Title: Dawson v. Lohn

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Dawson v. Lohn1985 WY 129705 P.2d 853Case Number: 83-225Decided: 08/30/1985MIKE S. DAWSON AND PATRICIA E. DAWSON, APPELLANTS (DEFENDANTS), 

v. 

PATRICK W. LOHN, APPELLEE (PLAINTIFF).
Supreme Court of Wyoming
MIKE S. DAWSON AND 
PATRICIA E. DAWSON, APPELLANTS (DEFENDANTS), 

v. 

PATRICK W. LOHN, APPELLEE 
(PLAINTIFF).

 
 
Appeal from the 
DistrictCourtofLaramieCounty, Paul T. Liamos, 
Jr., J.

 
 
Patrick M. 
Hunter, Law Offices of Georg Jensen, Cheyenne, for appellants.

Robert W. 
Costin, Laramie, 
for appellee.

Before THOMAS, C.J., and 
ROSE, ROONEY, BROWN and CARDINE, JJ.

THOMAS, Chief 
Justice.

[¶1.]     The problem posed in 
this case is whether, in the context of a disposition by summary judgment, a 
contract which conveys a trade name is ambiguous because that term might also 
allude to a trademark thereby requiring the district court to consider evidence 
apart from the contract documents to the effect that the parties contemplated a 
transfer of a trademark. We agree with the district court that this contract is 
not ambiguous and is susceptible to the rule that construction of such a 
contract is a matter of law for the court. The terms trade name and trademark 
are distinguishable legal terms of art. The summary judgment in favor of the 
business seller for the balance due on the purchase price is 
affirmed.

[¶2.]     Mike S. Dawson and 
Patricia E. Dawson, the appellants, who were the purchasers of a sandwich shop 
business, state the issues in this appeal in this way:

"1. Should the district 
court have considered parol or extrinsic evidence offered to show that the 
parties to the contract in question agreed to a transfer of a trademark along 
with the transfer of the business. 

"2. Should the district 
court have granted the plaintiff's motion for summary 
judgment."

Patrick W. Lohn, 
the seller in the transaction, articulates the issues inversely and somewhat 
differently:

"1. Whether or not the 
District Court erred in granting a Summary Judgment against Dawson and in favor of 
Lohn on the Promissory Note.

"2. That the Court did 
not err in refusing to admit parole [sic] evidence and took the position that 
the contract documents stood for themselves."

The focal 
question is whether a reference to a "trade name" in the contract documents 
inherently is ambiguous because it potentially refers to a 
"trademark."

[¶3.]     The Dawsons argue that the 
contract is ambiguous and that they should have been permitted to present 
information in addition to the contract documents to prove that the parties 
intended to include the transfer of a "trademark." The additional evidence would 
be significant for their purposes because it would support their contention that 
Lohn did not perform his obligations under the contract and should not be 
entitled to recover on his claim for the balance due upon the sale of the 
business. Furthermore, this evidence would support their counterclaim for 
damages for breach of the contract and fraud. The Dawsons claim that since the written contract 
is ambiguous the offered proof would present a question of material fact with 
respect to the subject matter of the contract and also would support their claim 
of fraud in the inducement of the contract entitling them to a recovery on their 
counterclaim. Lohn's position is that the parties contracted only for a trade 
name and there is no ambiguity which permits the introduction of the suggested 
evidence by the Dawsons. Under Lohn's theory there was no issue 
of material fact which would prevent the entry of summary judgment in his favor 
as a matter of law.

[¶4.]     In January of 1981 the 
Dawsons agreed to purchase and Lohn agreed to 
sell a business known as "My Hero Sandwich Shop" in Laramie, Wyoming. The basic document was denominated a 
lease, but the parties do not disagree with the proposition that a sale of the 
business was their real purpose. Four documents were executed to evidence the 
transaction: (1) a "Lease"; (2) a Security Agreement and Financing Statement - 
Form UCC-105; (3) a promissory note; and (4) a Bill of Sale. None of these 
documents make any reference to a trademark. In the "Lease" paragraph 6a 
provided as follows:

"6a. This lease and 
subsequent sale includes any property rights or rights of any kind in the trade 
name of "My Hero" and "My Hero Sandwich Shop" belonging to 
Lessor."

In the Bill of 
Sale the property transferred was described as follows:

"All of the inventory, 
personal property, accounts receivable, goodwill of the business known as My 
Hero Sandwich Shop, 
305 Grand 
Avenue, Laramie, Wyoming
, and any property rights or rights 
of any kind in the trade name of "My Hero" and "My Hero Sandwich 
Shop.""

