Beneficial Loan Corp. v. Personal Loan & Finance Corp.
| Decision Date | 30 October 1951 |
| Docket Number | Civ. A. No. 2322. |
| Parties | BENEFICIAL LOAN CORP. et al. v. PERSONAL LOAN & FINANCE CORP. |
| Court | U.S. District Court — Eastern District of Arkansas |
COPYRIGHT MATERIAL OMITTED
Wright, Harrison, Lindsey & Upton, by Edward L. Wright, Little Rock, Ark., for plaintiffs.
House, Moses & Holmes, by Thomas C. Trimble, Jr., Little Rock, Ark., Ewing, Laughlin & Watson, by James W. Watson, Memphis, Tenn., for defendant.
This cause having, by agreement of the parties, been tried to the Court at the City of Hope, Arkansas, upon the pleadings, pretrial briefs, opening statements of counsel, the testimony of witnesses taken ore tenus before the bar of the Court and the exhibits thereto, and oral argument, and the Court, being fully advised doth make the following Findings of Fact, Conclusions of Law, and Comment thereon, to-wit:
A. Findings of Fact.
The plaintiffs herein are the following corporations: Beneficial Loan Corporation (hereinafter sometimes called "Beneficial"); Personal Finance Company of Little Rock; Personal Finance Company of Fort Smith; Personal Finance Company of Texarkana; Personal Finance Company of El Dorado; Personal Finance Company of Pine Bluff; Personal Finance Company of Jonesboro; and Personal Finance Company of Arkansas. All of the plaintiffs, except Personal Finance Company of Arkansas, are corporations organized and existing under the laws of the State of Delaware; Personal Finance Company of Arkansas is a corporation organized and existing under the laws of the State of Arkansas. The plaintiffs, with the exception of Beneficial Loan Corporation, will be sometimes hereinafter referred to as the "operating plaintiffs". All of the operating plaintiffs are wholly owned subsidiaries of Beneficial Loan Corporation; these operating plaintiffs, together with other corporations wholly owned by Beneficial and having the words "Personal Finance Company" as an integral part of their corporate names, comprise a group or chain of "small loan companies" doing business in 36 states of the Union and in the Dominion of Canada. This chain will at times be referred to as the "Beneficial Group".
The defendant herein is a corporation organized and doing business under the laws of the State of Tennessee; it is likewise engaged in the "small loan" business.
The amount in controversy in this cause, exclusive of interest and costs, exceeds the sum of $3,000.
All operating plaintiffs, except Personal Finance Company of Arkansas, have qualified to do business in Arkansas as foreign corporations, and all of them have likewise been licensed by the Arkansas State Bank Department to engage in the "small loan" business in Arkansas under the terms of Act 203 of the 1951 General Assembly of the State of Arkansas. All of the operating plaintiffs applied to the State Bank Department on April 6, 1951, for authority to engage in the small loan business in Arkansas under the terms of said Act; the dates that such licenses were issued and the dates upon which they actually commenced business in Arkansas are set forth in the following table:
Date of Date of Opening
Name License of Office Place
Personal Finance Company
of Arkansas 5-31-51 6-4-51 North Little Rock
Personal Finance Company
of Little Rock 5-31-51 6-4-51 Little Rock
Personal Finance Company
of Pine Bluff 5-31-51 6-4-51 Pine Bluff
Personal Finance Company
of Fort Smith 6-6-51 6-11-51 Fort Smith
Personal Finance Company
of Jonesboro 6-6-51 6-18-51 Jonesboro
Personal Finance Company
of El Dorado 6-21-51 6-25-51 El Dorado
Personal Finance Company
of Texarkana 6-29-51 8-6-51 Texarkana
All of the operating plaintiffs after opening their offices, as above set forth, did business continuously between the respective dates of opening and the filing of this suit on August 24, 1951, and have continuously done business since said time at their respective locations.
The defendant qualified to do business in the State as a foreign corporation on June 1, 1951; it was licensed under Act 203 of 1951 on August 8, 1951, having applied for such a license on July 19, 1951. Prior to the filing of this action, the defendant had obtained an office in the City of Little Rock where it proposes to do a small loan business. It has no plans at the present time to engage in such business in Arkansas outside of Pulaski County, in which the cities of Little Rock and North Little Rock are located.
