Zimmerman v. Holiday Inns of America, Inc.

• Decision Date: 01 March 1969
• Docket Number: 213,211,Nos. 210,s. 210
• Citation: 266 A.2d 87,41 A.L.R.3d 421,438 Pa. 528
• Parties: , 41 A.L.R.3d 427, 166 U.S.P.Q. 52 Eugene W. ZIMMERMAN, t/d/b/a Holiday Motor Hotels, Appellant in 213, Holiday Inn Hotel Courts, Inc., Holiday Motor Hotel, Inc., Holiday Motel and Inn, Inc., Holiday Motor Hotel Restaurant, Inc., v. HOLIDAY INNS OF AMERICA, INC., et al., Appellants in 210, 211
• Court: Pennsylvania Supreme Court

Page 87

266 A.2d 87

438 Pa. 528, 41 A.L.R.3d 427, 166

U.S.P.Q. 52

Eugene W. ZIMMERMAN, t/d/b/a Holiday Motor Hotels Appellant in 213, Holiday Inn Hotel Courts, Inc. Holiday Motor Hotel, Inc., Holiday Motel and Inn, Inc., Holiday Motor Hotel Restaurant, Inc., v. HOLIDAY INNS OF AMERICA, INC., et al., Appellants in 210, 211.

Nos. 210, 211, 213 March Term, 1969 Supreme Court of Pennsylvania.

May 28, 1970.

Rehearing Denied July 2, 1970.

William H. Webb, William H. Logsdon, Webb, Burden, Robinson & Webb, for Holiday Inns of America, Inc. Harold R. Schmidt, Thomas E. Boettger, Rose, Schmidt & Dixon, Pittsburgh, for Zimmerman.

Before BELL, C.J., and JONES, COHEN, EAGEN, O'BRIEN, ROBERTS, and POMEROY, JJ.

OPINION OF THE COURT.

O'BRIEN, Justice.

This is an action in equity wherein the plaintiffs seek to enjoin defendants from alleged unfair competition by their use of the name 'Holiday Inn' in rendering motel, hotel and restaurant services within a geographical area of Pennsylvania. It also involves a counterclaim wherein the defendants petition to restrain the plaintiffs from alleged unfair competition through plaintiffs' use of 'Holiday Inn' as a dominant feature of the name 'Holiday Inn Town,' one of the plaintiffs' three motels.

The action was filed on July 31, 1963. In the complaint the plaintiffs (hereinafter called 'Zimmerman' because Eugene W. Zimmerman is the real party in interest, as he controls all of the identified plaintiffs) originally asked that defendants be enjoined from using the mark 'Holiday Inn' within a one hundred mile radius of Harrisburg and a corridor above and below the Pennsylvania Turnpike from the Ohio State line to the New Jersey State line. Further, Zimmerman contended that defendants willfully and deliberately planned and conspired to divert business away from him and to weaken and destroy whatever rights he had in the name 'Holiday.' Zimmerman alleged that this conspiracy and plan used an interlocking reservation and advertising system.

Zimmerman's claims were denied by the defendants. The defendants alleged that Zimmerman was not entitled to relief because he was guilty of unclean hands and unfair competition. Defendants also counterclaimed, seeking an injunction against Zimmerman's use of the words 'Holiday Inn' in his 'Holiday Inn Town' motel.

After a thirty-one day trial, concluded on February 18, 1965, over seventy witnesses and six hundred exhibits, the chancellor rendered his adjudication on May 9, 1968. The chancellor found that Zimmerman had established a secondary meaning to the name 'Holiday' in the immediate area of Harrisburg, which area he did not define. The chancellor dismissed defendants' counterclaim, finding that Zimmerman's use of the name 'Holiday Inn Town' since 1960 was not done deliberately to pass off his motel as one of those of defendants.

Exceptions were argued to the court en banc on June 27, 1968, and an amended adjudication was rendered on February 24, 1969. The final decree was issued on February 24, 1969, and it enjoined the defendants from encroaching upon Zimmerman's market area, which was found to be a twenty-two mile radius from the center of Harrisburg. Zimmerman and the defendants appealed.

As between Zimmerman and the defendants, he was the first user of the word 'Holiday' for a motor hotel in the Commonwealth of Pennsylvania. Zimmerman decided in August, 1952, to use the name 'Holiday' at his fifty-five unit motel at the Gettysburg Pike Interchange of the Pennsylvania Turnpike, which opened in 1953. Between July 8, 1953, and September 16, 1954, an additional thirty-five units were built, making the 'Holiday' into ninety units. Zimmerman also owned and operated a fifty-unit motel at the East Harrisburg Interchange of the Turnpike. Originally called 'Motel Harrisburg,' since 1957 this motel has been designated as 'Holiday East' and the motel at the Gettysburg Interchange has been identified as 'Holiday West.' In 1960 Zimmerman built an additional motel in downtown Harrisburg, midway between Holiday East and Holiday West, which was named 'Holiday Inn Town.'

