Sunday, October 28, 2012

On Beyond Holcombe: Andreas Saxlehner's Hunyadi Janos Natural Mineral Water

On Beyond Holcombe, by Malcolm A. Goldstein, appears on Sundays at 1898 Revenues.  This edition, on Hunyadi Janos Mineral Water, wades into a pool, as it were, of speculative attribution, for which Malcolm provides a prologue below.  Due to technical problems beyond this editor's control, images are limited for this post.  More may be added later.

The Philatelic Quandary of the “A.S.” Cancel

Andreas Saxlehner and his Hunyadi Janos Bitterquelle/Hunyadi Janos Natural Mineral Water, have never drawn much philatelic attention since the one “A.S.” cancel listed by Mustacich and Giacomelli is not printed, but handstamped, and, at best, tentatively linked to Andreas Saxlehner because of an old attribution by Morton Dean Joyce. His identifications have certainly been questioned and even in some cases apparently disproved. Moreover, “A.S.” cancels have been observed only on a minimal number of 1c and 2c proprietary stamps, values more traditionally used for taxing alcohol products. While Schedule B of the Revenue Act of 1898 included “waters” claiming medicinal properties among taxable proprietary medicines, that specific inclusion was followed by: “ except for natural spring waters and carbonated natural spring waters.” Since the paper label attached to the bottles of the Saxlehner company denominated its product “natural mineral water,” why would it have bothered to stamp its bottles, collect and pay the tax, and, if it did, where are all the stamps?

While this query poses a most vexing question, there are some possible explanations. The first, and most facile, is that the company conducted some a side-line business in a more traditionally taxable alcohol based product, and cancelled stamps for that purpose. That explanation protects both the clear import of the Act and accounts for the relatively few, pesky observed cancels on non-traditional values, but does require a McGuffin in the form of another undisclosed (and so far undiscovered) Saxlehner product. While Saxlehner also did manufacture pills at some point, the time frame was probably not in 1898, and pills do not fit the 1c, 2c mold either. Another, admittedly more circuitous, possible explanation arises from discussion of Hunyadi Janos containers in bottle collection circles, where they are fairly common and their attributes have often been discussed. There, as well informed bottle websites have noted, Saxlehner’s water is often mistakenly classified as a “bitters” because the name “Hunyadi Janos Bitterquelle” is pressed into the glass forming the bottom of the bottle. A “bitters” is a solution of ingredients dissolved in alcohol. Bitters were explicitly taxable under the Revenue Act of 1898. Might it not have been possible that Hunyadi Janos Bitterquelle was regarded either in some places, or at some time, as a bitters, even if only temporarily? (At the risk of prematurely revealing the punch line of a very different story,) certainly, the Coca Cola company stamped, collected and paid tax under the Revenue Act of 1898 only to sue and recover it back from the government later. (This series will eventually tackle that well documented company, as well, although that story has already been told in several places.) Of course, the better-safe-than-sorry explanation would require either a battleship stamped Bitterquelle bottle or a record of some tax recovery proceeding brought by the Saxlehner Company against the U.S. government, neither of which appears to exist. Of course, the simplest, most straight forward and least interesting solution would be to concede that the A.S. cancels belong to an unidentified alcohol distributor.

Having thus stated the paradox, I choose to commit philatelic heresy and accept the attribution of the “A.S.” cancels to Andreas Saxlehner for the sake of profiling an interesting nostrum company.

“Hunyadi Janos.” During his
lifetime his name was synonymous
with deeds of valor on the field
of battle and destruction of human
life; today it is synonymous with
preservation of health and life.

Pacific Medical Journal, March, 1898

Andreas Saxlehner, whose Hunyadi Janos Natural Mineral Water occupied a significant niche in the market of United States nostrums at the time of the Spanish-American War, probably never even visited this country and, because he seems to have lived and died in Hungary, may not have ever considered America significantly in his thinking. While the company participated as a member of the powerful Proprietary Association of America and the market for Hunyadi Janos Water was booming in the United States in 1898 - the very year the company issued a 129 page manifesto, from which the introduction above is quoted - Saxlehner was not even alive by that time. He was born in Pest in 1815 and died in the unified city of Budapest in 1889. Yet the business, after 1889 owned by his wife, Emilie, and managed by his son, Kalman, was always conducted in his name. Extant immigration records indicate that Kalman visited the United States at least in 1897 and 1905.

