Staples Coal Co. v. City Fuel Co.

• Decision Date: 16 June 1944
• Citation: 62 U.S.P.Q. 211,316 Mass. 503,55 N.E.2d 934
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: STAPLES COAL COMPANY v. CITY FUEL COMPANY & another.

316 Mass. 503

55 N.E.2d 934, 62 U.S.P.Q. 211

STAPLES COAL COMPANY v. CITY FUEL COMPANY & another.

Supreme Judicial Court of Massachusetts, Suffolk.

June 16, 1944

May 1, 1944.

Present: FIELD, C.

J., QUA, RONAN & WILKINS, JJ.

Name. Corporation Name.

Unlawful Interference. Unfair Competition. Equity Pleading and Practice, Injunction. A suit in equity could not be maintained under G. L. (Ter. Ed.) c. 155,

Section 9, before its amendment by St. 1943, c. 295, by a corporation to enjoin use by a later organized corporation of a corporate name identical with a trade name used by the plaintiff but unlike the plaintiff's corporate name.

An individual has a natural right to use his own name in his own business but he has no right to use it as a means of deceiving the public into believing that in dealing with him they are dealing with another, nor has he the right to use his name for the purpose of palming off his goods as those of another. Per RONAN, J.

A corporation has no more right to use its corporate name to effectuate unfair competition than has an individual.

A corporation might maintain a suit in equity to enjoin a second corporation from a fraudulent use of the defendant's corporate name in competition with the plaintiff tending to confuse and mislead the public into believing that they were dealing with the plaintiff, where it appeared that, while the plaintiff's corporate name was different from the defendant's, the plaintiff previous to the incorporation of the defendant had so far established a business under a trade name identical with the corporate name afterwards taken by the defendant that that name had acquired a secondary meaning as referring to that business.

In a suit in equity to enjoin the defendant from use of a name in unfair competition with the plaintiff, an injunction against listing of the name in telephone directories and otherwise using it was ordered modified by confining its scope to listing in directories and other use in towns and cities where the plaintiff was using the name and the defendant was using or threatening to use it in such competition.

BILL IN EQUITY filed in the Superior Court on September 28, 1943. The suit was heard by Brogna, J.

E. C. Jacobs, (J.

T. Coan with him,) for the defendants.

F. E. Allison, for the plaintiff.

RONAN, J. The plaintiff was incorporated in this Commonwealth in 1911 under the name of City Fuel Company and was engaged in selling coal and coke until 1928 when its corporate name was changed to Staples Coal Company. It has ever since continued to do business under the name of City Fuel Company selling coal and coke and, since 1932, also fuel oil for domestic and industrial use. The plaintiff as the City Fuel Company has advertised extensively in Boston and suburban newspapers, by pamphlets to the trade, by the radio and by general and classified listings and advertisements in the Boston telephone directory.

The defendant Donaghey started in 1933 in the retail fuel oil business in Woburn. He transferred the business to the defendant corporation which was incorporated on May 14, 1943, under the name of City Fuel Company. He owns all but three qualifying shares of this corporation. The individual defendant and later his corporation have done a small local business in Woburn and the neighboring towns selling fuel oil for domestic purposes and servicing fuel oil burners. Donaghey knew when he first assumed the trade name of City Fuel Company that the plaintiff was doing business under that name and sought to profit from the fact that the City Fuel Company had changed its name to Staples Coal Company, and the incorporation of his business was an attempt to legalize the use for his benefit of the name City Fuel Company. The public in greater Boston with the exception of Woburn and five nearby towns have generally come to know the City Fuel Company as the plaintiff. To permit the defendants to have a telephone listing in the name of City Fuel Co. or City Fuel Company would be likely to confuse and mislead the public to believe that such a listing was the plaintiff's, and result in loss of business to the plaintiff. The defendants appealed from a final decree enjoining them from using the name City Fuel Co. or City Fuel Company anywhere in the Commonwealth except in Woburn, Reading, Wakefield, Stoneham Winchester and Lexington, and enjoining them "from directly or indirectly seeking or causing to be listed either of said names in connection with the business of the defendants, or either of them in a telephone directory, except in a directory in which is included only the city of Woburn and the towns aforesaid."

