People ex rel. Brown v. Illinois State Troopers Lodge No. 41

• Decision Date: 15 August 1972
• Docket Number: No. 41,No. 11523,D,41,11523
• Citation: 7 Ill.App.3d 98,286 N.E.2d 524
• Parties: PEOPLE of the State of Illinois ex rel. Herbert BROWN, Director, Illinois Department of Law Enforcement, Plaintiff-Appellant, v. ILLINOIS STATE TROOPERS LODGE NO. 41, an Illinois not for profit corporation, a/k/a Fraternal Order of Police, Illinois State Troopers Lodgeefendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 524

286 N.E.2d 524

7 Ill.App.3d 98

PEOPLE of the State of Illinois ex rel. Herbert BROWN Director, Illinois Department of Law Enforcement Plaintiff-Appellant, v. ILLINOIS STATE TROOPERS LODGE NO. 41, an Illinois not for profit corporation, a/k/a Fraternal Order of Police, Illinois State Troopers Lodge No. 41, Defendant-Appellee.

No. 11523.

Appellate Court of Illinois, Fourth District.

Aug. 15, 1972.

Rehearing Denied Sept. 12, 1972.

William J. Scott, Atty. Gen., Chicago (Francis T. Crowe, Samuel E. Hirsch, Asst. Attys. Gen., of counsel), for plaintiff-appellee.

Edward G. Coleman, Springfield, for defendant-appellee.

SMITH, Justice.

A two-count complaint was filed by the People of the State of Illinois ex rel. Herbert Brown, Director of the Illinois Department of Law Enforcement, to enjoin the Defendant from using the name 'Illinois State Trooper' in its solicitation campaigns and to enjoin the violation of certain departmental rules. The trial court on motion dismissed the complaint and this appeal has been perfected.

The first count of the complaint alleged that the Defendant, Illinois State Troopers Lodge No. 41 (hereinafter referred to as Lodge No. 41) was a not-for-profit corporation which had registered under the Illinois Solicitation Act and which solicited funds from the general public for its organizational needs and purposes. It is alleged that Lodge No. 41 employed professional fund raisers for the purpose of raising funds and that the solicitation campaigns prominently featured the name 'Illinois State Trooper' and the connection of Lodge No. 41 with the State Police. The complaint further alleges that the Department of Law Enforcement has internal regulations issued pursuant to its statutory authority which prohibit police personnel from collecting money from citizens for any purpose and from collecting contributions by any means. Police officers are also forbidden by regulation from joining any group whose charter, constitution or by-laws exact a prior allegiance or prevent the full performance of the officers' duties. It is then alleged that the solicitation by the Defendant was a sham and a device to avoid rules of the Department, that the purpose of Lodge No. 41 was to create a corporate body to permit the troopers to do what they are prohibited from doing.

Count II of the complaint alleged that the term 'trooper' which is used in the name of the Defendant is synonymous with the term 'Illinois State Police' and that its use in the solicitation of funds tends to confuse and mislead the public. It is further alleged that the Illinois Solicitation Act forbids the solicitation of funds in a name closely related to a governmental body. An injunction is sought in Count I to prevent Lodge No. 41 from violation of departmental rules and in Count II to prevent the use of the name 'Illinois State Trooper' in its solicitation.

A motion to dismiss was filed and after hearing, granted. As to Count I, the court found that the rules of the state police do not apply to Lodge No. 41, and that there was an adequate remedy at law for the Department of Law Enforcement to enforce its own rules against its officers. As to Count II, the court found no confusing similarity between Illinois State Troopers Lodge No. 41 and the name of Illinois State Police such as would tend to confuse the public. The trial court also concluded that the Director of the Department of Law Enforcement does not have standing to sue for a violation of the Illinois Solicitation Act and that he was estopped by the license issued by the Attorney General to deny the legality of the solicitation.

Count I alleges that the solicitation of funds by Lodge No. 41 violates the regulations of the State Highway Police which are as follows:

'Police personnel shall not collect money from citizens for any purpose, or sell tickets or assist in the sale of ads for any publication, official or otherwise, or seek or collect contributions from any one, by any means, for any purpose or under any circumstances. This includes the solicitation or collection of contributions or pledges for charitable purposes regardless of how worthy the cause. * * *

Police personnel are prohibited from joining or affiliating with any organization, association, or group whose charter, constitution, or bylaws exact in anyway a prior allegiance or prevent the full performance of state police or divisional duties or responsibilities.'