The chairman of the defendant Holiday Inns of America, Inc., Mr. Kemmons Wilson, began his first motel in July of 1952 when he opened a Holiday Inn in Memphis, Tennessee. His first motel attracted a good deal of attention and was an immediate success. It became apparent to Mr. Wilson that he himself did not have sufficient financial resources to carry out his plans for a national system of motels. Therefore, he contacted Wallace E. Johnson, now president of Holiday Inns of America, Inc., who at that time was a well-known homebuilder in the Memphis area. Mr. Wilson succeeded in convincing Mr. Johnson to join with him in his plan to create a national system of motels.

In March of 1953, Messrs. Johnson and Wilson wrote letters to various homebuilders around the country and asked them to come to Memphis, Tennessee, for a conference regarding their plan to create a national system of franchise motels. This conference and the concept of a national system of motels gained significance and national notoriety. Articles relating to this conference appeared in publications having national distribution such as 'Hotel Management,' 'Business Week,' 'St. Louis Post Dispatch,' 'Wall Street Journal,' and 'Barrons.'

This meeting of homebuilders was in March, 1953, and was the beginning of the national system of 'Holiday Inn' motels. At this meeting franchises were granted for areas that covered practically the entire United States.

In the spring of 1954, Zimmerman, while on a trip to Memphis, was informed that a motel under the name of 'Holiday' existed there as part of a chain that intended to expand. Immediately upon return to Harrisburg, Zimmerman, in an effort to protect the name, on advice of counsel, formed various corporations, using the key word 'Holiday.'

Both Zimmerman and the defendant Holiday Inn chain have grown from these early modest beginnings. Zimmerman's motel at the Gettysburg Interchange, now known as 'Holiday Motor Hotel West,' had expanded by 1964 to three hundred airconditioned rooms, with television and telephone. It also has a restaurant, gas station, three-hole golf course, large ballroom fully equipped with a revolving stage for presentations and convention facilities, olympic-size swimming pool and recreation room.

Zimmerman's motel at the Harrisburg East Interchange, now known as 'Holiday Motor Hotel East,' had expanded by 1964 to one hundred fifty air-conditioned rooms, a swimming pool, a restaurant, television and telephone in every room, and banquet and many other facilities. Zimmerman's Holiday Inn Town has four hundred fifty rooms.

During this same period, the defendants' dreams of a national chain of motels had become a reality. By 1964 the chain had grown to five hundred twenty-five members, each with the same advertising configuration (the words 'Holiday Inn' written in script), known as the 'Great Sign,' and each with television, air conditioning, swimming pool, 24-hour telephone service, uniform operating procedures and an interlinking advance reservation and referral system.

In evitably, these two motel empires had to clash. On June 30, 1958, the defendant Holiday Inns of America, Inc., reached Pennsylvania, where a licensee, B & C Motel Corporation opened a motel known as 'Holiday Inn' near Allentown, Pennsylvania, about eighty miles from Zimmerman's 'Holiday East' and about ninety miles from his 'Holiday West.'

On July 26, 1958, Zimmerman brought an action to restrain alleged unfair competition by the Holiday Inn chain. Judge Henninger of the Court of Common Pleas of Lehigh County granted the defendants' motion for compulsory nonsuit. Ultimately the case came before us and we found that Zimmerman had not then proved the requisite secondary meaning of the Holiday name in the Allentown area. Zimmerman v. B & C Motel Corp., 401 Pa. 278 163 A.2d 884 (1960). The opinion by Justice Bok ended with this paragraph:

'We approve the lower court's leaving the case without prejudice, in case the parties extend their facilities in this rapidly expanding industry.'

Since the B & C Motel case, the defendant Holiday Inn system has expanded to the point where, as of 1965, when this case came to trial, there were fifteen 'Holiday Inns' in Pennsylvania. Thus, the fact situation is quite different from what it was the last time a dispute between these same parties came before this court.

However, the law is the same. In order to prove that he is entitled to relief from the courts in the form of an injunction to protect his use of the name 'Holiday,' from a competing use by the defendants, Zimmerman must prove that he has a legal right to exclusive use of the word 'Holiday,' that the defendant Holiday Inn is using a name or mark confusingly similar to Zimmerman's name or mark, and that defendants' use of the name is likely to cause confusion in Zimmerman's competitive area.

Although Zimmerman sought to enjoin the Holiday Inn system from operations all along the Pennsylvania Turnpike and in an area within one hundred miles of Harrisburg, the court found that Zimmerman was entitled to protection...