Case ID: ny-2d_9/html/0516-01.html
Source: Caselaw Access Project
Author: {"author": "Foster, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lanvin Parfums, Inc., Appellant, v. Le Dans, Ltd., et al., Respondents, et al., Defendants.
    Argued March 21, 1961;
    decided April 27, 1961.
    
      
      Jay Leo Rothschild for appellant.
    I. Subdivision 6 of section 2354 of the Penal Law is clear and explicit. The result is that there is neither need nor justification for interpretation or construction which erases from the statute what the Legislature plainly decreed. (People v. Shapiro, 4 N Y 2d 597; Matter of Andrews, 162 N. Y. 1; People v. Krivitsky, 168 N. Y. 182; People v. Luhrs, 195 N. Y. 377; Matter of Julius Restaurant v. Lombardi, 282 N. Y. 126; Homnyack v. Prudential Ins. Co., 194 N. Y. 456; Ely v. Holton, 15 N. Y. 595; People v. Kibler, 106 N. Y. 321; Low v. Hall, 47 N. Y. 104; Mabie v. Fuller, 255 N. Y. 194; Newell v. People ex rel. Phelps, 7 N. Y. 9; Matter of Russo v. Valentine, 294 N. Y. 338; Matter of River Brand Rice Mills v. Latrobe Brewing Co., 305 N. Y. 36; Matter of De Peyster, 210 N. Y. 216.) II. The Luhrs case, decided by this court, was predicated upon subdivision 6, as written, and on that basis this court held that the statute which made it a misdemeanor, irrespective of any fraudulent intent, to sell a trade-marked product except in its original package was a valid exercise of the State’s police power to prevent fraud. (Ewen v. Thompson-Starrett Co., 208 N. Y. 245; People ex rel. American Express Nat. Bank v. Purdy, 196 N. Y. 270; Smith v. Scholtz, 68 N. Y. 41; Matter of Fanoni, 88 Misc. 442, 169 App. Div. 958, 216 N. Y. 640; Chance v. Guaranty Trust Co. of N. Y., 164 Misc. 346, 251 App. Div. 855; People v. Kibler, 106 N. Y. 321; People v. Cipperly, 37 Hun 319, 101 N. Y. 634; Pollard v. Trivia Bldg. Corp., 291 N. Y. 19; Matter of Engelsher v. Jacobs, 5 N Y 2d 370; Lawton v. Steele, 119 N. Y. 226, 152 U. S. 133; Matter of Stubbe v. Adamson, 220 N. Y. 459; People v. West, 106 N. Y. 293; People v. Beakes Dairy Co., 222 N. Y. 416; Federal Trade Comm. v. Winsted Co., 258 U. S. 483; Fisher v. Star Co., 231 N. Y. 414; People v. Leonard, 8 N Y 2d 60.) III. Should it be deemed that the Luhrs case did not decide the issue here presented, and if, therefore, the occasion for its decision be taken to limit the rationale of the decision itself, then the least that may be said is that the issue is open and must now be decided for the first time. As an original proposition, subdivision 6 is too plain to warrant interpretation or construction and is constitutionally valid. (People v. Kibler, 106 N. Y. 321; Knapp v. Fasbender, 1 N Y 2d 212; Matter of Hotel Assn. of N. 7. City v. Weaver, 3 N Y 2d 206; Headley v. City of Rochester, 272 N. Y. 197; Matter of Brous v. 
      Smith, 304 N. Y. 164; Guerlain, Inc., v. Woolworth Co., 297 N. Y. 11; Adrian v. Unterman, 281 App. Div. 81, 306 N. Y. 771; Electrolux Corp. v. Val-Worth, 6 N Y 2d 556; Lincoln Bldg. Associates v. Barr, 1 N Y 2d 413.) IV. The Prestonettes case is without application. It certainly did not pass on any issue as to the constitutional validity of subdivision 6 of section 2354 of the Penal Law, nor did it limit New York’s power to enact preventative legislation to protect the public and the trade-mark owner. New York’s Penal Law provisions supplement the National trade-mark acts and New York’s trade-mark acts, as well as common-law trade-marks, by protective and preventive police power measures. (Prestonettes, Inc., v. Coty, 264 U. S. 359; Trade-Mark Cases, 100 U. S. 82; Oneida Community v. Oneida Game Trap Co., 168 App. Div. 769; Brown & Bigelow v. Remembrance Adv. Prods., 279 App. Div. 410, 304 N. Y. 909; Erie R. R. Co. v. Tompkins, 304 U. S. 64; Bourjois, Inc., v. Hermida Labs., 106 F. 2d 174; Association of Contr. Plumbers v. Contracting Plumbers Assn., 302 N. Y. 495; Matter of Julius Restaurant v. Lombardi, 282 N. Y. 126.) V. Plaintiff is entitled to an injunction to protect its good will and property rights. (Metropolitan Opera Assn. v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 279 App. Div. 632; Fisher v. Star Co., 231 N. Y. 414; People ex rel. Bennett v. Laman, 277 N. Y. 368.) VI. The complaint states a sufficient cause of action against the individual defendants. (Morgenstern v. Cohon, 2 N Y 2d 302; California Packing Corp. v. Kelly Stor. & Distr. Co., 228 N. Y. 49; Abrams v. Allen, 297 N. Y. 52; Michaels v. Lispenard Holding Corp., 11 A D 2d 12; Quaid v. Ratkowsky, 183 App. Div. 428, 224 N. Y. 624; People v. Dalsis, 5 A D 2d 28; People v. Sherman, 133 N. Y. 349; People v. Ahrend Co., 308 N. Y. 112.)
    
