Consumers Petroleum Co. v. Consumers Co. of Illinois

• Decision Date: 19 August 1948
• Docket Number: No. 9407.,9407.
• Citation: 169 F.2d 153
• Parties: CONSUMERS PETROLEUM CO. v. CONSUMERS CO. OF ILLINOIS.
• Court: U.S. Court of Appeals — Seventh Circuit

169 F.2d 153 (1948)

CONSUMERS PETROLEUM CO. v. CONSUMERS CO. OF ILLINOIS.

No. 9407.

Circuit Court of Appeals. Seventh Circuit.

July 16, 1948.

Rehearing Denied August 19, 1948.

Harry G. Hershenson, James B. McKeon, Albert E. Jenner, Jr., and Edward H. Hatton, all of Chicago, Ill. (Hershenson & Hershenson and Poppenhusen, Johnston, Thompson & Raymond, all of Chicago, Ill., of counsel), for appellant.

Joseph B. Fleming, Carl S. Lloyd, Lloyd M. Bowden, and Kirkland, Fleming, Green, Martin & Ellis, all of Chicago, Ill., for appellee.

Before MAJOR and MINTON, Circuit Judges, and LINDLEY, District Judge.

MAJOR, Circuit Judge.

This action was brought by Consumers Petroleum Company against Consumers Company of Illinois to enjoin the latter from employing the name "Consumers" in the business of marketing fuel oils in the Chicago metropolitan area, and for an accounting. Plaintiff was incorporated under the laws of the State of Illinois on December 28, 1925, and was authorized to "buy, sell, manufacture, and deal in petroleum and its by-products * * *." Since that time it has been engaged in the business of marketing petroleum and its by-products, particularly fuel oils, on a large scale in the Chicago and Cook County areas under the name "Consumers" and its corporate name "Consumers Petroleum Company," as trade names.

Defendant was incorporated under the laws of the State of Delaware in 1937, and was authorized "to buy, sell, and generally deal in and trade with at wholesale and retail, import and export, coal, coke, wood and other fuel or combustible material of every nature and description." Defendant was incorporated subsequent to and as a result of a corporate reorganization proceeding instituted in the United States District Court in March, 1941, in which an Illinois corporation by the name of Consumers Company was the debtor. The plan of reorganization directed the trustees to convey, assign, transfer and deliver all of the assets of the debtor corporation, "including good will and the right to use their respective corporate names," to the new corporation to be organized. On February 27, 1937, the trustees by assignment in writing sold, assigned and quit claimed all of the property and assets of the debtor corporation and its subsidiaries to defendant, including "trade marks, trade names, inventories, inventions and good will, together with any right to use the respective corporate names of the assignors."

Defendant's predecessor (sometimes referred to as the old or original Consumers Company) was organized in 1913 as the result of a merger of the Knickerbocker Ice Company with the City Fuel Company. The former was engaged in the ice business and the latter in the coal business. It was authorized "to deal at wholesale and retail in coal, coke, wood and other fuel of all kinds, * * * and engage in the * * * sale of all articles connected with the business of dealing in coal and other fuel."

The theory of the plaintiff embodied in its complaint and argument is that it has continuously engaged soley in the business of selling and distributing fuel oil in the Chicago area since 1925, the date of its incorporation, under its trade names of "Consumers" and "Consumers Petroleum Company," and during such time it has spent large sums of money in promoting and advertising its business under such trade names, and having first utilized said names in such business, it is entitled to their exclusive use in connection therewith. Further, it is claimed that the defendant subsequently appropriated the trade name "Consumers" in the sale and distribution of fuel oil and that as a result the public has been confused by such use, which constitutes unfair competition and resultant damages to plaintiff's business, good will and reputation. The defendant denies that it wrongfully appropriated the trade name "Consumers" in connection with the sale and distribution of fuel oil; in fact, its theory is that it had a right to utilize this trade name in connection with the sale of fuel oils since the incorporation of its predecessor in 1913, and that the appropriation of such trade name by plaintiff in 1925 was wrongful. Defendant does not contend that it was engaged in the fuel oil business in 1925, but, as alleged in one of its counter-claims, that the plaintiff from the inception of its business has "been charged with knowledge that Consumers Company, defendant's predecessor, might at any time commerce to sell fuel oils in addition to coal, coke and other fuel."

