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Attorney(S)

Haynes Gudger for plaintiff. Jones Williams for defendant.

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A. B. Zagier v. M. L. Zagier (Supreme Court of North Carolina, filed Dec. 23, 1914)

Citation context in source: Appeal by plaintiff from Justice, J., April Term, 1914, Buncombe County. Attorneys of record: Haynes Gudger for plaintiff; Jones Williams for defendant.

Factual and Procedural Background

The plaintiff brought a civil action seeking to restrain the defendants from using the surname "Zagier" in connection with a clothing and furnishing business conducted in the city of Asheville, North Carolina. The trial court sustained a demurrer to the plaintiff's complaint and entered judgment dismissing the action. The plaintiff obtained leave to file an amended complaint which, in substance, alleged that the defendant had, at the time he began doing business in Asheville, entered into an express contract with the plaintiff for valuable consideration not to conduct a clothing business in Asheville under the name "Zagier"; that the defendant nevertheless began and conducted such a business under the name; and that the plaintiff had been greatly wronged and damaged in the sum of $710,000. The plaintiff excepted to the dismissal and appealed to the Supreme Court of North Carolina.

Legal Issues Presented

Whether a person has the right to use his own name in connection with his business, subject to the limitation that he must do so honestly and not by unfair methods that wrongfully encroach upon another's rights or defraud the public.
Whether a person may, by contract, relinquish (or conclude himself from) the right to use his own name in a given business, and whether such an agreement will be enforced by the courts.
What effect an amended complaint has when it supersedes the original complaint, and whether a demurrer should be sustained to an amended complaint that, as presented, alleges an express contract forbidding use of the name and alleges resulting damages.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bingham School v. Gray, 122 N.C. 699	Cited for the proposition that, as a rule, a trade-mark cannot be taken in a surname; one having the same surname may conduct a like business provided there is no intent to injure or fraudulently appropriate the other's reputation.	The Court relied on this case as one of the authorities establishing the general principle that use of a surname in business is permitted unless dishonestly employed to mislead or appropriate goodwill.
Howe Scale Co. v. Wyckoff, 198 U.S. 118	Cited for the proposition that every man has the right to use his own name reasonably and honestly in business and is not obliged to abandon it; dishonesty in use is what is condemned.	The Court invoked this authority to support the statement that honest use of one's name in business is permissible and that it is dishonest use that is forbidden.
McLean v. Fleming, 96 U.S. 245	Cited among authorities supporting the general rule that a person may use his own name in business if used honestly and without intent to defraud.	Listed with other authorities to demonstrate the prevailing view approving honest use of a personal name in trade.
Blanchard Co. v. Simon, 104 Va. 209	Cited among authorities supporting the general rule described above (use of name permitted if honest and not fraudulent).	Included in the panel of authorities relied upon to articulate the general principle on name usage in trade.
Hazelton Boiler Co. v. Hazelton Co., 142 Ill. 494	Cited among authorities supporting the general rule permitting the honest use of one's own name in business.	Used as part of the body of authority confirming the general principle regarding name use.
Rauft v. Ramers, 200 Ill. 386	Cited for the principle that one may, by contract, bar himself from using his own name in a particular business and that courts will enforce such agreements.	The Court relied on this group of decisions (including this case) to support the proposition that contractual relinquishment of the right to use one's name will be enforced.
Frazier v. Frazier, 121 Ill. 147	Cited for the contractual-enforcement principle: a person may sell or otherwise relinquish the right to use his own name in connection with particular goods or business.	Included as authority for enforcement of agreements that limit the use of one's name in trade.
Russia Cement Co. v. LePage, 147 Mass. 206	Quoted at length for the multifaceted rule: (1) a person cannot make a trade-mark of his own name to debar others of the same name; (2) one has absolute right to use his name honestly even if it incidentally injures another; (3) one cannot use artifice or misleading acts to deceive the public; (4) one may sell or assign a trade name/trademark and thereby conclude himself from further use.	The Court adopted the Russia Cement formulation as a "very satisfactory statement" covering both the general rule permitting honest name use and the corollary that contractual transfer or assignment of a trade name may deprive one of future rights to use it; the Court applied these principles to assess the sufficiency of the amended complaint.
Hall Safe Lock Co. v. Herring-Hall, etc., Safe Co., 143 Fed. 231-237	Cited among authorities for the enforceability of agreements limiting the use of a name or trade designation.	Used by the Court to support the proposition that contractual limitation of name use is enforceable.
Holloway v. Holloway, 13 Beav. 209	Cited within the quotation from Russia Cement Co. v. LePage as an authority relevant to the limitations on misleading the public by the use of a name.	Appears in the Russia Cement quotation and thereby supports the quoted proposition about the prohibitions on artifice and misleading conduct in name usage.
Meneely v. Meneely, 62 N.Y. 427	Cited within the Russia Cement quotation as an authority relevant to limits on name use that misleads the public or appropriates goodwill.	Included in the group of supporting authorities quoted from Russia Cement to illustrate the rule against misleading or fraudulent use.
Gilman v. Hunnewell, 122 Mass. 139	Cited within the Russia Cement quotation as another supporting authority on the limits of use of a name that would mislead or wrongfully appropriate the goodwill of another.	Referenced in the Russia Cement passage relied upon by the Court.
Rogers v. Rogers, 53 Conn. 121	Cited within the Russia Cement quotation as further supporting authority concerning use of a name and rights conveyed by sale or assignment.	Included as part of the authorities cited in the Russia Cement quotation which the Court accepted as instructive.
Warren v. Susman, 168 N.C. 462	Listed in the opinion under the heading "Cited."	Presented in the opinion as a subsequent or related citation; the opinion does not apply or discuss its substance.
Griggs v. Griggs, 213 N.C. 627	Listed in the opinion under the heading "Cited."	Presented as a related or subsequent citation; the opinion itself does not apply or discuss the case's substance.

