Bank of Arizona v. The Arizona Central Bank

• Decision Date: 06 June 1932
• Docket Number: Civil 3175
• Citation: 11 P.2d 953,40 Ariz. 320
• Parties: THE BANK OF ARIZONA, a Banking Corporation, Appellant, v. THE ARIZONA CENTRAL BANK, a Banking Corporation Doing Business as THE ARIZONA BANK, and THE ARIZONA BANK, a Banking Corporation, Appellees
• Court: Arizona Supreme Court

11 P.2d 953

40 Ariz. 320

THE BANK OF ARIZONA, a Banking Corporation, Appellant, v. THE ARIZONA CENTRAL BANK, a Banking Corporation Doing Business as THE ARIZONA BANK, and THE ARIZONA BANK, a Banking Corporation, Appellees

Civil No. 3175

Supreme Court of Arizona

June 6, 1932

APPEAL from a judgment of the Superior Court of the County of Maricopa.Joseph S. Jenckes, Judge.Judgment affirmed.

Messrs Favour & Baker, for Appellant.

Messrs Moore & Shimmel, for Appellees.

OPINION

LOCKWOOD, J.

This is an action by the Bank of Arizona, a banking corporation hereinafter called plaintiff, against The Arizona Bank, a banking corporation, hereinafter called defendant, seeking to enjoin the latter from using in any manner the corporate name "The Arizona Bank" or any corporate name containing the words "Bank of Arizona," not modified by some other distinguishing words.

The case was tried to the court without a jury and the relief sought for denied, whereupon the matter was brought before us for review.

This suit is, in substance, one for the purpose of restraining unfair competition, and is governed by the rules applying to such an action.The unfair competition alleged is the use by defendant in its banking business of a name so similar to that of plaintiff that confusion will arise among the customers, present and prospective, of the two banks, so as to deprive plaintiff of the valuable good will attached to the use of its corporate name and to transfer a large part of such good will to defendant.

The question of unfair competition has been before the courts many times, and much has been said in regard to the nature of the action and the essentials thereof.We think as good an explanation as any is found in the recent case of Federal Securities Co. v. Federal Securities Corp.,129 Or. 375, 66 A.L.R. 934, 276 P. 1100, which was also to enjoin the use of a corporate name.After reviewing a large number of the leading casesthe court said:

"We believe that they justify the conclusion that primarily it is not the name which is protected, but the business; the latter is guarded against injury through a fraudulent traffic in its name by later comers.The business will be protected whether conducted in the name of an individual or that of a corporation; whether the name is fanciful or not.But, to justify relief, the circumstances must be such that it appears that the business will suffer from a deceptive use of its name, or that by reason of a similar act of unfair competition, the public will be imposed upon. . . .

"The ultimate question is always whether tradeis being unfairly diverted, and whether the public is being cheated into the purchase of something which it is not in fact getting; the courts interfere solely to prevent deception.The law recognizes a right of property in a name, and generally permits each to conduct his business in his own name; these rights are subject to the limitation that they shall not be so dishonestly exercised that the public will be misled as to the identity of a business or the source of a piece of merchandise.The sole distinction between a corporate and an individual name, in the application of these principles, is that a second incorporator comes to the name not unconsciously, but by choice, and that he need not select the name of an already well-established business.Should he do so, he thereby will supply evidence that he intends to palm off his goods as those of the first appropriator.And, as is suggested in Newby v. Oregon Cent. Ry. Co., supra[Fed. Cas. No. 10144, Deady, 609], 'although not technically a trade-mark, the authorities are in favor of holding that a corporate name deserves the same consideration as a trade-mark.'The injury guarded against is two-fold: (1) Injury to the public by having palmed off upon it a spurious article believing it to be the product of the old established firm in which it reposes confidence; (2) injury to the defrauded corporation by having its trade diverted to the newcomer."(Italics ours.)

It will be noted that there are two injuries to be guarded against, one to the public and the other to the defrauded corporation.There is no complaint in the present case that the general public is being injured.The wrong set up is the injury to the plaintiff.

With these general principles before us, let us consider the facts in the case at bar, for it is obvious on a careful examination of the cases that there is usually very little dispute as to the law, the real argument being over its applicability to the facts.

Plaintiff herein was incorporated under the laws of the territory of Arizona in 1877, and in 1927 its charter was renewed for a further period of twenty-five years.Since the time of its incorporation it has been carrying on a general banking and trust business in Prescott, Arizona, and has for years maintained branches in Jerome and Clarkdale.Approximately ninety-four per cent. of its depositors live in Yavapai county, while the other six per cent. are scattered all over the country, most of them, however, presumably living in Arizona.A large number of these outside depositors are persons who opened their deposits while residents of Yavapai county, and, when they moved away, for various reasons, continued their old banking relations.Through its many years of successful operation plaintiff has built up a reputation in banking circles of the highest character, which is naturally of great value to it, and is a valuable property right.

Defendant was incorporated approximately ten years after the incorporation of plaintiff under the name of "The Arizona Central Bank."Its original place of business was Flagstaff, Arizona, but it later established branches in McNary, Williams, Kingman and Oatman.In January, 1930, the control of defendant changed hands and it moved its principal place of business and banking office to Phoenix, maintaining all its existing branches and also adding new ones at Chandler and Gilbert.In accordance with the methods provided by law, defendant, after its removal, changed its corporate name from "The Arizona Central Bank" to "The Arizona Bank."The reason for dropping the word "Central" was that some years ago there was a Central Bank in Phoenix which failed under rather discreditable circumstances, and the officers of defendant wished to avoid any possibility of its being confused in the minds of the public with the defunct bank.

When the officers of plaintiff learned of the proposed change of name, they protested in every possible manner to the officers of defendant and to the corporation commission, but without avail, and, after the change in name was approved by the corporation commission, but before any place of business in Phoenix was opened by defendant, this action was promptly filed.

There was a large amount of evidence offered by both plaintiff and defendant, which we shall consider at the proper time.The first point raised by defendant is that in actions of this kind it is necessary that actual damages be shown by the plaintiff, and that, since at the time of the filing of the action the former had not yet commenced the use of its new name, the action was prematurely brought.This particular question is discussed in the case of Standard Oil Company of Maine v. Standard Oil Company of New York,(C.C.A...