Umpqua Broccoli Exchange v. Um-Qua Valley Broccoli Growers

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This is a suit brought by the plaintiff Umpqua Broccoli Exchange to enjoin the defendant Um-Qua Valley Broccoli Growers from using as its corporate name, or transacting business under the name of "Um-Qua Valley Broccoli Growers," or any name with the combination of the words "Umpqua" or "Um-Qua" and "Broccoli" therein.

The trial court found that it did not appear from the evidence that defendant's name was adopted by those who organized defendant with the intent to defraud plaintiff by means of the similarity of the name of the two corporations; that while there has been some confusion in the delivery of mail of defendant to plaintiff, yet such misdelivery was through failure to exercise ordinary care; that plaintiff had failed to show any injury or damage likely to accrue to them through the alleged similarity of names, and dismissed plaintiff's complaint. Plaintiff appeals.

The plaintiff corporation was organized and received its charter in September, 1921, and during the season of 1922 and 1923 carried on an extensive business in the shipping and selling of broccoli, or winter cauliflower, during which time it expended considerable sums of money in advertising itself as a seller and shipper of broccoli, and by its manager making several trips throughout the middle west and south acquainting himself with dealers in broccoli, and advertising his company and building up for itself a good name and trade.

The defendant is an Oregon corporation organized in May, 1923, formed by about forty growers of broccoli, in the Umpqua Valley, Douglas County, Oregon, organized and carried on for the purpose of marketing the products of its stockholders.

The defendant has expended considerable sums of money in the construction of a warehouse where it carries on the shipping business of its stockholders. The plaintiff did not file its articles of incorporation in Douglas County until after defendant was incorporated.

The principal business in which the plaintiff is engaged is the buying and selling and shipping of broccoli, the principal market for which is in the east, middle west and south; both the plaintiff and defendant shipping principally in carload lots and selling to jobbers and brokers, and practically all of the business being transacted by telegraph and mail orders. The sellers and shippers are known to the trade only by their respective corporate names and seldom come in direct contact personally with the buyers. The principal office and place of business of both plaintiff and defendant is in the City of Roseburg, Douglas County, Oregon.

The evidence discloses that the directors and other stockholders of the defendant Um-Qua Valley Broccoli Growers had been for years engaged in the business of growing broccoli in Umpqua Valley and marketing the same prior to the incorporation of plaintiff Umpqua Broccoli Exchange.

Dr. C.H. Bailey and R.B. Cooley, two of defendant's stockholders, were the originators of the broccoli industry in the Umpqua Valley about the year 1914, Mr. Cooley at the time of the trial being secretary of the defendant. These persons were formerly stockholders and officers of the Umpqua Valley Fruit Union, which had been dissolved before the incorporation of either party to the suit.

The Umpqua Valley Fruit Union was a shipper of broccoli which was marketed under the name of "Um-Qua Broccoli"; the peculiar spelling of the word "Um-Qua" having been adopted in order to register a United States trademark. The words as so spelled, being inclosed within a double circle and followed by the word "Broccoli." Several years prior to the incorporation of either party to this suit, those who later incorporated the defendant marketed broccoli in this way, all crates and containers being marked "Um-Qua Broccoli." By reason of the business so conducted, and the advertising of the products of these persons, a large market became established for Umpqua Valley broccoli in different parts of the United States.

When the Umpqua Valley Fruit Union ceased to do business it assigned its trademark in the word "Um-Qua" to S.D. Cooley, who later became the secretary of defendant, and permitted defendant to make use of the trademark in the same way as the Umpqua Valley Fruit Union had used it.

The gist of plaintiff's complaint is that the defendant, well knowing the value, efforts and expenditures the plaintiff had given to the combination of the two words "Umpqua" and "Broccoli," and the advertising of plaintiff with intent to benefit therefrom without expense to itself and in fraud of the rights of the plaintiff, and over the protests of plaintiff, adopted the name of "Um-Qua Valley Broccoli Growers," thereby simulating plaintiff's name with intent thereby to reap the benefit from the combination of the words "Umpqua" and "Broccoli," made valuable by the good name, advertising and work of plaintiff.

