McFell Electric & Telephone Co. v. McFell Electric Co.

Mr. Presiding Justice Freeman delivered the opinion of the court. Appellants insist that the court erred in finding the equities with appellee and granting it the relief prayed for in the original bill. The contention seems to be that upon the expiration of the charter of the original corporation having substantially the same name as that adopted byappellee, the right to use the name reverted to Judson McFell, who was one of its original incorporators, and who had previously sold out to McWade, another of its incorporators, all his stock in the company and all interest in its business. The transfer of McFelPs stock to McWade occurred in March, 1900. When, with McFelPs consent, he being one of the incorporators and stockholders, the original company was created with the name “The McFell Electric Company,” there can be no doubt that he conferred on such corporation the right to use his name in that manner; and when he sold out his stock in the company and his interest in its business to McWade for a valuable consideration, as he did, he could not afterward resume the use even of his own name in.carrying on the same business during the lifetime of the corporation, in such a way as to mislead the public. By the sale and transfer of his stock in the company for a valuable and adequate consideration he equitably estopped himself from questioning its right to the use of its corporate name. See Frazer v. Frazer Lubricator Co., 121 Ill. 147-157. Under the statute, moreover, the said corporation had the exclusive privilege of becoming re-incorporated under the same name within thirty days from and after the expiration of its original-charter. (R. S., Chap. 32, Sec. 28½.) It did not avail itself of this right, but its stockholders did continue to carry on the business with McFelPs consent in the same name, he remaining in their employment. Later he joined with two of the stockholders in making application for a license to enable them to obtain a new charter under substantially the same name, the only difference being an omission of the article “the” and an abbreviation of the word “company.” He appears thus to have recognized the existence of an equitable right in the stockholders of the old company to continue to do business in, and for that purpose to re-incorporate under, the old name, for the use of which he had received a valuable consideration in the purchase price paid for his stock and his interest in the business. It is said, however, that before the application for the new license was forwarded to the secretary of state he revoked bis consent. As to that the testimony is conflicting. The alleged revocation is by no 'means established by the evidence. McFell himself does not even now seek to interfere with the use by appellee of its corporate name. . It appears that after signing and acknowledging the application for a license to re-incorporate appellee’s business under substantially the old name, McFell concluded to give up his salaried position in its service, and go into business for himself. Reaching this conclusion he promptly took steps to incorporate under the name which he has selected for the appellant corporation. Obtaining its charter, the name indicating that its business was the same as appellee’s, it was located in the same building, in close proximity to the place where appellee’s business had been conducted for more than six years. That the conditions were such as to deceive the public and lead persons to suppose they were dealing with appellee when in fact they were employing appellant, is, we think, apparent. The name of the new company was placed on the bulletin-board of the building immediately above that of appellee, so as to readily give the impression that they were one and the same company. The circumstances justify the inference that it was for' some such purpose the location was selected. This is not open and honest competition. It has every appearance of an attempt to mislead the public and-to obtain by deception the benefit of the patronage and clientage enjoyed by appellee. Courts of equity give relief against such violations of the rules of honesty and fair dealing. See Merchants’ Detective Ass’n v. Detective Mercantile Agency, 25 Ill. App. 250, 259. If appellants’ new business was established and conducted with the fraudulent and wrongful intention of attracting to themselves the custom intended for appellee, this is clearly a fraud upon the rights of the latter. Allegretti v. Chocolate Cream Co., 177 Ill. 129-133. In Imperial Mfg. Co. v. Schwartz, 105 Ill. App. 525-529, we said: “The public are entitled to protection from being misled to trade with parties not known to them, under the impression that they are doing business with an established firm or person with whom they have been accustomed to deal.” What is said in Internat’l Com. Y. W. C. A. v. Y. W. C. A., 194 Ill. on page 200, is applicable in this case; namely,that though there may be no property in a name, the principle in these cases is that it is a fraud on a person who has an established trade and carries it on under a given name, that another person should assume the same name with a slight alteration, so as to induce people to deal with him in the belief that they are dealing with those who have given a reputation to the name in the particular line of business. The judgment of the Superior Court must be affirmed.