. As I have said, we are all agreed that the defendant company was guilty of unfair practices and has been properly enjoined.

As to the younger Merritt, the decree appealed from does not forbid him to use his own name even in the undertaking business, but only requires that if he desires to so use his name he shall do so in a manner and with such explanatory suffixes as will truthfully show that he is not -his grandfather, and will not unfairly, by a suggestio falsi, compete with the trade of plaintiff. There is ample authority for such a decree. The subject has but recently been carefully considered by the Court of Appeals. In World’s D. M. Assn. v. Pierce (203 N. Y. 419, 425) it is said: “The defendant has the right to use his name. The plaintiff has the right to have the defendant use it in such a way as will not injure his business or mislead the public. When there is such a conflict of rights it is the duty of the court so to regulate the use of his name by the defendant that, due protection to the plaintiff being afforded, there will be as little injury, to him as possible. Defendant should so use his name in connection with his remedies that he will obviate deception, or with an explanation which will inform or be a notice to the public that those remedies are not those of plaintiff.” (Citing Herring, etc., Safe Co. v. Hall’s Safe Co., 208 U. S. 554; Devlin v. Devlin, 69 N. Y. 212; Meneely v. Meneely, 62 id. 427.)

As to the elder Stephen Merritt, known as the Reverend, the decree enjoins him from embarking upon an undertaking business in competition with plaintiff in his own name, or from granting to any other person license or authority to use his name or portrait for carrying on such a competing business. As has already been pointed out, the elder Merritt conferred upon the plaintiff corporation the right to use his name as its trade name and it constitutes a valuable item of its assets. Having done this, we take it to be well settled that he has, so far as he and his privies are concerned, conferred upon the plaintiff an exclusive right to the use of his name as a trade name, in analogy' to the rules respecting trade mark, and may not use it again in competition with plaintiff, or confer upon another the right so to use it. The authorities to support this proposition are numerous, and have been so lately collated and reviewed by this court that it is unnecessary to cite them again (Ludwig & Co. v. Claviola Co., 144 App. Div. 388).

We are, therefore, of the opinion that the judgment appealed from is right and should be affirmed, with costs.

Clarke and Dowling, JJ., concurred; Ingraham, P. J., and Laughlin, J. dissented.