Opinion
No. 6863.
January 14, 1950.
APPEAL FROM THE CIRCUIT COURT OF JASPER COUNTY, WALTER E. BAILEY, J.
Richard K. McPherson, Joplin, Ralph Baird, Joplin, for appellant.
Stewart E. Tatum, Joplin, Roy Coyne, Joplin, for respondent.
This is an injunction suit. On January 8, 1949, appellant filed in the Circuit Court of Jasper County, the following petition:
"1. The plaintiff is and has been since the date of its incorporation, a corporation created and existing under the laws of the State of Missouri; that plaintiff was created a corporation on the 2nd day of January 1907, and has an actual paid-up capital of Eighty Thousand ($80,000) Dollars and an earned surplus, with its office, warehouse and place of business located in the City of Joplin, Jasper County, Missouri, on the west side of Byers Avenue, between Tenth and Eleventh Streets, and using as its mail address, 1024 Byers Avenue, Joplin, Missouri;
"2. That plaintiff was created for the purpose and with the powers, among others, `to carry on a general wholesale and retail business in paper supplies and other merchandise,' and that ever since its incorporation plaintiff has engaged in said business in said city, and has an established business, with a large retail store and warehouse located in said city at the above described location, and has a large trade in the sale of paper supplies and related products in said city and surrounding territory for a radius of approximately seventy miles; that it has built up and now enjoys a large and profitable business in the aforesaid city and territory and that it enjoys the confidence and trust of the people of said community because of its financial responsibility and the manner in which its business has been conducted;
"3. That the existence and business of the plaintiff has been for many years advertised in said community and territory and is still so advertised, and that it has had and still has salesmen working in said community and territory selling its products; that the public in said community and territory has come to know the plaintiff as a company engaged in the business of dealing in paper and paper products and related supplies, and to know the plaintiff as `Osborn Paper Company,' and regular users of paper and paper products and related supplies, such as store operators and other users of paper and paper products, have come to know and speak of it in many instances, in relation to paper and paper products and related supplies, as `Osborn's,' and to deal with it in the purchases and sale of paper and paper products and related supplies because of its business standing and ability in its field;
"4. That at no time since its incorporation until the incorporation of the defendant, as hereinafter stated, has there been any other incorporation, association, firm or person engaged in the same or similar business in said city or community using the name of `Osborn' as its name or any part of its name, or using the name of `Osborn Paper Company' as its name or any part of its name;
"5. That on or about the 1st day of January, 1949, the defendant herein was incorporated under the laws of the State of Missouri under the name of Carrold Osborn Paper Company, Inc., without the knowledge or consent of this plaintiff, with its office and place of business in said City of Joplin, for the purpose of dealing in paper products, and on or about the 3rd day of January, 1949, the defendant occupied a building and business location on the northeast corner of the intersection of Tenth Street and Byers Avenue, Joplin, Jasper County, Missouri, said business location bearing the address of 929 Byers Avenue, and approximately 100 yards from plaintiff's place of business aforesaid, and is engaging in the business of selling the same products under its corporate name of Carrold Osborn Paper Company, Inc;
"6. Plaintiff further avers, upon information and belief, that the authorized capital stock of the defendant is Fifty Thousand Dollars ($50,000) divided into Five Hundred (500) shares of the par value of One Hundred Dollars ($100) each and that the incorporators are Carrold Osborn, J. G. C. Blockwitz, Rolland O. Shadday, T. H. Strecker, and Roy E. Steele, and that the said Carrold Osborn is a minority stockholder in said corporation, and that the corporate purposes of defendant are to deal in paper and paper products;
"7. That on the 27th day of August, 1946, 674 shares of the 800 shares of the capital stock of plaintiff was sold by S. D. Osborn, O. W. Osborn, F. A. Osborn, and D. S. Osborn, and that the said plaintiff was originally organized by the grandfather of Carrold Osborn, and that his said grandfather, his father, his uncles, and Carrold Osborn have been in the employment of plaintiff, and that at the time of the sale of the said 674 shares of the capital stock of plaintiff, the purchasers thereof paid to the sellers six per centum (6%) of the book value of the said corporate stock as of December 31, 1946, for the good-will of said corporation. Plaintiff further avers that the use by defendant of the name Carrold Osborn Paper Company, Inc., is confusing in the trade area of plaintiff to its prospective customers, by reason of the association of the said Carrold Osborn, his grandfather, his father, and uncles with plaintiff;