It is further alleged that confusion has resulted in delivery of mail, telegrams and bills of lading; that the railroad company made a mistake in spotting a carload of crates. The evidence shows the delivery of a few pieces of mail to plaintiff which was intended for defendant, but no delivery of plaintiff's mail to defendant; no confusion in telegrams or express matter; and two cars of shooks were erroneously spotted by the railroad company. The errors that occurred were at the early stage of the business, soon after defendant was incorporated and was soon practically discontinued. The evidence does not show that plaintiff ever lost an order for broccoli because of defendants being in business. The manager of the Western Union Telegraph Company of the Roseburg office testified that his office had handled perhaps one thousand telegrams for plaintiff during the past season prior to the trial, without a single misdelivery. Some confusion existed in the box manufacturing plant where both parties purchased box shooks for their customers and where the customers or growers would resort to obtain the material for their crates.

Plaintiff also complains that the defendant engaged in the practice of selling cars of broccoli at auction, which was displeasing to the customers of plaintiff who charged the act to plaintiff. AFFIRMED. Plaintiff maintains that by reason of the fact that it first adopted the name "Umpqua Broccoli Exchange" as its corporate name and had built up a good reputation under such name the defendant should be enjoined from using as its corporate name any name similar to plaintiffs; that the use of the name so similar to plaintiff by defendant amounts to a piracy of plaintiff's name in business; that it is a fraud upon the plaintiff and is unfair competition. Defendant maintains there is no such similarity between the names "Umpqua Broccoli Exchange" and "Um-Qua Valley Broccoli Growers" as to justify an injunction; and there being no evidence of fraud, plaintiff cannot prevail. Defendant claims a prior right to use the trademark "Um-Qua" and that the predecessor in interest of defendant first used the combination of the words "Um-Qua Broccoli" in shipping their product.

There is no dispute about the facts in the case. It is practically conceded that a court of equity has jurisdiction in the consideration of the question involved.

Our statute, Or. L., Section 6861, provides thus:

"Whenever there shall be presented to the secretary of state for filing any articles of incorporation in which the name assumed by the proposed corporation shall appear to said secretary of state to resemble the name of a corporation previously formed under the laws of this state so closely as to be likely to cause confusion, or when, in the opinion of the secretary of state, the name so assumed tends to mislead or deceive the public as to the character, purpose or plan of business of the proposed corporation, then the secretary of state may require, before filing such articles, that the name of the proposed corporation shall be changed."

A corporate charter grants no immunity in the use of a deceptive name. The same rule applies to corporate names as applies to the name of natural persons. The name may be used, but only if used honestly. A name selected and adopted for the purpose of deception and calculated to produce it will be enjoined. Corporate names will be protected from imitation constituting unfair competition. Injunction will be refused where no probability of deception by reason of the name is shown. Priority in adoption and user usually confers the superior right. In cases of alleged conflict of corporate names a court of equity is guided by the same principles that are applied in the protection of individuals in the use of trademarks and trade names. The question for consideration is whether the public purchasing the commodity or service in question will probably be deceived to the injury of plaintiff: 38 Cyc. 819 et seq.;Danton v. Mohler Barber School, 88 Or. 164 (170 P. 288).

In Nims on Unfair Competition and Trade Marks (2 ed.), page 163, Section 83, it is stated, in effect, that the incorporation of an organization in no way alters its rights as against those of other concerns using the same or a similar name. The act of incorporation gives it no right to demand that a rival should desist from using the common name.

