Opinion
April 6, 1954 —
May 4, 1954.
APPEAL from a judgment of the circuit court for Milwaukee county: GUSTAVE G. GEHRZ, Circuit Judge. Affirmed.
For the appellants there were briefs by Becker, Kinnel, Doucette Mattison of Milwaukee, and oral argument by James R. Mattison.
For the respondent there was a brief by Wood, Warner, Tyrrell Bruce, and oral argument by T. L. Tolan, Jr., and Jackson M. Bruce, all of Milwaukee.
This action involves the right to the use in Wisconsin of the trade name "Skycoach." It was commenced on November 21, 1952, by Arthur Lee Aldrich and his wife. Eileen Eppers Aldrich, copartners. After various motions and orders there remained in the case at the time of trial as defendants Skycoach Air Lines Agency of Milwaukee, Inc. (hereinafter referred to as "Milwaukee Skycoach"), Ray Mitchell, and Wisconsin Telephone Company.
Plaintiffs demanded judgment against Milwaukee Skycoach enjoining it from the use of the trade name and from allowing Mitchell or others the use of the name, and for an accounting. Milwaukee Skycoach demanded dismissal of the complaint and counterclaimed for judgment enjoining plaintiffs from the use of the name and for an accounting. Milwaukee Skycoach in a cross complaint demanded judgment against the Telephone Company enjoining it from permitting the use of the name in any directory as describing the business of the plaintiffs.
Judgment entered on August 5, 1953, enjoins plaintiffs from the use of the trade name, the Telephone Company from permitting the use of the name as describing the business of the plaintiff in any directory, requires the Telephone Company to transfer to Ray Mitchell its listings under the name, and dismisses plaintiffs' complaint. Plaintiffs appeal.
The facts are adequately stated in the trial court's findings as follows:
"5. The name Skycoach is an arbitrary and fanciful name and is used as a trade name in the business of the sale of tickets on nonscheduled and irregular air lines.
"6. The trade name Skycoach was first used in about 1947 in connection with nonscheduled air-line-ticket business by Skycoach Air Travel, Inc., a New York corporation.
"7. In 1950, Skycoach Agency of New York, Inc. (hereinafter referred to as "New York Skycoach"), a New York corporation, acquired and took over the good will and business of Skycoach Air Travel, Inc., and succeeded to all of its rights in the name Skycoach, and it opened offices and did business under that trade name in New York, Philadelphia, Chicago, Boston, and other cities. Its business was that of the sale of tickets for flights on nonscheduled or irregular air carriers, certain of which carriers used the services of such agency exclusively for the sale of their tickets and were frequently referred to as Skycoach air lines.
"8. In April of 1950, New York Skycoach opened an office for the sale of tickets on irregular or nonscheduled air lines over the air lines serviced by such agency, in the lobby of the Wisconsin Hotel, 720 North Third street, in the city of Milwaukee. It did business in the state of Wisconsin from that time until October 18, 1950, and was the first corporation or individual to use the trade name Skycoach in the Milwaukee area.
"9. When it opened its Milwaukee office, New York Skycoach hired the plaintiff, Mrs. Arthur L. Aldrich (then Eileen Eppers) as its manager of that office and she continued as such employee of the company until September 1, 1950.
"10. In the period prior to October 18, 1950, New York Skycoach secured telephone listings under the name Skycoach in Milwaukee, advertised its business in the Milwaukee area, erected a large neon sign prominently bearing the name Skycoach, in the hotel lobby, distributed literature with the name Skycoach prominently displayed, and conducted a campaign of advertising by radio, newspaper, and otherwise, all playing up the name Skycoach. Some of this advertising was arranged for by Miss Eppers, as an employee of New York Skycoach.