"8. That plaintiff is not the owner of any of the stock of the defendant or of any of its property or business, and has no connection whatever with the defendant. That by reason of the fact that the distinguishing word `Osborn' and the distinguishing words `Osborn Paper Company' are a part of the name of the plaintiff corporation and the defendant corporation, and that the name of the plaintiff is Osborn Paper Company and the name of the defendant is Carrold Osborn Paper Company, Inc., and by reason of the fact that both corporations are engaged in the same line of business in the same city, the use of the name Carrold Osborn Paper Company, Inc., by the defendant is calculated to and will, and does, deceive or confuse the public, and the names of said corporations are so similar as to deceive, confuse or mislead the public in the belief that the defendant corporation is the same corporation as the plaintiff corporation, and that in dealing with the defendant corporation or purchasing any of its stock of goods or products it is dealing with or purchasing the stock of goods or products of the plaintiff corporation; that in consequence of the facts aforesaid, plaintiff is damaged and unless the defendant is restrained as hereinafter prayed, the plaintiff will continue to suffer irreparable damage by reason of the use of the name Carrold Osborn Paper Company, Inc., and that plaintiff has no adequate remedy at law.
"Wherefore, plaintiff prays that the defendant be perpetually enjoined and restrained from in any manner engaging in the business of selling paper products under its corporate name or any other name containing the words `Osborn Paper Company,' or any name identical with or similar to or in imitation of the name of plaintiff, and for the costs and disbursements of this suit, and for such other and further relief in the premises as the plaintiff may in equity be entitled to."
After some preliminary matters, which we do not think it necessary to note here, the trial court made the following statement:
"Statement of the Court: I have studied the cases in regard to this matter, and while it may be a close question, I think that in this country the right of a man to use his name is almost inviolate unless it is shown beyond any question that it is used for an ulterior motive, and I can't see that has been proven in this case. He is not a stockholder in the old company, and had nothing to do with the sale of it, and there is no restrictive clause in the sale, it is simply a transaction of stock from the old original Osborn stockholders to the present stockholders. And while I appreciate the fact that I have known that the Osborn Paper Company has been an institution in Joplin as long as I can remember, I think the mere fact that their addresses is on the same street and close together is not necessarily an indication of deliberate intent to try to make use of the name for an ulterior motive. There isn't any question but what Carrold Osborn is a person trained in the paper business and I can't agree that a man can be prohibited from using his own name. I think the decisions seem to indicate that is the true rule. For that reason I am going to sustain the motion to dismiss this application for injunction."
On March 3, 1949, the trial court entered the following order: "It is therefore ordered and adjudged by the Court that this cause be and the same is hereby dismissed; * * *."
Upon its motion for a new trial being overruled, plaintiff filed its notice of appeal to this Court. The case is thus before us.
As all of the facts in the case appear in the petition of appellant, it is unnecessary to repeat any of them.
In its brief, appellant makes only two assignments of alleged error of the trial court. The first assignment is:
"The motion to dismiss admits as true all material facts well pleaded in the petition," and cites cases and authorities purporting to support that proposition. We will not refer to these cases and authorities, since we are well satisfied that appellant has properly announced the law in that assignment of error.
The second assignment of alleged error is:
"The allegations of the petition state a claim upon which relief can be granted." Appellant cites ten cases in supposed support of such assignment. This we regard as a more serious assignment of alleged error and it requires us to examine those cases at some length.
In reading over the case of Empire Trust Co. v. Empire Finance Corp. 226 Mo.App. 298, 41 S.W.2d 847, by the Kansas City Court of Appeals, we feel that possibly appellant has drawn its petition, so far as the facts permit, from the petition in the case cited. There defendant was using the word "Empire" in its title, even though defendant had been so incorporated by the Secretary of State. We note in the statement of the trial judge, that one could not be enjoined from using his own name. That was not true in the case cited. The word "Empire" is not a Christian or given name.
