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ported to the secretary of state that the stock was fully subscribed as follours: Oliver D. Peck, 100 shares, amounting to $10.000; Henry D. Coghlan, 200 shares, $20,000;' William A. Ratcliffe, 72 shares, $7,200; James L. Ratcliffe, 378 shares, $37,800,--and that there had been elected as directors the four subscribers to the capital stock and George C. Morton, whereupon on that day the secretary of state issued his certificate "that the said Peck Bros. Co. is a legally organized corporation under the laws of this state." Mr. Coghlan, who subscribed for 200 shares, was the attorney of the Chicago branch and was one of the attorneys of the defendant Sanders as receiver, and is one of the solicitors of record for the defendants in this suit. The bill charges the fact to be “that, although the name of the defendant Albert D. Sanders does not appear as one of the incorporators of the desendant 'Peck Bros. Co.,' he was directly interested and contributed toward the payment upon the shares of its capital stock, and that as your orator is informed and believes, the two hundred shares of capital stock of said corporation subscribed by Henry D. Coghlan were in reality a subscription in trust for and in behalf of the defendant Albert D. Sanders; that the said Henry D. Coghlan was the confidential attorney of the said Albert D. Sanders both before and after his app: intment as ancillary receiver; that said Albert D. Sanders immediately upon resigning his said receivership became the general manager of the defendant Peck Bros. Co.,' and has continued to be such general manager up to this time, and has taken an active part in the conduct and management of the affairs of said corporation from the time of its creation.” To this allegation the defendant Albert D. Sanders answered that he "denies that on the 25th day of June, 1896, he conspired with the defendants William D. Peck and William A. Ratcliffe for the purpose of obtaining the name and good will and business of the firm of Peck Bros. & Company. He denies that he had anything to do with the organization of Peck Bros. Company, the defendant company. He denies that the subscription of Henry D. Coghlan to the capital stock of Peck Bros. Company was a subscription in trust for this defendant. He denies that the said Henry D. Coghlan was his confidential attorney, either before or after his appointment as ancillary receiver, but represents the fact to be that Henry D. Cogblan was the attorney for Peck Bros. & Company of New Haven, Conn., for years prior to its insolvency, and after its insolvency acted in connection with E. A. Otis as attorneys of the receivers in winding up the affairs of Peck Bros. & Company, and that everything done by the said Henry D. Coghlan in the organization of Peck Bros. Company was done for purposes and reasons unknown to this defendant, and in no way connected with him." All the defendants, except the defendant James L. Ratcliffe, “further answering, deny that the plaintiff has the exclusive right to the use of the name 'Peck Bros. & Co.,' 'Peck Bros. Co.,' or 'Peck Bros.,' or the name of 'Peck,' in connection with its said business. These defendants aver and charge that the defendant Peck Bros. Company is alone entitled to the use of the said name or names; that it was duly incorporated under the laws of the state of Illinois long prior to the complainant; that it purchased the assets and good will of the Western branch of Peck Bros. & (0.; that its company is headed by Oliver D. Peck, of the original firm of Peck Bros. & Co., who acts as its president; and that it had been in existence and doing business since June, 1896, and under the name adopted has built up a large business, which it alone is entitled to share and enjoy." No evidence was taken on behalf of the defendants below, except the deposi. tion of one Wilson, the representative of the defendant corporation in the city of New York, touching the location of its office in that city.