The bill cannot be maintained under G. L. (Ter. Ed.) c. 155, Section 9, on the ground that the defendant corporation (hereinafter called the defendant) has assumed a corporate name so similar to that of the plaintiff that the defendant's name will be likely to be mistaken for the plaintiff's name. The plaintiff's corporate name is not similar to the defendant's, and there is no possibility that the public would on this account be deceived into dealing with the defendant in the belief that they were dealing with the plaintiff. Indeed, the plaintiff does not contend that any confusion would result from the use of these two corporate names but bases its contention upon the fact that the defendant's corporate name is identical with the trade name which the plaintiff has assumed and under which it has become generally known to the fuel purchasing public. The statute, however, did not at the time the defendant was incorporated on May 14, 1943, give any relief except where there was similarity between corporate names. Boston Rubber Shoe Co. v. Boston Rubber Co. 149 Mass. 436 . The plaintiff's corporate name since 1928 has been Staples Coal Company. This statute has been broadened by St. 1943, c. 295, which now extends injunctive relief to a corporation whose corporate name or trade name, or a name similar to either, has been assumed by another corporation. This last statute was not approved until four days after the incorporation of the defendant and therefore has no application to the instant case. Hanscom v. Malden & Melrose Gas Light Co. 220 Mass. 1 . Rosenthal v. Liss, 269 Mass. 373 . Bernhardt v. Atlantic Finance Corp. 311 Mass. 183 . See Lorntsen v. Union Fisherman's Co. 71 Ore. 540.

The bill of complaint does not rest entirely upon alleged rights under G. L. (Ter. Ed.) c. 155, Section 9, for it also purports to set forth a cause of action in the nature of unfair competition for injury to the plaintiff's business. A bill to enjoin unfair competition differs essentially from a bill brought under the statute to restrain the use of a similar corporate name. The primary purpose of one is to secure freedom from fraudulent conduct of another while the principal object of the second is to protect the public from imposition by means of identical or similar corporate names. In the first damages may be recovered and in the second nothing more than injunctive relief may be afforded. Economy Food Products Co. v. Economy Grocery Stores Corp. 281 Mass. 57 . National Shoe Corp. v. National Shoe Manuf. Co. Inc. 302 Mass. 449 . Women's Mutual Benefit Society, St. Mary of Carmen v. Catholic Society Feminine of Maria, S. S. of Monte Carmelo, 304 Mass. 349 . A trade name acquired by a corporation, if extensively used over a long period of years in the successful conduct of its business, may become an asset of great value to the corporation; and, even if the trade name cannot be protected by a statute which applies only to corporate names, we see no reason why, apart from the statute, the trade name may not be protected in accordance with the general principles respecting the granting of relief in cases of unfair competition. Thaddeus Davids Co. v. Davids Manuf. Co. 233 U.S. 461. Hurn v. Oursler, 289 U.S. 238. Armstrong Paint & Varnish Works v. Nu-Enamel Corp. 305 U.S. 315.

The plaintiff made little, if any, use of its present corporate name in dealing with the public, and it transacted all or nearly all of its business under its trade name of City Fuel Company. Its business was extensively advertised under that name. The plaintiff was generally known as the City Fuel Company. The words "City Fuel Company" acquired a secondary meaning. They meant the business conducted by the plaintiff. A corporation has a right to assume a trade name and in the absence of fraud to conduct its business in that name. Melledge v. Boston Iron Co. 5 Cush. 158. William Gilligan Co. v. Casey, 205 Mass. 26 . Lord v. Cummings, 303 Mass. 457. Blanchard v. Stone's Inc. 304 Mass. 634 . The defendant's corporate name is identical with the plaintiff's trade name. Both the plaintiff and the defendant are engaged in the retail sale of fuel oil. The defendant has about one hundred fifty fuel oil customers while the plaintiff has five hundred, only a very few of whom are located in the district served by the defendant. Donaghey knew of the use of the name City Fuel Company by the plaintiff for some years before he incorporated his business under a name identical with the plaintiff's trade name.

The evidence and the findings of the judge show that there has been a fraudulent use of the plaintiff's trade name by the defendants. The question presented is whether in these circumstances an injunction can issue against such use of the defendant's corporate name.

An individual has the right to use his own name in his own business but he has no right to use it as a means of deceiving the public into believing that in dealing with him they are dealing with another, nor has he the right to use his name for the purpose of palming off his goods as those of another. He has a natural right to use his...