Summary
In Meridian Yellow Cab Co. v. City Yellow Cabs, 206 Miss. 812, 41 So.2d 14, the Court held that the names "Meridian Yellow Cab Co., Inc."
Summary of this case from Dollar Department Stores of Mississippi, Inc. v. LaubOpinion
June 13, 1949.
1. Corporations — corporate names — similarity in.
The right of a corporation under Sec. 5322, Code of 1942 to be protected in its name against a subsequently created corporation with a name so similar as to be misleading exists as soon as the prior corporation is brought into being and so long as it continues, and it is not necessary to show the actual use of the name in business.
2. Corporations — names — right to use not adjudicated by grant of charter.
In granting a corporate charter the state does not thereby adjudicate the legal right of the corporation to the unlimited use of the name chosen, and the name may not be used in a manner which will result in fraud or deception.
3. Corporations — names — similarity of.
The name City Yellow Cabs is so similar to that of a previously created corporation under the name Meridian Yellow Cab Co., Inc., especially when both operate cabs in the same area with the words "Yellow Cab" in large letters on their sides, as to be misleading within the terms of Sec. 5322, Code 1942, wherefore the subsequently organized corporation could not lawfully operate under its misleading name in the same competitive area with the previously created corporation and may be enjoined by the latter from doing so.
4. Corporations — names — similarity in — injunction.
Even in the absence of a statute, parties organizing a corporation must choose a name at its peril; and the use of a name similar to one previously adopted by another corporation if misleading and calculated to injure it in the exercise of its corporate functions, regardless of intent, may be enjoined by the corporation having the prior right.
Headnotes as approved by Smith, J.
APPEAL from the chancery court of Lauderdale County, ARTHUR G. BUSBY, Chancellor.
Dunn Singley, for appellant.
Since Section 5322 of our Code has apparently never been construed or interpreted by this court we must necessarily turn to the text books and decisions from other states having similar statutes, to determine the method or manner of its application. One of the outstanding authorities on this point, American Jurisprudence, has this to say in Volume 13, paragraph 137, page 137: "The inquiries when equitable relief is sought must be whether it is likely that the public will be misled and whether the complaining corporation is likely to be injured. Experience, not in the particular case, but in other cases, must be employed in determining the fact. Mere conjecture is not sufficient. Moreover, whether the court will interfere in a particular case must depend upon cidcumstances; the identity or similarity of the names; the identity of the business of the respective corporations; how far the name is a true description of the kind and quality of the articles manufactured or the business carried on; the extent of the confusion which may be created or apprehended; and other circumstances which might justly influence the judgment of the judge in granting or withholding the remedy."
From the Supreme Court of Michigan, a state having a similar statute, we find the following expression as to the application of the statute: "In 66 A.L.R. 975 et seq. are listed numerous names held to be similar or dissimilar. While illustrative, they are not determinative because each case depends upon the application of principles to its own peculiar facts." Metal Craft Co. v. Metalcraft Heater Corporation, 225 Mich. 642, 239 N.W. 364.
Another well reasoned opinion from a state with such statute is from New Jersey where it is said: "What similarity must be deemed as leading to uncertainty or confusion must depend upon circumstances. An important test oftentimes will be found in the objects of the corporation set forth in its certificate." L. Martin Co. v. L. Martin Wilckes Co., 71 A. 409.
To the same effect is the authority found in A.L.R.: "The status of the corporations in the commercial field, e.g., the character of the business and of the product and the place where the business is carried on often has an important bearing upon the right of a corporation to protection against the use of its name by another corporation." 66 A.L.R. 962, et seq.
Some of the decisions have even gone much farther in construing the application of such statutes as is evidenced by the following opinion from the Supreme Court of Oregon: "We believe that (the authorities) justify the conclusion that primarily it is not the name which is protected, but the business." Federal Securities Co. v. Federal Securities Corporation, 129 Or. 375, 276 P. 1100. Again, "Injunction relief may be obtained to the same extent and on the same principles by which individuals are protected in the use of trade marks and trade names." 18 C.J.S. 576. And see: Chas. S. Higgins Co. v. Higgins Soap Company, 144 N.Y. 462, 39 N.E. 490.
