Metropolitan Life Insurance Co. v. Metropolitan Ins. Co.

• Decision Date: 13 May 1960
• Docket Number: No. 12913.,12913.
• Citation: 277 F.2d 896
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. METROPOLITAN INSURANCE COMPANY, a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

277 F.2d 896 (1960)

METROPOLITAN LIFE INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. METROPOLITAN INSURANCE COMPANY, a corporation, Defendant-Appellant.

No. 12913.

United States Court of Appeals Seventh Circuit.

May 13, 1960.

Frank Greenberg, Donald L. Thompson, Chicago, Ill. (Halbert O. Crews, Charles E. Zeitlin, Meyers & Matthias, Peebles, Greenberg & Keele, Chicago, Ill., of counsel), for appellant.

Owen Rall, Herbert C. Loth, Jr., Chicago, Ill. (Peterson, Lowry Rall, Barber & Ross, Chicago, Ill., of counsel), for plaintiff-appellee.

Before HASTINGS, Chief Judge, SCHNACKENBERG and KNOCH, Circuit Judges.

HASTINGS, Chief Judge.

This action was brought by plaintiff-appellee, Metropolitan Life Insurance Company (plaintiff), against defendant-appellant, Metropolitan Insurance Company (defendant), to enjoin defendant from using its corporate name or any name containing the word "Metropolitan" or any name deceptively similar to the name of plaintiff. Plaintiff moved for a temporary injunction based upon the verified complaint and supporting affidavits. The trial court continued generally plaintiff's motion for a temporary injunction on the ground that a trial on the merits would be shortly forthcoming.

By a timely motion to dismiss the complaint, defendant asserted the following defenses: (a) the complaint fails to state a cause of action upon which relief may be granted; (b) the plaintiff lacks capacity to sue for the relief prayed for in the complaint and the court lacks jurisdiction of the subject matter of the action in view of the applicable provisions of the Illinois Insurance Code.¹ The motion to dismiss was denied.

The errors relied upon for reversal arise from the denial of defendant's motion to dismiss and alleged erroneous findings of fact and conclusions of law. The parties agree that the law of Illinois governs the disposition of this case.

I.

At the outset defendant concedes that absent the Illinois Insurance Code (Code) the action would lie and that it has the burden to show that it was the purpose of the Code to abolish the remedy invoked by plaintiff.²

Defendant is a corporation organized and existing under the laws of the State of Illinois and has engaged continuously in the business of casualty insurance in Illinois since January, 1951. Defendant began business under the corporate name of Highway Casualty Company and used that name until December 21, 1956, when its name was changed to Highway Insurance Company. It kept this latter name until October 20, 1958, when it changed to its present name of Metropolitan Insurance Company. It effected this latest change by the required statutory procedure of submitting for filing and for approval to the Director of Insurance of the State of Illinois appropriate amended articles of incorporation. The amended articles were approved and filed by the Director of Insurance. Similar action was taken by defendant in the sixteen other states wherein it was authorized to do business, and approval was granted in each of such states.

Plaintiff is a corporation organized and existing under the laws of the State of New York and has transacted business as a life insurance company continuously since 1868. It was licensed to do business in the State of Illinois in 1868 and, with the exception of a short period between 1880 and 1881, has thereafter continuously transacted business in Illinois. Likewise, plaintiff is authorized to carry on and does engage in the life, accident and health and annuity business in all of the states of the United States, as well as in the District of Columbia, the Territory of Puerto Rico and the Provinces of the Dominion of Canada.

The change of name of defendant to Metropolitan Insurance Company and all of the steps to effectuate such change took place without prior notice to or prior knowledge of plaintiff. At no time did plaintiff consent to or acquiesce in such change of name. Plaintiff has filed no complaint with the Director of Insurance of Illinois against defendant's use of its present name and has not sought a review or reversal by such Director of his administrative act in approving defendant's change of name from Highway Insurance Company to Metropolitan Insurance Company. As soon as it learned of this change of name, plaintiff demanded that defendant discontinue its use of its present name; but defendant refused to accede to this demand.

