Wilmer v. Thomas

Alvey, C. J., delivered the opinion of the Court. The only question presented on this appeal is, whether the purchasers of the Druid Mills manufacturing property ⁴⁸⁷ at the sale thereof by the trustee, under and by virtue of a deed of assignment made by the manufacturing company for the benefit of creditors,' will acquire, with the property purchased by them, the right to the good-will and business of the insolvent corporation, including the brand or trade-mark used by the company to mark the goods manufactured by it before the assignment ? By the deed of assignment, dated the 12th of December, 1890, the Druid Mills Manufacturing Company, an insolvent corporation, assigned and conveyed to the appellant, as trustee, “all its estate and property of wllatever kind and wherever situated,” in trust for the benefit of creditors, with power to the trustee to sell, either at public or private sale, and on such terms as might seem best for the interest of the creditors. The trustee advertised the property for sale at public auction; and in the advertisement he described the property as the “old established and valuable cotton duck mill at Woodberry, well known as ‘Druid Mills,’ containing about 12,000 spindles .and 200 looms, in full operation;” and adding, after full description of the particulars of the plant, “that the machinery is of the most modern, and is constructed for the manufacture of all numbers, widths and weights of cotton duck, awning, tripes, yarns, twines, &c., all the well known Druid Mills brand.” The trustee sold the property to the appellees under this advertisement and according to the foregoing description; and in his amended report of the sale, he states that he “offered at public sale the well known ‘Druid Mills’ as thefi in full operation and agoing concern, with all the real and leasehold property, machinery and plant, together with the good-ioill and business of the said Druid Mills Manufacturing Company, of Baltimore County, subject to the operation and effect of a certain mortgage described in the advertisement of sale; and that he then ⁴⁸⁸ and there sold the same to Douglas H. Thomas, Christian Devries and Charles C. Homer, as a committee representing the creditors of the said company, at and for the sum of $120,000, that being the highest bid." These purchasers, upon the report being made, came into Court, and while admitting the facts stated in the trustee’s amended report, objected to the ratification of the sale, upon two grounds : 1st.

That the deed of trust or assignment did not assign or transfer to the trustee the right to sell and convey to the purchasers of the Druid Mills property the exclusive right to continue the business and to the use of the brand or trade-mark of the company; and, 2ndly, That the advertisement of sale did not distinctly state that the brand and trademark of the company would be offered for sale. Upon these exceptions an order pro forma was passed setting aside the sale as reported, and the trustee has appealed. That the good-will of an established business, as also the brands or trade-marks used to distinguish and specially denote the product of manufacture of the establishment, are property, and form the subjects of contract and sale, is a principle too well settled to need the citation of authorities for its support. Indeed it is often the case, that a large portion of the intrinsic marketable or assessable value of a manufacturing establishment consists in the good-will maintained by it, and in the brands or trade-marks to which it has acquired an exclusive use, by which to denote the origin and make of its goods when placed upon the market.

And so important a contribution to the value of the establishment are these elements or accessories of the business, that in the sale or assignment of such manufactory or business establishment, to be continued as formerly, the sale or transfer of such an establishment ordinarily carries with it, by reasonable intendment or implication, the right to such good-will and trade-mark, as incidents to or accessories ⁴⁸⁹ of the business carried on by the establishment. This would now seem to be settled by a great preponderance of authority, though after a considerable conflict of judicial opinion. This Court, in the case of Witthaus vs. Mattfeldt & Co., 44 Md., 305 , has said that where a trade-mark is used to designate the place, and the person by whom the goods are made, the right to such trade-mark passes to the purchaser upon the sale and transfer of the business and manufactory at which the goods are made. And the Supreme Court of the United States, in Kidd vs. Johnson, 100 U. S., 617, 620 , in speaking of the right to dispose of a trade-mark, in connection with a business establishment, said : “As to„ the right of Pike to dispose of his trade-mark in connection with the establishment where the liquor was manufactured, we do not think there can be any reasonable doubt.

It is true, the primary object of a trade-mark is to indicate by its meaning or association the origin of the article to which it is affixed. As distinct property, separate from the article created by the original producer or manufacturer, it may not he the subject of sale. But when the trade-mark is affixed to articles manufactured at a particular establishment and acquires a special reputation in connection with the place of manufacture, and that establishment is transferred either by contract or operation of law to others, the right to the use of the trade-mark may be lawfully transferred with it. Its subsequent use by the person to whom the establishment is transferred is considered as only indicating that the g'oods to which it is affixed are