Be that as it may, however the authorities are apparently unanimous in holding that each case must be determined by the circumstances applicable to its own peculiar facts, and that such circumstances are usually determined by the several inquiries set out in American Jurisprudence and the authorities quoted above.
Examining the facts in this case on the basis of these inquiries we may look first at the corporate names themselves. Not only are the names similar, but, in truth, they are almost identical. By setting the two names down, one above the other, in this manner for instance:
Meridan Yellow Cab Co., Inc. City Yellow Cabs
we see at once that two of the words in both corporate names are identical, the words "Yellow" and "Cab". (We cannot agree with appellee's argument in the lower court that the plural sense of a word changes the word itself). Examining the names further we find that the first word in appellant's name is "Meridian" while the first word in appellee's name, "City" is simply a designate of Meridian. It is not believed that the last two words in appellant's name afford any distinguishing characteristics since they are generic and identify no corporation in particular.
See the case of Metal Craft Company v. Metalcraft Heater Corporation, supra, in which a dissimilarity in names was argued by reason of the words "Heater" and "Corporation" in appellee's corporate name. The court said: "The use by defendant of the word 'Heater' and of 'Corporation' instead of 'Company' does not emphasize the distinction from plaintiff's name."
In the lower court, appellee laid great stress on the fact that "Yellow" and "Cab", found in both names, are descriptive and generic words and that consequently, neither appellant nor anyone can lay claim to their exclusive use or appropriation. The rule for which appellee contends finds efficacy under the common law for protection against unfair competition and in suits involving trade marks and trade names, but has no application under a statute which guarantees protection of a corporate name for simulation, absolutely. "The statute does not confine its protection of the name of a corporation first adopting it to any particular or special class of name, and the protection afforded is more comprehensive than that given under the law of trade name or trade mark and protects even those using purely descriptive titles without secondary meanings." Diamond Drill Contracting Co. v. International Diamond Drill Contracting Company, 106 Wn. 72, 179 P. 120. We find therefore that the only distinguishing difference of identity between the corporate names is in the use of the first word in both names — "Meridian" and "City", both referring to the same thing, and, in the manner of their use, similar to a high degree. Both to the eye and the ear is there great simulation for even in the speaking of the names, one detects little, if any, distinction between them. We think it may be reasonably stated that the names are not only similar but, to all practical purposes, they are identical.
Going next to the question as to the identity of the business of the two corporations we find another positive application. The business of both corporations is the same — that of carrying on a taxi cab business. There is no dispute on this point. Since such a business is so widely known and accepted by the world at large, no explanation of its operations is believed to be necessary.
Our next inquiry leads us to a determination of how far the corporate names are a true description of the kind and quality of the business carried on. In view of the widely known and accepted business of taxi cabs it is apparent that the names of both corporations readily identify the kind of business carried on by each. This is true because the word "Cab" has come to be generally understood by the public as referring to a taxi cab. Even Webster defines the word as "a kind of closed carriage, usually a public vehicle, a cabriolet; taxi cab". One seeing or hearing the name Meridian Yellow Cab Co., Inc. or City Yellow Cabs would immediately recognize and understand the names as identifying a business engaged in operating taxicabs, thus increasing more and more the confusion between the two names and the corporations they identify. Not only do the names create confusion by a ready identification of the kind of business each corporation is engaged in but the similarity is even more misleading by reason of the fact that the words "Yellow Cab", contained in both the names, identify the quality of the business carried on. Appellee agrees thoroughly with this fact for its President, Mr. Johnson, testified in the lower court that the words "Yellow Cab" identified a particular kind of taxi cab service. The names of the two corporations, therefore, identify in the mind of the public both the kind and quality of the business carried on by each, creating still more confusion that unquestionably flows from such a situation.