In the Supreme Lodge of the World, Loyal Order of Moose et al. v. Paramount Progressive Order of Moose et al., 224 Mo.App. 276, 26 S.W.2d 826, by the St. Louis Court of Appeals, the defendant was not only enjoined from using the word "Moose," but was also enjoined from using certain lodge paraphernalia owned by plaintiff. There was no similarity in the names, except the use of the word "Moose."
The case of Lo Buono v. Viviano Bros. Macaroni Mfg. Co., 197 Mo.App. 618, 198 S.W. 498, also by the St. Louis Court of Appeals, was different from the case at bar, in that it was the product sold by defendants, and not their names, which constituted unfair competition.
In Katz Drug Co. v. Katz, 217 S.W.2d 286, by the Kansas City Court of Appeals, defendant was charged with using the trade-name of "Katz" without appending thereto his given name of "Jerry." Defendant not only used the trade-name of "Katz," but used the identical "script." It was a plain case of unfair competition, and Judge Cave very properly so held.
The case of Mary Muffet, Inc., v. Smelansky, 158 S.W.2d 168, by the St. Louis Court of Appeals, was mostly an unfair trade-mark case. Judge Hughes also passed upon the sufficiency of the petition charging unfair competition, as well as unfair use of a trade-mark. In that case, it was the location of defendant's business, as well as the use of a trade-name, quite similar to plaintiff's trade-mark, which was enjoined. That case has no probative value in this case.
Appellant cites State ex rel. Hutchinson v. McGrath, Secretary of State, 92 Mo. 355, 5 S.W. 29, 30. Black, J. there said in a mandamus suit, that the Secretary of State need not issue a certificate of incorporation to "The Kansas City Real-Estate Exchange," when he had previously issued a certificate of incorporation to a corporation named "Kansas City Real-Estate and Stock Exchange." That case is not an authority on the facts involved in this case.
Appellant cites Plant Seed Co. v. Michel Plant Seed Co., 37 Mo.App. 313. Injunction was denied and the St. Louis Court of Appeals adhered to its former opinion in 23 Mo.App. 579. Even the use of the same words "Plant Seed Co." by both plaintiff and defendant was insufficient. The defendant used the words "Plant Seed Company," and used the word "Michel," which was not used by plaintiff company. We do not think that case helps appellant's contention in this case.
Plaintiff cites Furniture Hospital v. Dorfman, 179 Mo.App. 302, 166 S.W. 861. There the plaintiff had been doing business as the "Furniture Hospital," and defendant used the name "New York Furniture Hospital." The trial court had denied an injunction and the Kansas City Court of Appeals, by Judge Trimble, reversed and remanded the case, holding that the use of the words "Furniture Hospital," even when connected with the words "New York," was unfair competition.
Appellant cites the case of Bagby et al. v. Blackwell, 211 S.W.2d 69, 70, by the Kansas City Court of Appeals. There the trial court had held that the use, by an unincorporated plaintiff, of the words "Associated Furniture Distributors," was not an infringement, because of the use by defendant of the same words by plaintiff, when plaintiff was not incorporated. This judgment was reversed, with instructions, in an opinion by Dew, Judge. It seems that the court held that incorporation is not essential, nor any defense, to the use of a name by individuals. That case has no bearing on the case before us.
The last Missouri case cited by appellant is the case of Thomas Patrick, Inc., v. KWK Investment Co. et al., Mo.Sup., 206 S.W.2d 359. The trial court had held that radio station KWK, an unincorporated radio station, was not unlawfully discriminated against by the incorporation of defendant under the name of "K W K Investment Company," when defendant did not engage in the radio business. This judgment was reversed by the Missouri Supreme Court, in an opinion by Barrett, Commissioner. That ruling was quite like the opinion in the case of Bagby v. Blackwell, considered just above.
The first case outside of Missouri, cited by appellant, is R. H. Macy Co., Inc., v. Colorado Clothing Mfg. Co., 10 Cir., 68 F.2d 690, 691. There, in an opinion by Phillips, Circuit Judge, the District Court of Colorado was overruled and the case remanded. The defendant in that case had been advertising that it could put out suits of clothing under the "Macy Tailoring System of America." The use of the word "Macy" was held to be unfair competition.
