People Ex Rel. Power v. Rose

By the demurrer to the answer the allegations of fact in the answer are admitted to be true. Under these allegations, as set forth in the statement preceding this opinion, the company referred to in the answer as the "old United States Express Company" would have the right and power to restrain by injunction the use of its name by petitioners herein, or by the new corporation, which they propose to form. In International Com. Y. W. C. A. v. Y. W. C. A., 194 Ill. 194,62 N. E. 551, 56 L.R.A. 888, we held that, although generic terms or mere descriptive words are the common property of the public, and not ordinarily susceptible of appropriation by an individual, yet an injunction may issue to restrain the use of such terms, or words, at the suit of one who has already adopted them, where the evidence shows a fraudulent design, and that the public will be misled. In cases referred to and quoted from in the Y. W. C. A. Case, supra, it was held that, although certain plaintiffs had no exclusive right to the words "Conveyance Company," or "London Conveyance Company," or any other words, they had a right to call upon a court of chancery to restrain the defendant from fraudulently using precisely the same words and devices which they had taken for the purpose of distinguishing their property, and thereby depriving them of the fair profits of their business by attracting custom on false representation that carriages, really belonging to the defendant, belonged and were under the management of the plaintiff. It was there held that, although there was no property in the words "The Guinea Coal Company," yet it was a fraud on a person who had an established trade and carried it on under a given name that some other person should assume the same name with a slight alteration, as "The Pall Mall Guinea Coal Company," in such a way as to induce persons to deal with him in the belief that they are dealing with the person who has given a reputation to the name; in other words, "that it is a fraud on the part of a defendant to set up business under such a designation as is calculated to lead, and does lead, other people to suppose that his business is the business of another person." In McLean v. Fleming,96 U. S. 245, 24 L. Ed. 828, it is said: "Nor is it necessary, in order to give a right to an injunction, that a specific trademark should be infringed, but it is sufficient that the court is satisfied that there was an intent on the part of the respondent to palm off his goods as the goods of the complainant." The same doctrine is announced in the following cases, to wit: Lane v. Brothers, etc., 120 Ga. 355,47 S. E. 951; Aiello v. Montecalfo, 21 R. I. 496, 44 Atl. 931; Rudolph v. Southern Beneficial League, 23 Abb. N. C. 199, 7 N. Y. Supp. 135.

In the case at bar the old United States Express Company had had an established business in the United States, and in foreign countries, for more than 50 years, when the petitioners made application to the Secretary of State to organize a corporation in Illinois under the same name, to wit, the "United States Express Company." It appears from the allegations in the answer that the incorporation of the new company under the same name as the old company would be a fraud upon the old company, as being an attempt to take away from it a part of its business, and to deceive the public into the belief that, when dealing with the new company, they were, as matter of fact, dealing with the old company. Indeed, the answer specifically alleges that the action proposed to be taken by the commissioners would be a fraud upon the old company, and the demurrer to the answer admits this allegation. It being true, then, that the old company would be entitled to file a bill in chancery to enjoin the new corporation, proposed to be organized, from doing business under the same name as the old company, the writ of mandamus will not issue to compel the Secretary of State to issue a certificate of organization to the new company. The writ of mandamus will not be issued, if its issuance would fail to accomplish a good purpose or to have a beneficial effect.

"The writ is not granted as a matter of absolute right, and where it can be seen that it cannot accomplish any good purpose, or that it will fail to have a beneficial effect, it will be denied." Cristman v. Peck,90 Ill. 150; People v. Lieb, 85 Ill. 484; Illinois Watch Case Co. v. Pearson, 140 Ill. 423, 31 N. E. 400, 16 L.R.A. 429. It is difficult to see how the issuance of the writ in this case could accomplish any good purpose or have any beneficial effect, if the new corporation proposed to be organized could be enjoined from using the name of the old company and doing business under that name.

It is contended, on the part of the petitioners, that the old United States Express Company is a foreign corporation, organized under the laws of New York, and that, as such foreign corporation, it cannot be admitted to do business in Illinois, except by comity of the latter state. It is furthermore insisted that the old United States Express Company cannot do business in this state, or maintain any suit in the courts of this state, because it has not obtained a license so to do business in Illinois from the Secretary of State of Illinois. Many decisions are referred to by counsel in support of this position. The argument proceeds upon the supposition that the old United States Express Company is a foreign corporation. It does not appear, however, clearly upon this record that it is a foreign corporation. The answer avers "that there is now in existence a joint-stock company called the United States Express Company, organized and doing business under the common law and statute law of the state of New York." The demurrer to the answer admits this allegation to be true. For the purposes of this case, therefore, the old United States Express Company is to regarded as a joint-stock company, organized and doing business under the common law, as well as the statute law of the state of New York. A joint-stock company is defined in the text-books to be "an association of individuals for purposes of profit, possessing a common capital, which is divided into shares, of which each member possesses one or more, and which are transferable by the owner. These associations, formed for business purposes, were at common law, and as a general rule still are, considered merely as partnerships, and their rights and liabilities are in the main governed by the same rules and principles which regulate commercial partnerships." 17 Am. Eng. Ency. of Law (2d Ed.) pp. 636, 637. While it is true that many companies called joint-stock companies have many of the essential characteristics of a corporation, yet there is a distinction between such companies and regularly organized corporations so called. In 17 Am. Eng. Ency. of Law (2d Ed.) p. 638, it is said: "In respect to their formation there is a broad distinction between a corporation, technically so called, which always owes its existence to the sovereign power of the state, and a joint-stock company, which, being essentially a partnership, is brought into being by the contract of its members inter sese." Counsel refer to cases in other states and in the federal courts holding that joint-stock companies possess many of the characteristics of corporations, but the definition which characterizes them as partnerships has been recognized as correct, if not actually adopted, by the decisions of the Illinois courts. In Robbins v. Butler, 24 Ill. 387, this court, speaking through Mr. Justice Breese, said (page 426): "These stock companies are nothing more than partnerships, and every member of the company is liable for the debts of the concern, no matter what the private arrangements among themselves may be, if they have not shifted their liability in the very mode pointed out in the articles of association." See, also, Pettis v. Atkins, 60 Ill. 454; Hodgson v. Baldwin, 65 Ill. 532. In Wadsworth v. Duncan, 164 Ill. 360, 45 N. E. 132, this court, speaking through Mr. Justice Phillips, again said, indorsing the doctrine announced in Robbins v. Butler, supra, as follows: "The members of a joint-stock association are partners, and each member Is liable for the debts of the association, unless he has shifted his liability in the very mode pointed out in the articles of association."