"11. Between September 1, 1950, and October 18, 1950, the plaintiff Eileen Aldrich and New York Skycoach were negotiating to settle differences between them, including the claim of Eileen Aldrich that there was an oral understanding between her and New York Skycoach entered into in late July, 1950, whereby she had been appointed as an agent of New York Skycoach and her claim that this agreement had been breached by New York Skycoach. These negotiations resulted in agreements entered into about October 18, 1950, consisting of a complete release of New York Skycoach by the plaintiffs of any and all claims arising prior thereto, part of the consideration for which was paid by a transfer to plaintiffs of the office equipment of New York Skycoach in the lobby of the Wisconsin Hotel; and an agreement designating the plaintiffs as the Milwaukee representatives of New York Skycoach for the exclusive sale by the Aldriches in the Milwaukee area of tickets through New York Skycoach. Such agreement contained no assignment of the trade name Skycoach to plaintiffs.
"12. In late 1950, New York Skycoach merged with another corporation, the merged corporation being known as Safeway Skycoach Airlines Terminal, Inc. (hereinafter referred to as "Safeway Skycoach"), which merged corporation took over the assets and business of New York Skycoach, including its good will and trade name, Skycoach.
"13. From October 18, 1950, until about May 15, 1951, the plaintiffs sold air-line tickets exclusively through New York Skycoach and Safeway Skycoach and cleared and confirmed all reservations with the Chicago office of New York Skycoach and subsequently of Safeway Skycoach, both of which companies acquiesced in use of and expected plaintiffs to use and advertise the name Skycoach so long as plaintiffs did business with the Skycoach organization.
"14. After May 15, 1951, plaintiffs began placing some of their business with carriers other than those served by the Skycoach organization, although the greatest portion of their tickets (at least 70 per cent) continued to be Skycoach tickets and cleared through the Safeway Skycoach Chicago office until early 1952.
"15. Plaintiffs expended moneys promoting the name Skycoach in the Milwaukee area from October 18, 1950, to the date of the commencement of this action and profited by their business relationships and arrangements with the Skycoach organization.
"16. Early in 1952, the plaintiffs ceased doing business with Safeway Skycoach, no longer sold tickets on the air lines served by Safeway Skycoach and cleared no tickets through that company. They nevertheless continued to use the name Skycoach in connection with their sales of tickets on other irregular and nonscheduled air lines which did not have their tickets sold through Skycoach agencies.
"17. Sometime after May, 1952, defendant Milwaukee Skycoach was incorporated and licensed to do business in this state. It obtained a written assignment of the trade name Skycoach, and the good will associated therewith, from Safeway Skycoach and opened a ticket office in Milwaukee, doing business there until sometime in March, 1953, under the trade name Skycoach and promoting the name Skycoach in the Milwaukee area.
"18. Since October 18, 1950, there were and are other travel agencies in the Milwaukee area and elsewhere in Wisconsin which were authorized by New York Skycoach and Safeway Skycoach to sell Skycoach tickets in Wisconsin through those corporations and which used the name Skycoach on literature and otherwise in connection with their business.
"19. Defendant, Ray Mitchell, was a subagent of defendant Milwaukee Skycoach during the months in 1952 and 1953 in which said corporation did business in this state and sold the tickets of that corporation during this period.
"20. In April, 1953, defendant, Ray Mitchell, was assigned the name and good will of Skycoach for use in the Milwaukee area in accordance with the terms of a written agreement between him and Milwaukee Skycoach.
"21. Skycoach Agency of New York had a telephone listing in Milwaukee under the name Skycoach with the interpleaded defendant, Wisconsin Telephone Company, from April to October 20, 1950, at which time the listing was transferred by the authority of New York Skycoach to the plaintiffs herein.
"22. The name Skycoach appeared in alphabetical listings and in advertising and listings in the classified section of the telephone directories published by Wisconsin Telephone Company in November, 1950, for New York Skycoach; in November, 1951, for the plaintiffs; and in November, 1952, for both the plaintiffs and defendant Milwaukee Skycoach.
