Local Loan Co. v. Local Finance Corporation

• Decision Date: 29 August 1944
• Docket Number: Civil Action No. 832.
• Citation: 56 F. Supp. 658
• Parties: LOCAL LOAN CO. v. LOCAL FINANCE CORPORATION.
• Court: U.S. District Court — Eastern District of Wisconsin

56 F. Supp. 658

LOCAL LOAN CO. v. LOCAL FINANCE CORPORATION.

Civil Action No. 832.

District Court, E. D. Wisconsin.

August 29, 1944.

Elmer W. Roller, of Milwaukee, Wis., and Newton, Wilhelm & Kenny, Joseph E. Newton, and James V. Kenny, all of Chicago, Ill., for plaintiff.

Giles F. Clark, of Milwaukee, Wis., and Werner, Clemens & Miller, and Edward H. Clemens, all of Sheboygan, Wis., for defendant.

DUFFY, District Judge.

The complaint alleges unfair competition. In 1908 Fred B. Snite started a small loan business in Chicago using the name Local Loan Company. The venture prospered and Snite and his wife subsequently expanded their operations in Chicago and elsewhere. By 1928 they were operating five offices in Chicago under the name of Local Loan Company; they also operated several offices in other States through wholly owned corporations. They then incorporated under the name of Local Loan Company, and the corporation took over the business and assets of the above mentioned Chicago offices. During this period and since then plaintiff has engaged in vigorous advertising campaigns, special emphasis being placed upon the first word of its name, "Local." Slogans were adopted to impress this part of its name upon the public, examples of which, are "Local Gives You What You Want," "Originated by Local, Recommended by Thousands," "Local, Single Signature Method," "Local's Confidential Low Cost Service."

Sport broadcasts, particularly of baseball games, were sponsored by the plaintiff in the years 1936 to 1939. The services of two well known sports announcers, Pat Flanagan and Bob Elson, were utilized over radio stations WBBM and WGN located in Chicago. These programs could be heard in Wisconsin in Sheboygan, Manitowoc, Fond du Lac, West Bend, and elsewhere. Plaintiff's nickname, "Local," was frequently reiterated in these broadcasts.

On October 2, 1939, plaintiff qualified to do business as a foreign corporation in Wisconsin; and on April 11, 1940, it obtained a license from the State Banking Commission under the provisions of the Wisconsin Small Loans Act, Laws 1933, c. 347, to operate a small loan office in Milwaukee. Thereafter it obtained additional licenses to operate in Kenosha and Superior. Up to the present time it has continued to operate its Milwaukee and Kenosha offices under the name of Local Loan Company. Plaintiff spent $28,500 in advertising solely within Wisconsin since it commenced operations in this State; this does not include radio, newspaper and other advertising outside the State, a portion of which reaches the attention of Wisconsin residents. The increase in volume of plaintiff's business is indicated by the amount of money loaned: it was $276,000 in 1940 and mounted to $1,225,000 in 1943.

When this action was commenced in 1942, plaintiff was operating 35 offices in Illinois, Minnesota, Wisconsin, Kentucky, New York, Washington, Oregon, and California. For the past four years its annual net profits have averaged $850,000, and its total assets on December 31, 1943, were more than $12,000,000. Since its incorporation plaintiff has expended in excess of $2,000,000 in advertising, with emphasis upon the word "Local."

About five months after plaintiff was licensed by the State Banking Commission to operate a small loan company in Wisconsin, the defendant was incorporated under the laws of Wisconsin; and two and one-half months thereafter, to wit, on November 20, 1940, defendant was granted a license to conduct a small loan business at Sheboygan. After operating in that city defendant established offices in Fond du Lac, Manitowoc, and West Bend, the latter city being approximately thirty-seven miles from Milwaukee. Defendant has between $300,000 and $400,000 outstanding in small loans.

A hearing was held by the Banking Commission of Wisconsin upon defendant's application for a license to operate in Sheboygan. Plaintiff appeared by Attorney Lee and objected to the use by defendant of the word "Local" in its name. The spokesman for the defendant, who became its president, represented: "This stock will be taken by very few customers and will not be offered publicly and will not be offered outside to very few even in the county." The attorney for the Banking Commission stated, "As I understand it, this business is local, want to confine it to local capital and manager," which was confirmed by defendant's representative who responded, "Entirely local from Sheboygan." The attorney for the Banking Commission then stated: "Mr. Lee, I don't think you are before the proper tribunal. After all, there is nothing in our law which says anything about the name, and I think we would be exceeding or abusing our discretion and exceeding our authority if we did anything. I suppose you might have cause for an injunction through court action to restrain." Thereupon a license was issued for the defendant to operate in Sheboygan. On October 4, 1940, plaintiff wrote to defendant protesting the use of the word "Local" in defendant's name. Another letter of protest was written April 5, 1941, after defendant had expanded to Manitowoc and West Bend, wherein legal action by plaintiff was threatened. On January 31, 1942, the defendant advertised 7,200 shares of its stock for sale to the public and on February 21, 1942, plaintiff again wrote a letter of protest to the defendant. In September, 1942, this action was commenced.

The small loan business, as its name implies, is one of loaning small sums of money to necessitous borrowers. Due to their circumstances and lack of business experience, most of such borrowers are peculiarly susceptible to imposition; so the small loan business is affected with a public interest and in most States is subject to strict regulation.

The testimony shows that the plaintiff enjoys an excellent reputation in the small loan field. It is one of the largest companies in this line of endeavor, and has had a very rapid growth. The defendant likewise expanded rapidly. Witnesses have testified as to satisfactory dealings with it. The records of this court disclose a criminal prosecution against defendant for an alleged violation of the Bankruptcy Act, 11 U.S.C.A. § 1 et seq., in 1942. The trial held before this court at Milwaukee resulted in an acquittal. Mention is here made of that action because if the verdict had been one of guilty, undoubtedly great harm would have been done to the plaintiff which, as hereinabove indicated, operates an office in Milwaukee.

Companies operating in the small loan field often are referred to by the first word of their name, such as "Household," "Citizens," "Local," "Personal," etc. The words "Loan" and "Finance" are used interchangeably, the public not distinguishing between them, as are the words "Company" and "Corporation." Plaintiff has come to be known in the small loan field as "Local" to public officials, social agencies, competitors, borrowers and to the public generally. The word "Local" has for many years signified the plaintiff company and its services in those States in which it operates.

The defendant has also emphasized the word "Local" in its advertising. In 1941 it...