Massachusetts Mut. Life Ins. Co. v. Massachusetts Life Ins. Co.

• Decision Date: 26 June 1969
• Citation: 249 N.E.2d 586,356 Mass. 287
• Parties: , 163 U.S.P.Q. 119 MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY v. MASSACHUSETTS LIFE INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 586

249 N.E.2d 586

356 Mass. 287, 163 U.S.P.Q. 119

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY v. MASSACHUSETTS LIFE INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Feb. 5, 1969.

Decided June 26, 1969.

Andrew G. Meyer, Boston (Wendall J. Leary, Boston, with him) for defendant.

Edward J. Duggan, Boston (Daniel J. Johnedis, Boston, with him) for plaintiff.

Before WILKINS, C.J., and SPALDING, WHITTEMORE, KIRK, and REARDON, JJ.

KIRK, Justice.

The plaintiff seeks by this bill in equity to enjoin the defendant from doing business under the name 'Massachusetts Life Insurance Company.' Relief is sought under (a) general equitable principles, (b) G.L. c. 155, § 9, and (c) G.L. c. 110, § 7A. In an earlier opinion in the same case, 351 Mass. 283, 291, 218 N.E.2d 564, we held that the plaintiff could proceed on all three avenues of relief. By counterclaim the defendant seeks to confirm the legality and propriety of its chosen corporate name and to enjoin the plaintiff from interference with its use of the name. The case was tried before a judge, who filed a voluntary report of material facts and ordered the entry of a decree enjoining the defendant from continued use of the name 'Massachusetts Life Insurance Company.' Pending the entry of the final decree the defendant took steps to change its name to 'Massachusetts Life and Annuity Insurance Company.' The plaintiff thereupon moved to amend the order for decree. The motion was allowed and the judge entered a final decree permanently enjoining the defendant from using in its corporate name the word 'Massachusetts,' and dismissing the defendant's counterclaim. The defendant appeals from the final decree. In addition to the judge's voluntary report of material facts, we have a transcript of testimony and all the exhibits which the parties agree are material to the issues in the case. In this posture it is our duty to examine the evidence and decide the case on our own judgment, accepting as true the findings of the judge based on oral testimony unless they are shown to be plainly wrong. See Flavell v. Flavell, 324 Mass. 362, 363, 86 N.E.2d 647; Hanrihan v. Hanrihan, 342 Mass. 559, 564, 174 N.E.2d 449; Wilson v. Jennings, 344 Mass. 608, 611, 184 N.E.2d 642; Sulmonetti v. Hayes, 347 Mass. 390, 391--392, 198 N.E.2d 297; Burlingham v. Worcester, 351 Mass. 198, 199, 218 N.E.2d 123.

We summarize the facts from the findings of the judge: The plaintiff was established in 1851 and has since conducted its life insurance business under the name 'Massachusetts Mutual Life Insurance Company.' As a mutual company it has paid dividends to its policyholders every year since 1861. ¹ It is licensed to do business in all States, the District of Columbia, Puerto Rico and Canada. It operates on a general agency basis with 251 agency officers all using its name throughout its licensed area. The plaintiff has a distinguished group of agents in its force. In the New England area, it has its home office in Springfield, two general agency offices in Boston, and other offices in Springfield, Framingham, Worcester, Wellesley and Northampton, Massachusetts, as well as three offices in Maine, two in New Hampshire, one in Rhode Island and five in Connecticut. The plaintiff writes widely diversified lines of insurance, including ordinary life, individual annuity, and pension trust plans, as well as group life, group annuities, and accident and health plans. It is the seventh largest mutual life insurance company in the United States measured by its assets and during the decade 1955 to 1965 had the highest growth rate among the largest mutual companies. The plaintiff is and has been for many years in excellent financial condition, most ably managed and enjoys an excellent reputation. At the end of 1966 it had in force over 1,000,000 policies representing a volume in excess of $13,700,000,000; its assets exceeded $3,400,000,000. In 1966 it had a net operating gain of over $16,000,000 and paid dividends to policyholders of nearly $80,000,000. In 1966 it had a surplus of over $200,000,000 and a lapse ratio of about 4%. ² In 1965 the reinsurance rate of the plaintiff was about 4% of the total in force dollar volume.