It is not necessary in such cases to show by specific instances that purchasers have actually been deceived by defendant's conduct and led to purchase his goods in the belief that they are the goods of the plaintiff, or to deal with defendant thinking he was dealing with plaintiff. It is sufficient to show that such deception will be the natural and probable result of defendant's acts; but mere possibility of deception is not enough: 38 Cyc. 773; Columbia EngineeringWorks v. Mallory, 75 Or. 542, 547 (147 P. 542). See, also,Union Fish Co-op. Packing Co. v. Point Adams, 108 Or. 535,549 (217 P. 642).

The Supreme Court of the United States once said: "There is no distinction between corporations and natural persons in the principle, which is to prevent fraud." (See Waterman v. ModernPen Co., 235 U.S. 88, 94 (59 L. Ed. 142, 35 Sup. Ct. Rep. 91, 92, see, also, Rose's U.S. Notes.)

Persons desiring to incorporate under a name they have previously used as the name of an organization not incorporated are not barred from so doing because of the fact that others had incorporated under that name subsequent to the time they began to use it as the name of an unincorporated organization. If they were the first to use the name and to become known by it, they cannot be denied the right to incorporate under that name because others have adopted their name and preceded them in incorporating under it. Any damage resulting to the plaintiff from such incorporation is chargeable to their folly in choosing a name already in use.

The principle here enunciated has some bearing upon the use of the trademark "Um-Qua" and the combination of the words "Um-Qua Broccoli," which were formerly used by the predecessors of defendant.

In any case, to entitle the complaining corporation to an injunction, the name used by defendant, when not the same as that of plaintiff, must be so similar thereto that, under all the circumstances of locality, business, etc., its use is in itself reasonably calculated to deceive the public and result in injury to plaintiff, or else it must be used fraudulently in such a way as to have that effect. Unless the words have acquired in the mind of the public a secondary meaning as denoting the goods or business of a particular company, a corporation cannot acquire the right to the exclusive use of geographical words in its corporate name, or words merely generic or descriptive of a particular business, class of goods, etc., which anyone may lawfully use, so as to be entitled to enjoin their use by another corporation or association in its name, in the absence of actual fraud or intent to deceive: 14 C.J. 328, § 397; Elgin Butter Co. v. Elgin Creamery Co. (Sands),155 Ill. 127 (40 N.E. 616); Elgin Nat. Watch Co. v. Illinois WatchCo., 179 U.S. 665 (45 L. Ed. 365, 21 Sup. Ct. Rep. 270, see, also, Rose's U.S. Notes); Delaware H. Canal Co. v. Clark,80 U.S. 311 (20 L. Ed. 581); Nebraska Loan Tr. Co. v. Nine,27 Neb. 507 (43 N.W. 348, 20 Am. St. Rep. 686); Kansas Mill Co. v. Kansas Flour Mill Co., 89 Kan. 855 (133 P. 542, Ann. Cas. 1915A, 540, and note). In the note in that volume, at page 543, we find the following:

"The recent cases affirm the previously settled rule, that a geographical name, or term, by which is meant a term denoting locality, cannot be exclusively appropriated as a trademark or trade name, because such a term is generic or descriptive, and any one who can do so truthfully is entitled to use it." CitingAmerican Wine Co. v. Kohlman, 158 Fed. 830; Wolf v.Hamilton Brown Shoe Co., 165 Fed. 413 (91 C.C.A. 363), and many other precedents * * "The rule heretofore laid down is, however, subject to the exception that where a geographical name has been so used in connection with a certain line of business that it has come to indicate, not only the place of manufacture or production, but the name of the manufacturer or producer and the excellence of the article made, then it has acquired such a secondary significance or meaning as will entitle the one who has so used it to protection in its use by means of an injunction restraining others from using the name in a manner that will mislead buyers as to the actual origin or quality of the thing sold, or enable the sellers to palm off their goods as those of the prior user." Citing Herring Hall Marvin Safe Co. v. Hall's Safe Co.,208 U.S. 554 (52 L. Ed. 616, 28 Sup. Ct. Rep. 350).