The name Hunyadi Janos and the stern countenance of the product’s logo derived from the great Hungarian warrior John Hunyadi (1407-56) renowned for driving the Turks out of the Balkans in his time, and lifting a Turkish siege of Belgrade shortly before his untimely death from plague. The water itself came from the Buda district of Budapest, about five miles from the town itself. As the company’s tract explained, although Buda had been known as a site for medicinal springs and baths even in Roman times, it was Saxlehner himself who bought the spring and the surrounding land in 1863 from the peasant who discovered the water’s healing properties.

In 1898, the company could justly crow “Hunyadi Janos water has been a household word wherever the sun of civilization shines, for more than a quarter of a century.” Saxlehner shrewdly gathered the 120 acres of the Orsod valley surrounding the spring as a compound to preserve its purity and boasted that: “The greatest care is taken in collecting and bottling the water, the whole process being carried out entirely by machinery, and every possible source of contamination is most scrupulously guarded against. “ The collection plant, gathering water from the 112 wells comprising the spring, was manned by approximately 250 employees, who, along with storehouses for the water, had cottages and a fire station right on the estate premises. Before turning to a very long recitation of the encomiums the water had received from eminent scientists and other leaders of society, the book carefully analyzed the geological formations which accounted for the springs and, in minute detail, the mineral components of the water and each of their healing properties, as well as providing a discussion of the benefits the water brought to the treatment of disorders such as constipation (first and foremost), “torpidity of the liver,” dyspepsia, hemorrhoids, obesity, specific diseases of women and children, various diseases of the heart and circulation, the respiratory organs, the brain and spinal chord, eyes, urinary tract, fevers, gout, rheumatism, as well as mental diseases, which the book defined essentially as constipation of the character best regulated with a purgative: “Faecal [sic] accumulation not infrequently causes delusions, which are dispelled by a purgative that clears out the intestinal canal. In all forms of disease of the mind regulation of the bowels is an important part of the treatment.” So much for Freud and his ilk!

The Hunyadi Janos name was so much a part of the marketing of Saxlehner’s water that the company fought titanic struggles in the courts of both England and the United States to protect its exclusive rights particularly to the Hunyadi portion of the name. Saxlehner had first sold his Hunyadi Janos water in England in 1870, but in 1876 had entered into a ten year contract with the Apollinaris Co. Ltd., an English importer and dealer in mineral waters of various kinds, granting that company the right to represent itself as the sole distributor of his water almost anywhere in the world except Europe and Smryna, Turkey. The arrangement was successful enough to be continued and renewed. However, in 1888, Apollinaris began to add an additional red diamond label to the Hunyadi Janos label for purposes of denominating the water an Apollinaris mineral water product, apparently without informing Saxlehner. At the same time, Apollinaris also purchased land in Buda which, coincidently, also contained mineral water springs. In 1896, after Apollinaris cancelled its distributorship contract with Saxlehner, it immediately began marketing in England its own “Arpenta” water, bottled at the “Uj [New] Hunyadi” springs in Budapest , which bore a label similar to the Hunyadi Janos label and mentioned Hunyadi prominently several times. It also transferred over to the Arpenta label the additional Apollinaris red label.

Emilie Saxlehner then sued in the English courts to bar Apollinaris from selling any water not from her springs as “Hunyadi” water, claiming that her water had become commonly or popularly identified with the name “Hunyadi” water, and further asserting the steps Apollinaris had taken since 1888 indicated its deliberate effort to trade on Saxlehner’s “Hunyadi Janos” name. Apollinaris’s defense turned on two points. First, as Saxlehner’s distributor for so long, the red diamond it had established as its identity and then transferred to the Arpenta label belonged to it not Saxlehner. If people paid more attention to the red diamond than the Saxlehner label that was Saxlehner’s problem, but not a problem the court could fix. Second, Saxlehner had no exclusive right to the “Hunyadi” term, since Hunyadi was regarded as a Hungarian regional designation and its use of the term on its own Arpenta water was proper because its water came from the same geographic area. Quickly cutting to the heart of the matter, the Court ruled in favor of Saxlehner. In its one long paragraph decision, it found that regardless of the circumstances which created the situation, the simple governing legal principle was that: “Nobody has the right to represent his goods as the goods of someone else.” To the English court, that legal certainty sufficiently covered all the legal ground necessary to uphold Saxlehner’s rights. However, it carefully circumscribed the relief it granted: it gave Saxlehner the exclusive right to use the “Hunyadi” name (which it felt`sufficiently protected Saxlehner’s rights), and granted an accounting for lost sales damages, but it did not enjoin Apollinaris’s switch of its subsidiary red diamond label to its own new water, relying upon level headed English consumers to recognize the difference between Apollinaris’s own mark on the revised Arpenta label and the absent Saxlehner “Hunyadi” mark.