Confusion on the part of the buying public as between plaintiff and defendant as to the source of fuel oils purchased or sought to be purchased was charged in both the complaint and in defendant's counter-claims. Each side, however, disclaims responsibility for the confusion and each asserts that it was the result of the wrongful act of the other in appropriating and using the trade name "Consumers" in connection with the sale and distribution of fuel oil.

A Master in Chancery to whom the cause was referred heard and considered a large amount of both oral and documentary evidence, made a voluminous report, thoroughly analyzed the pleadings, the theories of the respective parties, the law applicable thereto, and recommended that the issues be decided in favor of the plaintiff and against the defendant. On exceptions to the Master's report, the court refused to follow the Master's recommendation, adopted its own findings of fact and concluded as a matter of law that the defendant had a right to engage in the fuel oil business on its own account under its corporate name, and that neither this nor any other act of defendant constituted unfair competition with plaintiff; that each party was guilty of laches so as to bar all relief sought by each party against the other; that plaintiff was also barred by estoppel; that the theory of damages adopted by the Master was without foundation in law or fact; that plaintiff was in equity with unclean hands; that neither party was entitled to relief, and that the complaint and counter-claims should be dismissed.

Some of the numerous questions presented may be disposed of in summary fashion. Jurisdiction was based upon diversity of citizenship. The court expressed the view that it was without jurisdiction because the requisite amount was not involved. Neither side attempts to support this view as to want of jurisdiction, and we think it was erroneous. Moreover, the court, while expressing this view as to lack of jurisdiction, proceeded to decide the case on its merits.

Plaintiff attempts to differentiate between the rights of the defendant with reference to the use of the trade name in controversy and that of its predecessor corporation. Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., 142 Ill. 494, 504, 509, 30 N.E. 339, is cited in support of this contention. The wording of the assignment in the Hazelton case is quite different from that in the instant case and is readily distinguishable. In our view, defendant by the assignment acquired the same right, no more and no less, to use the trade name "Consumers" as that possessed by its predecessor. In other words, the defendant stepped into the shoes of its predecessor insofar as the right to its use was concerned. We shall, therefore, treat the situation as though defendant had been in existence from the date of the incorporation of its predecessor.

A question much discussed involves the effect to be given Rules 52(a) and 53(e) (2) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, inasmuch as the District Court has made findings of fact in some respects inconsistent with those made by the Master. We think there is no occasion to discuss the effect which should properly be given these rules because, as we view the matter, the result reached by the court, contrary to that of the Master, was occasioned in the main by the application of different principles of law.

The Master found:

"Shortly after its formation, Consumers Company defendant began to sell solid fuels to the public in and around Chicago, and * * * sold, among other things, petroleum carbon, the residue remaining after gasoline has been distilled from crude oil but it did not start to sell fuel oil to domestic consumers because it was not until about the year 1922 that the domestic oil burner was sufficiently perfected to permit of its efficient and economical use in homes, although one type of oil burner had been available since 1919. During all this period and continuing until the present time, Consumers Company has spent large sums of money in and about advertising the products it offered for sale, for the purpose of building up a good will for these products. It has built up a very valuable good will."

The findings relate that in November, 1925, there were listed in the Chicago telephone directory 55 concerns bearing the name "Consumers" and doing business in the Chicago area. The Master also found:

"After making due inquiry and ascertaining that Consumers Company was not in the business of selling oil, Mr. Schurman plaintiff's president chose the name Consumers Petroleum Company and incorporated his company on or about December 28, 1925, under the laws of the State of Illinois. * * * Shortly, thereafter, it began selling fuel oil in and around Chicago. It acquired a bulk plant and bought and operated trucks. * * * Since its incorporation and continuing until the present time, Consumers Petroleum Company has spent large sums of money in and about advertising the products it offered for sale, for the purpose of building up a good will for those products. It has built up a very valuable good will."

The Master further found:

"Commencing in 1927, Consumers Company defendant began advertising the sale of fuel oil for domestic users and began the solicitation of orders therefor. These orders were filled by the Standard Oil Company of Indiana which delivered oil refined by it and sold...