[¶5.]     The Dawsons made some 26 
payments of $600 each according to the note, although some of the payments were 
made late. Lohn ultimately became dissatisfied with the manner in which the 
payments were made and invoked the acceleration clause found in both the 
security agreement and financing statement and the promissory note. Lohn then 
brought this action to recover the balance due on the note plus interest. The 
Dawsons in their 
answer asserted as an affirmative defense failure of consideration. In addition 
the Dawsons 
filed a counterclaim in which they contended that Lohn had agreed to transfer a 
trademark which he had represented as having been registered as a national 
trademark. Based upon the alleged failure of Lohn to perform and the asserted 
representation concerning the trademark, the Dawsons claimed failure of consideration and 
fraud, and requested damages including punitive damages in the total amount of 
$150,000. With the issues thus joined Lohn then filed a motion for summary 
judgment supported by his affidavit asserting that payment had not been made 
according to the contract documents and presenting the four contract documents 
described above. In a counter-affidavit, Mike S. Dawson did not contest the fact 
of nonpayment, but he did assert that Lohn had represented that the name "My 
Hero" had been or soon would be a registered national trademark and that the 
Dawsons were 
purchasing that trademark as well as the other assets. He also stated in the 
affidavit that no assignment of any trademarks from Lohn had been made and that 
he had discovered that no trademarks existed.

[¶6.]     The district court, 
upon hearing the motion for summary judgment, apparently concluded that the four 
documents represented an integrated contract which was not ambiguous and 
therefore was not subject to being construed in the light of evidence apart from 
those documents. The court then found that there was no issue of material fact 
with respect to the contract and the failure to pay on the part of the Dawsons. Summary judgment 
was entered for Lohn for $4,240, together with interest in the amount of $284 
and costs in the amount of $25. An application to set aside the order of summary 
judgment on the part of the Dawsons was denied by the court, and this 
appeal then was taken.

[¶7.]     The Dawsons have no quarrel 
with the proposition that an integrated written contract may be found even 
though it is included in more than one document. In Busch Development, Inc. v. City of Cheyenne, 
Wyo., 645 P.2d 65 (1982), we found a contract did exist composed of a series of letters. 
An agreement may consist of one or more than one document. Busch Development, Inc. v. City of Cheyenne, 
supra; Allen v. Allen, 
Wyo., 550 P.2d 1137 (1976). They argue, however, that the 
words "trademark" and "trade name" are words which to lay people connote the 
same subject matter, and which can overlap in their definitions, and therefore a 
reference to trade name in the contract documents is ambiguous. This is the 
premise from which they contend that they were entitled to present evidence 
apart from the contract documents to show that the parties intended to contract 
with respect to a trademark as well as a trade 
name.

[¶8.]     While a trademark may 
be composed of words, it still appears that a trademark is readily 
distinguishable from a trade name. Section 40-1-101(a), W.S. 1977, 
provides:

"(a) The term `trademark' 
as used herein [§§ 40-1-101 to 40-1-114] means any word, name, symbol, or device 
or any combination thereof adopted and used by a person to identify goods made or sold by him and to 
distinguish them from goods made or sold by others." (Emphasis 
added.)

Section 
40-2-101(a)(iv), W.S. 1977, provides:

"(iv) `Trade name' means 
a word, name, or any combination of the foregoing in any form or arrangement 
used by a person to identify his 
business, vocation, or occupation and distinguish it from the business, vocation 
or occupation of others." (Emphasis added.)

[¶9.]     As long ago as 1945 
this court discussed the distinction between trademarks and trade names. In Bernstein v. Friedman, 62 Wyo. 16, 160 P.2d 227 (1945), a judgment was entered in favor of plaintiff Western Ranchman 
Outfitters enjoining the defendant from using a sign which read "Western 
Outfitters" and had a picture of a ranchman between the two words. In affirming 
the judgment this court said:

"* * * The terms adopted 
constitute a trade name, not a trade-mark, as technically known. The distinction 
is pointed out in 52 Am.Jur. 512, where it is said that: `It may be stated 
generally that a trademark relates chiefly to the thing sold, while a tradename 
involves also the individuality of the maker not only for protection in trade 
and to avoid confusion in business, but also to secure the advantages of a good 
reputation. In other words, a trademark is applicable to the vendible commodity 
to which it is affixed, while a trade name is applicable to a business and its 
good will.' Nims on Unfair Competition and Trade-Marks, p. 386, states that 
trade-marks and trade names to a certain extent overlap. `One distinction is 
that a trade-mark "is applicable only to a vendible article of merchandise to 
which it is affixed," while "a trade-name relates to a business and its good 
will rather than a vendible commodity." "Trade-name" has, however, a somewhat 
broader meaning than this, although it is not really capable of exact 
definition. It includes, in general, names which perform the function of 
trademarks, but which are not susceptible of being set apart to the exclusive 
use of one concern.' On p. 81, the same authority states that: `A business or 
trade name is one that identifies a particular concern, or the goods of one 
concern. When such a name is fanciful it is a trade-mark. Where it is a word in 
the public domain but used in a trade sense, it is a trade name.' See also 3 
Restatement of the Law of Torts, § 716 and Comment A. Section 117-101, Rev.St. 
1931, protects `a label, trade mark, stamp or form of advertisement.' The term 
`trade name' is not specifically used. But the trade name used by the plaintiff 
as well as the sign complained of, used by the defendant, may both be said to be 
a `form of advertisement,' so that we are not prepared to say that the statute 
did not intend to cover the situation here involved. * * *" Bernstein v. Friedman, supra, 160 P.2d  
at 228.