In the United States, Emilie Saxlehner took her fight to protect the Hunyadi Janos name all the way to the Supreme Court. Saxlehner’s opponent in the United States was an importer named Eisner & Mendelson (another company which also cancelled battleship revenues and will be visited by this series in due course). When the case arrived at the Supreme Court, that Court noted the same basic facts as in the British case, although recognizing, much more pointedly than the English court, that the contract between Saxlehner and Apollinaris had included the United States as part of the distributorship territory granted to Apollinaris. E & M argued its right to sell a Hunyadi Matyas water, which both came in a bottle and bore a label suspiciously similar to that of the Hunyadi Janos water, derived from a separate grant made in Hungary to another producer of mineral water. In addition - in what must have been a claim particularly galling to Saxlehner - E & M argued that Apollinaris, as Saxlehner’s agent in the United States, had known about and approved E & M’s use of the Hunyadi Matyas name. The Court set out both these arguments at length, reviewing in detail the histories both of convoluted Hungarian grants of licenses to bottle mineral water, together with that of mineral water designations in the United States. Essentially accepting E & M’s explanations, it found both that Hunyadi was a regional designation from which more than one mineral water could emerge, and that Saxlehner had not been vigilant enough in challenging the use of the name “Hunyadi” by others in the United States.

Yet, the Court still ruled in Saxlehner’s favor, ultimately holding that E & M had deliberately manipulated both the bottle shape and the label of its water - apart from its invocation of the Hunyadi name - in a deliberate attempt to mislead and deceive. It too awarded damages for lost sales, and, again, exempted from the ban, as did the English Court, only a special additional label that E & M, like Apollinaris, had affixed to the bottle to identify the product as its own import, reasoning as did the English, that consumers could distinguish between the importer and the bottler once the label confusion itself was resolved. In this manner, two different courts approached the same question by two different routes, one circuitous and one direct, and reached the same conclusion. While neither court relied on a specific written law for its ruling, the sense of both opinions is that the courts should stop unfair competition, and, as Justice Potter Stewart said a hundred years later about pornography, the courts “know it when they see it.” The kind of legal reasoning that both courts implicitly applied is one that permits the courts to address the totality of the circumstances of an entire situation - using so-called “supplemental jurisdiction” - to decide a clutch of different possible legal claims that arise out of a single set of facts. In the United States, Saxlehner immediately issued an industry-wide warning to all retailers to stop selling E & M’s water. The Philadelphia branch of the retail drug industry had to make a special plea to the Saxlehner company to refrain from threatening suit against local drug stores, but once the label changes were made, the courts had no further trouble allowing the Arpenta water to be sold in competition to the Hunyadi Janos, and further legal efforts by Saxlehner to disrupt its sales were denied.

In the 1900s, the Andreas Saxlehner office in the United States continued to prosper, apparently managed by one Charles Edward Ensko. In 1913, the company even addressed a letter to the Ways and Means Committee of the United States House of Representatives, expressing its view that mineral water should be exempted from import duties. However, during World War I, the company was seized by the U S government and confiscated under the Trading With The Enemy Act as an importing business operating at 130 Fulton Street in New York City and still owned by Emilie, a Hungarian citizen, and, as such, a enemy national. This wartime legislation authorized the U S government to confiscate all money, stock and property in the United States owned by enemy nationals. The government transferred seized assets to an Alien Property Custodian (at that time, U S Attorney General Mitchell A. Palmer), who had the war time power to administer it in the manner best suited to advance the war effort, including conserving it, licensing it or even selling it at public auction to American interests. To raise money for the government, Saxlehner’s company was sold at auction in 1921 and ultimately transferred to a new Hunyadi Janos Corporation, which then resumed advertising and sales of Hunyadi Janos water.

All seemed well until April, 1922 when a man named Alexander F Stoeger, whose principal business appears to have been guns and firearms, advertised to the pharmacy trade that he had just completed a contract with the Saxlehner family in Hungary to import and distribute the real Hunyadi Janos water from the original spring in Hungary. (On the same trip to Europe, Stoeger apparently had also negotiated a license to sell Luger pistols in the United States.) Now there were to be Hunyadi Janos products distributed by the American company, and the imported Hungarian Hunyadi Janos water distributed by Stoeger. Who actually owned the rights to call its water Hunyadi Janos water?

