United States Light & Heating Co. of Maine v. U.S. Light & Heating Co. of New York

• Decision Date: 21 June 1910
• Citation: 181 F. 182
• Parties: UNITED STATES LIGHT & HEATING CO. OF MAINE v. UNITED STATES LIGHT & HEATING CO. OF NEW YORK et al.
• Court: U.S. District Court — Southern District of New York

181 F. 182

UNITED STATES LIGHT & HEATING CO. OF MAINE v. UNITED STATES LIGHT & HEATING CO. OF NEW YORK et al.

United States Circuit Court, S.D. New York.

June 21, 1910

Dos Passos Bros., for complainant.

Alfred J. Talley, for defendants.

HAND District Judge.

Upon the merits I have no doubt that Moore's effort was either to embarrass the New Jersey company by preventing it from getting a New York license, or to set up a business which should divert or disarrange the complainant's business. The case is quite devoid of the usual excuses and defenses and seems to me to be a more impudent effort by a retiring or discharged employe to seize part of the business, than I have ever before met with. An especially flagrant fact is that Moore organized the company-- which is the most obvious cover for himself alone-- while he was yet in the employ of the New Jersey company. In short, he planned his dummy corporation to trade on the complainant's business while he was still taking the pay of the New Jersey company, and was pledged not only in law, but in good faith, to give it loyal service. It is a matter of no consequence whether or not Moore knew of the proposed incorporation of the Maine company and its rights, because the complainant stands in the right of the New Jersey company. The right to transfer the use of that name is not challenged, nor indeed could it be. Certainly an assignee of the good will and business may use the old name either with or without an incorporation. The defendants raise two grounds of defense: First, that a foreign corporation may not prevent the use of the name of a domestic corporation and, second, that both the complainant and the New Jersey company got no license to do business in New York, and that the New Jersey company failed to pay its taxes and lost its charter in New Jersey for that reason.

As to the first position, it is supported by Hazleton Boiler Co. v. Hazleton Tripod Boiler Co., 142 Ill. 494, 30 N.E. 339, and by some clearly obiter remarks in Continental Insurance Co. v. Continental Fire Association, 101 F. 255, 41 C.C.A. 326 (Circuit Court of Appeals, Fifth Circuit). However, a decision squarely in opposition is Peck Brothers Co. v. Peck Brothers Co., 113 F. 291, 51 C.C.A. 251, 62 L.R.A. 81 (Circuit Court of Appeals, Seventh Circuit), and another is the decision of Judge Bradford in Philadelphia Trust, S.D. & I. Co. v. Philadelphia Trust Co. (C.C.) 123 F. 534, in which, however, the point was apparently not discussed. No one contends that a domestic corporation may not get an injunction against another domestic corporation forbidding the piracy of its own name, and this is true as well in the federal as in the state courts. The distinction made in the Illinois decision is that a foreign corporation, which comes into the state by sufferance, cannot prevent the state from naming its own corporations as it will. However, this proves too much, because a court is as much bound by the act of a state government in giving a corporate name, when complaint is made by a domestic corporation, as when by a foreign corporation. The question is not who complains. 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-- and, indeed, the only possible view, which can justify the interference of courts in such cases between domestic corporations-- 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. For example, suppose Moore had in this case, under section 440 of the Penal Law of New York (Consol. Laws, c. 40) adopted the name which he gave the defendant corporation. No one would for a moment suppose that the license given by that statute upon filing a record in the county clerk's office was a defense. Indeed, it would be only an added evidence of the wanton character of his attempt, just as it is here, when the corporation is a mere blind. Clearly the statute in that case would not give him immunity. Yet the general statute authorizing the formation of corporations is in this respect no different; it merely authorizes the taking of a name when used lawfully.

If this be so, as no one denies, the power equally exists, whoever is the complainant, and I confess I cannot see why a foreign corporation should be obliged to submit to a tort which the state has not legalized, and which, if committed against a domestic corporation, or an alien individual, could be remedied. Of course the state might make a foreign corporation wholly an outlaw and exclude it from all tribunals, but, in so far as it has the general right to appear and complain of torts, it must be presumed to stand upon the same basis as to this kind of tort, as it does as to others. For these reasons, I shall hold that the complainant may sue.

There remains the defense of its misconduct in failing to take out a license in this state. Section 15 of the general corporation law of New York (Consol. Laws, c. 23) forbids any foreign stock corporation from doing business without a license, and then says that such a corporation may...