There were negotiations in the spring of the year 1896, between the Connecticut receivers and Mr. Sanders, the ancillary receiver, on the one hand, and William A. Ratcliffe, representing a syndicate for the purchase of the property of the Connecticut corporation located in the city of Chicago. It was unknown to the Connecticut receiver who composed that syndicate. After some negotiation a price was fixed for the goods, and the sale was finally consummated in the month of September. The Connecticut receivers heard of the pr. posed new corporation in Illinois, not from the parties, but from some person on the outside, and on August 8th wired Mr. Sanders as follows: "We object to title of new company. Avoid recognizing in any way,"—and on the same day addressed to him the following letter:
“New Haven, C nn., August 8, 1896. "Mr. A. D. Sanders, Receiver, Chicago-Dear Sir: Since we heard of the organization of the new company to succeed to our business in Chicago, we have seriously considered the matter of allowing them to use the name Peck Bros. in any way, and in conversation with one of our prominent stockholders, Mr. W. H. Hart, he decidedly objected to it. While the intentions of the projectors might be all right, I can readily see where serious complications might arise from any company doing business in the same line under the name of Peck Bros., and we shall be under the necessity of refusing to recognize this company by making any sale of goods to them. I have just wired you to this effect, and I think, if you will stop to consider the matter, you will readily see the necessity of our entering the protest. I presume there may be some way by which the use of this name might be permitted under restrictions and limitations, but have not bad an opportunity, as yet, of consulting our attorney in reference to the matter. I thought best to enter the protest, and will notify you and write you further after consultation with our attorney. "Yours truly,
J. M. Peck, Receiver." On August 14, 1896, he addressed a letter to "Mr. W. A. Ratcliffe, Agent for the Peck Bros. Co.," which contains the following: “We have talked over the matter of the name of the new company, viz., The Peck Bros. Co.,' and we could see where it could and might be used by you to the detriment of the business of Peck Pros. & Co., but I had your assurance when in conversation with you that your idea in taking the before-mentioned name was to preserve the present channels of trade for Peck Bros. & Co.'s goods so far as possible, and so far as it could be made mutually advantageous. To this we can see no objection, but if at any time in tlie future Peck Bros. & Co. should find that goods were on the market not of their manufacture but marked The Peck Eros. Co.' we have no doubt but the name of the new com. pany is, in our opinion, so near like the old that it would at least warrant a trial of the matter in the courts. As 1) such case is likely to arise during the receivership, we think the matter can probably be left to the future board of directors of Peck Bros. & Co. In the meantime we shall consider that you are to sell Peck Bros. & Co.'s goods in Chicago and vicinity, and that all orders for goods shall be referred to you, and that we will not give competing prices against you." On August 24th he addressed a letter to Mr. Sanders, receiver, with reference to an inventory of the property at Chicago, in which he stated: "I did say to both you and Mr. Rateliffe that I did not think it best for you to have any connection with the new firm until the matter was fully closed out, and I distinctly said that this was for your own interest." The negotiations seem to have at first contenplated the acquirenient of the good will and name of the Connecticut corporation. On September 23, 1896, the Connecticut receiver wired Mr. Sand
“Receivers have no authority to sell good will nor make contracts extending beyond the receivership. Instructions of August 14th cover all we can do. If those terms are not sufficient, call the deal off, and we will advise you further."
On September 23, 1896, the defendant Albert D. Sanders, the ancillary receiver, filed his petition in the ancillary suit, representing that the stock of goods in Chicago was valued at $37,667.60, and that the Illinois ( rporation, "Peck Bros. Co.," had offered to purchase the same for $18.830.So in cash; that he submitted the proposition to the principal receiver of the Connecticut corporation, and had been instructed to procure authority of the court to consummate the sale.--and an order was entered by the court authorizing the sale of the goods, which sale was consummated. The order did not authorize the sale of any good will or trade-name, but simply all the stock on hand. In December, 1896, Mr. Porter, the Connecticut receiver, visited Chicago, and called at the oflice of the defendant corporation. He then found the defendant Sanders engaged in the service of that corporation. Subsequently, and on December 31, 1896, Sanders resigned as ancillary
