169 F.2d 153 (7th Cir. 1948), 9407, Consumers Petroleum Co. v. Consumers Co. of Illinois

Docket Nº:9407.
Citation:169 F.2d 153, 78 U.S.P.Q. 227
Party Name:CONSUMERS PETROLEUM CO. v. CONSUMERS CO. OF ILLINOIS.
Case Date:July 16, 1948
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 153

169 F.2d 153 (7th Cir. 1948)

78 U.S.P.Q. 227

CONSUMERS PETROLEUM CO.

v.

CONSUMERS CO. OF ILLINOIS.

No. 9407.

United States Court of Appeals, Seventh Circuit.

July 16, 1948

Rehearing Denied Aug. 19, 1948.

Page 154

Joseph B. Fleming, Carl S. Lloyd, Lloyd M. Bowden, and Kirkland, Fleming, Green, Martin & Ellis, all of Chicago, Ill., for appellee.

The word 'Consumers' is a common word and affords only a limited protection in contrast with arbitrary, fanciful and distinctive words.

The defendant engaged in the sale of solid fuels under name of 'Consumers Company of Illinois' acquired no property right in trade name 'Consumers' as applied to fuel oil, where it did not commence selling fuel oil until after plaintiff had commenced selling fuel oil under name 'Consumers Petroleum Company'.

A person or corporation can acquire a property right in a trade mark or trade name only by use of such mark or name in connection with goods of the same descriptive class.

The mere adoption and use of words in advertisements, circulars and price lists and on signs and stationery gives no exclusive right to their use.

Where defendant engaged in selling solid fuels under name of 'Consumers Company of Illinois' made no protest when plaintiff commenced using name 'Consumers' in connection with its fuel oil business, defendant thereby abandoned right to use the name in connection with fuel oil business, and its silence for many years constituted recognition of right of plaintiff to use name.

The assignee of corporate name 'Consumers Company' assigned in connection with reorganization of former company acquired same right to use trade name 'Consumers' as that possessed by its predecessor.

Where similarity of names results in confusion as to origin or products it is immaterial whether such names be treated as trade marks or trade names.

Solid fuels, such as coal and wood, which defendant was selling under name 'Consumers Company' when plaintiff commenced selling fuel oil were not of same descriptive class as fuel oil so as to preclude plaintiff from adopting name of 'Consumers Petroleum Company'.

The fact that defendant under its charter had right to sell fuel oil as well as solid fuels did not give it right to commence selling such oil, even under its own name, where such name had already been adopted by another company for sale of fuel oil. Id.

Where defendant had used name 'Consumers' only in connection with sale of solid fuels prior to incorporation of plaintiff under name 'Consumers Petroleum Company' for sale of fuel oil, action of defendant several years later in commencing to sell fuel oil violated plaintiff's right to use of trade name 'Consumers' for fuel oil and amounted to unfair competition. Id.

Where first fuel oil business conducted by defendant for about 11 years was under trade names of another oil company, plaintiff fuel oil company was not then harmed and it was not guilty of laches in delaying several years before bringing action to enjoin defendant from thereafter using name 'Consumers' in selling fuel oil, in view of timely notice protesting use of name.

The fact that plaintiff was entitled to enjoin defendant from unfair competition in use of a trade name did not entitle plaintiff to a monetary award as a matter of course.

The plaintiff, although entitled to enjoin defendant's use of trade name leading to confusion, was not entitled to a monetary award where defendant had not been guilty of fraud and apparently acted in good faith. Id.

Before MAJOR and MINTON, Circuit Judges, and LINDLEY, District Judge.

Page 155

MAJOR, Circuit Judge.

This action was brought by Consumers Petroleum Company against Consumers Company of Illinois to enjoin the latter from employing the name 'Consumers' in the business of marketing fuel oils in the Chicago metropolitan area, and for an accounting. Plaintiff was incorporated under the laws of the State of Illinois on December 28, 1925, and was authorized to 'buy, sell, manufacture, and deal in petroleum and its by-products * * * .' Since that time it has been engaged in the business of marketing petroleum and its byProducts, particularly fuel oils, on a large scale in the Chicago and Cook County areas under the name 'Consumers' and its corporate name 'Consumers Petroleum Company, ' as trade names.