It is disclosed by the testimony of Mr. R.H.C. Wood, manager of the defendant corporation, that he and his associates, the stockholders of defendant, who were largely growers of broccoli for several years before the defendant was incorporated, shipped their product through the old Umpqua Valley Fruit Union. In selling the broccoli they marked the crates "Um-Qua Valley Broccoli," and the other association of growers named, shipped broccoli in about the same manner prior to the organization of defendant. It was shipped to different parts of the United States. Therefore the defendant claims that the Umpqua Valley Fruit Union first used the combination of the words "Umpqua" and "Broccoli."

The present method of marking the crates of broccoli shipped by defendant is as follows:

The name of the company, "``Um-Qua' Valley Broccoli Growers," is printed on each crate with the trademark, "``Um-Qua' Broccoli," "Roseburg, Oregon," together with the grade and name of the grower stamped on the crate with a rubber stamp. The Umpqua Valley Fruit Union marked the crates of broccoli in the same manner that the defendant does except as to the name of the corporation. The first name of the defendant corporation "Um-Qua" was so spelled to correspond with its trademark and with no intent to simulate the name of plaintiff.

Undoubtedly the word "Umpqua" or "Um-Qua" is a geographical word. "Broccoli" is a generic term. The plaintiff cannot acquire the exclusive right to the use of either of these words in its corporate name. The word "Umpqua" or "Um-Qua" has no secondary or particular meaning as denoting the business or products of plaintiff. That name, however, spelled, pertains to the place where broccoli is raised in large commercial quantities. In the absence of actual fraud or intent to deceive the defendant has a right to use the word in its corporate appellation.

"Broccoli" is merely descriptive of winter cauliflower, or a vegetable, and the word cannot be monopolized as a part of a corporate name. There is a marked difference in the names of plaintiff and defendant. Plaintiff's name consists of the three words designating an "exchange." It buys, ships and sells broccoli and other similar products. Defendant's name is composed of four words, two of which have no similarity to any part of plaintiff's name. Its name suggests that it or its organizers and stockholders are "growers" of broccoli. As its name indicates, the people associated under this name are and have been for many years engaged in raising broccoli. The defendant markets the products so grown. The public, or any member thereof, by the use of reasonable diligence and discrimination, which is presumed by the law to be used, can easily distinguish one name from the other: Standard Paint Co. v. Trinidad Asphalt Mfg. Co.,220 U.S. 446; 2 Fletcher, Cyclopedia Corp., 1662. Under all the circumstances we do not think there is any probability of anyone being deceived or misled by the similarity of the two names to the injury of plaintiff. See, also, 2 Fletcher, Cyc. Corp., 1677, § 734;Diamond Drill Co. v. International Diamond Drill Co.,106 Wash. 72 (179 P. 120, at page 122).

The corporation commissioner is the successor of the Secretary of State in the matter of passing upon the selection of a name of a corporation under the statute above quoted (Or. L. 6861). It must be presumed that under the circumstances as to the incorporation of defendant, official duty has been performed. That official examined the articles of incorporation of the defendant and found no objection thereto. It would seem that the exercise of discretion of the corporation commissioner should not be interfered with except in cases of abuse: Section 14 C.J., p. 314; American Order of Scottish Clans v. Merrill,151 Mass. 558 (24 N.E. 918, 8 L.R.A. 320).

The learned trial judge who tried this case found, in effect, upon consideration of all of the facts and circumstances in the case, in conformity with the corporation commissioner.

Each case involving a question like that in the present case must largely be determined upon its own characteristics. No hard-and-fast rules can be laid down by the courts which would dispose of all cases. The courts under the variant facts and circumstances have many times applied the principles set forth in the rules above referred to.

It follows that the decree of the lower court should be affirmed. It is so ordered. AFFIRMED.

McBRIDE, C.J., and BROWN and BELT, JJ., concur.