receiver, and on the same day Joseph Porter was appointed ancillary receiver in his place. The reports of the ancillary receiver showed payments of $300 to Henry D. Coghlan for services as solicitor of the receiver. On December 17, 1897, the New Haven court entered a decree, upon the application of the Connecticut receiver, for the sale of the property of the New Haren corporation, and directed "that Joseph Porter, the receiver of Peck Erothers & Company, be, and he is hereby, authorized and empowered to sell all of the property of said company, of every kind and wheresoever situated, including its franchises, name and good will," in such manner as, in the judgment of the receiver, would realize the greatest amount. The decree further provided that creditors and stockholders might bid at the sale. The report of the receiver, filed March 11, 1898, declares that the receiver offered for sale at public auction to the highest bidder at the designated date the entire property of the corporation, including its “franchises, name, and good will, and all other assets of every kind, and wheresoever situated.” At that sale, P. N. Welch, F. C. Hollins, and H. C. Warren, who were agents for the committee of stockholders of the corporation, purchased the property, good will, etc., for the sum of $265,520. The report of the sale was on the same day confirmed, and the receiver was ordered to execute and deliver to such person or persons as shall be designated in the written request of the agents of the committee of stockholders who purchased said property a proper deed of conveyance. On the 4th day of April, 1998, Welch, Warren, and Hollins, as trustees of the stckholders in the original corporation, uniting with others, entered into articles of organization of the “Peck Brothers & Company,” the appellant here, which was filed with the secretary of state of the state of Connecticut on the 5th day of May, 1898. The number of shares of the corporation was 24,000, of the par value of $25 each, and were fully subscribed for. Welch, Warren, and IIollins, as trustees of all the stockholders, subscribed for 23,836 shares. On May 5, 1898, the receivers of “Peck Brothers & Co.," the original Connecticut corporation, having received a written request from the trustees of all the stockholders to deliver a bill of sale to the new corporation "Peck Brothers & Company,” conveyed to the last-named corporation all the property of the old company, "together with the franchises, name, and good will, and all trade-names, trade-marks, and patents and all other assets of every kind, and wheresoerer situated, belonging to said Peck Brothers & Company, or to me as receiver thereof." On May 10, 1898, the receiver reported to the court, among other things, that he had received the final payment for the property and franchises sold; "that a committee representing all of the stockholders of said defendant corporation has purchased all of the property and franchises and name of said company, and has caused a new corporation to be organized for the benefit of the stockholders of the defendant company, and has transferred all of the pr perty and franchises and the name of the defendant company to said new corporation; and that said committee, representing all of the stocklolders of said defendant company, desires that said defendant company shall be dissolved, and has requested the undersigned to apply to this court for an order of dissolution." Thereupon on that date an order was entered by the court reciting the report of the receiver, "and the committee representing all stockholders of said defendant company, appearing by their attorneys, Alling, Webb & Morchouse, and joining in the prayer for dissolution, and, the facts recited in said report having been found to be true,” it was ordered that the corporation in that case be dissolved, and its corporate existence terminated.
The record is replete with evidence touching the question of confusion of goods, and in the sales thereof. The defendant corporation, having its headquarters in Chicago, reaches out for its trade throughout the East and throughout the territory covered by the complainant corporation. Its goods are stamped, "Peck Bros. Co. Chicago.” The stamp of both corporations upon their goods is necessarily in small letters, requiring close inspection to distinguish. The evidence discloses that in repeated instances experienced plumbers had purchased the goods made by the defendant corporation, supposing them to be the goods manufactured by the complainant corporation; and much confusion is proven to have occurred in the delivery of letters, checks, and statements forwarded by mail. Upon the question of confusion of goods there is no dispute.
E. A. Otis and Henry C. White, for appellant.
Before JENKINS and GROSSCUP, Circuit Judges, and BAKER, District Judge.
JENKINS, Circuit Judge, after stating the facts as above, delivered the opinion of the court.