      Robert Goldstein for respondents.
    I. The decision of the Supreme Court of the United States in Prestonettes, Inc., v. Coty (264 U. S. 359) permitted rebottling and relabeling of a trade-marked article and held in reversing (285 F. 501) that such rebottling, repackaging and relabeling as done by corporate respondents was not a violation of subdivision 6 of section 2354 of the Penal Law. (People v. Luhrs, 195 N. Y. 377.) II. Subdivision 6 of section 2354 of the Penal Law does not prohibit rébotiling, and the courts cannot read into such section an intention never expressed by the Legislature. (People v. Daly, 244 N. Y. 278; People v. Goetz, 234 App. Div. 421; People v. Hoffheimer, 110 App. Div. 423; People v. Briggs, 193 N. Y. 457; People v. Harms, 308 N. Y. 35; People v. Grogan, 260 N. Y. 138; Kennahan v. City of New York, 162 App. Div. 364; Furey v. Town of Gravesend, 104 N. Y. 405; City of Rochester v. Rochester Gas & Elec. Corp., 233 N. Y. 39; People v. Dioguardi, 8 A D 2d 426; People v. Grant, 14 Misc 2d 182.) III. In the event the construction of subdivision 6 of section 2354 of the Penal Law, as urged by appellant, is adopted, then and in such event the statute must be declared unconstitutional as depriving the corporate defendants of their property without due process of law and depriving them of their right to earn a livelihood. (Nashville C. & St. L. Ry. v. Walters, 294 U. S. 405; Liggett Co. v. Baldridge, 278 U. S. 105; People v. Perretta, 253 N. Y. 305; People ex rel. Appel v. Zimmerman, 102 App. Div. 103; New State Ice Co. v. Liebmann, 285 U. S. 262; Ives v. South Buffalo Ry. Co., 201 N. Y. 271; Cowan v. City of Buffalo, 247 App. Div. 591; People ex rel. Moskowitz v. Jenkins, 202 N. Y. 53.) IV. Subdivision 6 of section 2354 of the Penal Law would be unconstitutional if, as contended by appellant, the law regulates the price that may be charged as alleged in paragraphs No. 6 and No. 7 of the complaint. (United States v. Colgate & Co., 250 U. S. 300; Federal Trade Comm. v. Beech-Nut Co., 257 U. S. 441; Dr. Miles Med. Co. v. Park & Sons Co., 220 U. S. 373.) V. No facts are. alleged in the complaint as against the individual defendants and the complaint as to them was properly dismissed. (Potter v. Minskoff, 2 A D 2d 513; Fermetal Steel Corp. v. Heckett, 6 A D 2d 781; Greenauer v. Sheridan-Brennan Realty Co., 224 App. Div. 199; Lowendahl v. Baltimore & Ohio R. R. Co., 247 App. Div. 144, 272 N. Y. 360; International Aircraft Trading Co. v. Manufacturers Trust Co., 297 N. Y. 285; Gerdes v. Reynolds, 281 N. Y. 180; Villani v. National City Bank, 143 Misc. 416.)
    