Lodge No. 41 contends that as it is a separate corporate entity, a not-for-profit corporation registered with the Attorney General for soliciting funds for charitable purposes, the rules may not be enforced against it as the rules are only applicable to State Police personnel. It is contended that if there are rules that are being violated, the departmental sanctions should be applied to the offending officer and that there cannot be any application of these rules to a separate corporate entity which is not under the jurisdiction of the Department of Law Enforcement.

Courts have been hesitant to disregard the corporate entity unless the circumstances cumstances strongly warrant such action. However, it has long been held that the corporate veil will be pierced in order to prevent the evasion of a statutory or constitutional duty imposed by the state. In Ohio Tank Car Co. v. Keith Ry. Equipment Co., 148 F.2d 4 (7th Cir.), the court stated on page 6 as follows:

'The general rule that a corporation and its stockholders are deemed separate entities is subject to the qualification that the separate identity may be disregarded in exceptional situations where it otherwise would present an obstacle to the due protection or enforcement of public or private rights.'

The court therein found a violation of a statute dealing with rebates in the railroad industry rejecting the argument that the prohibition did not apply to the separate corporate defendant.

In Kavanaugh v. Ford Motor Company, 353 F.2d 710 (7th Cir.), the court again disregarded the corporate entity concluding that it must look to the substance and the reality of the situation and not the form of the organizational structure. The court stated on page 717:

'It is settled doctrine that the fiction of corporate entity will be disregarded whenever it has been adopted or used to evade the provisions of a statute. (Citing cases) For the reasons we have demonstrated, the Dealers' Day in Court Act would be subverted in the instant case if the corporate format adopted by the parties was given recognition. Hence, we must 'pierce the veil' of the corporate entity and look to the substance and reality of the situation.'

A similar holding was adopted in Bigelow v. RKO Radio Pictures, 170 F.2d 783 (7th Cir.).

All of the members of Lodge No. 41 were members of the State Highway Police; this fact was admitted in the brief of Lodge No. 41. The complaint alleged that the purpose of the creation of the lodge was the avoidance of these rules and that the solicitation was just a sham and a device for the purpose of evading the proscription against solicitation. Those allegations appear to bring the cause of action directly in line with the foregoing cases wherein the corporate structure was used to evade a statute, or the prohibition of an injunction, or in this case, rules of the Department of Law Enforcement. The complaint therefore states a cause of action for application of the rules to the separate corporate entity.

It is no defense that there is an independent party hired to do the solicitation; he is still hired by Lodge No. 41 and obtains his instructions and directions from Lodge No. 41. Whether an independent contractor or not, 'The hand is the hand of Esau, although the voice is the voice of Jacob.'

The central issue in Count II is whether the use of the name 'Illinois State Troopers Lodge No. 41' might be confusing to the public. The statutory authority, which is the basis for this count, is set forth in Chapter 23, Sec. 5111(d) of the 1969 Ill.Rev.Stat., and provides:

'No charitable organization or professional fund raiser soliciting contributions shall use a name, symbol, or statement so closely related or similar to that used by another charitable organization or governmental agency that the use thereof would tend to confuse or mislead the public.'

There is no decision under this section of that statute. Lodge No. 41 contends that the Plaintiff must plead and show actual confusion, or fraud, or abuse in the use of the name, in order to be entitled to an injunction. However, a review of the cases in analogous areas indicates that the likelihood of confusion is the touchstone in the use of similar names.

The common law is stated in Baldassano v. Accettura, 336 Ill.App. 445, on page 447, 84 N.E.2d 336, on page 337, wherein the court states as follows:

'The rule is that equity will give injunctive relief to a corporation where another has used the former's name or a name so clearly similar as to almost necessarily lead to complication and confusion in the business of the parties * * *. The trend is to place less emphasis on the idea of business unfairness * * * and more on confusion of the public. * * * It has been held that proof of actual confusion is not essential. * * *'

Section 22 of Chapter 140 of the Illinois Revised Statutes provides that an injunction may be issued restraining individuals from the use of similar trademarks when the use might lead to confusion as to the source of the goods and services. Un...