Standard Oil Co. of New Mexico v. Standard Oil Co. of Cal.

• Decision Date: 21 March 1932
• Docket Number: No. 543.,543.
• Citation: 56 F.2d 973
• Parties: STANDARD OIL CO. OF NEW MEXICO, Inc., v. STANDARD OIL CO. OF CALIFORNIA.
• Court: U.S. Court of Appeals — Tenth Circuit

56 F.2d 973 (1932)

STANDARD OIL CO. OF NEW MEXICO, Inc., v. STANDARD OIL CO. OF CALIFORNIA.

No. 543.

Circuit Court of Appeals, Tenth Circuit.

March 21, 1932.

F. A. Catron, of Santa Fé, N. M., for appellant.

E. R. Wright of Santa Fé, N. M. (Miley, Hoffman, Williams & France, of Oklahoma City, Okl., and Donovan N. Hoover, of Santa Fé, N. M., on the brief), for appellee.

Before PHILLIPS and McDERMOTT, Circuit Judges, and KENNEDY, District Judge.

PHILLIPS, Circuit Judge.

Standard Oil Company of California brought this suit against the Standard Oil Company of New Mexico, Inc., to enjoin the latter from using the corporate name, the Standard Oil Company of New Mexico, Inc., or any corporate name which contains the words "Standard Oil Company" or words so similar thereto in sound or appearance as to lead to confusion or uncertainty, or to use the word "Standard" in connection with the manufacture or sale of petroleum products.

Plaintiff is a corporation organized under the laws of Utah, and in February, 1928, it was duly authorized to transact business in New Mexico as a foreign corporation. Defendant was organized as a corporation on September 27, 1929, under the laws of New Mexico.

Both plaintiff and defendant are authorized under their respective articles of incorporation to engage generally in the business of producing, manufacturing, and marketing petroleum and petroleum products, including gasoline, motor oil, and specialty products derived from petroleum. Continuously since it was authorized to transact business in New Mexico, plaintiff has engaged in the business of distributing and selling petroleum and petroleum products both at wholesale and retail in such state. It has a capital investment in New Mexico of approximately one-half million dollars, and its gross annual sales exceed one and one-half million dollars; and it has built up a large and profitable business and good-will under its corporate name.

In 1923 the Standard Oil Company of Indiana registered with the secretary of state of New Mexico the word "Standard" as a trade-mark to be used in connection with its business of distributing and selling petroleum. In October, 1929, it assigned such trade-mark to plaintiff. The Standard Oil Company of Indiana has not qualified to do business in New Mexico and its business in such state has been limited to interstate transactions.

Since commencing business in New Mexico, plaintiff has used the word "Standard" as descriptive of its products, and the words "Standard," "Standard Oil," "Standard Oil Products," and "Standard Oil Company Products" in connection with the sale and distribution of its products and in the transaction of its business in New Mexico; and such words have come to be understood by the public to mean the products of plaintiff, and have acquired what is commonly called a secondary meaning.

On September 27, 1929, one Harry Starr of New York City caused defendant to be incorporated. At or about the same time he caused other companies to be incorporated in Virginia, West Virginia, Maine, Rhode Island, North Dakota, Alabama, and South Carolina. In each instance the corporate name adopted consisted of the words "Standard Oil Company of," followed by the name of the state within which the corporation was organized. The articles of incorporation of each of such corporations were substantially alike. In organizing defendant, Starr was acting as attorney and agent of Jacob J. Smith, Stanley Andt, and Leonard E. Finkle of New York City, and E. Walter Hudson and Jacob J. Shilfer of Philadelphia. Smith and Hudson have been directors and officers of defendant since October 16, 1929.

The incorporation of defendant was a part of a general plan and scheme of Starr and those whom he represented to organize in various states corporations with names similar to Standard Oil Companies already incorporated in such states.

In March, 1930, defendant filed in the office of the State Corporation Commission of New Mexico a certificate showing the payment of its capital stock, the holding of its first annual meeting, and the election of its board of directors and executive officers.

The trial court entered a decree enjoining defendant from using in the state of New Mexico, except for the purpose of changing its corporate name, the name "`The Standard Oil Company of New Mexico, Inc.,' or any * * * name containing the words `Standard,' `Standard Oil,' or any similar name, or any variation thereof, or any other words so * * * similar in sound or appearance to the corporate name of" plaintiff "as to lead to uncertainty and confusion."

Defendant has appealed.

Section 1, c. 112, N. M. Laws 1927, in providing what a certificate of incorporation shall set forth, in part reads as follows:

"No name shall be assumed already in use by another existing corporation of this State, or which in the judgment of the State Corporation Commission, is so nearly similar thereto as to be misleading or confusing."