Upon the evidence in this case, we think we are warranted in saying of this defendant, as we had occasion to say of another corporation under circumstances not dissimilar, that "it was conceived in sin and brought forth in iniquity, that wrong attended at its birth, and that fraud stood sponsor at its christening, imposing upon the corporate child a name to which it was not entitled, and which it had no right to bear.” Kathreiner's Malzkaffee Fabriken Mit Beschraenkter Haftung v. Pastor Kneip Medicine Co., 27 C. C. A. 351, 82 Fed. 321. The original Conneciicut corporation had builded up a large manufacturing interest. Its goods were of superior quality, and commanded higher prices in the market than the goods of other dealers. They were universally known to the trade as "Peck Brothers Goods." The name indicated the origin, and was a guaranty of the superior excellence of the goods, and was so recognized by all dealing in them. The name and designation was a property right belonging to, and a valuable asset of, the original Connecticut corporation. Its financial embarrassment caused no suspension of its manufacture or trade. That was continued by the receivers appointed under the bill filed manifestly for the purposes of reorganization. The defendant Oliver D. Peck was at the time the vice president oi the Connecticut corporation, and bound by his duty to abstain from injuring its good will and trade name. So, likewise, were the defendants Albert D. Sanders and William A. Ratcliffe thus obligated. Each of them was a stockholder in the Connecticut corporation; the former the manager, and afterwards the receiver, of its Chicago branch, and the latter its principal salesman. So long as they occupied those relations of trust, they were bound in honor to refrain from acts detrimental to the company, and which would undermine its business and affect the value of its trade-name. Mr. Coghlan, one of the incorporators of the Chicago company, was the counsel of the Connecticut company for its Chicago branch, and was one of its counsel in the receivership proceedings in the Northern district of Illinois; and while that confidential relation continued he also was bound by ordinary professional ethics to take no part in a proceeding which must necessarily prove injurious to his client. Pending the proceedings for reorganization, and before it was known whether the corporation would be reorganized, or its property and assets disposed of to others, Coghlan, with two companions, proposed to form a corporation under the title "Peck Bros. Co.” to carry on a like business, and, as events have proven, within the territory occupied by his client. Peck, William A. Ratcliffe, and Coghlan were three of the four subscribers to the stock of that company, and were three of its five directors. They assumed a name to which they had no warrant of right. There were no brothers Peck interested in this new enterprise. There was but one Peck. The name assumed was itself a falsehood, and we must believe that it was so assumed for a purpose. The fact of the proposed incorporation was by these parties either designedly concealed from, or was not made known to, the officers or the Eastern receivers of the Connecticut corporation; but the fact that such incorporation was proposed incidentally came to the knowledge of the Connecticut receivers, and as early as August 8th they wired to the defendant Sanders, who manifestly was not unfriendly to the proposed corporation, objecting to the title of the new company, and directing him to avoid recognizing it in any way. This was nearly two weeks before the incorporators met to elect a board of directors. gust 14th the Connecticut receiver addressed a letter to the defend-ant William A. Ratcliffe, likewise protesting against the use of the name to the injury of the Connecticut corporation. So that they proceeded with this incorporation, assuming a name to which they had no right, with knowledge that they who were then in charge, a: off.cers of the court, of the rights of the stockholders of the Connecticut corporation, protested against the assumption of the name. Here, therefore, was no mere mistaken action, but a deliberate assumption of a name which, as we think, the corporation had no right to bear. We need not stop to inquire too curiously with respect to the real part played by the defendant Albert D. Sanders in this transaction. That he was knowing to it all cannot be doubted. He and his codefendants, it is true, deny all conspiracy to defraud; but they content themselves with mere denial. Having submitted to answer, they should have answered fully. In view of the allegations of the bill, it was incumbent upon all of the defendants having knowledge to have informed the court whether Coghlan's subscription was for himself or for others, or in part for himself and in part for others; whether his own money paid for his subscription to the stock, or whether it was in whole or in part paid for by others, and by whom. The fact that the defendant Albert D. Sanders was the general manager of the Chicago branch, and that within a few months after the incorporation, and while still receiver, he was, either as general manager or in some responsible position, aiding in the management of the affairs of the new corporation, made it incumbent upon him not merely to deny without explanation, but to fully explain, especially in view of the fact that it is conceded that he is now a stockholder and officer of the new corporation. But no word of explanation comes. They refrain from thus speaking by their answer. They refrain from testifying upon the hearing. Upon this whole business, and with respect to their connection with it, the defendants are as silent as the sphinx. We cannot but believe that the corporation was formed with a view to obtain, rightfully or wrongfully, the good will and trade-name of the Connecticut business. Indeed, the answer asserts that the company was formed "to buy the assets and good will of the insolvent corr