Holmes, Booth & Haydens v. Holmes, Booth & Atwood Manufacturing Co.

37 Conn. 278 | Conn. | 1870

Carpenter, J.

In 1853 the plaintiff corporation was organized under the joint stock laws of this state, taking the name of four of its principal corporators or promoters. Two of these, Israel Holmes and John C. Booth, whose names appear in the corporate title, by long experience had acquired considerable skill and reputation in the manufacture of brass, the business for which the corporation was organized. Thus organized, the corporation established and carried on a successful business, and their corporate name acquired a valuable reputation in the public markets of the country. There were but five original stockholders. The amount of the capital stock, and the number of shares owned by each, do not appear ; but at the time of the organization of the defendant corporation, February 9th, 1869, the stock consisted of six-icon thousand shares, distributed among fifty-one stockholders. Six of the eight corporators in the new corporation were stockholders in the old, and four of them were directors, one of whom was president until a short time before. The respondents organized under the corporate title of “ The Holmes, Booth & Atwood Manufacturing Company,” for the purpose of carrying on, and carried on, the same business as that dono hjr the petitioners.

Their place of business was in the same town, and their depots in Now York and Boston were in the same streets. The similarity of the names of the two companies resulted in confusion of their correspondence, mistakes in tire delivery of orders, goods, &c., and it is expressly found that, “ by reason of this similarity, dealers in the market are likely to be confused and misled into the belief that the companies are ihc same.” Other facts of less importance appear, but the above embraces all the material facts in the case.

Upon these facts the petitioners pray that the respondents may be restrained from the use of their corporate name, also from using the words “Holmes, Booth,” or the words “ Holmes” or “ Booth,” in the name, title, or style of the corporation, or any words or titles so expressed as to be in any degree an imitation of the corporate name of the petitioners.

The petitioners insist that if the respondents are permitted to continue their business as heretofore, their goods will be sold in market as the goods of the petitioners. This claim is not seriously controverted, and we think it is a fair inference from the facts found. That any name, symbol or device, adopted by an individual, corporation or business firm, for the purpose of designating the origin and ownership of goods manufactured by them, will be protected as a trade-mark is well settled law. The name of a corporation or partnership, accomplishing the same object, will be protected upon the same principle. This is not disputed. Indeed the respondents seem to admit that the petitioners are entitled to the relief sought, unless they can protect themselves in the use of their corporate name on one of three several grounds.

1. That the petitioners, having taken their name from some of their principal stockholders, could acquire no exclusive right to the use of that name as against another corporation, subsequently formed, embracing those same stockholders.

2. That there is no actual fraud found, and no purpose or intention on the part of the respondents to use their name to the prejudice of the petitioners.

8. That the petitioners’ name is itself a misrepresentation, and calculated to deceive the trade.

The case will be considered with reference to these objections.

1. In respect to the names.

The argument of the respondents’ counsel upon this point proves too much. If sound it would establish the proposition that if the Haydens, or one of them, had united in forming the respondent corporation, they might have taken the petitioners’ name verlatim, and the petitioners would have had no legal ground of complaint. Indeed this result is necessarily involved in the statement of the proposition. Such a claim, in terms, certainly would not be seriously made. There can be no distinction in principle between talcing the entire name and so much of it as will mislead dealers into the belief that the two corporations are the same. The mischief in both cases is of precisely the same character, differing only in degree.

It will be well to observe that, the controversy in this case is between two corporations. Each party owes its existence to the law. The law authorizes, sanctions, and protects every act done, and every step taken, in pursuance of law, either in the process of organization, or in the course of its business. It is true all the details are not prescribed in advance. Certain general powers are conferred, which are applicable alike to all corporations ; such as the power to hold property, to sue and be sued, and the like. So also of certain requisites and forms, such as the par value of each share of stock, the publication of notice, and recording the articles of association, &c. Other powers and privileges are left in a measure to the discretion of the parties interested. Among these are the amount of capital stock, the location, the business to be transacted, and the name. When the corporators have once exercised their power in respect to these matters, the law declares the capital stock, the location, the business, and the name, to be as thus determined, until changed in pursuance of law. In respect to these matters the corporation is as much the creature of, and subject to, and protected by, the law, as in the former.

The law having authorized the selection of a name, and having declared the name so selected to be the name of the corporation, we see no reason why the law should not protect the corporation in the use of that name, upon the same principle, and to the same extent, that individuals are protected in the use of trade-marks. Hence it necessarily follows that corporations in -the exercise of discretionary powers conferred by the statute, must so exercise them as not to infringe upon the established legal rights of others.

But it is contended, conceding that if John Boe and Richard Roe had formed the defendant corporation they would have had no right to use the petitioners’ name, that the petitioners, by incorporating into their name the names of some of the principal corporators, have forfeited their right to this •protection, for the reason that t^ey coul* not thereby so absorb the names of Israel Holmes aj-id?John C. Booth as to prevent them from imparting the right to use their names to any other corporation or business_firm with which' they might become connected. We state the claim in this form because, as it seems to us, in this form only has it any application to the present case. We do not wish to be understood as deciding that the respondents may not, in any legitimate way, indicate to the trade that their business had the benefit of the experience, skill and reputation of these gentlemen. But the simple question is, have they^a rigid to do it by a substantial use of the petitioners’ name ?^Yln answering this question we shall answer that Mr. Holmes and Mr. Booth, in the first instance, had a perfect right to prohibit the use of their names by the petitioners. If so, presumptively at least, they assented to such use. T-he^ subscribed to the capital stock with the knowledge, if not upon the condition, that the corporation would thus hold out to' the world that their skill and experience were involved'in the enterprise. The same consideration may have influenced others to subscribe to the stock originally or to purchase stock subsequently. The value of the stock may have depended upon it. There is involved in the case, therefore, the element of a contract or an estoppel. If these parties allowed the use of their names, thereby receiving, as they might have done, and probably did, a consideration in the enhanced value of their stock, why does not the law imply an agreement that the name shall continue so long as the corporation shall exist ? Or, if they, in connection with others, held out to the world, by the use of their names, that the corporation was entitled to the benefit of their skill and experience, what moral, equitable, or legal right have they now to withdraw, or otherwise impair, the right to the use of their names ? .