      B. von Maltitz, W. J. Derenberg, L. Kunin, V. T. Giordano and S. Michelman for Chanel Industries, Inc., and another, amici curice.
    
    I. Assuming, arguendo, that the Appellate Division was correct in its construction of subdivision 6 of section 2354, the Prestonettes case and the cases which follow it indicate clearly that the conduct complained of herein is deceptive. Hence, the complaint should be upheld against a motion to dismiss. (Prestonettes, Inc., v. Coty, 264 U. S. 359; Coty v. Blume, 24 F. 2d 924; Bourjois, Inc., v. Hermida Labs., 106 F. 2d 174.) II. The Appellate Division was incorrect when it failed to recognize that sound policy considerations require a literal reading of subdivision 6 of section 2354. (Matter of Debs, 158 U. S. 564.)
   Foster, J.

By a divided court, the complaint of the plaintiff in this action has been dismissed by the Appellate Division, First Department, on the ground that it does not state facts sufficient to constitute a cause of action. This was a reversal of the Special Term which held the complaint sufficient.

In four identical causes of action the complaint alleges that plaintiff is a Delaware corporation which imports various perfumes and perfume extracts from France, and sells the same either in original packages as imported, or as toilet water which plaintiff packages in this State under labels, marks and names placed thereon for and by plaintiff, and under brand names, including ‘ ‘ Arpege ’ ’ and ‘ ‘ My Sin ’ ’. The complaint alleges further that the corporate defendants are purchasers of plaintiff’s toilet waters, who systematically rebottle or repackage the same in containers of one dram each and sell them at prices far less than those charged by plaintiff.

On the theory that the defendants ’ alleged practice is a violation of. subdivision 6 of section 2354 of the Penal Law, plaintiff seeks an injunction and damages. This statute provides, so far as it'is material here :

‘ ‘ A person who:

* # #

“ 6. Knowingly sells, offers or exposes for sale, any goods which are represented in any manner, by word or deed, to be the manufacture, packing, bottling, boxing or product of any person, firm or corporation, other than himself, unless such goods are contained in the original package, box or bottle and under the labels, marks or names placed thereon by the manufacturer who is entitled to use such marks, names, brands or trade-marks; or,

* # #

Is guilty of a misdemeanor ”.

The containers used by the defendants bear labels which identify the contents as plaintiff’s product, and which, in addition, disclose that the contents are rebottled from the genuine

product “ wholly independent of [the plaintiff] ”. The form of the labels was stipulated into the record and reads as follows, with changes appropriate to each of the corporate defendants:

“LANVIN’S ARPEGE Eau de Lanvin REBOTTLED FROM THE GENUINE PRODUCT
By
Le Dans, Ltd.
WHOLLY INDEPENDENT Of LANVIN
New York, N. Y. 1 Dram ”

The Appellate Division has held that the statute does not prohibit a rebottler from using the trade name of the manufecturer or original bottler, if, in addition, the rebottler indicates on the label that the product has been rebottled independent of the manufacturer or original bottler.

Plaintiff argues that the statute is designed to protect both trade-mark owners and the general public from transactions fraught with the possibility of fraud and that no actual intent to deceive need be shown to constitute a violation thereof. Defendants contend that the statute was designed to prohibit actual fraud and must be read to allow their business practice involving, as it does, a full disclosure of the facts.

If the statute is construed literally, the complaint clearly alleges a violation by the defendants.

The evident purpose of the statute is such that it may and should be read and construed literally. We agree with the observation of the dissenting Justice below that there is no basic rule that a statute may not be read literally unless to do so would distort the intention of the Legislature.

