Personal Finance Co. of Lincoln v. Personal Loan Service
| Decision Date | 08 October 1937 |
| Docket Number | 29871. |
| Citation | 275 N.W. 324,133 Neb. 373,35 U.S.P.Q. 217 |
| Parties | PERSONAL FINANCE CO. OF LINCOLN v. PERSONAL LOAN SERVICE. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. Unfair competition means conduct in any trade or business whereby one party, in a deceptive manner, transacts his business with the public in such a way as to leave the impression it is dealing with another.
2. In order for one to be entitled to enjoin the use of a trade-name as unfair competition, it must appear that ordinary persons, dealing with ordinary caution, are likely to be misled or confused. Where there is no probability of deception there can be no unfair competition.
3. As a general rule, descriptive terms, or generic words, are not susceptible of exclusive appropriation. They may be used by all the world in an honestly descriptive or nondescriptive manner; but if by their use one person, intending to avail himself of another's reputation, is enabled to transact his business as that of his rival, and prospective customers are likely to be misled or confused thereby, such use then becomes unlawful.
4. The law does not require the plaintiff to prove that deception or confusion actually occurred; he will be entitled to equitable relief if he shows a calculation on the part of the defendant to deceive and a reasonable likelihood that deception or confusion will result therefrom.
5. A permit to transact business issued to a corporation by the secretary of state is not binding upon the courts as res adjudicata.
6. Evidence shows defendant to be conducting its business in such manner as to amount to unfair competition.
Appeal from District Court, Lancaster County; Broady, Judge.
Suit by the Personal Finance Company of Lincoln against the Personal Loan Service. From a decree denying an injunction, plaintiff appeals.
Reversed.
Personal Finance Company.
Woods Aitken & Aitken, of Lincoln, for appellant.
Max G Towle, of Lincoln, for appellee.
Heard before GOSS, C. J., EBERLY, DAY, PAINE, and CARTER, JJ., and ELDRED and CHASE, District Judges.
This is a suit in equity, in which the plaintiff seeks to enjoin the defendant from using its corporate name, claiming the use thereof constitutes unfair competition. The trial court, by its decree upon the merits, denied the injunction, and the plaintiff presents the record here for review.
The pleadings are so involved we can only epitomize them. The plaintiff asserts that it is a corporation organized under the laws of the state of Delaware, licensed to transact the business of a small loan and finance company in Nebraska, under the name of Personal Finance Company, of Lincoln, and is engaged in such business at Lincoln; that it began business on June 15, 1931; that on the 6th day of June, 1935, the defendant was incorporated under the laws of the state of Nebraska to carry on a similar business under the corporate name of Personal Loan Service; that one Joseph J. Hynes had been active manager of plaintiff's business until the incorporation of the defendant, at which time he left plaintiff's employ and organized the defendant corporation for the purpose of carrying on a finance business, also at Lincoln, in competition with the plaintiff; that the plaintiff's business had been built up because of its reputation for honesty and fair dealing; that the defendant Hynes, during this period, was its chief managing officer; that the plaintiff's name had thus become a valuable trade-name; that the said Hynes and his associates knew these facts, and for the purpose and with the intention of appropriating the good-will and trade-name of the plaintiff adopted its corporate name and advertised such name through newspapers, telephone directories and listings; that the defendant adopted the name in pursuance of a preconceived fraudulent intention of deceiving the customers of the plaintiff and winning them over to the defendant; that customers intending to contact plaintiff were deceived, misled, and diverted, and induced to communicate with the defendant, with the result that plaintiff lost considerable business through the defendant's unfair conduct, and the defendant thereby became enriched and benefited to the damage of the plaintiff; that the intention of the defendant in adopting a name of such similarity to that of the plaintiff was to confuse the customers of the plaintiff and induce them to deal with the defendant under the belief they were dealing with the plaintiff; that the damages resulting from such conduct are not susceptible of adequate legal measurement, but that they have accrued and will continue to accrue in the future, and plaintiff is without adequate remedy at law.
The defendant, after traversing the general allegations of the petition, admits that it is incorporated under the name Personal Loan Service and is doing business as such. It avers as an affirmative defense that the secretary of state has issued a permit to the defendant to use such trade-name.
From the evidence it appears that the plaintiff began business in Lincoln in 1931, spent approximately $200 a month for advertising; that it made about 1,200 loans every year; that one Joseph J. Hynes, the secretary-treasurer of the defendant, was employed by the plaintiff as its managing officer in June, 1932, and continued in such employment about three years; that he was assisted by one Fern Beardsley as cashier; that in 1935 Hynes left the employ of the plaintiff voluntarily, and with one Waller organized the defendant company; that shortly after the organization of the defendant company the cashier, Fern Beardsley, volun tarily left the employ of the plaintiff and became cashier of the defendant; that both Mr. Hynes and Miss Beardsley, during their employment with plaintiff, made contact with plaintiff's customers at its place of business in the Sharp building in Lincoln, Nebraska. The defendant's place of business is in the Federal Securities building, immediately across the street from that of the plaintiff. During the time Hynes was in its employ the plaintiff contacted about 2,600 customers. It is claimed that about 35 of these customers have since transferred their business from the plaintiff to the defendant. Whether this abandonment of the plaintiff by these customers is due to confusion, business dissatisfaction, or otherwise, is not disclosed by the record; neither is their identity established. The plaintiff, in its endeavor to establish the charge of confusion, proffered a witness who testified he had previously been a customer of the plaintiff, and had some loans with them; that he knew Hynes had moved his office to the Federal Securities building; that such information had been gleaned by newspaper advertisements. While he admitted that he was aware that Hynes was not then working for plaintiff, he was confused, however, in the nature of Hynes' business; that he believed Hynes was now engaged in the insurance business. There was also offered in evidence a letter written...
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