In Brooks Bros. v. Brooks Clothing of California, Limited, 60 F.Supp. 442, the Federal District Court of the Central Division of the Southern District Court of California, in an elaborate opinion, Yankwich, District Judge, held that the use, by defendant, of the word "Brooks" was an infringement of plaintiff's exclusive right to the use of that word.
Appellant cites Hat Corporation of America v. D. L. Davis Corporation, 4 F. Supp. 613, by the District Court of Connecticut. In a long finding of facts, the trial court had held that one who had formerly worked for the predecessor of plaintiff, was not engaged in unfair competition by the former business connection of defendant and use of the name "Doobs" by defendant. That case is only like this case, in that respondent herein was alleged, at one time, to have been connected with the firm which took over appellant's business and location in business. In the case cited, it was the use of the product, and not the name of defendant which was held to be unfair competition.
The last case from other jurisdictions, cited by appellant, is the case of American Steel Foundaries v. Robertson, by the U.S. Supreme Court, cited in 269 U.S. 372, 46 S.Ct. 160, and 70 L.Ed. 317. Justice Sutherland delivered the opinion of the court. It was originally a certiorari case and the Supreme Court of the United States held that the use of the word "Simplex," only, did not justify a refusal of registration of the defendant company.
We do not think that incorporation of respondent by the Secretary of State of Missouri itself authorized unfair competition by respondent. Nor are we able to agree with respondent that there was nothing in the use of the words "Osborn Paper Company, a Corporation," and the location of respondent's business, to indicate unfair competition. If that was all, we would be compelled, under the decisions, to hold that respondent was guilty of unfair competition.
But we think the trial judge correctly analyzed the situation when he said: "The right of a man to use his name is almost inviolate, unless it is shown beyond any question that it (his name) is used for an ulterior motive." Such ulterior motive of respondent is not alleged in the petition of appellant. The most that the petition alleges is that respondent "is engaged in the business of selling the same products under its corporate name of "Carrold Osborn Paper Company, Inc."
We think the statement of the trial court, set out above, is fully supported by the cases cited by respondent, to wit: Stix, Baer Fuller Dry Goods Co. v. American Piano Co., 8 Cir., 211 F. 271; Howe Scale Company of 1886 v. Wyckoff, Seamans Benedict, cited in 198 U.S. 118, 25 S.Ct. 609, 49 L.Ed. 972, and Horlick's Malted Milk Corporation v. Horlick, 7 Cir., 143 F.2d 32, and many other cases.
We have examined all of those cases and are satisfied that respondent was not guilty of unfair competition, when it used in its name, in addition to the words "Osborn Paper Company, a Corporation," the given name of "Carrold." Such was the opinion of the trial court, which we approve. The judgment of the trial court is affirmed.
McDOWELL, J., concurs.
VANDEVENTER, P. J., dissents in separate opinion.
I am unable to concur in the majority opinion written by my brethren. The court sustained a motion to dismiss the petition upon the ground that it fails to state a claim upon which the relief sought might be granted. In passing upon such a motion, the court must assume that every well pleaded fact in the petition is true, and resolve doubtful questions in favor of the petitioner. Jays, Inc., v. Jays Originals. Inc., 321 Mass. 737, 75 N.E.2d 514. Therefore, the court must take as true that the plaintiff was incorporated in 1907 as the Osborn Paper Company, with a paid up capital of $80,000 and that its place of business was on the west side of Byers Avenue at No. 1024, Joplin, Missouri. That it was created for the purpose of dealing in paper supplies and other merchandise, both at wholesale and retail and for more than 40 years had engaged in that business, had a well established business, a large retail warehouse at the above number, and a large trade in paper supplies, not only in Joplin but in the surrounding territory within a radius of 70 miles. That in that territory, it had a large and profitable business and the confidence and trust of the people in the community because of its financial responsibility, etc. That it had advertised its business in the territory of its trade, had covered the territory by salesmen selling its product and has become well known as the Osborn Paper Company and its regular customers speak of it as "Osborns". That at no time since its incorporation, until respondent