In examining the last of the tests to be applied to the corporate names here involved, that is to say, the extent of the confusion which may be created or apprehended and other influencing circumstances, we would particularly note that the word "may" is used in this test. This is done because of the rule, unanimously recognized, that actual confusion need not be shown. "It has been held that it is not necessary to prove that the public has actually been deceived by the similarity in names. It is the liability to deception and consequent injury which justifies the issuance of an injunction. If the court can see that confusion and deception are liable to result from the similarity of names, it will not refuse injunctive relief because the damage has not already been done." M.M. Newcomer Co. v. Newcomers New Store, 142 Tenn. 109, 217, S.W. 822. See also: 66 A.L.R. 972; McVay Son Seed Company, Inc. v. McVay Seed and Floral Company, 201 Ala. 644, 79 So. 116; Household Finance Corporation v. Household Finance Corporation, 11 F. Supp. 3 (1935 D.C.); A. Weiskittel Son Co. v. J. Harry C. Weiskittel Co.; 167 Md. 306, 173 A. 48.
But with all the confusion which attends the similarities above outlined, there are yet further circumstances which add immeasurably to its intensity. By reference to the Record, the court will find a picture of appellant's and appellee's cabs which we believe will remove any doubt as to the confusion caused by the similarity. The court will observe that the taxi of appellee has painted upon it, in words easily read, the corporate name of appellee. The degree to which such similarity is misleading is further heightened by the manner in which appellee's name is applied to its cabs — the words "Yellow Cab" are appreciably larger than "City" and are placed under it. Such treatment of application is nothing if not conclusive of the value appellee places upon the word "Yellow Cab" in its corporate name — words that appellee admits identify a particular kind or quality of taxi service. One would think that appellee could go no further in adding to the confusion created by the similarity and capitalizing on its corporate name but appellee finds a way — appellee paints its taxis yellow, the same color as those of appellant. The simulation is now complete. In what manner or by what device may the public separate the identity of the two corporations? Neither by name, type of business, quality of service, location or color of cabs is there a distinguishing characteristic by which even a discerning and cautious public can identify the two corporations. How can a public, using only that degree of care which the law requires, ever hope to escape being misled?
"What similarity is sufficient to effect the object has to be determined in each case by its own circumstances. We may say, generally, that a similarity which would be likely to deceive or mislead an ordinary unsuspecting customer is obnoxious to the law." Celluloid Mfg. Co. v. Cellonite Mfg. Co., 32 Fed. 94 (C.C.).
It is interesting to note that even though brought under the doctrine of unfair competition there are several cases in which the defendant has been enjoined solely on the ground that his taxis were painted the color of yellow in simulation of plaintiff's. One of these is Yellow Cab Co. v. Knox from New Jersey, reported in 144 A. 11 when it was held: "Complainant's cars are widely advertised and favorably known to the public and their peculiarly conspicuous color has brought them to the attention of almost everyone who has occasion to use taxi cabs."
It would seem that the court in the above case took judicial notice of the public's knowledge and acceptance of the quality of service rendered by complainant's yellow cabs — the same cabs simulated by appellee in the case.
Adhering to the same declarations is the case of Yellow Cab Co. v. Simon, 143 A. 533 (N.J.).
J.V. Gipson and Champ C. Gipson, for appellee.
It is a general rule in equity and is held in 66 A.L.R. 1026 that a person seeking relief in the chancery court must come into court with "clean hands" and in said case it is held that same applies in cases involving corporate names in practically the same manner as in the cases of trade names and trade marks, and the appellant laying dormant with its charter from November, 1945, until April, 1948, without taking any affirmative steps to establish or advertise a business, and appellee securing a charted and beginning business first as the appellee insists, did not come into court in good faith and with clean hands and ask for an injunction herein.
In Blackwell Durham Tobacco Company v. American Tobacco Company, 59 S.E. 123, in holding that an actual user of corporate names, the court used the following language, to-wit: "It cannot be the law that three or more persons may, either under our general corporation law or by special act of the Legislature, become incorporated by any name which they may select for the purpose of engaging in some branch of trade or manufacture and thereby without engaging in the business of buying, selling or manufacturing, the article or product named in its charter, acquire a perpetual monopoly in the Corporate name. This would create a monopoly in a corporate name without ever using it, by legislative enactment, and in violation of our fundamental law and the well settled law of the State."
