American Home Benefit Association, Inc., a Corp. v. United American Benefit Association, Inc., a Corp.

• Decision Date: 12 May 1942
• Docket Number: 7014
• Citation: 63 Idaho 754,125 P.2d 1010
• Parties: AMERICAN HOME BENEFIT ASSOCIATION, INC., a corporation, Appellant, v. UNITED AMERICAN BENEFIT ASSOCIATION, INC., a corporation, Respondent
• Court: Idaho Supreme Court

125 P.2d 1010

63 Idaho 754

AMERICAN HOME BENEFIT ASSOCIATION, INC., a corporation, Appellant, v. UNITED AMERICAN BENEFIT ASSOCIATION, INC., a corporation, Respondent

No. 7014

Supreme Court of Idaho

May 12, 1942

APPEAL from the District Court of the Third Judicial District of the State of Idaho, in and for Ada County. Hon. Chas. F. Koelsch Judge.

Judgment sustaining general demurrer to first cause of action Reversed. Judgment dismissing second cause of action Sustained. Remanded with instructions.

Cause remanded with instructions. Each party to pay its own costs.

Ariel L. Crowley, for Appellant.

The corporate name of any corporation may not be the same as, nor deceptively similar to the name of any other domestic corporation, and the statute expressly provides for injunction to restrain such use. (Section 29-107 I. C. A Subdivisions 2 and 7.)

The determination of deceptive similarity is one of fact, dependent upon the circumstances of each case, and the issue is not one of law. (Fletcher, Cyc. Corporations, Section 2429 (p. 52) and 2429 (p. 56) and cases compiled in notes; Umpqua Broccoli Exchange v. Umpqua Valley Broccoli Growers, 117 Ore. 678, 245 P. 324.)

While there is a general rule that no one may obtain an exclusive right to use of descriptive words or geographical terms as a trademark, the rule is equally well established that a combination of such words, prefixed with the word "American" invokes the law or rule of secondary meanings, and an injunction will lie to restrain a use conflicting with such a name, even though every word in it is of a generic, descriptive or geographical character. ( American Radio Stores, Inc. v. American Radio and Television Stores Corporation, 150 At. 180 (Delaware); In Re American Steel & Wire Co. of New Jersey, 81 F.2d 397.)

In this case the corporate existence as well as the right to do business is subject to private attack for the following reasons:

1. The case is not one of those listed in the special statute as to the powers of the attorney general. (Section 29-157 I. C. A.; Taylor v. Beneficial Protective Association, 60 Idaho 587, 94 P.2d 787.)

2. Under the exceptions pointed out in paragraph 5, supra the plaintiff private corporation being injured has the right to make its present attack. (Indiana Bond Co. v. Ogle, 54 N.E. 407, 72 Am. St. 326.)

Charles F. Reddoch, for Respondent.

A geographical name is not the subject of exclusive appropriation. (18 C. J. S., Sec. 173, Subd. "b," p. 578-9; 13 Am. Jur. Sec. 134, pages 271-2; Michigan Sav. Bank v. Dime Sav. Bank, 162 Mich. , 297, 127 N.W. 364, 139 Am. St. Rep. 558.)

Words merely descriptive of a particular business are not the subject of exclusive appropriation. (Economy Food Products Co. v. Economy Grocery Stores Corporation, 281 Mass. 57, 183 N.E. 49; Federal Securities Co. v. Federal Securities Corporation, 129 Ore. 375, 276 P. 1100, 66 A. L. R. 934.)

The state or some designated public office is the proper party to maintain an action for the forfeiture of a corporate franchise. (I. C. A. Sec. 29-157; Chap. 6, Title 9, I. C. A.; 19 C. J. S. Sec. 1698, Subd. (2), p. 1464; 13 Am. Jur. Sec. 1328, p. 1182; Taylor v. Beneficial Protection Association, 60 Idaho 587, 94 P.2d 787.)

BUDGE, J. Givens, C. J., and Morgan, Holden, and Ailshie, JJ., concur.

OPINION

BUDGE, J.