3a.
At the time this suit was filed the defendant had not commenced actual operations in Arkansas, and upon the filing of the suit it forbore such operations pending the disposition of this litigation. It has engaged in the small loan business in Memphis, Tennessee since January, 1948.
The operating plaintiffs, on the one hand, and the defendant, on the other hand, are engaged in the business of making what are known as "small" or "personal" loans. Such loans, varying in amount, are made to private individuals, to be repaid in installments which usually fall due monthly and are usually equal in amount; the proceeds of such loans are used by the borrowers for their own purposes. Such loans are usually made to salaried people, wage earners, and persons with fixed incomes, who are considered to be able and willing to pay the installments as they fall due.
The small loan business is essentially local in its nature and the largest area which can be feasibly served by a given office is a city, or at most, a city and the surrounding county. Because of the local character of the business, the area of direct competition between the plaintiffs and the defendant in Arkansas is limited to Pulaski County, Arkansas.
The plaintiffs brought this action to enjoin the defendant from operating in Arkansas under its corporate title, "Personal Loan & Finance Corporation", and to further enjoin it from using the word "personal" in association with the words "loan" or "finance" in its advertising and literature. The plaintiffs contend that by reason of the extensive operations and advertising of the Beneficial Group of small loan companies, nationally and outside of Arkansas, prior to the dates upon which the operating plaintiffs commenced business in Arkansas, as set forth above, and by further reason of the operations and advertising of the operating plaintiffs since those dates and prior to the filing of this suit, the Beneficial Group, including the operating plaintiffs, has become identified in the minds of the borrowing public in Arkansas with honesty and fair dealing in the small loan field; that said Group has become known to said borrowing public as "Personal"; that the name "Personal", standing alone, and the name "Personal", when used in association with the words "finance" and "loans", separately or together, have become so intimately identified in the mind of the borrowing public with the Beneficial Group, including the operating plaintiffs, that they have acquired a "secondary meaning" in Arkansas, which identifies the operating plaintiffs to the borrowing public; that said word having acquired such a secondary meaning, they have a property right therein which a court of equity will protect from unfair appropriation by another, and that if the defendant is permitted to operate in Arkansas under its corporate name, or to use the word "personal" in association with "loans" or "finance" in its literature and advertising, the borrowing public in Arkansas will be confused and will do business with the defendant under the impression that it is doing business with one of the operating plaintiffs, and that the plaintiffs will be irreparably damaged thereby. The prayer of the complaint is that the defendant be enjoined from operating in Arkansas under its corporate title "Personal Loan & Finance Corporation", and that it be further enjoined from using the word "personal" in association with "loans" and "finance" in its advertising and literature.
The defendant, on the other hand, denies that the word "personal" has acquired a secondary meaning in Arkansas as contended by the plaintiffs, and denies that plaintiffs are entitled to the relief sought. By way of counterclaim, it contends that it has been engaged in the small loan business in Memphis, Tennessee since 1948, that it has advertised extensively in Memphis newspapers which have a wide circulation in Arkansas, and particularly in Eastern Arkansas, and that its operations in Memphis and its advertising have invested the word "personal" with a secondary meaning in its favor; it prays that the operating plaintiffs be restrained from doing business under their corporate titles, and that they be further restrained from using the words "personal" and "finance" in relation to loans in their advertising.
Neither plaintiffs nor defendant have shown by a preponderance of the evidence that on the date of the filing of the complaint herein or on the date of the filing of the cross complaint the word "personal", when used in the corporate name of a small loan company or when used in association with "loans" and "finance" in the advertising and literature of such a company, had acquired any secondary meaning in Arkansas generally, or in Pulaski County in particular, such as would identify in the minds of the borrowing public either the operating plaintiffs or the defendant. On the other hand, as of those dates, the word "personal" when so used, had no meaning in Arkansas except its primary meaning, which is generic and descriptive of the business in which not only the parties to this action but also many other persons and corporations are engaged.
Since the filing of this suit, however,...
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