Coast & Southern Fed. S. & L. Assn. v. Trans-Coast S. & L. Assn.
| Decision Date | 23 March 1971 |
| Docket Number | TRANS-COAST |
| Citation | 16 Cal.App.3d 205,93 Cal.Rptr. 791 |
| Court | California Court of Appeals Court of Appeals |
| Parties | COAST AND SOUTHERN FEDERAL SAVINGS AND LOAN ASSOCIATION OF LOS ANGELES, a Federal Savings and Loan Association, Plaintiff and Appellant, v.SAVINGS AND LOAN ASSOCIATION OF OXNARD, a California corporation, Defendant and Respondent. Civ. 36418. |
Hill, Farrer & Burrill, Los Angeles, for plaintiff-appellant.
Swerdlow, Glikbarg & Shimer, Beverly Hills, for defendant-respondent.
Thomas C. Lynch, Atty. Gen., Arthur C. De Goede, Edmond B. Mamer, Deputy Attys. Gen., as amicus curiae on behalf of respondent.
This is an appeal from a judgment in favor of defendant Trans-Coast Savings and Loan Association of Oxnard ('Trans-Coast') which followed an order sustaining Trans-Coast's demurrer to plaintiff's second amended complaint without leave to amend.
The filing of this action was occasioned by the fact that on June 5, 1969, over plaintiff's protest, the Savings and Loan Commissioner of the State of California ('commissioner') approved an application of the Oxnard Savings and Loan Association to change its name to Trans-Coast Savings and Loan Association of Oxnard. Thereafter Trans-Coast opened a branch office in Sherman Oaks, California just about the same time as plaintiff's predecessor, Coast Federal Savings and Loan Association of Los Angeles merged with Southern Federal Savings and Loan Association of Los Angeles ('Coast'). In some of its advertising defendant called itself simply 'Trans-Coast Savings.'
Plaintiff did not seek judicial review of the commissioner's order of June 5, 1969. Presumably such review would have taken the form of 'administrative mandate.' (Code Civ.Proc., § 1094.5.)
The complaint contains the usual allegations in an action for unfair competition, that is to say the competition between the parties, the secondary meaning of the word 'Coast,' likelihood of confusion to the detriment of plaintiff and the public and damage. The prayer is for an injunction, five million dollars in actual and twenty-five million in punitive damages.
We have been rather brief in our summary of the complaint, since there is no claim that, absent the impact of certain provisions in the Financial Code, 1 it is defective. It is, however, defendant's position that plaintiff is barred by the effect of the commissioner's order of June 5, 1969, and plaintiff's failure to seek judicial review thereof.
The statutory scheme in which defendant seeks refuge must be briefly summarized. The division of the Financial Code which relates to savings and loan associations (§ 5000 et seq) contains extensive provisions concerning the necessary steps to be taken when going into business as a new savings and loan association. Among other provisions, the law provides for a hearing on the question of whether 'the name of the proposed association is the same as one already adopted or appropriated by an association then existing in this State, Or so similar thereto as to be likely to mislead the public.' Notice of the hearing must be given 'to each association existing in this State.' (§ 5510.) 2 If the commissioner finds a deceptive similarity in the proposed name, 'he shall refuse to issue the certificate' approving the articles. (§ 5512.) Section 5512.5 provides that as part of the procedure of opening a new savings and loan association 'or upon filing an amendment to the articles changing the name of a proposed association,' the incorporators are to apply for a certificate of reservations of the name pursuant to section 310 of the Corporations Code. If a license is later issued by the commissioner it 'shall be in the name reserved.'
The Financial Code further requires a separate license for each branch of the savings and loan association (§ 6000 et seq). Finally, if an association seeks to change its name, it must receive the approval of the commissioner for such change 'upon the same notice, proceedings, upon the same grounds, and subject to the same rules, presumptions and restrictions as are set forth in Article 1 of this chapter in relation to the matters of the name of an association.' (§ 5651.) 3
Section 5258 provides for judicial review of all orders of the commissioner provided it is sought within 60 days.