Appellee insists that the appellant's name "Meridian Yellow Cab Company" and the appellee's name "City Yellow Cabs" have only one word that is exactly the same in each name and that is the word "Yellow" and that the appellant does not have the exclusive right to the use of the word "Yellow".
In the case reported in 61 N.Y.2d 198, the court used the following language, to-wit: "A corporation which changed its name with permission of Secretary of State to 'Liberty Fabrics of N Y, Inc.' was not restrained from using the words 'Liberty Fabrics' in action by individual who used the name 'Liberty Fabrics Company'."
In the case of Beach Haven Yacht Club v. Beach Haven Harbour Yacht Club, 160 A. 884, the court used the following language, to-wit: "'Beach Haven Yacht Club' could not enjoin nearby organization occupying complainant's previous location, from using name 'Beach Haven Harbour Yacht Club'."
In the case of Drive It Yourself Company v. James D. Morton, 43 A.L.R. 206, the court held substantially that the name "Drive It" in the charter did not give the exclusive right to use said words in a name and that because a business was identified by a corporate name alone is not sufficient to entitle relief by injunction.
In McKay v. Legler, 36 So.2d 793 decided recently by this court, this court held in said case substantially that "Old Southern Tea Room" and "Jackson Olde Southern Tea Room" was not such as would entitle the complainant to injunctive relief sought.
It is presumed that at the time the charter of the appellee was granted that the Attorney General, Secretary of State and the Governor of this State all knew that the charter had been granted to the appellant prior thereto, and it also presumed that they further knew that appellant had not engaged in business or used its charter from November, 1945, to the granting of appellee's charter, and had not spent any money advertising its business and that Section 5322 of Mississippi Code of 1942 was properly construed by them when appellee's charter was granted by them when appellee's charter was granted in the light of the then existing circumstances and facts, and the law presumes every officer does his duty properly as required by law and that applies to the said officers that approved of and granted appellee's charter.
The reason for an injunction in some cases is where the party praying for an injunction has established a business under a certain definite name, trade mark or trade name and had spent money advertising said business in that particular name in such a way as to bring that particular name favorably into the minds of prospective customers and that an injunction is prayed for thereafter if and when some person or corporation undertakes to operate a business under the same name or such a name as is misleading to the public in such a way as to amount to fraud in taking the legitimate earned business away from the party who spent the time, trouble and money to establish and advertise such business, but this case does not come within that reasoning as the appellant here secured its charter in November, 1945, and at the time that the appellee began its business in February, 1948, the appellant had not started any business and had not advertised any business or built up any good name, therefore, the appellee did not and could not possibly have reaped any benefits from any time, trouble, effort or expense of the appellant since the appellant had not incurred same.
If using the word "Yellow" in both of the corporate names of the appellant and the appellee entitles the appellant to an injunction against the appellee and said Code Section is so construed by this court and a precedent is set by this court in this State by construing said Code Section against the appellee, an avenue for numerous law suits may be opened, as you might take the word "automobile" or the word "motor" or the word "cleaners" and the word "laundry" and any number of other words and place such a word in the corporate name of two or more corporations as the word "Yellow" is used here and under the construction of said Code Section requested by the appellant, such names in such charters would give rise to future suits and handicap business and cause expensive hardships.
Appellant filed its original bill of complaint in the Chancery Court of Lauderdale County, praying that ". . . the defendant, City Yellow Cabs, be permanently enjoined from using the corporate name, City Yellow Cabs or any corporate name containing the words 'Yellow Cabs' or any corporate name similar to the corporate name of complainant"; and for general relief.
The suit was predicated upon the claimed protection of appellant by Section 5322, Code of 1942, as follows: "No corporation shall be created under the laws of this state with the name of any existing corporation of this state nor with the name of any company or corporation for profit incorporated under or by virtue of the laws of any government, or of any other state or territory, now or hereafter doing business in this state which has heretofore filed or may hereafter file in the office of the secretary of state of Mississippi a copy of its charter or articles of incorporation or certificate of incorporation, as required by the laws of this state, or with a name so similar thereto as to be misleading."