Since its organization the plaintiff has used its name 'Massachusetts Mutual Life Insurance Company' on all its policies. Also on every policy is a picture of the plaintiff's home office and date 'organized 1851.' Until 1964 the plaintiff used a letterhead carrying its name across the top, the word and date 'Organized 1851' immediately below the name, and the words 'In Our Second Century of Service' at the bottom of the page. In all its advertising the plaintiff uses its name, sometimes giving emphasis to the first two words 'Massachusetts Mutual' and other times giving equal emphasis to each word in its name. The plaintiff advertises in different media, including trade and consumer magazines, newspapers, flyers and direct mail. In 1966 the plaintiff spent over $960,000 on advertising ($878,000 in 1965, $1,000,000 in 1964, $933,000 in 1963, and $902,000 in 1962).

The defendant, which also engages in the life insurance business, was incorporated August 15, 1963, under the name 'Massachusetts Life Insurance Company.' The plaintiff never consented to the defendant's use of this name. The defendant is a stock company and does not pay dividends to its policyholders. ³ One of its goals is to build profits for stockholders to whom it reports. In is presently licensed to do business only in the six New England States, but has policyholders residing in thirty-eight States. It intends to apply for authority to do business in all States except New York, and has already filed applications in New Jersey, Pennsylvania, Delaware and Mayland. The defendant has its home office in Boston. It also operates on the general agency system and although it has about 285 licensed agents in New England, only a few of this number devote their full time to the defendant's business. Apart from its home office the defendant has twenty-two other offices in Boston and numerous other offices scattered throughout the Commonwealth, two offices in Maine, six in New Hampshire, eleven in Rhode Island and thirty-one in Connecticut.

The defendant's president, Charles Breslin, its primary organizer, receives a salary of $50,000, is the largest single stockholder, owning or controlling 525,000 shares, about 35% of the total shares issued, and holds a stock option on 30,000 additional shares. John J. Byrne, secretary, treasurer and actuary of the defendant, Wallace H. Heller, a vice-president, and Edgar H. DeGraeve, comptroller, also hold options on substantial numbers of shares. Stock options may also be given to agents as an inducement. They present an opportunity to profit from a rise in the market price of the stock without risk and are an incentive for key men to remain with the company.

At the end of 1965 the defendant's in force dollar volume of insurance was over $51,600,000 and its assets approximately $3,000,000. In the same year it sustained an operating loss of over $246,000, had a lapse ration of about 24%, and a reinsurance rate of approximately 25%. The high lapse ratio, caused in part by an unstable agency force, has adversely affected its earings. The relatively substantial amount of reinsurance adds to the operating costs of the defendant and consequently reduces profits.

The defendant's president with twenty-six years of experience in the life insurance busines in the Boston area, was long aware that the plaintiff was an old life insurance company with substantial assets, a broad line of policies and a well-known name, and that as a mutual company it enjoyed a competitive advantage over the defendant, a stock company. The defendant, in a registration statement, had pointed out that the life insurance business was highly competitive and that many companies, 'as compared with the Defendant, had been in business for longer periods of time, offered more diversified lines of coverage, had substantially greater resources, larger selling organizations, highly skilled personnel of long experience in every department, a broader diversification of risks and more well-rnown names' (emphasis supplied).

About August, 1963, Breslin, with knowledge of the plaintiff's policies, participated in the design of the defendant's policy form. On the policy form appear the words 'Massachusetts Life Insurance Company'; as on the plaintiff's form, 'Massachusetts' is emphasized and the words 'Life Insurance Company' are deemphasized; the defendant's policy from contains the picture of a building (Faneuil Hall) and the date '1742' apparently referring to Faneuil Hall. This combination of name, old building and date is used in other materials in the conduct of the defendant's business, including advertising. The defendant's letterhead on some designs contain the printed words 'Distinguished Service' at the bottom in a way similar to the words 'In Our Second Century of Service' on the plaintiff's letterhead. DeGraeve, who designed some of the defendant's letterheads, had definite knowledge of other companies' letterheads.

A well-known name is an important asset in the life insurance business, a fact understood by the defendant when it selected its name in 1963. A substantial number of persons of at least average intelligence identifies the plaintiff by the name 'Massachusetts Life Insurance Company' or abbreviated forms thereof. For example, in the period September, 1963, to January, 1967, the plaintiff received 2,700 pieces of mail intended for it but addressed 'Massachusetts Life Insurance Company' or abbreviations thereof. ⁴ In 216 of these envelopes were 238 checks drawn to 'Massachusetts Life Insurance Company' (or abbreviations thereof), intended for the plaintiff. Some of the 2,700 envelopes contained 'checks from various debtors of the Plaintiff drawn to the order of 'Massachusetts...