In the case at bar the original complaint, filed August 13, 1969, simply ignored the fact that on June 5 the commissioner had overruled plaintiff's objections to defendant's proposed name change. Defendant's demurrer to that complaint raised the legal issues to be discussed in this opinion. By the time the second amended complaint was filed plaintiff was able to allege--and did allege--that on September 18, 1969, the commissioner had denied its petition for reconsideration and further hearing and, on November 19, 1969, had denied plaintiff's petition requesting the commissioner to issue a cease and desist order against defendant. 4
It is perfectly clear that the trial court was of the belief that somehow the statutory scheme which we have outlined prevented plaintiff from obtaining any relief in its common law action for unfair competition. It is not clear, however, whether the court's theory was that the relevant provisions of the Financial Code gave the commissioner so-called primary jurisdiction to determine the issue of confusion and that such determination would be conclusive on the parties in any ensuing common law action for unfair competition, 5 or whether it believed that the Legislature intended to abolish such litigation between savings and loan associations, 6 or whether it felt plaintiff was precluded from pursuing this litigation merely because it had failed to seek judicial revue of the June 5 order. 7
Defendant, of course, will accept an affirmance on any theory. For that reason, perhaps, we cannot be sure whether its brief is an appeal to the primary jurisdiction theory, to the doctrine of exhaustion of administrative remedies or to a supposed exclusive administrative jurisdiction. 8
It is our view that none of these theories bar plaintiff's right to pursue this action. This results from our conviction, gained from a reading of the applicable statutory provisions, that it was not the legislative intent that the proceedings before the commissioner were to have any effect on actions for unfair competition between savings and loan associations. 9
Our outline of the statutory scheme has referred to section 5512.5 of the Financial Code. For convenience the section is set forth in full in the footnote. 10 It is evident that the Legislature intended to dovetail the provisions of the Financial Code relating to the names--or changes of names--of savings and loan associations and those of section 310 of the Corporations Code relating to deceptively similar names of other corporations. The determination of whether or not a new name of a savings and loan association is deceptively confusing with an existing one, was taken out of the hands of the Secretary of State and entrusted to the commissioner. Further, obviously because of the length of time which proceedings before the commissioner may take, the 30 day period 11 provided for by section 310 of the Corporations Code during which a new name could be reserved, was lengthened to a maximum of one year and six months.
We thus have clear evidence that the Legislature wrote the relevant sections of the Financial Code with section 310 of the Corporations Code in mind. Yet nowhere in the Financial Code do we detect the slightest evidence that it intended to abrogate, in the case of savings and loan associations, the last paragraph of section 310 of the Corporations Code which reads as follows: 'The use by a corporation of a name in violation of this section may be enjoined notwithstanding the filing of its articles by the Secretary of State.'
Defendant points out that the distinction between corporations generally and savings and loan associations in particular is that there is no room for a hearing under section 310 of the Corporations Code, while the Financial Code does provide for one. 12 While this distinction would have validity if the question were whether the Legislature had the power to prescribe that the administrative determination allowing the use of an allegedly misleading name is conclusive, it is immaterial in the absence of evidence that such was the legislative purpose. Reading the applicable sections of the Financial Code we cannot find that the Legislature intended to accomplish more than just this: that as part of his duties to police the savings and loan industry, the commissioner was given the power to make an initial determination whether a new name would mislead the public. If he did so determine, that was to be the end of it, subject of course to a review for abuse of discretion under section 1094.5 of the Code of Civil Procedure. In this way the threat of unfair competition could be nipped in the bud before harm to the public ensued. 13 If the Legislature had intended that the administrative proceedings, which on their face appear to be designed for the sole purpose of facilitating the commissioner's housekeeping functions in the savings and loan industry, were to have an effect on previously recognized common law rights, it would have said so in explicit terms.
Defendant's cases are easily distinguishable. It relies chiefly on Woodard v. Broadway Fed. S. & L. Ass'n, 111 Cal.App.2d 218, 244 P.2d 467 and Reich v. Webb, 218 Cal.App.2d 862, 32 Cal.Rptr. 803. The Woodard case involved an attempt to have the superior court hold invalid the election of certain defendants to the board of directors of the defendant association. The association in question was organized under the provisions of the Home Owner's Loan Act of 1933. The plaintiffs had never attempted to have the Home Loan Bank Board, which administered...
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People v. McKale
...name even though the Savings and Loan Commissioner had approved the use of such name. (Coast and Southern Fed. S. & L. Assn. v. TransCoast S. & L. Assn. (1971) 16 Cal.App.3d 205, 93 Cal.Rptr. 791.) In similar situations our courts have arrived at consistent conclusions. The Accountancy Act ......