In People v. Luhrs (195 N. Y. 377) the statute here involved was analyzed by this court. A bartender had refilled an empty Wilson bottle with whiskey taken from a demijohn below the bar, and had resold the whiskey to the public. We held that his conduct violated the provisions of the statute, notwithstanding that the whiskey actually might have been of the Wilson brand. We specifically said that the statute was designed to prevent adulteration and substitution of “ spurious goods ” for the original with “ no probable chance ” of discovery, and to prevent ‘ ‘ a kind of fraud that is easy to practice, difficult to detect and dangerous in result ” (supra, p. 382).

It is true that we stressed the tacit misrepresentation inherent in the situation and pointed out that the public was led to believe that the whiskey they purchased came from the original Wilson bottle. But the violation consisted of rebottling and reselling the whiskey under the Wilson brand name, irrespective of an actual fraud.

The possibility of fraud, or at least of inadvertent adulteration or dilution of the original product, is not appreciably lessened by a label on the new container acknowledging that the product has been rebottled from the original. And the rebottler nevertheless is trading upon the reputation of the owner of the trade-mark. Accordingly, no exception is made in the statute for collateral use ” of the manufacturer’s trade-mark (cf. Guerlam, Inc., v. Woolworth Co., 297 N. Y. 11, 19, cert. den. 332 U. S. 837).

In creating this statute to prohibit transactions and business practices replete with possibilities of fraud and deception and to protect the trade-mark owner, the Legislature acted well, within the scope of its police power (People v. Weller, 237 N. Y. 316, 324; People v. Beakes Dairy Co., 222 N. Y. 416, 427-428; People v. West, 106 N. Y. 293, 296). No sound reasons for departing from a literal construction of the statute have been presented.

' Defendants cite Prestonettes, Inc., v. Coty (264 U. S. 359, 368-369) in support of their position. In that case, the Supreme Court of the United States held that rebottling and reselling of perfumes by the defendant, under labels substantially similar to the labels used by defendants in the case before us, constituted no infringement of plaintiff’s federally registered trade-mark, despite the “ omnipresent possibility of fraud ” and the likelihood of spoliation. But that case was not decided under our statute, and has no bearing here.

In Champion Plug Co. v. Sanders (331 U. S. 125) the Supreme Court extended the doctrine of Prestonettes to rule out unfair competition, but again our statute was not involved.

Significantly, the doctrine of Prestonettes has been severely criticized by the writers (e.g., Handler and Pickett, “ TradeMarks and Trade Names—An Analysis and Synthesis ”, 30 Col. L. Rev. 168, 173; Derenberg, “ Sale of Reconditioned Articles as Trade Mark Infringement ”, 32 Bulletin of United States Trade Mark Assn. [N. S.], p. 15), and by the lower Federal courts (e.g., Bourjois, Inc., v. Hermida Labs., 106 F. 2d 174 [3d Cir., 1939]). Thus, in Bourjois, the United States Circuit Court of Appeals said: “In that case \Prestonettes1 Mr. Justice Holmes lent the prestige of his great name to a doctrine that does not appeal very greatly to the sense of fairness of the ordinary man ”.

Defendants next contend that plaintiff seeks an injunction to prevent the violation of a criminal statute, and that an injunction will not lie merely to prevent a crime. But the alleged criminal acts also threaten plaintiff’s property rights, trademark, and good will, and an injunction, therefore, is available (People ex rel. Bennett v. Laman, 277 N. Y. 368, 376).

Finally, there is some dispute as to whether the complaint sets forth causes of action against the individual defendants simply by alleging that they are officers, ‘ ‘ and, directly or indirectly ’ ’ are owners of the corporate stock and in control of corporate activities. We feel that such allegations are sufficient in this action.

The judgment of the Appellate Division should be reversed and the motion to dismiss the complaint should be denied, with costs.

Judges Dye, Froessel, Van Voorhts and Burke concur with Judge Foster; Chief Judge Desmond and Judge Fuld dissent and vote to affirm upon the majority opinion below.

Judgment reversed, with costs in this court and in the Appellate Division, and matter remitted to Special Term for further proceedings in accordance with the opinion herein.