Elgin Nat. Watch Co. v. Loveland

• Decision Date: 25 August 1904
• Docket Number: 29.
• Citation: 132 F. 41
• Parties: ELGIN NAT. WATCH CO. v. LOVELAND et al.
• Court: U.S. District Court — Northern District of Iowa

132 F. 41

ELGIN NAT. WATCH CO. v. LOVELAND et al.

No. 29.

United States Circuit Court, N.D. Iowa, Cedar Rapids Division.

August 25, 1904

'That complainant is a corporation duly incorporated in 1865 under the laws of the state of Illinois. That its name first was 'The National Watch Company,' which, in 1874, was changed to the 'Elgin National Watch Company'. That by its charter it is empowered to manufacture, purchase, and sell watches, clocks, jewelry, and parts and materials for the manufacture thereof. That its factory is located at Elgin, Kane county, Illinois, where for many years its business has been the manufacture of watch movements. That at first its business was small, but this has steadily increased until at the present time it is one of the largest of its kind in the world. That its product is sold all over the United States, and to a large extent abroad. That it has acquired a high reputation for accuracy and durability; and complainant enjoys a business good will, which, owing to the high reputation of its product, is of incalculable value. That notice that the complainant is the manufacturer of its product was given first by stamping its name on the plate and dials of all its manufactures, but since 1890 the custom and practice has been to stamp the name 'Elgin' upon the dials, while its full corporate name and the word 'Elgin' have always been placed upon the plates; with the result that the name 'Elgin' has become identified and associated with the complainant so that its products are not bought, ordered, or spoken of except as 'Elgin watches.' That the complainant has been spending about $75,000 a year for so many years in advertising, and this has all been done as the advertisement of the 'Elgin watch' under that name. That its corporate name is seldom used, and not generally known outside the trade. That, as a result, the name 'Elgin' in the jewelry trade in general has come to point distinctively to complainant, not only as applied to watches, but to time pieces of all descriptions as well as jewelry in general, and the name 'Elgin,' as applied to or in connection with watches, timepieces, and jewelry, is understood to mean and refer to complainant as the manufacturer, and to be a guaranty of excellence; and to the public indicates (1) the place of manufacture, (2) the business of complainant, (3) that the product on which or in connection with which the name is used is of complainant's manufacture, and (4) associates complainant's business with the general manufacture of jewelry. That prior to February, 1903, the defendants Theodore O. Loveland, James L. Records, and Charles W Harrison, were engaged in the business of jobbing and selling at wholesale jewelry, watches, watch movements, timepieces silverware, and similar articles at Iowa City, in the state of Iowa, under the name of the 'Equitable Manufacturing Company,' and at about said time the said defendants conceived the fraudulent scheme and plan of using and employing, and so began the use of, the name 'Elgin Jewelry Company,' for the purpose of exploiting and offering for sale and selling thereunder jewelry, watches, clocks, watch movements, and similar articles. That the word 'Elgin' in said name was selected by said defendants solely because of the high reputation and standing of complainant and its product, and because of the close association and identification of the word with complainant, and its use by the public to describe complainant and its product, and that the association of the name 'Elgin' therewith had become in the minds of buyers and the public extended from watch movements to watches, clocks, timepieces, and jewelry in general. That under such name the defendants have sold and continue to sell an inferior grade of watches, timepieces, and jewelry as the product and manufacture and manufacture of the complainant, thereby deceiving buyers and defrauding complainant by the use of such name. That in March, 1903, said defendants attempted to form a corporation under the laws of the state of Illinois under the name of the 'Elgin Jewelry Company,' the objects of which corporation were to manufacture and sell watches, clocks, jewelry, and fancy goods of every description, and other articles, including cotton and woolen goods and wearing apparel. That the capital stock of said corporation was to be $25,000, and the location of its principal office was to be at Elgin, Kane county, Illinois. That the shares of stock of said corporation were to be five hundred in number, and of the par value of fifty dollars. That said Theodore O. Loveland and James L. Records each subscribed for 249 shares of said capital stock, the defendant Charles W. Harrison for one share, and one Frank E. Blackburn, of Chicago, Illinois, for one share. That the defendants Theodore O. Loveland, James L. Records, and Charles W. Harrison, were pretended to be elected as directors of said corporation, and the business office of the company was designated as 'Room 32, Young Men's Christian Association Building, Elgin, Kane County, Illinois.' That said corporation was never in fact completed. That its articles of incorporation and certificate of the Secretary of State of Illinois were never recorded in the office of the recorder of deeds of Kane county, Illinois, nor in any other county in said state. That said defendants are each and all residents of the city of Iowa City, in the state of Iowa, do not now transact, and never have transacted, any business in the city of Elgin, Illinois. That neither they nor the pretended corporation the 'Elgin Jewelry Company' have now, or ever have had, any factory, works, or business in the city of Elgin, Kane county, Illinois. That defendants have for some time maintained a sham place of business in said city of Elgin, located at Room 32, Young Men's Christian, Association Building, which is a single small room in an office building in Elgin, but that no business of any kind place in the city of Elgin, except that mail addressed to the Elgin Jewelry Company at Elgin is there received by a young woman in charge of said room 32, and forwarded to defendants at Iowa City, or as directed by defendants from Iowa City. That as a matter of fact all business obtained by defendants under the name 'Elgin Jewelry Company' and the establishment and maintenance of defendants' office at Elgin, Illinois, is a mere sham for the purpose of asserting some colorable right to the use of the name 'Elgin' in said corporate style, and in this way to deceive the public, and profit and trade upon the complainant's business and reputation.'