Section 7 of the Code³ provides that "the corporate name of any company organized under this article shall not be the same as, or deceptively similar to, the name of any domestic company, or of any foreign or alien company authorized to transact business in this State."

Section 14.1 of the Code⁴ provides for the form of articles of incorporation, including a statement of the corporate name. Section 15⁵ provides that executed articles of incorporation shall be delivered to the Director of Insurance. Section 18⁶ provides that "if the Director finds that the documents and papers so delivered comply with the provisions of this Code," he shall file them with his endorsed approval and the incorporation shall be deemed established.

Section 201 of the Code⁷ provides that "no order, judgment or decree enjoining, restraining or interfering with the prosecution of the business of any company" shall be granted "otherwise than upon the complaint of the Director represented by the Attorney General," except in certain instances not relevant here. (Emphasis added.) Section 401⁸ charges the Director with the enforcement and execution of all insurance laws of the State.

Section 407 of the Code⁹ provides for review of any action of the Director by an aggrieved party in the state courts after such party receives a prescribed notice of such action from the Director.

Defendant contends that this injunction proceeding is in effect an action charging it with a violation of Section 7 of the Code and charging further that the Director acted unlawfully in approving its corporate name. It argues that the Director's action cannot be disturbed except in a statutory proceeding for judicial review under Section 407 of the Code or by writ of mandamus. It says that the decision of the Director in such matters is vested with finality and that the courts cannot entertain an independent third-party action to review such a decision. It urges that only the Director, acting through the Attorney General, has standing to sue for an injunction in such cases. It finally concludes that plaintiff had an administrative remedy under the Code and, having failed to invoke or exhaust such remedy, the court is deprived of jurisdiction. Defendant relies on these theories in support of its claim of error in the denial of its motion to dismiss the complaint.

It is clear to us that plaintiff's action is not one to be defined within the narrow limits described by defendant. The complaint states ample equitable grounds for traditional injunctive relief. Plaintiff is plainly seeking to enjoin defendant from using a corporate name it claims to be so deceptively similar to its own name as to be likely to confuse and mislead the public with the resulting likelihood of injury and harm to plaintiff. Neither is a complaint made against the Director of Insurance nor is any relief sought under the Code.

We do not read into the Code any limiting purpose or intention to oust a court of its equitable jurisdiction to grant the relief sought under the circumstances described in the complaint.

The prohibitions in Section 201 are limited to interference with the prosecution of the business of an insurance company. That is not this case. Defendant may continue fully to operate and conduct its insurance business. Defendant cites and relies upon Winger v. Chicago City Bank & Trust Co., 1946, 394 Ill. 94, 67 N.E.2d 265 and People ex rel, Benefit Ass'n of Railway Employees v. Miner, 1944, 387 Ill. 393, 56 N.E.2d 353, as authority for holding no jurisdiction under Section 201. Those cases have no application here. In Miner, a class action by the members of a benefit insurance association, the relief sought was to require cancellation of an exclusive agency contract authorized by the directors and to remove and elect a new board of directors. The court held that this would constitute an interference with the business of the company. In Winger, a class action to require restoration by the directors of allegedly diverted funds and for an accounting, it was held that the court had jurisdiction; and the Miner case was distinguished. We think Winger gives strong support to plaintiff, rather than to defendant. To the same effect, see People ex rel. Parkinson v. Williams, 1945, 392 Ill. 224, 64 N.E.2d 464.

In seeking to limit relief sought here to the statutory proceeding for judicial review under Section 407 of the Code, defendant relies on American Surety Co. v. Jones, 1943, 384 Ill. 222, 51 N.E.2d 122 and People ex rel. Barber v. Hargreaves, 1940, 303 Ill.App. 387, 25 N.E.2d 416. Defendant's reliance on these cases is misplaced. In American Surety, 384 Ill. at page 229, 51 N.E.2d at page 125, the court points out that the Section 407 review is limited to "that company or person involved in the granting of the certificate." In the case at bar, plaintiff was not a party to the Director's administrative action in approving defendant's change of name; it received no notice of such contemplated action and was not...