"23. During all of the period in which the plaintiffs were dealing with New York Skycoach and Safeway Skycoach their ticket sales to the public were only tentative in that every sale and reservation had to be confirmed and acted upon by the Chicago office of those corporations.
"24. Plaintiffs also did and still do business in the sale of tickets upon irregular or nonscheduled air lines not serviced by the Skycoach agencies under the name of Consolidated Air Travel Company in the lobby of the Wisconsin Hotel, and had telephone listings under that name, promoted that name by advertising in telephone directories and otherwise, since August 31, 1950.
"25. Public confusion exists between the business of the plaintiffs and that of the defendant, Skycoach Airlines Agency of Milwaukee, Inc., and defendant, Ray Mitchell.
"26. Plaintiffs have practiced deceit upon the public and attempted to pass off their business as that of the defendant and its predecessor corporations during the period between early 1952, when they stopped doing business with Safeway Skycoach, down to the present time, by leading the public to believe that they were authorized dealers and representatives of the nation-wide Skycoach corporations.
"27. New York Skycoach appropriated the trade name Skycoach by prior use in the Milwaukee area.
"28. New York Skycoach did not assign the trade name Skycoach to the plaintiffs.
"29. There is a valid succession of the trade name Skycoach by merger and assignment, from New York Skycoach to Safeway Skycoach to defendant Milwaukee Skycoach, down to defendant Ray Mitchell.
"30. New York Skycoach was licensed to do business in Wisconsin as a foreign corporation on July 9, 1953."
That the parties agree that the word "Skycoach" may be appropriated as a trade name and is not in the public domain appears from the fact that each of the principal parties claims the exclusive right to its use.
It appears from the foregoing statement of facts that New York Skycoach was the first to use the trade name in Wisconsin; that until after trial it had not been licensed to do business in Wisconsin as a foreign corporation; and that whatever right the defendants, Milwaukee Skycoach and Mitchell, have to the use of the name was acquired by the assignments referred to in the findings.
In 1950, when New York Skycoach opened its office in Milwaukee, there was in effect sec. 226.02(1), Stats. 1949, which provided:
"No foreign corporation shall transact business or acquire, hold, or dispose of property in this state until it shall have filed in the office of the secretary of state . . ." certain documents.
That section was repealed by ch. 731, Laws of 1951. However, there was created by the same act sec. 180.801(1), Stats., which provides:
"A foreign corporation shall procure a certificate of authority from the secretary of state before it shall transact business in this state or acquire, hold, or dispose of property in this state. . . ."
Plaintiffs urge that the right to the exclusive use of a trade name is property which, by virtue of the quoted statutes, New York Skycoach could not hold, acquire, or dispose of in Wisconsin. The precise nature of the right in a trade name is a matter of great dispute. The courts do not agree that it is property in any sense. Many authorities hold to the doctrine that the appropriator of a trade name acquires no property by such appropriation; that the owner's right is to protect the goods or enterprise to which the name is applied from unfair competition, a right enforceable in an action of the nature of one in tort. 3 Callmann, Unfair Competition and Trade-Marks (2d ed.), p. 991 et seq., sec. 66.3. Whether it be considered as property for any purpose, we doubt, without being required to hold, that the intangible right to the use of a name is the kind of property which the legislature had in mind in the enactment of either of the statutes.
Plaintiffs served and filed a complaint, two amended complaints, and a reply to the counterclaim of Milwaukee Skycoach. In none of these pleadings is there a suggestion that New York Skycoach had not been licensed to do business in Wisconsin and therefore was ineligible to acquire, hold, or dispose of property in the state. Their offer to prove the lack of license was objected to upon the ground that the issue had not been pleaded. The objection was overruled. Even at that stage plaintiffs made no effort to amend their pleadings so as to allege the failure of New York Skycoach to obtain a license to do business in this state. In each of their pleadings they allege ownership of the name and base their claim to the right to use it upon an assignment thereof to them by New York Skycoach which they now contend never had any interest in it.
