Appeal from the Circuit Court for Baltimore County; Berry, J.
Brune, C. J., and Henderson, Hammond, Prescott and Horney, JJ. Henderson, J., delivered the opinion of the Court.
This appeal is from a decree dismissing a bill for injunction
which sought to enjoin the use by the respondents of the trade names "Gault", "William A. Gault & Son", and "The Original House of Gault", and granting an injunction, prayed in a cross bill, against use by the appellants of the corporate name "William A. Gault & Bro., Inc."
Matthew Gault, the great-grandfather of the appellants, established a stone and monument business in 1832. His son, William A. Gault, incorporated the business in 1913, under the name "William A. Gault & Son, Inc.", but in 1916 his son, H. Matthew Gault, father of the appellants, left the employ of the corporation and established a competing business under his own name. Since his death in 1941 his sons, the complainants, partners trading as "Gault Monument Co.", have continued the business.
William A. Gault died shortly after Matthew withdrew in 1916, and the controlling interest in the corporation was sold to Gustavus Sehlstedt. Albert Sehlstedt continued the business until his death in 1954. In 1958 his widow discussed with R. Dorothy Wagner, who had been employed by the corporation for many years and in full charge of the business since 1953, her plan to discontinue the monument business, and utilize the corporate form simply to hold title to certain business properties. Miss Wagner persuaded her, in consideration of an earlier termination of Miss Wagner's salary contract, to sell her "the name and good will" of the monument business. By articles of amendment filed with the State Tax Commission on July 25, 1958, the name of the corporation was changed from "William A. Gault & Son, Inc." to "The Sehlstedt Company". On July 28, 1958, the corporation executed a bill of sale to Miss Wagner, conveying "the monument and tombstone business owned and operated by the said vendor, located at 712 York Road * * * together with the good will of the said business, the exclusive right to the use of the trade name, 'William A. Gault & Son', together with all records, work-orders and other documents and/or other memoranda pertaining to said business".
The corporation, William A. Gault & Son, Inc., had conducted its business at 505 Park Avenue, in a building owned by it, but on the same date on which the bill of sale to Miss
Wagner was executed, the Sehlstedt Company sold its finished monuments to Wagner and Frank Hammaker, who was engaged in the business at 712 York Road, at a price of $2,000. Wagner and Hammaker entered into an agreement that Wagner should work for Hammaker at a salary of $75 per week and that she would permit Hammaker to use the name "William A. Gault & Son", and receive a commission of 5 per cent on all business coming in under the "Gault" name. Hammaker has since advertised rather extensively under the name "William A. Gault & Son", and is listed in the telephone directory under that name.
In August, 1958, upon learning that the corporation "William A. Gault & Son, Inc." had changed its name, the appellants formed a corporation under the name "William A. Gault & Bro., Inc." in order to preempt that name. But they did not transfer the assets from the partnership to the corporation, nor did they trade under or advertise in the corporate name. In short, they made no use of it. If we assume that they would have had a right to use a corporate title composed of their proper family names, it does not follow that they would be entitled to encroach upon the good will acquired by the original house of Gault through the use of the similar trade name. See American Stewart Distillery v. Stewart Distilling Co., 168 Md. 212, 219. Cf. Miami Credit Bureau, Inc. v. Credit Bureau, Inc., 276 F. 2d 565 (C. A. 5th). They have, however, stressed the name "Gault" in their advertising. It was shown in the testimony that there have been instances where prospective purchasers were confused as to which manufacturer they were dealing with.
The chief question presented is as to the right of the respondents to use the name "William A. Gault & Son" as a trade name. It is not disputed that the Sehlstedts acquired the right to use the corporate name "William A. Gault & Son, Inc." when they purchased a controlling interest in that firm in 1917. It is not so clear that they acquired a right to use the name "William A. Gault & Son" as a trade name. However, Miss Wagner testified that over a twenty-five year period the telephone at 505 Park Avenue was ...