Court's Reasoning and Analysis

Justice Hoke began by stating the governing legal landscape as recognized in this jurisdiction and supported by a line of authorities: a person ordinarily has the right to use his own name in connection with his business so long as the use is honest and does not employ unfair methods to encroach upon another's rights or to defraud the public. The Court identified this as the primary principle and noted supporting cases.

The Court then emphasized the complementary principle that a person may by contract surrender his right to use his own name in a particular business, and that such agreements are enforceable in equity. The opinion cites several authorities for this contractual-enforcement principle and quotes at length from Russia Cement Co. v. LePage to explain both the limits on the proprietary use of a surname as a trademark and the enforceability of assignments or sales of trade names/trademarks.

Turning to the record, the Court observed that the plaintiff's original complaint, which attempted to ground relief on allegations of dishonest use of the defendant's name, did not clearly bring the defendant's conduct within the condemnation of the general rule forbidding dishonest use. However, with leave of court the plaintiff filed an amended complaint that supplanted the original complaint and that alleged, in substance, (1) the existence of an express contract supported by consideration whereby the defendant agreed not to conduct a clothing business in Asheville under the name "Zagier," (2) that the defendant nevertheless began and conducted such a business under that name, and (3) that the plaintiff suffered specific damages in the amount of $710,000.

The Court applied the authorities establishing the contractual-enforcement rule and the procedural principle that an amended complaint supersedes the original to conclude that, as presented, the amended complaint states a good cause of action within the second position (i.e., the contractual relinquishment of the right to use a name). Consequently, the demurrer to the complaint was improperly sustained. The Court ordered that this conclusion be certified so that further proceedings consistent with law could occur.

Holding and Implications

Holding: The judgment of dismissal based on the sustaining of the demurrer was REVERSED.

Implications:

Direct effect: The Supreme Court held that the plaintiff's amended complaint—alleging an express contract by which the defendant agreed not to do business in Asheville under the name "Zagier" and alleging damages—superseded the original complaint and, as framed, stated a sufficient cause of action. The sustaining of the demurrer and resulting dismissal were therefore improper, and the case was remanded for further proceedings in accordance with law.
Broader precedent: The opinion reiterates and applies two well-established principles: (1) the right to use one's own name in business is permitted when used honestly and without intent to mislead or defraud; and (2) a person may contractually relinquish the right to use his name in connection with a business or trade name, and such agreements will be enforced. The opinion did not purport to establish a new rule of law beyond applying these principles to the amended complaint; it confined its holding to the procedural and substantive sufficiency of the amended pleading in light of the cited authorities.

Disposition noted in the original opinion: "This will be certified, that further proceedings may be had in accordance with law. Reversed."

Show full summary ...

A. B. ZAGIER v. M. L. ZAGIER.

1. Injunction — Trade Name — Name of Person — Contracts — Enforcement.

A man has the right to the use of his own name in connection with his business, provided he does so honestly and does not resort to unfair methods by which he wrongfully encroaches upon another's rights or commits a fraud upon the public; but he may, by contract, conclude himself from the use of his own name in a given business, and the agreement will be enforced by the courts.

2. Pleadings — Amendments — Effect — Demurrer.

Where the complaint in an action sought to restrain the use of the plaintiff's name in a given business is insufficient, and an amended complaint is allowed and filed which makes allegation sufficient to sustain the suit, the amended complaint has the effect of superseding the first, and a demurrer to the complaint should not be sustained.

3. Pleadings — Trade Names — Injunction — Sufficient Allegations.

In an action to restrain the use of a name in a given business, a complaint is held sufficient which alleges, in substance, that the defendant had expressly contracted with the plaintiff for a valuable consideration not to do business of a given kind in a certain city under the name of Z.; and that he had wrongfully begun and conducted the business therein under the name of Z., and that the plaintiff, also engaged there in that business under the designated name, had been greatly wronged and damaged in a stated sum.

