Middletown Trust Co. v. Middletown Nat. Bank

• Decision Date: 25 July 1929
• Citation: 110 Conn. 13,147 A. 22
• Court: Connecticut Supreme Court
• Parties: MIDDLETOWN TRUST CO. v. MIDDLETOWN NAT. BANK.

147 A. 22

110 Conn. 13

MIDDLETOWN TRUST CO. v. MIDDLETOWN NAT. BANK.

Supreme Court of Errors of Connecticut.

July 25, 1929

Appeal from Superior Court, Middlesex County; Alfred E. Baldwin and Arthur F. Ells, Judges.

Action by the Middletown Trust Company against the Middletown National Bank for an injunction to restrain the defendant from continuing to use the words " Trust Company" in connection with its name. Defendant's demurrer to the complaint was sustained and judgment was rendered for defendant, and plaintiff appeals. Error, and cause remanded.

Haines J., dissenting.

Alvan Waldo Hyde and Wallace W. Brown, both of Hartford, and Ernest A. Inglis, of Middletown, for appellant.

Bertrand E. Spencer, of Middletown, for appellee.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS JJ.

HINMAN, J.

It is alleged in the original and supplemental complaints that the plaintiff, chartered by this state in 1909, since its organization has been engaged solely in the transaction of business as a trust company, and not as a general banking institution, has become widely known as such and as the only company heretofore so engaged in Middletown, and has built up a large and profitable trust business. Until the amendment of the Federal statutes in 1913, the defendant had no authority to transact business as a trust company and for many years engaged solely in a general banking business. In May, 1928, a vote was passed by the stockholders of the defendant corporation to change the name from the " Middletown National Bank" to the " Middletown National Bank & Trust Company," and, notice of this action having been presented to the Comptroller of the Currency, a certificate was issued, in July, 1928, that the name had been so changed and such change approved by the Acting Comptroller of the Currency.

Since this certificate was issued the defendant has commenced an extensive campaign of advertising in an effort to increase its business by the use of the name and style so adopted. This name " has so great similarity to that of the plaintiff as to lead to confusion in the minds of the public and to cause irreparable injury to the property rights and good will established by the plaintiff through the use of its name over a substantial period of years." " As a consequence of the action of the defendant in changing its name many persons have been deceived as to the identity of the respective institutions, letters intended for the plaintiff have been sent to the defendant and there will be further confusion and injury to the plaintiff in the event defendant continues to make use of said name." " The use of a name likely to be confused with that of the plaintiff is not essential to the transaction by the defendant of its business as a national bank, having trust powers, and is an invasion of the plaintiff's established rights."

To this complaint the defendant demurred, on the following grounds: " 1. The defendant is a national banking corporation existing and doing business solely under the acts of Congress of the United States and the name under which it performs its functions is subject solely to the control of the Federal government acting through the Comptroller of the Currency of the United States. 2. The confusion and resulting injury alleged by the plaintiff to exist as a result of the change in the defendant's corporate name is alleged to arise solely out of the use in the defendant's name of the words ‘ Middletown’ and ‘ Trust Company’ and the alleged similarity in these particulars is not sufficient to form a basis for the belief sought by the plaintiff."

The court held that, the change having been made and approved in the manner provided by the Federal law, its use cannot be interfered with by any other authority, and sustained the demurrer.

Since national banks are instrumentalities of the Federal government, they are subject to the paramount authority of the United States. This authority extends to the name adopted for such a bank as well as the other incidents of its creation and of the conferring of its powers. Such bank may adopt any name which the Comptroller of the Currency approves. Third National Bank of Baltimore v. Teal (C. C.) 5 F. 503, 505; Swanson v. National Bank, 74 Colo. 135, 137, 219 P. 784; 7 Corpus Juris, p. 762. No question is made that the change of name by the defendant was effected in the manner prescribed by the Federal statute and regulations. In the sense that it is the name conferred upon the corporation by the proper chartering powers, it is not open to alteration or impairment by a state or its officers. This is well illustrated by Fidelity National Bank & Trust Co. v. Enright (D. C.) 264 F. 236, in which the right of the plaintiff bank to its name was upheld, notwithstanding a Missouri statute construed by the state authorities as not permitting corporations to assume the name of " Bank & Trust Company." It does not follow, however, that this principle avails to authorize or protect an unlawful or tortious use of a name, although it be lawfully chosen and approved. In United States Light & Heating Co. of Maine v. United States Light & Heating Co. of New York (C. C.) 181 F. 182, 184, a suit to restrain the use by the defendant of its name, Judge Hand says: " If it were true that, in giving a corporation a name, the executive of a State licensed it to use that name in any way it chose, of course no court would have power to interfere at all with the use of the name, and the charter would become a general license to use that name, whether or not the use proved tortious. The sounder view * * * is that the corporate name is given merely as the name which the entity may use so long as it acts in accordance with law. By that name so chosen it gets no license to commit what would otherwise be a tort. * * * The statute * * * merely authorizes the taking of a name when used lawfully." See also Hudson Tire Co., Inc., v. Hudson Tire & Rubber Corporation (D. C.) 276 F. 59.

In Peck Brothers & Co. v. Peck Brothers Co. (C. C. A.) 113 F. 291, 62 L.R.A. 81, involving the right of the plaintiff a Connecticut corporation, to relief against the defendant, incorporated in Illinois, it was held that such incorporation did not protect the latter from the consequences of use of its corporate name in unfair competition. " In a certain limited sense the sovereignty of the State had conferred the name. There is, however, in the term ‘ sovereignty,’ no magic to conjure by. It can confer upon individuals no right to perpetrate wrong. Nor do we think that the sovereignty of the State of Illinois sought to do that. It has a general law of incorporation, by which any body of men combining for the purpose of business may incorporate under any name they may select. The name is not imposed by the law but is chosen by the incorporators. With that selection the sovereignty of the State has nothing to do. The act of sovereignty allowing incorporation is permissive, not mandatory. It sanctions the act of incorporation under the name and for the business proposed, if that name and that business be otherwise lawful. The sovereign by the act of incorporation adjudges neither the legality of the business proposed, nor of the name assumed. That is matter for judicial determination by a court having jurisdiction of the subject when the legality of the business or of the name is called in question. If one may not use the name imposed upon him in invitum so that it shall work wrong to another, by what token may he become incorporated under a name selected by himself to effect like wrong? And how is the sovereignty * * * impugned by the denial to incorporators of a right to perpetrate such a wrong?" Page 300 of 113 F.

" Incorporators of a company choose a name at their peril. * * * They will be presumed to know the names under which probable existing competitors * * * are doing business. The choice of a name colorably similar to that used by a competitor is evidence of...