Curiously, a question very similar in legal consequences to this one had been litigated years before in 1886 in a case also involving Saxlehner arising from somewhat different factual circumstances. In the earlier case, Apollinaris, as Saxlehner’s American distributor, had clearly marked its bottles of Hunyadi Janos water as being legitimately for sale only within Apollinaris’s sales territory. Another importer, Scherer, purchased legitimate Hunyadi Janos water from Saxlehner’s European distributor, imported it to the United States without Apollinaris’s restricted marking, and then undersold Apollinaris in the United States. Apollinaris sued for trademark infringement. The court denied the injunction on the grounds that the trademark on the other importer’s Hunyadi Janos water was perfectly legitimate, so their could be no infringement of trademark, thus holding that the trademark protected the genuineness of the underlying product, not the distributor’s exclusive contractual right to sell in the territory assigned to it by the producer. It cautioned that if the other water had been some other kind falsely labeled instead of genuine Hunyadi Janos water, the injunction would have been granted. Even by 1922, scholars and some other courts had challenged the legal reasoning of that decision as not going far enough to protect the legitimate distributor’s right to its territory.

In 1922, The new American Hunyadi Janos company, now possessor of the underlying trademarks, immediately sued Stoeger, claiming precedence for its water by way of its purchase of the Saxlehner Hunyadi Janos trademark from the Alien Property Custodian, and stating that the 1921 purchase had established a territorial boundary against encroachment by a later trademark user, no matter how legitimate the second usage might claim to be. Stoeger, using one of Saxlehner’s attorneys from the E & M dispute twenty years earlier, defended on two grounds: first, that the trademark actually was part of the Saxlehner’s Hungarian water well property, not the New York business, and thus had never properly been seized by the Alien Property Custodian; second, on the grounds raised in the 1886 case, that since the water he was selling was the real Saxlehner product, there certainly could not be a violation of the registered trademark rights. Stoeger won the preliminary court skirmishes in 1922 largely on the strength of the 1886 ruling. The court permitted him to sell the Hungarian water as genuine Hunyadi Janos water. Given clear sailing by the federal court, he pressed his advantage, advertising widely that the federal court had blessed his distributorship.

In 1923, the Supreme Court took up the issue of whether trademarks only guaranteed genuineness of the product or protected the distributor’s territorial rights to exclusive use as well, and changed the law by extending the ambit of trademark protection to protect the distributor’s exclusive right to use within its territory. In 1925, when the lawsuit between the American Hunyadi Janos Corporation and Stoeger finally was tried, the trial court had no difficulty following the 1923 Supreme Court ruling. Yet, when the federal appellate court reviewed that trial record and sorted the legal issues through completely, it reversed the trial court and again supported Stoeger’s claim. This court approached the matter quite differently than the Supreme Court had either the E & M case or the 1923 case. First, the appellate court took an extremely narrow approach to its power to determine the dispute. It ruled that since both parties lived in the same state, only the state court had the proper authority to hear all claims of unfair competition or rights to images acquired by use. Instead of invoking, either implicitly or explicitly, its “supplemental jurisdiction” to examine all of the commonalities of the appearance of the two products and the entire set of circumstances surrounding the two differing claims, it held that the federal court only could rule on that claim which pertained to the trademarks directly registered with the federal government. By avoiding the very issue of unfair similarities in shape and look that the Supreme Court had earlier determined to be critical in the E & M case, the federal court narrowly circumscribed its legal examination to the issue of whether the Alien Property Custodian had, in fact, properly seized the registered Saxlehner trademarks.

To accomplish this inquiry, the court then recounted the history of the trademark registrations. It found that Andreas Saxlehner had originally filed two trademarks in 1887 patterned on the same logo design, the difference being that one specifically protected the term “Hunyadi” and the logo, and the other protected the term “Janos” and the logo. The court then ruled that the decision in the E & M case had effectively cancelled any protection under the “Hunyadi” trademark, and, further, that since the current record did not identify the owner of the 1887 “Janos” trademark as an alien, it could not determine ownership of that trademark. However, the court noted, more significantly, the Saxlehner family had made two later registrations of Hunyadi Janos trademarks in 1909. These trademarks, it concluded, were “appurtenant to” the Hungarian wells themselves and thus owned by the Saxlehners personally, not the business office in New York located at 130 Fulton Street. Reasoning from that conclusion, the court held that the Alien Property Custodian had never properly attached or seized them. Because the Alien Property Custodian had not seized them, the Custodian could not sell them as part of the 1921 auction of the Andreas Saxlehner Hunyadi Janos business located at 130 Fulton Street. The American company was entitled to no protection under trademarks it had never owned. In other words, although the court did not use this coarse expression, it ruled: “no tickee, no washee.”