[¶10.]  The discussions of trade names found in 
two more recent cases, Wyoming National 
Bank of Casper v. Security Bank and Trust Company, Wyo., 572 P.2d 1120 
(1977), and First National Bank v. First 
Wyoming Savings and Loan Association, 
Wyo., 592 P.2d 697 (1979), follow and support the generally accepted proposition that a 
trade name is something different from a trademark. E.g., American Steel Foundries v. Robertson, 
269 U.S. 372, 46 S. Ct. 160, 70 L. Ed. 317 
(1926); Balesteri v. Holler, 151 Cal. Rptr. 229, 87 Cal. App. 3d 717 (1978); Gordy v. Dunwoody, 209 Ga. 627, 74 S.E.2d 886 
(1953); Great Atlantic & Pacific Tea 
Co. v. A & P Trucking Corp., 51 N.J. Super. 412, 144 A.2d 172 (1958); Neva-Wet Corporation of America v. Never 
Wet Processing Corporation, 277 N.Y. 163, 13 N.E.2d 755 (1938); Armington v. Palmer, 21 R.I. 109, 42 A. 308, 43 L.R.A. 95, 79 Am.St.Rep. 786 (1898); and Gluck v. Kaufman, 117 W. Va. 685, 186 S.E. 615 
(1936).

[¶11.]  "Trade name" and "trademark" are legal 
terms of art. Different legal connotations do attach to them, and the reference 
to "trade name" in these contract documents did not result in any ambiguity and 
did not manifest any intention to make a trademark a part of the parties' 
transaction. In the Bill of Sale the reference to the trade name is coupled with 
the transfer of the goodwill of the business in such a way that the traditional 
application of that term obviously was intended.

[¶12.]  The Dawsons further argue, however, that even if 
the contract is not ambiguous they were entitled to produce their evidence to 
show fraud in the inducement with respect to the contract. In making this 
argument the Dawsons ignore the proposition that a 
misstatement of fact must be material to the transaction in order for a claim of 
fraud to lie. See Reynolds v. Tice, Wyo., 595 P.2d 1318 (1979); McCamon v. Darnall Realty, Wyo., 
444 P.2d 623 (1968). Even if one were to assume that the parties had dialogue 
with respect to the existence of, the obtaining of, or the potential transfer of 
a trademark, the trademark was not a subject of the contract which they 
formalized by the written documents. A misrepresentation made with respect to 
some fact which is not a subject of the contract is not a material 
misrepresentation which will support a claim of 
fraud.

[¶13.]  In Johnson v. Soulis, Wyo., 
542 P.2d 867, 872 (1975), this court reiterated the requisites for fraud when we 
said:

"In Wyoming the elements of 
an action for fraud have been identified as a false representation by a 
defendant of material facts which are relied upon by a plaintiff to his damage. 
Davis v. Schiess, Wyo., 
417 P.2d 19 (1966)."

 We 
reviewed the definition of material fact in Reoh v. Suchor Investments, Inc., 
Wyo., 699 P.2d 284, 286-287 (1985), in which we quoted Johnson v. Soulis, supra, 542 P.2d at 
872:

"* * * [F]or the purposes 
of ruling upon a motion for summary judgment a fact is material if proof of that 
fact would have the effect of establishing or refuting one of the essential 
elements of a cause of action or defense asserted by the parties. Such a fact 
would necessarily affect the application of the appropriate principle of law to 
the rights and obligations of the parties. In considering a motion for summary 
judgment it is appropriate for a court to identify the essential elements of the 
plaintiff's cause or of the defense asserted, and to then determine the 
materiality of any fact in the light of whether it will establish or refute one 
of those essential elements. If it does not have that effect, it would not be a 
material fact in the controversy, and a genuine issue with respect to that fact, 
no matter how sharp, would not foreclose the granting of a motion for summary 
judgment."

[¶14.]  In the case at bar, the parties only 
contracted for the use of the trade name, and not the trademark. Thus, any 
representation concerning the existence of the trademark is not material since 
it does not establish or refute an element of the cause of action or a defense. 
The allegations concerning the trademark have no legal significance for the 
present action and the granting of summary judgment was 
proper.

[¶15.]  The district court was correct in 
determining that in this instance there was no issue of material fact. It also 
is clear that Lohn was entitled to judgment for the unpaid balance on the 
purchase price, a fact not contested by the Dawsons, as a matter of law. Because a 
trademark was not a subject of the transaction between these parties, any 
representation with respect to a trademark was not material to any denial of a 
cause of action or a defense.

[¶16.]  The summary judgment is 
affirmed.