Boston Rubber Shoe Co. v. Boston Rubber Co.

| Mass. | Jun 20, 1889

W. Allen, J.

To give the court authority to act under the Pub. Sts. c'. 186, § 17, the petition must show that the respondent, in bearing the name Boston Rubber Company as its corporate name, is in the exercise of a franchise not conferred by law, and thereby injures or puts in hazard some right or interest of the petitioner.

The petition shows that the respondent was incorporated under the St. of 1870, c. 224, and a copy of a certificate in due form, as prescribed by the statute, of the incorporation of the ■respondent is annexed to the petition. By the terms of § 11 of the statute, this has the force and effect of a special charter, and is conclusive of the organization and establishment of the corporation.

The respondent does not contest this, but contends that the franchise to bear the corporate name is distinct from the franchise to be a corporation, and that the certificate is not conclusive as to the former, though it may be as to the latter. Without considering whether a corporation can exist under the statute without a corporate name, and whether any proceedings against it for being incorporated by a name which it had no right to assume should not be for a forfeiture of its whole franchise as unlawfully obtained, we think that the statute intended that the certificate should be conclusive of the right to the corporate name, and gave a franchise to bear the name, which can no more be impeached by private persons than can the franchise to be a corporation, and that in bearing the name the respondent was exercising a franchise conferred by law. See Goddard v. Smithett, 3 Gray, 116, and Rice v. National Bank of the Commonwealth, 126 Mass. 300" court="Mass." date_filed="1879-02-26" href="https://app.midpage.ai/document/rice-v-national-bank-of-the-commonwealth-6419536?utm_source=webapp" opinion_id="6419536">126 Mass. 300.

Section 1 of the statute of 1870 provided that persons associating together by an agreement in writing, such as is described in the statute, with the intention of becoming a corporation for certain purposes, “ shall become a corporation upon complying with the provisions of the eleventh section of this act.” Section 7 prescribed what things the agreement should set forth; among others, the name by which the corporation should be known. Section 8 provided that “ any name may be assumed for such corporation which shall indicate that it is a corporation, and which is not previously in use by an existing corporation or company, and the name assumed in the agreement of association shall not be changed but by act of the Legislature.” It further provided, that, in the cases of corporations organized' for certain purposes, certain words should form part of the name. Section 11 provided for a certificate of incorporation under the seal of the Commonwealth, which “ shall have the force and effect of a special charter, and be conclusive evidence of the organization and establishment of such corporation.”

By earlier statutes, persons associating, by agreement in writing, for certain purposes, and complying with the provisions-of the statute, could become a corporation under any name not previously in use by any other corporation or company. These statutes required that there should be an organization as a corporation, and that a sworn certificate of its officers, containing various particulars mentioned, should be published in newspapers and deposited with the Secretary of the Commonwealth. Gen. Sts. c. 61. St. 1851, c. 138.

Section 11 of the statute of 1870 was new. It provided that' a sworn certificate of the officers, containing a copy of the agreement and of the record of organization, should be submitted to the commissioner of corporations for his examination, and he was authorized to require other evidence if he thought necessary. If it appeared that the requirements of the statute had been complied with, he was to certify that fact, with his approval of the certificate. The certificate, with his approval indorsed, was to be filed with the Secretary of the Commonwealth, who was to issue the certificate of incorporation in a form prescribed.He was also to make a record of the certificate, and a copy of the record was made evidence. Section 12 provided that corporations organized under former general acts, might, by complying with the provisions of the section, receive a certificate of the same effect as that provided for in § 11.

The Legislature plainly intended to require that the certificate provided for by § 11 should be procured, and that it should be a substitute for the evidence of compliance with the provisions of the statute that was required under former acts, and that in a case within the provision of the statute the certificate should be conclusive as to private person's of the right to the corporate existence by the designated corporate name.

The question whether the franchise was improperly obtained, or improvidently granted, may arise in proceedings for a forfeiture in behalf of the public, but it is not open in proceedings by a private person under the Pub. Sts. c. 186, § 17.