was incorporated, had there been any other company engaged in the same or similar business in Joplin, using the name "Osborn" as any part of its name. That in 1949, the defendant was incorporated under the name Carrold Osborn Paper Company, Inc., without plaintiff's knowledge or consent, for the purpose of dealing in paper products and occupied a business building at 929 Byers Avenue, approximately 100 yards from plaintiff's place of business and were engaged in the business of selling the same products as the plaintiff under their corporate name; that the capital stock of said defendant was $50,000 and that Carrold Osborn is a minority stockholder. That in 1946, the Osborns (not including Carrold) sold 674 shares of the stock of plaintiff (total shares 800), that the plaintiff corporation was organized by the grandfather of Carrold Osborn and that said grandfather, Carrold Osborn's father and uncles and Carrold Osborn had been in the employment of plaintiff. That when the 674 shares of capital stock were sold by the Osborns, the purchasers paid six percent of the book value of the stock for the good will of said corporation; that the use of the name Carrold Osborn Paper Company Inc., is confusing in the trade area of plaintiff to its prospective customers by reason of the former association of Carrold Osborn and other Osborns with plaintiff. That plaintiff owns no stock in defendant and has no connection with it, whatsoever. That the fact that the words, "Osborn Paper Company" were a part of the name of plaintiff and also of the defendant and by reason of the further fact that both corporations were engaged in the same line of business in the same city and on the same street, the result was that it was "calculated to and will and does deceive or confuse the public," which acted under the belief that the defendant corporation was the same as plaintiff and that when it deals with defendant, it thinks it is dealing with plaintiff and purchasing goods and products of the plaintiff corporation, and that because of these matters, plaintiff is damaged, etc.
The word "calculated" is defined by Webster as "Adapted by calculation, contrivance or forethought, to accomplish a purpose."
If plaintiff Carrold Osborn were conducting a personal business and using his own name, a different situation would be confronting us. But that is not the case here. He has virtually loaned or sold his name to a corporation, of which he is a minority stockholder, and under that name it enters the same kind of business as the plaintiff, establishes a place of business on the same street in the same city and within one hundred yards of plaintiff's business, appropriates all of the name of plaintiff, which it has exclusively used for more than forty years in its trade territory, with only the distinguishing features that the word "Carrold" precedes it and "Inc." follows, all of which, according to the petition, deceives the public, which, when it trades with defendant, thinks it is trading with plaintiff, who has an old and established reputation, both as to business dealings and quality of the product sold. The rule under such circumstances as this is stated in 18 C.J.S., Corporations, § 173, page 579, as follow: "Also, a corporation cannot lawfully employ even the name of one of its incorporators as a part of the corporate name, when such name has been selected intentionally for the purpose of unfairly competing with another corporation lawfully using the same name."
In 66 A.L.R. page 987, art. VI, there is a long note citing many cases where a corporation has adopted the name in whole or in part of one of its incorporators or stockholders. Its first citation is an English case, Fine Cotton Spinners D. Asso. v. Harwood Cash Co. (1907) 2 Ch. (Eng.) 184. The learned Chancellor, in that case so clearly and succinctly stated my idea of the law, that I quote: "I consider, as the law stands at present, that a new company with a title of which the name `A', for instance, forms part, has not the natural rights that an individual born with the name of `A' would have. I think, also, that such a company, merely by registration, does not acquire and incorporate the individual rights which its promoters may respectively have had to carry on business in their own names; and, further, I think that a person of the name of `A', without transferring a business and good will, cannot, by merely authorizing the promoters of a company to use his name as part of their title, confer upon such company a right to do so as against other people who would be damaged thereby."
Many other cases from various jurisdictions are also cited in this A.L.R. note applying in different language, the rule above quoted.