"It has been generally held that the issue of corporate existence of a plaintiff or defendant corporation cannot be raised by a general denial, but that, in order to raise the issue, the corporate existence of the plaintiff or defendant must be specifically denied." Anno. 55 A.L.R. 510.
The rule is embodied in our statutory law:
"In an action or proceeding by or against any corporation, it shall not be necessary to prove the existence of such corporation unless its existence is specially denied by an answer, duly verified." Sec. 328.31, Stats.
The issue is not raised by a general denial, Williams Mower Reaper Co. v. Smith, 33 Wis. 530, nor is a denial upon information and belief sufficient, Crane Bros. Manufacturing Co. v. Morse, 49 Wis. 368, 5 N.W. 815. True, neither the rule nor the statute can be said to apply precisely to the issue here raised. It seems, however, that the reason for the rule, that which calls for its recognition, should be considered here. Our code permits of rather loose pleading, but underlying all of its provisions there is the purpose, at least implied, to relieve a party from the necessity of preparing to meet objections and contentions on the trial unless notified by the pleadings that the opponent intends to rely on them.
"The primary purpose to be served by pleadings is to acquaint the court and the parties with the facts in dispute. The plaintiff is expected to state truthfully his cause of action. The pleadings should point out the actual issues to be settled, giving notice to the parties of the claims, defenses, and cross demands of their adversaries." Trampe v. Wisconsin Telephone Co. 214 Wis. 210, 214, 252 N.W. 675.
The peculiar facts of this case seem to demonstrate the need for a rule which requires that a claim such as is here made should be pleaded. As we have pointed out, plaintiffs claim the right to use the name by virtue of an assignment made to them by a corporation which they now insist never had any interest in the right. Defendants cannot be said to have suspected that plaintiffs would attack the source of their title. Had the issue been pleaded defendants might well have contended that plaintiffs acquired nothing from one who had no more. Had it been pleaded defendants might have urged and shown that the transactions of New York Skycoach in Wisconsin were in interstate commerce to which sec. 180.801(1), Stats., does not apply. Standard Sewing Equip. Corp. v. Motor Specialty, 263 Wis. 467, 57 N.W.2d 706. We hold that plaintiffs' omission to plead the failure of New York Skycoach to have obtained a license to do business in Wisconsin precludes them from urging that issue either as a part of their complaint or as their reply to the counterclaim.
It follows, therefore, that we must treat this appeal as though New York Skycoach had legal title to the use of the name with the right to assign it to the plaintiffs or either of them, and that we must determine what, if any, right to its use was assigned to them.
From April to October, 1950, Mrs. Aldrich was engaged by New York Skycoach as manager of its Milwaukee office, receiving a monthly salary and commission. On October 18, 1950, the plaintiffs and New York Skycoach entered into several written agreements which the trial court found to be "an agreement designating the plaintiffs as the Milwaukee representatives of New York Skycoach for the exclusive sale by . . . [them] in the Milwaukee area of tickets through New York Skycoach." The court also found that "New York Skycoach did not assign the trade name Skycoach to the plaintiffs." Neither of these findings is attacked by plaintiffs. Absent such attack they are conclusive and, of course, are a determination that plaintiffs acquired no irrevocable right to the use of the name. We should add that we have examined the record, particularly the agreement made on October 19, 1950, and that we are of the opinion that plaintiffs failed to meet the burden which, of course, was theirs to establish that New York Skycoach at any time irrevocably assigned the name to them.
Plaintiffs attack finding 13, that the parties expected plaintiffs to use and advertise the name "Skycoach" so long as plaintiffs did business with the Skycoach organization. The relation between the parties was created and continued as that of principal and agent. It follows necessarily that the right in the plaintiffs to use the name terminated when the relationship ceased. The finding is no more than an inescapable inference made from the facts as found by the court.
By the Court. — Judgment affirmed.
STEINLE, J., took no part.