Counsel for defendant contends that the State Corporation Commission of New Mexico, when it granted a charter to defendant, necessarily passed on the question of whether the name adopted by defendant was so similar to the name of plaintiff as to be misleading or confusing; and that the decision of the commission is final and conclusive. The statute does not undertake to make it so. The authorities generally hold that such a decision is not conclusive on the courts. General Film Co. of Mo. v. General Film Co. of Me. (C. C. A. 8) 237 F. 64; Drugs Consolidated, Inc. v. Drug Incorporated (Del. Ch.) 144 A. 656; Diamond Drill Contracting Co. v. International Diamond Drill Contracting Co., 106 Wash. 72, 179 P. 120; Knights of the Maccabees of the World v. Searle, 75 Neb. 285, 106 N. W. 448; People ex rel. Columbia Chemical Co. v. O'Brien, 101 App. Div. 296, 91 N. Y. S. 649; Material Men's Merc. Ass'n v. New York Material Men's Merc. Ass'n, 169 App. Div. 843, 155 N. Y. S. 706; Fletcher Cyc. Corporations (Per Ed.) vol. 6, § 2426.

We are of the opinion that such a decision by an administrative officer or board does not preclude the courts from granting injunctive relief, if the requisite grounds therefor exist.

Counsel for defendant asserts that the mere adoption of a name similar to that of plaintiff, until defendant has engaged in business thereunder, does not constitute unfair competition warranting injunctive relief by a court of equity.

This is not strictly a suit to enjoin unfair competition. It is in the nature of a bill quia timet to enjoin the threatened unlawful use of a corporate name. Defendant's articles of incorporation indicate that it proposes to engage in New Mexico in the same line of business as plaintiff is now carrying on in such state, and that defendant purposes to use in connection therewith the words "Standard," "Standard Oil" or "Standard Oil Company."

Equity aids the vigilant, not those who slumber on their rights. Etting v. Marx's Executor (C. C. Va.) 4 F. 673, 681; Frank v. Butler County (C. C. A. 8) 139 F. 119, 124; Hammond v. Hopkins, 143 U. S. 224, 274, 12 S. Ct. 418, 36 L. Ed. 134; St. Paul F. & M. Ins. Co. v. Freeman, 80 Mont. 266, 260 P. 124, 128; Standard Oil Co. of N. Y. v. Standard Oil Co. of Me. (D. C. Me.) 38 F.(2d) 677; Pomeroy's Equity Jurisprudence (4th Ed.) vol. 1, § 418.

It was the duty of plaintiff to act before the rights of innocent third persons (such, for example, as purchasers of stock in defendant) had intervened. Edison Storage Battery Co. v. Edison Automobile Co., 67 N. J. Eq. 44, 56 A. 861, 864, 865; Cleveland Opera Co. v. Cleveland Civic Opera Ass'n, 22 Ohio App. 400, 154 N. E. 352, 355; Fletcher Cyc. Corporations, (Per Ed.) vol. 6, § 2440.

Furthermore, since defendant has not commenced the transaction of business, it will be a simple matter for it to change its corporate name, and the decree will result in little inconvenience to it. On the other hand, defendant would be greatly inconvenienced by such a decree rendered after it had actually engaged in manufacturing and marketing its products under the names "Standard," "Standard Oil," or "Standard Oil Company."

A court of equity will act by injunction to prevent a threatened wrongful act which appears to be imminent, if irreparable injury will result therefrom. Standard Oil Co. of Me. v. Standard Oil Co. of N. Y. (C. C. A. 1) 45 F.(2d) 309, 310, 311; United Drug Co. v. Parodney (D. C. N. Y.) 24 F.(2d) 577; Cleveland Opera Co. v. Cleveland Civic Opera Ass'n, supra; Guardian Assur. Co. v. Garrett, 40 Dom. L. Rep. 455; Fletcher Cyc. Corporations (Per Ed.,) vol. 6, § 2440. "One does not have to await the consummation of threatened injury to obtain preventive relief. If the injury is certainly impending, that is enough." Pennsylvania v. West Virginia, 262 U. S. 553, 593, 43 S. Ct. 658, 663, 67 L. Ed. 1117, 32 A. L. R. 300.

Neither reason nor authority required plaintiff to wait until the threatened injury had occurred.

Counsel for defendant urges that the names of defendant and plaintiff are not so similar as to make it probable that the public will be confused or deceived. The trial court found and the evidence fully established that "Standard," "Standard Oil," and "Standard Oil Products" have acquired a secondary meaning in New Mexico, and have come to mean the goods and products of plaintiff. The only difference between the corporate names is the last word thereof, one being "New Mexico" and the other "California." "Standard Oil Company" are the dominant words in such names. Under such a state of facts there can be no doubt that, if defendant were permitted to engage in the petroleum business under its corporate name, third persons would deal with defendant thinking they were dealing with plaintiff and would purchase the goods and products of defendant in the belief that such were the goods and products of plaintiff; and the identity of plaintiff would be confused and destroyed.

Finally, counsel for defend...