A large moral can be adduced from thoughtful consideration of this last court opinion. While the decision appears wrong intuitively, most federal courts in most ages have actively inclined to narrow the scope of their judicial intrusion into normal commerce and the lives of American citizens, a position that is often articulated today as “strict construction,” and such a view always must be considered and analyzed most carefully, in light of the peculiar practical consequences which follow from it, as in this case. Too often the forest can be missed while one is busy staring at the trees. This is the modern moral the reader should carry away from this absurdly extended treatise on mineral water long ago evaporated by time.

However, a more twisted, conspiratorial theory for this decision - even if more banal and pedestrian in its motivation - can also be elicited, and so, in the interests of full disclosure, must be reported. Records, available today even on line, show that the Alien Property Custodian, in its report for the year 1919, clearly lists the 1909 Hunyadi Janos trademarks as part of the property of the Andreas Saxlehner firm the Alien Property Custodian had seized and now considered within its control. The 1921 sale most definitely included those 1909 trademarks, so the American company’s claim should have had precedence over Stoeger’s.

In the plane of legal reasoning, the second theoretical question, left unexamined by the appellate court, of whether the new company with proper ownership of the trademarks could have barred the original company through its new distributor from selling the same product should have been resolved by the Supreme Court’s 1923 decision. That court should have barred the new distributor from selling the original company’s water. While that ruling might have led to the further difficulty of where the new American Hunyadi Janos Company would have obtained its future supply of genuine Hunyadi Janos water (since Saxlehner, after 1922, was dealing with Stoeger), the court could have left the market to resolve that difficulty: reasoning that if Stoeger were barred from selling the Hunyadi Janos water, Saxlehner would either have to return to supplying its product to the American Hunyadi Janos Company that owned its U S trademarks, or risk not having any representative in the United States market selling Hunyadi Janos water. The trial court was prepared to permit this result.

By completely ignoring, discounting or nullifying the seizure of the 1909 trademarks, the appellate court rendered that issue merely hypothetical, and what stands out about the 1925 decision is the error the court permitted to stand concerning the seizure of the 1909 trademarks. The appellate court attached no credence, and certainly no legal significance, to the 1919 report of the Alien Property Custodian that specifically listed the 1909 trademarks among the seized property. How could the court overlook that fact? What purpose did the Alien Property Custodian serve, if not to seize the “business” of foreign nationals? How could the trademark remain in Hungary with the wells, and not represent the “good will” associated with the trademark image that the American company had clearly purchased? If not the exclusive right to use the image, what did the 1909 trademark stand for?

Normally the litigants themselves must be blamed when courts draw improper impressions of the facts. The conspiratorial twist enters the plot here. Judge Martin T. Manton, one of the three judges responsible for the appellate court opinion (although not the judge who signed it) was subsequently stripped of his office, convicted of selling his court vote for money and sentenced to prison, some fourteen years after this decision, in 1939. While the Depression, which began in 1929, is blamed for Manton’s terrible plight and downfall, it is possible to speculate that maybe there was hanky panky going on even at this early date! While this explanation is extremely fanciful and far fetched, just as Barry Bonds, Mark McGuire and Sammy Sosa draw asterisks in the home run record books, an asterisk might well be applied to this 1925 court decision. All decisions in which Judge Manton played some role still draw extra scrutiny, even almost ninety years later. Conspiracies can exist where ever one chooses to look for, and find, them.

Sadly, for all the hoopla surrounding the various court decisions, little more is recorded about the ultimate fate of the dueling companies in New York City, their products and their distributorship businesses in the United States. While the Hungarian Saxlehner company was still advertising its water in Australia in 1928 and registering Hunyadi Janos trademarks in the United States in 1931, the record is silent about the ultimate fate of the Hunyadi Janos brand. Perhaps the contending distributors succumbed to the effects of the Depression. There are no buildings, as some other companies left, to memorialize their passing, and mentions of the water, the pills and all of the contending companies in advertising and public documents just ceases in the 1930s. Stoeger’s arms business continued well into the 1950s. The Saxlehners continued to live in Budapest until 1938, just after Emilie’s death, when growing European unrest compelled them to flee from Hungary to the United States. There is left only one last philatelic quirk: Andreas Saxlehner’s mansion in Budapest now serves as the Hungarian Postal Museum.


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