The facts, as developed in the record before us, are that both appellant and appellee are chartered under the laws of Mississippi, domiciled at Meridian, and doing a similar taxicab business in said city. The corporate name of appellant is "Meridian Yellow Cab Co., Inc." and that of appellant is "City Yellow Cabs". On the sides of the cabs of both companies under their respective names in small lettering are the words "Yellow Cab" in large letters. The cabs of appellant are yellow all over except the tires, and those of appellee are yellow all over except for the hood, fenders and tires.
Appellant was incorporated November 30, 1945. Appellee's charter was granted February 13, 1948, and it seems to have begun the operation of its taxicabs promptly, while those of appellant were not put on the streets until two months later, approximately. Both concerns are now actively engaged competitively in the taxicab business in the City of Meridian. The delay in the actual start of its operations by appellant is not explained in the record. While on the witness stand, and under cross-examination, the president of appellee company, with reference to the phrase, "Yellow Cab", was asked:
"Q. Does it identify any particular kind of taxi service to your mind, Mr. Johnson? A. Yes, and no, there is more than one yellow that the cabs have.
"Q. Does it identify any particular kind of cab service to you with or without yellow, Mr. Johnson? A. I say yes.
"Q. In your opinion, personal opinion, does 'Yellow Cab Company,' constitute an asset to the taxicab business A. To a certain extent, yes."
Appellee averred in its answer: "Answering further, defendant alleges that from November 30, 1945, until April, 1948, that the complainant did no advertising, operated no automobile as a Taxi and had no established place of business and did not until about two months after the defendant began to operate it's automobiles in it's Taxi Business under it's Charter that it secured from the State of Mississippi, according to law and that was approved by the Attorney General of the State of Mississippi, and the Governor and the Secretary of the State of Mississippi, according to law and for which the defendant paid the Charter fees." Appellee, also by its answer, raised the further point that public officials are presumed to do their duty and to know the law and facts in the premises of performing it; ". . . and, therefore, at the time that the Attorney General, the Governor and the Secretary of State of the State of Mississippi approved and granted the Charter of the defendant and accepted the Charter fees, that they then knew that the complainant secured it's Charter in November, 1945, but had not gone into business, purchased any automobiles, done any advertising, operated any Taxies, for which it's Charter was granted, and that under said facts and circumstances, such officers held that the City of Meridian, Mississippi, was entitled to have Taxi Service such as the defendant is furnishing and that the complainant had no legal right to secure a Charter and decline to use same from November, 1945, until February, 1948, when defendant's Charter was granted and still prohibit the granting of a Charter to the defendant as waiting that long to begin business could be construed to mean that it would not go into business at any time under it's Charter on the theory and under the old adage that 'a dog should not decline to gnaw a bone himself and at the same time prohibit anyone else from gnawing the bone.'"
No proof of the averments as to the knowledge of the above stated officers was made. In fact, there is little evidence in the record, and no conflicting testimony. The learned Chancellor announced his decision in these words: "The Court holds in this case that names of the complainant and the defendants are not so similar as to mislead the public"; and dismissed the bill of complaint, and complainant appealed from the decree accordingly entered.
It is a question of law that confronts us. Does the statute quoted, supra, protect appellant, as claimed by it, under the circumstances of this case, and entitle it to an injunction as prayed? In other words, the appellant relies upon the statute for justification of its position rather than the general run of precedents based upon trade-names and trade-marks. The attitude of appellee is that appellant misconstrues the statute; that the chartering State Officers were, so to speak, an adjudicating board, and their grant to appellee of its charter, after the grant to appellant, adjudicated the issue now before the court, in favor of appellee, and its judgment should not be disturbed; and that, under the circumstances of this case, and the applicable law, the court should not grant an injunction "to prohibit the defendant (appellee here) from continuing to operate it's Taxi Business under it's Charter".
The question is not without difficulty. However, the primary approach to its solution is to determine the purpose of the statute, and this must be done here by consideration of its language. The Legislature certainly had the accomplishment of some objective by the passage of Section 5322, supra. Deleting therefrom provisions as to foreign corporations, we find that "No corporation shall be created under the laws of this state with the name of any existing corporation of this state . . . or with a name so similar thereto as to be misleading." This brings us down to the issue, initially, are the names "Meridian Yellow Cab Company, Inc." and "City Yellow Cabs" so similar as to be misleading?