But the petitioner fails to show that the respondent did not conform to the statute in taking the name “ Boston Rubber Company.” The only ground stated is, that the name was previously in use by the petitioner. It was not the petitioner’s corporate name, and it was clearly within the authority of the commissioner to approve it. If it was within his discretion to refuse to approve it, this court cannot exercise that discretion. But the petitioner alleges that it used the name “Boston Rubber Company ” before the respondent was incorporated, and that it was known in the trade by that name as well as by the name of “ Boston Rubber Shoe Company.” By the name previously in use by an existing corporation, the statute means the corporate name, and not another name by which the corporation may have been known. A corporation may acquire a right to the exclusive use of another name than its corporate name as a trade name, but not as a corporate name. That is prohibited by law. The object of the statute is not to prevent the fraudulent use of trade names, but to prevent the identity of corporate names. The same provision was inserted in the St. of 1872, c. 217, (Pub. Sts. c. 40, § 17,) which authorized the formation of library corporations, and is generally found in acts authorizing other than trading corporations. See Pub. Sts. c. 115, § 3.

The petition must also show that the petitioner has been injured by the exercise by the respondent of a franchise not conferred by law. The respondent has exercised the franchise for ten years, and the only injury alleged to have been received by the petitioner is the occasional delay of letters and packages addressed to the Boston Rubber Company, but intended for the petitioner. It is alleged that this has not been of vital importance, and that the petitioner contented itself with merely remonstrating, and made no active opposition. The lapse of time would be a sufficient answer if this ground were relied on. The only other injury alleged, and that upon which the petitioner relies, is the anticipated injury to its business from a proposed change in the business of the respondent. It is alleged that the business of the petitioner is the manufacture and sale of rubber boots and shoes, which it is alleged is a different business from that of the respondent; that the respondent has never 'engaged in that business, but is now preparing to do so, and to use its name in the business ; and that it will thereby greatly injure the business of the petitioner. Passing by the objection that it is not the actual, but the threatened use of the- name, that is alleged to cause apprehension of injury and hazard to the petitioner’s interest, it is obvious that this injury is not alleged to be caused by the exercise of the franchise bearing the corporate name, but by the particular manner in which the name may be used.

It is not alleged that injury arises from the existence of the corporate name, but that it will arise from the use of the name in the business of making rubber boots and shoes, in which business the petitioner alleges that it has acquired a right to the name as a trade name or trade-mark. If the respondent should not engage in that business, or should carry it on distinct from its other business, and under a trade name distinct from that of the petitioner, it is not shown that there will be any injury to the petitioner, unless what it has submitted to for ten years, from the continued use by the respondent of its corporate name. The alleged right is that acquired by the petitioner, by contract or otherwise, to prevent the respondent from engaging in the business of manufacturing rubber boots and shoes, or from using its name in that business, and the alleged injury is that the respondent intends to engage in the business, and to use its name in it in competition with and to the injury of the petitioner’s business. The injury is not from using the name as a corporate name, but as a trade name.

Every act of a corporation involves the exercise of its franchise, but the statute does not give to every person injured by the breach of contract or by the wrongful act of a corporation the right to file a petition to test the validity of the franchise exercised by it. It must appear that the exercise of the franchise is itself injurious; the injury must be the direct and necessary result of the exercise of the franchise, and one to which the remedy of exclusion from the franchise is adapted. The only judgment that can be rendered against the-respondent is, that it be perpetually excluded from the franchise, that is, precluded from having a corporate name. The respondent has used its corporate name for ten years, and it has caused no injury to the petitioner of which it can or seeks to avail itself in this proceeding. If the petitioner apprehends injury to its business from an anticipated new use by the respondent of its name in a particular way against the private right of the petitioner, its remedy is to establish the right and secure commensurate remedy by suit, and not, by the extraordinary remedy provided by the statute for usurpation of a franchise, to exclude the respondent wholly from its name, on the ground that it was not conferred by law.

For these reasons, because the certificate is conclusive that the respondent’s name was conferred by law, because the facts show that the name was properly approved, and because the petitioner does not show that its right or interest has been injured or put in jeopardy by the exercise of a franchise, without considering whether the allegations of the petition show any injury to any right of the petitioner, we think that the petition does not show sufficient ground for granting leave to file an information.

Petition dismissed.