Much of the argument in behalf of the respondents is based upon the analogies between partnerships and corporations. We concede the existence of the analogies, hut deny that they strengthen the respondents’ position.

The principle we have been contending for should, under similar circumstances, be applied to partnerships and corporations alike. It is only when the circumstances change that the principle becomes inapplicable. A person whose name appears in the firm name of a partnership, in the absence of anything raising a contrary presumption, will be presumed to have agreed that it should so continue during the existence of the partnership. If, before the partnership expires, he merely sells his interest in the concern to a stranger, he conveys to the purchaser a right in the use of his name during the remainder of the term. If at the expiration of the term he sells his interest, with an agreement, express or implied, that the business shall thereafter be continued under the same name, the same rule applies. At the dissolution of the partnership, the partners revert back to their individual rigid s and responsibilities, and each partner, in the absence of any agreement to the contrary, has an absolute right to control the use of his own name. In all these’ respects there is no difference between a corporation and a partnership.

But the difficulty with the argument is, that the plaintiff corporation still exists, and the rights which others have acquired in the use of its corporate name are still outstanding. Until its dissolution therefore, Holmes and Booth must use their own' names subject to the rights of the petitioners, unless relieved of that inconvenience by their consent.

2. Fraud.

" It is said that the finding in this case failed to substantiate the allegation of fraud in the petition, and an intent on the part of the respondents, by simulating the petitioners’ name, to draw away their customers. There are cases which seem to establish the proposition that neither fraud nor an actual intention to do the injury complained of is essential -to the petitioners’ case. Millington v. Fox, 3 Mylne & Craig, 338; Cartier v. Carlisle, 31 Beavan, 203; Davis v. Kendall, 2 R. Isl.,566.

The ground on which courts of equity afford relief in this class of cases, is the injury to the party aggrieved, and the imposition upon the public by causing them to believe that the goods of one man or firm are the production of another. The existence of these consequences does not necessarily depend upon the question whether fraud or an evil intent does or does not exist. The quo animo, therefore, would seem to be an immaterial enquiry.^/

Perhaps • however it is inexpedient to declare the broad proposition deduciblc from those cases as the law of this state. Every man, acting intelligently, will be presumed to intend the necessary consequences of his acts. Charton v. Douglass, 23 Jurist, 887; S. C., Johnson’s Rep., (Eng.,) 174; S. C., 22 Law Reporter, 172. The same presumption applies, with less force perhaps, to the probable and ordinary consequences. The application of this rule to the present case can do no injustice. Most of the respondents’ corpora-tors were officers, stockholders and employees of the plaintiff ■corporation. One after another resigned his office or position, and sold out his stock, and secretly organized and put in operation a rival company, which bought the entire property of'a similar corporation in a neighboring town, and located themselves permanently in the same town with the petitioners, established their depots for the sale of their goods in New York and Boston as near as practicable to the depots of the petitioners, and assumed a name so nearly like that of the petitioners as to induce the belief that the two companies were the same. From these facts the intention to benefit themselves at the expense of injuring the petitioners, so far as such intention is essential, may be legitimately inferred.

3. Fraud or misrepresentation of the petitioners.

This objection is twofold. 1. That the petitioners’ name imports a partnership, rather than a corporation. 2. That it is equivalent to a representation that they have the benefit of the .skill and experience of Holmes and Booth.

With regard to the first, rve cannot conceive that it makes much difference to the public, who deal with them, or purchase their wares, whether the petitioners are a corporation or a partnership. The name they selected was in strict conformity to the law as it existed at the time. And we see nothing in the subsequent statute, requiring the name of joint stock corporations to commence with the word “ The,” and end with the word “ Company,” that makes the retention of that name illegal or improper. Strictly speaking it is not a misrepresentation at all; but if in any sense it may be regarded in that light, it is not a misrepresentation that affects trade or business in such a manner as to render it inequitable for a court of equity to grant the relief sought. So too in regard to the second branch of the objection. We do not consider that the corporate name imports a declaration that the individuals, whose names appear therein, will always remain in the employment of the corporation. Perpetuity is s prominent' feature of corporations. Ordinarily, they are organized, not for a lifetime merely, but for generations and perhaps centuries. It cannot be expected, therefore, that any one individual will remain in the employment of. a corporation during the term of its possible continuance. On the other hand, it was doubtless true that the petitioners’ name was originally adopted for the purpose claimed. It probably served to introduce their wares into the markets of the world, and enabled them to establish a profitable and paying business. But every one must understand that the connection of these men with the corporation, in any capacity whatever, was temporary in its nature, and subject to the ordinary changes and vicissitudes of human life. Their interest in the corporation might at any time cease. They might decline further employment, and sickness or death might incapacitate them for further service. These are contingencies which must have been contemplated.

For these reasons we advise the Superior Court to grant the prayer of the petitioners.

In this opinion the other judges concurred; except Seymour, J., who having been counsel in the case when at the bar, did not sit.