Defendant was incorporated under the laws of the State of Deleware in 1937, and was authorized 'to buy, sell, and generally deal in and trade with at wholesale and retail, import and export, coal, coke, wood and other fuel or combustible material of every nature and description.' Defendant was incorporated subsequent to and as a result of a corporate reorganization proceeding instituted in the United States District Court in March, 1941, in which an Illinois corporation by the name of Consumers Company was the debtor. The plan of reorganization directed the trustees to convey, assign, transfer and deliver all of the assets of the debtor corporation, 'including good will and the right to use their respective corporate names, ' to the new corporation to be organized. On February 27, 1937, the trustees by assignment in writing sold, assigned and quit claimed all of the property and assets of the debtor corporation and its subsidiaries to defendant, including 'trade marks, trade names, inventories, inventions and good will, together with any right to use the respective corporate names of the assignors.'

Defendant's predecessor (sometimes referred to as the old or original Consumers Company) was organized in 1913 as the result of a merger of the Knickerbocker Ice Company with the City Fuel Company. The former was engaged in the ice business and the latter in the coal business. It was authorized 'to deal at wholesale and retail in coal, coke, wood and other fuel of all kinds, * * * and engage in the * * * sale of all articles connected with the business of dealing in coal and other fuel.'

The theory of the plaintiff embodied in its complaint and argument is that it has continuously engaged solely in the business of selling and distributing fuel oil in the Chicago area since 1925, the date of its incorporation, under its trade names of 'Consumers' and 'Consumers Petroleum Company, ' and during such time it has spent large sums of money in promoting and advertising its business under such trade names, and having first utilized said names in such business, it is entitled to their exclusive use in connection therewith. Further, it is claimed that the defendant subsequently appropriated the trade name 'Consumers' in the sale and distribution of fuel oil and that as a result the public has been confused by such use, which constitutes unfair competition and resultant damages to plaintiff's business, good will and reputation. The defendant denies that it wrongfully appropriated the trade name 'Consumers' in connection with the sale and distribution of fuel oil, in fact, its theory is that it had a right to utilize this trade name in connection with the sale of fuel oils since the incorporation of its predecessor in 1913, and that the appropriation of such trade name by plaintiff in 1925 was wrongful. Defendant does not contend that it was engaged in the fuel oil business in 1925, but, as alleged in one of its counter-claims, that the plaintiff from the inception of its business has 'been charged with knowledge that Consumers Company, defendant's predecessor, might at any time commerce to sell fuel oils in addition to coal, coke and other fuel.'

Confusion on the part of the buying public as between plaintiff and defendant as to the source of fuel oils purchased or sought to be purchased was charged in both the complaint and in defendant's counter-claims. Each side, however, disclaims responsibility for the confusion and each asserts that it was the result of the wrongful act of the other in appropriating and using the trade

Page 156

name 'Consumers' in connection with the sale and distribution of fuel oil.

A Master in Chancery to whom the cause was referred heard and considered a large amount of both oral and documentary evidence, made a voluminous report, thoroughly analyzed the pleadings, the theories of the respective parties, the law applicable thereto, and recommended that the issues be decided in favor of the plaintiff and against the defendant. On exceptions to the Master's report, the court refused to follow the Master's recommendation, adopted its own findings of fact and concluded as a matter of law that the defendant had a right to engage in the fuel oil business on its own account under its corporate name, and that neither this nor any other act of defendant constituted unfair competition with plaintiff; that each party was guilty of laches so as to bar all relief sought by each party against the other; that plaintiff was also barred estoppel; that the theory of damages adopted by the Master was without foundation in law or fact; that plaintiff was in equity with unclean hands; that neither party was entitled to relief, and that the complaint and counter-claims should be dismissed.

Some of the numerous questions presented may be disposed of in summary fashion. Jurisdiction was based upon diversity of citizenship. The court expressed the view that it was without jurisdiction because the requisite amount was not involved. Neither side attempts to support this view as to want of jurisdiction, and we think it was erroneous. Moreover, the court, while expressing this view as to lack of jurisdiction, proceeded to decide the case on its merits.

Plaintiff attempts to differentiate between the rights of the defendant with reference to the use of the trade name in controversy and that of its predecessor corporation. Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., 142 Ill. 494, 504, 509, 30 N.E. 339, is cited in support of this contention. The wording of the assignment in the Hazelton case is quite different from that...

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