An injunction, preliminary and perpetual, is asked against the defendants, restraining them from using or employing the word 'Elgin' or any like word in the manufacture, exploitation, or sale of watches, timepieces generally, or jewelry, or in any way, unless upon and in connection with the genuine product and manufacture of complainant, and from using the name 'Elgin Jewelry Company,' or any name in which the word 'Elgin' is a part, as a business name or style; also from recording or attempting to record in the state of Illinois said certificate of incorporation, or completing the alleged incorporation of said Elgin Jewelry Company under the name or style of 'Elgin Jewelry Company.'

The complainant notified the defendants of an application for a preliminary injunction, and defendants have filed a demurrer to the bill on the grounds: (1) Want of equity; (2) that complainant has a complete and adequate remedy at law; (8) that there is a defect of parties to the suit, in that the Elgin Jewelry Company is an indispensable party thereto, and is a corporation of the same state as complainant, and the court is without jurisdiction of said Elgin Jewelry Company; (4) that defendants have no interest in the subject-matter of the suit, the said Elgin Jewelry Company being alone interested therein.

Frank F. Red, Edward S. Rogers, and Cooper, Clemans & Lamb, for complainant.

Charles A. Clark & Son, William G. Clark, and Dutcher & Davis, for defendants.

REED District Judge (after stating the facts).

1. The only ground of the demurrer that need be considered is that the Elgin Jewelry Company is an indispensable party to the suit-- in fact, is the real party in interest; that it is a corporation of the same state of the complainant; and the court is without, and cannot acquire, jurisdiction of the controversy. If that company is in fact a corporation, and an indispensable party to the suit, it may be conceded that this ground of the demurrer is well taken. The articles of incorporation of that company and the certificate of the Secretary of State for the state of Illinois were never filed or recorded in the office of the recorder of deeds of Kane county, Ill., nor any other county in that state. Is the Elgin Jewelry Company, then, a corporation? The incorporation act of Illinois provides:

'The Secretary of State shall thereupon issue a certificate of the complete organization of the corporation, duly authenticated under his hand and seal of state, and the same shall be recorded in a book for that purpose, in the office of the recorder of deeds of the county where the principal office of such company is located. Upon the recording of the said copy, the corporation shall be deemed fully organized and may proceed to business. ' Hurd's Rev. St. Ill. 1899, c. 32, Sec. 4.

The Supreme Court of Illinois has several times held that the recording of the articles of incorporation and the certificate of the Secretary of State, as required by this section, is essential and a condition precedent to the legal existence of the corporation.

In Gent v. M. & M. Ins. Co., 107 Ill. 652, it is said:

'That a corporation should have a full

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