--Appellant, American Home Benefit Association, Inc., is a corporation organized and existing under the provisions of Chapter 110, p. 171, 1933 Session Laws, as amended by Chapter 114, p. 201, 1941 Session Laws, and has its home office in Boise. It became a corporation in September, 1933. Respondent, United American Benefit Association, Inc., is a corporation organized under I. C. A., Chapter 10 Title 29 (29-1001-5), which is a non-profit co-operative statute. It was created in November, 1939, more than six years after the creation of appellant corporation. Appellant in its complaint sets out two causes of action. In its first cause of action, it attacks the deceptively similar name of respondent corporation and seeks to enjoin and restrain said corporation from the use of the name "United American Benefit Association, Inc.," under the provisions of I. C. A. section 29-107. In its second cause of action, appellant seeks to enjoin and restrain respondent from further doing business as a death benefit association under any name. To appellant's complaint, respondent interposed and the court sustained a general demurrer to the first cause of action upon the ground that the facts therein alleged did not constitute a cause of action. To its second cause of action, respondent interposed and the court sustained a special demurrer on the ground that appellant was without legal capacity to sue upon, or maintain, the second cause of action as set forth in said complaint.

Respondent also interposed a general demurrer to both causes of action and further demurred on the ground "That there is a defect of parties plaintiff, in that the State of Idaho is the only proper and necessary party for the prosecution of the second cause of action set forth in said complaint. That several causes of action have been improperly united, in that, the second cause of action asserts that the defendant is improperly exercising the functions of a benefit association, which has no connection with the first cause of action asserted by it, nor any relation to the injunctive relief sought by the plaintiff." Respondent also interposed a motion to strike the second cause of action and subdivision 2 of the prayer for the reason that the same are sham, irrelevant and immaterial. The court concluded that having sustained the general demurrer to the first cause of action and the special demurrer to the second cause of action as herein indicated that there was no necessity of passing upon the other grounds of demurrer or the motion to strike. Appellant refused to plead further whereupon the court entered judgment dismissing the action, from which judgment this appeal is prosecuted.

We will discuss the two causes of action separately, directing our attention to appellant's first cause of action which presents the sole question of whether or not the complaint is vulnerable to a general demurrer in that it fails to state facts sufficient to constitute a cause of action. Keeping in mind the universal rule that a demurrer is an admission of the truth of the facts well pleaded and all intendments and inferences that may reasonably be drawn therefrom, and that the facts will be construed in the light most favorable to the plaintiff, we call attention to the allegations of the complaint.

Among other things, are alleged: The corporate existence of appellant and respondent, the respective dates of their incorporation, their corporate names, the statutes under which they were incorporated, and

"The said name 'United American Benefit Association, Inc.' is deceptively similar to the name of the plaintiff corporation 'American Home Benefit Association, Inc.,' and by reason of the said deceptive similarity of names the said defendant corporation's mail is and has been frequently delivered to the plaintiff; its policy holders have and do now frequently mistake the plaintiff for the defendant; complaints lodged with the Department of Insurance of the State of Idaho, arising under the policies issued by the said defendant have been referred to the plaintiff upon the mistaken belief of the Commissioner of Insurance, induced by the said deceptive similarity of names, that the policies involved were issued by this plaintiff; the agents of the plaintiff have frequently been informed by prospective members of the plaintiff association, and have insisted upon such membership until examination of their policies has disclosed that such prospective members have, under the mistaken assumption, induced by the said deceptive similarity of names, purchased policies issued by the defendant; the general public has been misled and deceived by said deceptive similarity of names, and in numerous and divers ways and details the plaintiff has suffered inconvenience, annoyance, embarrassment and damaging invasion of its corporate right and business operations, its reputation and standing by the defendant's adoption and continued use of said deceptively similar name.

"The said corporate name was adopted without the knowledge, permission or consent of the plaintiff; and after the plaintiff became aware of such corporate existence, the plaintiff lodged with the Bureau of Insurance of the State of Idaho, a written protest against the qualification of said corporation under Chapter 110, 1933 Session Laws of Idaho, under said deceptively similar name, and made repeated demands upon the said defendant to desist from use of said name and change its name to some name not deceptively similar. Nevertheless, the said defendant has retained the said corporate name and continued the use thereof, and has thereby wrongfully and unlawfully availed itself of the good will and public esteem built up over a long period of years and publicly imputed to the American Home Benefit Association, Inc."

"This action is brought by authority of Section 29-107, I. C. A."

"The assumption and use of said deceptively similar corporate name by the defendant violated and now violates the provisions of Sections 29-1002 and 29-107 I. C. A., and invades the prior and subsisting right of the plaintiff acquired upon its organization years before the organization of the defendant; and further use of the said deceptively similar corporate name should be enjoined and forbidden by this court."

Respondent in support of its contention that the complaint fails to state facts sufficient to constitute a cause of action urges that appellant cannot...