In Gabriel v. Niederstein's Restaurant, Inc., 230 App.Div. 716, 243 N.Y.S. 472, 473, the court said: "The law is settled that, even in cases where family names are involved, a person may not give his name to a corporation and thereby take from another his good will and rights which he has acquired by the use of such name, especially where the purpose is to mislead the public as to the identity of the establishments. While we recognize that a person may not make a trade-mark of his own name, and thus attain a monopoly of it, which will debar all other persons of the same name from using their own names in their own business (Meneely v. Meneely, 62 N.Y. 427, 20 Am.Rep. 489), we are of opinion that the record justifies the granting to the plaintiff of relief pending the action." In McVay Sons Seed Co. v. McVay Seed Floral Company, 201 Ala. 629, 79 So. 116, 118, a situation similar to the one here confronted the court. The trial court overruled a demurrer to the bill in equity and the defendants appealed and in the opinion is the following quotation from Nims on Unfair Competition, Sec. 90. "One of the most common ways of naming a corporation is to use the personal name of one or more of the incorporators. The rules applicable to it are practically the same as those relating to the use of personal names in other trade-names. * * * There is, however, this difference, as has already been observed, and it is a substantial one. As the law now stands, when a natural person starts business under his own name, a duty rests upon him to so use that name as to prevent confusion between his house and goods and the house and goods of any other person by the same family name in the same business. When however, a person causes the organization of a corporation, a much greater burden and duty rests upon him. (Italics ours.) If his use of his surname as a part of the corporate name will cause confusion between his new corporation and its rivals, he may not use his name in the corporate name at all. * * *
"The sum of the whole matter is this: If a plaintiff can demonstrate that the defendant's use of its corporate name is causing unfair competition as against the plaintiff, the defendant must change its name, even though it contain the personal name of an incorporator, and inasmuch as an affirmative duty to differentiate itself from the plaintiff rests upon defendant, the failure so to do is an evidence of fraud."
In Vick Medicine Co. v. Vick Chemical Company, 5 Cir., 11 F.2d 33, 35, the court said: "We understand that a corporation is not entitled to use in its name or for its products the name of an individual, though that individual is interested in the corporation and consents to the use made of his name, if that name, instead of another, was selected in order to aid the corporation in competing with an established concern engaged in a similar business, and using the same name, such corporation's use of that name being calculated and intended to mislead the public with respect to the origin of its products, and having the effect of a false representation and of promoting unfair competition."
The following cases sustain my views in this question: Robert Reis Co. v. Herman B. Reiss Inc., Sup., 63 N.Y.S.2d 786; International Silver Co. v. Williams H. Roger's Corp., 67 N.J.Eq. 646, 60 A. 187, 110 Am.St.Rep. 506, 3 Ann.Cas. 804; De Nobili Cigar Co. v. Nobile Cigar Co., 1 Cir., 56 F.2d 324; Great Atlantic Pac. Tea Co. v. A. P. Meat Market, 138 Misc. 224, 244 N.Y.S. 535; Great Atlantic Pacific Tea Co. v. A. P. Radio Stores, D.C.E.D. Pa., 20 F.Supp. 703; R. W. Roger Co. v. Wm. Rogers Mfg. Co., 2 Cir., 70 F. 1017; International Silver Co. v. Wm. H. Rogers Corp., 66 N.J.Eq. 119, 57 A. 1037, 2 Ann. Cas. 407; Garrett v. T. H. Garrett Co., 6 Cir., 78 F. 472; J. P. Coats, Limited, v. John Coates Thread Co., C.C., 135 F. 177; Staples Coal Co. v. City Fuel Co., 316 Mass. 503, 55 N.E.2d 934; Winifred Warren, Inc., v. Turner's Gowns, Sup., 16 N.Y.S.2d 994; Neuhoff, Inc., v. Neuhoff Packing Co., 6 Cir., 167 F.2d 459; King Pharr Canning Operations v. Pharr Canning Co., D.C., 85 F.Supp. 150; Cook Paint Varnish Co. v. Cook Chemical Co., D.C., 85 F.Supp. 257; Compania "Ron Bacardi" S. A. v. American Bacardi Rum Corp., Sup., 63 N.Y.S.2d 610; Bloom Furniture Co. v. Bloom, Pa.Com.Pl., 39 Berks. 277.
It seems to me more than a coincidence that the defendant corporation would be organized and use the name of one of its minority stockholders, after the other Osborns had sold their stock in plaintiff, and that it would conduct exactly the same kind of business as plaintiff on the same street in the same city and within one hundred yards of plaintiff's place of business. A person is presumed to intend that which is the natural and probable consequence of his act. It seems to me clear that the allegations of the petition are sufficient as against a motion to dismiss. What the evidence will show is another matter. I think the plaintiff was entitled to its day in court and be allowed, if it can, to establish the allegations of its petition. I believe the learned trial judge was in error in sustaining a motion to dismiss the petition.