Civil action to restrain the defendants in the use of the name Zagier in connection with the clothing and furnishing business in the city of Asheville.

A demurrer in terms to the complaint was sustained and judgment entered dismissing the action, and plaintiff excepted and appealed.

HOKE, J.

It is recognized in this jurisdiction, and the position is in accord with authority very generally prevailing, that a man has the right to use his own name in connection with his business, provided he does so honestly and does not resort to unfair methods by which he wrongfully encroaches upon another's rights or commits a fraud upon the public. Bingham School v. Gray, 122 N.C. 699; Howe Scale Co. v. Wyckoff, 198 U.S. 118; McLean v. Fleming, 96 U.S. 245; Blanchard Co. v. Simon, 104 Va. 209; Hazelton Boiler Co. v. Hazelton Co., 142 Ill. 494.

In Bingham's case, supra, it was held: "As a rule, a trade-mark cannot be taken in a surname, and any one having the same surname as that under which a business has been long and successfully conducted by another, so as to acquire a reputation therefor, can conduct a like business under the same name, provided there be no intent to injure or fraudulently attract the benefit of the good name and reputation previously acquired by the other."

In Howe Scale Co. v. Wyckoff, supra, it was said: "Every man has the right to use his name reasonably and honestly in every way, whether in a firm or corporation, nor is a person obliged to abandon his name or to unreasonably restrict it. It is not the use, but dishonesty in the use, of the name that is condemned," etc. And it is also well established that one may, by contract, conclude himself from the use of his own name in a given business, and the agreement will be enforced by the courts. Rauft v. Ramers, 200 Ill. 386; Frazier v. Frazier, 121 Ill. 147; Russia Cement Co. v. LePage, 147 Mass. 206; Hall Safe Lock Co. v. Herring-Hall, etc., Safe Co., 143 Fed., 231-237.

A very satisfactory statement in reference to both positions will be found in Russia Cement Co. v. LePage, opinion by Devens, J., as follows: "A person cannot make a trade-mark of his own name, and thus debar another having the same name from using it in his (618) business, if he does so honestly and without any intention to appropriate wrongfully the good-will of a business already established by others of the name. Every one has the absolute right to use his own name honestly in his own business for the purpose of advertising it, even though he may thereby incidentally interfere with and injure the business of another having the same name. In such case the inconvenience or loss to which those having a common right to it are subjected is damnum absque injuria. But although he may thus use his name, he cannot resort to any artifice or do any act calculated to mislead the public as to the identity of the business, firm, or establishment, or of the article produced by them, and thus produce injury to the other beyond that which results from the similarity of name. Holloway v. Holloway, 13 Beav., 209; Meneely v. Meneely, 62 N.Y. 427; 20 Am.Rep., 489; Gilman v. Hunnewell, 122 Mass. 139; Rogers v. Rogers, 53 Conn. 121; 55 Am. Rep., 78. While this is the general rule, it is also true that one may so sell or part with the right to use his own name as a description or designation of a manufactured article as to deprive himself of the right to use it as such, and confer this right upon another. . . . One who has carried on a business under a trade name, and sold a particular article in such a manner, by the use of his name as a trademark or a trade name, as to cause the business or the article to become known or established in favor under such name, may sell or assign such trade name or trade-mark when he sells the business or manufacture, and by such sale or assignment conclude himself from the further use of it in a similar way."

On perusal of the record, we are of opinion that a correct application of this principle is against the ruling of his Honor, as the question is now presented. It is true that the original complaint, filed by plaintiff, based on allegations designed to show a dishonest use of defendant's name, does not seem to bring defendant's conduct under condemnation of the principle first stated; but later, and by leave of the court, plaintiff filed what is termed an amended complaint, making an entire statement of his cause of action and alleging, in effect: "That defendant, at the time he began to do business in the city of Asheville, N.C. entered into an express contract with plaintiff for valuable consideration not to do a clothing business in the city of Asheville at any time under the name of `Zagier.'

"2. That defendant wrongfully began his business in the city under the name of `Zagier,' and that plaintiff, engaged in that business, has been thereby greatly wronged and damaged, towit, in the sum of $710,000."

(619) On authority, the amended complaint, in the form as now presented, has the effect of superseding the first (1 Enc. Pl. and Pr., p. 625), and considering plaintiff's demand in that aspect, he seems to have stated a perfect cause of action, within the meaning of the second position, above stated, and the demurrer to complaint was improperly sustained.

This will be certified, that further proceedings may be had in accordance with law.

Reversed.

Cited: Warren v. Susman, 168 N.C. 462 (2c); Griggs v. Griggs, 213 N.C. 627 2d.

ZAGIER v. ZAGIER