Budget System Inc. v. Budget Loan & Finance Plan

• Decision Date: 06 April 1961
• Docket Number: No. 9224,9224
• Citation: 12 Utah 2d 18,361 P.2d 512
• Parties: d 18, 129 U.S.P.Q. 201 BUDGET SYSTEM, INC., Plaintiff and Respondent, v. BUDGET LOAN AND FINANCE PLAN, Defendant and Appellant.
• Court: Utah Supreme Court

Page 512

361 P.2d 512

12 Utah 2d 18, 129 U.S.P.Q. 201

BUDGET SYSTEM, INC., Plaintiff and Respondent, v. BUDGET LOAN AND FINANCE PLAN, Defendant and Appellant.

No. 9224.

Supreme Court of Utah.

April 6, 1961.

Callister & Fullmer, Salt Lake City, for appellant.

Mulliner, Prince & Mulliner, Salt Lake City, for respondent.

FAUX, District Judge.

By this appeal we are asked to consider the decision in equity which has enjoined appellant corporation, defendant in the district court, from using in its name the word 'Budget.' This court accepts the definition and scope of its duty with respect to this appeal as set out in Corey v. Roberts. ¹ Accordingly, as to errors assigned, we have considered both questions of law and of fact, keeping in mind, however, the rule that it is our duty to affirm the decision of the trial court, unless the evidence clearly preponderates against the findings and judgment of the trial court.

The trial court found that plaintiff's predecessors in interest, Mr. and Mrs. Hugh Barker, commenced the operation of a corporation loan and finance business in Salt Lake City under the name 'Budget System,' in the year 1928. During the year 1935 Budget System was disincorporated and the Barkers resumed operation as partners under the assumed names 'Budget System' and 'Budget Finance' as to which names affidavits were duly filed. In 1957 some of their small loan business was transferred to a corporation named 'Budget System, Inc.,' and in the same year the Barkers sold all of the stock in that company to American Co-op Finance Co., a corporation. The Barkers had floored automobiles for dealers in the name of Budget Finance until the cars were sold, at which time the cars were financed in the name of Budget System. The partnership, Budget Finance, had never had a bank account.

When they sold their stock in Budget System, Inc., they assigned the floor plan contracts and the balance of their small loan business to a partnership which operated under the name and style of Barker and Company.

Earlier facts relating to the defendant, appellant here, show that in the year 1948 Budget Loan and Finance Plan was incorporated in Utah. It was owned by a California corporation of similar name and was the parent and sole owner of two operating subsidiaries: One, Friendly Service and Finance Company which became Credit Finance Plan; the other, Credit Industrial Loan Plan.

In 1958 to more profitably fit into 'a national organization' acquired by the California parent company and operating under the name Budget Finance Plan, the name of Credit Finance Plan was changed to Budget Loan and Finance Plan through application to the Utah Bank Commissioner who, under the small loan law, licensed two locations for that name in Salt Lake City: 802 South State Street and the other in Sugar House.

The corporation, Budget Loan and Finance Plan has continued its small loan business at 802 South State Street since November, 1958. Since 1945 Budget System, Inc., has operated its small loan business at No. 854 South State Street. Previously for about five years it did business at No. 763 South State Street. Defendant makes no complaint about the foregoing historical facts as the trial court found them.

The first charge of error is in the finding that the word 'Budget' in defendant's name since November 1958 has caused and will continue to cause confusion and deception to the public in the Salt Lake City area among present and potential customers therein; that the similarity of said name is a deceptive use by defendant, an unfair trade practice, and has and will result in probable damage to plaintiff's business.

The second charge is substantially within the first.

The third charge of error is the legal conclusion that plaintiff has acquired the exclusive right to use of the word 'Budget' in conducting its credit and loan business in the Salt Lake City area.

The fourth charge of error is the court's decree in favor of plaintiff and against defendant by which defendant was enjoined from use in its business of the word 'Budget.'

Defendant's premise in assailing the trial court's decision is that the basis for an action to enjoin unfair competition is essentially one of fraud and deceit. In support of this it refers to Nims, Unfair Competition and Trade Marks, Fourth Ed. Sec. 6, pages 40 and 41, citing Reynolds & Reynolds Co. v. Norick, 10 Cir., 1940, 114 F.2d 278, and it stoutly contends that there is no evidence in the record of any fraud or deceit on its part.

Defendant's evidence here was presented apparently to persuade the court that their purpose in using the word 'Budget' in their name was to build up the morale of numerous new employees obtained through purchase of finance companies in many states to round out their national chain which used 'Budget' in its name. Another purpose was to decrease advertising costs by chain store methods and devices. Other advantages were advanced as being available through use of the name 'Budget.' Seemingly all of these motives are laudable from a business standpoint and may to some protect appellant entirely from the charge of pirating which appears in so many of the unfair competition cases.

Nevertheless, two phases of the evidence seem to indicate an intent to harm plaintiff, Budget System, Inc., rather than merely to benefit the internal competitive position of defendant Budget Loan and Finance Plan. The evidence shows that plaintiff has had its place of business in about the center of 800 block on State Street for about twenty years and for about fifteen years of that time at the present location 854 South State Street. It would seem something less than a friendly coincidence that when defendant began use of the name 'Budget' it did so on a corner location one-half block away from plaintiff's place of business.

Of similar bearing is the emphasis upon the word 'Budget' in letterheads and outdoor electrical signs. From these one would not get the impression that defendant made an attempt to modestly initiate the new name into its operations by overshadowing it with either of the words 'Loan,' 'Finance,' or 'Plan.'

These two factors would lend support to the view that the confusion which the trial court found to exist was not accidental but in fact grew out of a desire in defendant to appear as plaintiff for the purpose of benefiting from the good will and reputation which plaintiff claimed it had developed over the years and which good will was connected with patrons and the business by the name Budget System, Inc.

Inasmuch as many of the unfair competition cases are in the merchandising field, that generalization as to those cases will not be seriously contested. However, those cases involve what is termed 'palming off' to the buyer of goods and merchandise which he did not intend to buy. Therein lies the fraud and deceit to which appellant refers. Ordinarily, in reliance upon a name, reputation, brand, wrapper or covering, a buyer purchases what has theretofore pleased him. If, because of a simulation as to one or more of those features, he gets something different or gets something made by some one other than the manufacturer whose name he relied upon, it may truly be said that he has been defrauded.

As will be pointed out, there is not in this case the classical situation of palming off, actually no 'goods' being sold, no public being thus deceived and cheated. For all that the record shows the public may have been given better treatment at defendant's place of business than at plaintiff's. Accordingly, there must be additional reason why equity should intervene if the injunction imposed by the trial court should be allowed to stand.

There is another element in addition to and aside from damage to the public which will properly and effectively appeal to equity. Use of a name in combination with a service can by careful nurturing and skillful business practices develop something that identifies the type and quality of that service. In business as a...