In view of what has been said, it is not altogether certain that the old express company, which is admitted here to be a joint-stock company, is such a foreign corporation as is required by our statute to file a copy of its charter, or articles of incorporation, or certificate of incorporation, in the office of the Secretary of State. The statute imposing the requirement in question upon a foreign corporation desiring to do business in this state speaks of "every company incorporated for the purposes of gain under the laws of any other state," etc., and, in the subsequent part of the section, which uses the words just quoted, the company so incorporated is referred to as "such corporation," and not as "such company," and it would seem to be the proper construction of the statute in question (4 Starr C. Ann. St. Supp. 1902, p. 310, par 53), that it refers to regularly organized corporations rather than to joint-stock companies. This is so because, as has already been stated, the corporation, technically so called, owes its existence to the sovereign power of the state, while the joint-stock company, being merely a partnership, is brought into being by contract of its members. The statutory requirement embraces foreign corporations rather than joint-stock companies, because the former owe their existence to the power of a foreign state; and statutes in relation to requirements imposed upon foreign corporations concern the creatures of the foreign states, and not the creatures which are brought into being by the mere contract of parties. In the case at bar the provisions of the instrument, or articles of organization, under which the old United States Express Company acts and does business, are not anywhere set forth in the present record. We are unable to say what the terms of its articles of association are, as they are not set forth in the pleadings. But, whether the view, thus taken of the character of the old United States Express Company, is correct or not, it is certainly a matter of doubt whether it is a corporation, or a mere partnership. Under these circumstances the writ of mandamus will not be issued. "The writ is never granted in doubtful cases, nor unless the party asking it has a clear right." High on Ex. Legal Rem. § 9; Illinois Watch Case Co. v. Pearson, supra.

It is furthermore contended by the petitioners herein that, if the old United States Express Company is not a corporation, then it had no right to use the name "United States Express Company" in the transaction of business in the state of Illinois. This contention is based upon the alleged ground that the Criminal Code of this state makes it an offense to assume and use a corporate name in transacting business, not being incorporated. The provision of the Criminal Code thus referred to reads, in part, as follows: "If any company, association or person puts forth any sign or advertisement, and therein assumes, for the purpose of soliciting business, a corporate name, not being incorporated, * * * such company, association or person shall be fined not less than $10.00, nor more than $200.00, and a like sum for each day he or it shall continue to offend, after having been once fined." 1 Starr C. Ann. St. 1896 (2d Ed.) p. 1332, par. 368. The section of the Criminal Code above quoted was passed in March, 1869, either in the above or a more stringent form. The answer shows that the old United States Express Company was organized in 1854, 15 years before this statute was passed, and had been doing business throughout the country for many years before its passage. During the years prior to its passage, when it was thus transacting business, it cannot be said that it was not doing business in good faith, or that it was doing business with any intention of violating the law in question, because the law in question was not then in existence. It is to be observed, however, that the statute does not denounce the assuming of a corporate name, but the putting forth of a sign or advertisement, and thereby assuming a corporate name for the purpose of soliciting business. It cannot be said here that the old company in question put forth its corporate name for any such purpose. "What the Legislature had in view in enacting this section of the Criminal Code manifestly was to prevent persons from obtaining a fictitious credit by advertising themselves as being a corporation when they were not incorporated." Edgerton v. Preston, 15 Ill. App. 23. Under the allegations of the answer herein, which are admitted to be true by the demurrer, it cannot be said that the old company here under consideration was in any way advertising itself as a corporation for the purpose of obtaining a fictitious credit. Before the criminal statute was passed it already had a credit which was not fictitious, so far as the present record shows. The fraud, which the criminal statute in question seeks to punish or to prevent, is the use of a name in such a way as to deceive the public, and it is the deception or improper use of the name, and not the name itself, which constitutes such fraud. "It is not, therefore, enough to show the mere use of the name to make out a violation of the statute. There must be some evidence at least tending to show such use as the statute forbids." Imperial Manf. Co. v. Schwartz, 105 Ill. App. 525. It is furthermore to be observed that this criminal statute does not make contracts made by persons guilty of the offense prohibited invalid, but merely provides that such persons shall be liable to pay a certain fine. It would appear, therefore, that a violation of the statute can be attended with no other consequences than merely the infliction of the penalty therein prescribed. Edgerton v. Preston, supra.

For the reasons above stated, we are of the opinion that the Secretary of State properly refused to issue a certificate of complete organization of the new corporation proposed to be organized by the petitioners, and that the prayer of the petition herein for a mandamus must be and is denied.

Writ denied.