A broad general rule is laid down in 66 A.L.R. 952, where it is said "Courts of equity are frequently called upon to remedy conditions which grow out of the use by a corporation of a name similar to the name of another corporation carrying on a business of the same character. In such cases it is usually, if not always, true that relief is granted because experience has demonstrated that the public is misled, and the corporation first established is defrauded on account of the similarity of names. We assume that the statutes referred to were intended to prevent, to some extent, the conditions which, in such cases, when they arise, make a resort to the courts necessary."
American Jurisprudence lays down the practice to be that "The inquiries when equitable relief is sought must be whether it is likely that the public will be misled and whether the complaining corporation is likely to be injured. Experience, not in the particular case, but in other cases, must be employed in determining the fact. Mere conjecture is not sufficient. Moreover, whether the court will interfere in a particular case must depend upon circumstances; the identity or similarity of the names; the identity of the business of the respective corporation; how far the name is a true description of the kind and quality of the articles manufactured or the business carried on; the extent of the confusion which may be created or apprehended; and other circumstances which might justly influence the judgment of the judge in granting or withholding the remedy." 13 Am. Jur., Par. 137, page 274.
The Supreme Court of Oregon observed that the authorities justified the conclusion that primarily it is not the name which is protected, but the business. Federal Securities Co. v. Federal Securities Corp., 129 Or. 375, 276 P. 1100, 66 A.L.R. 934. And "Injunctive relief may be obtained to the same extent, and on the same principles, by which individuals are protected in the use of trade-marks and trade-names." 18 C.J.S., Corporations, § 173, p. 576.
"It has been held that it is not necessary to prove that the public has actually been deceived by the similarity in names. It is the liability to deception and consequent injury which justifies the issuance of an injunction. If the court can see that confusion and deception are liable to result from the similarity in names, it will not refuse injunctive relief because the damage has not already been done." M.M. Newcomer Co. v. Newcomer's New Store, 142 Tenn. 108, 217 S.W. 822, 826. It is to be borne in mind that our statute, Section 5322, Code 1942, supra, is along the same line, concluding with this language: "or with a name so similar thereto as to be misleading."
Appellee largely depends on the doctrine of "clean hands" in their brief, charging that the charter of appellant lay dormant from November 1945 to April 1948, and it took no steps toward embarking upon business until the latter date, approximately two months after appellee had initiated its business under its charter, and quotes from Blackwell's Durham Tobacco Co. v. American Tobacco Co., 145 N.C. 367, 399, 59 S.E. 123, 126, as follows: "It cannot be the law that three or more persons may, either under our general corporation law or by special act of the Legislature, become incorporated by any name which they may select for the purpose of engaging in some branch of trade or manufacture, and thereby, without engaging in the business of buying, selling, or manufacturing the article or product named in its charter, acquire a perpetual monopoly in the corporate name. This would be to create a monopoly in a corporate name without ever using it by legislative enactment and violation of our fundamental law and the well-settled policy of the state." It is to be observed here that while appellants waited a considerable time before engaging in its chartered business, it did not do so perpetually.
In our judgment, a well-reasoned opinion, expressing a sound and reasonable view, was delivered by the Delaware Court, in Drugs Consolidated, Inc. v. Drugs, Inc., 16 Del. Ch. 240, 144 A. 656, 657: "It certainly cannot be the intention of the act to require a corporation created under it to become engaged in its corporate business in a material and physical sense, as a prerequisite to the undisturbed enjoyment of the protection of its corporate name which the statute affords. (Hn 1) It would seem rather to be more consonant with rational and practical interpretation to say that as soon as the corporate existence is brought into being and as long as it continues; the right assured by the statute to have the corporate name distinguished from other corporations of like kind subsequently created is free from encroachment. The statute thus removes the necessity of showing actual use in business of the name, a use which many cases dealing with the general law of unfair competition require as a prerequisite to relief in trade-name and trade-mark controversies."
Among other cases cited by appellee in its argument here is McKay v. Legler, 36 So.2d 793, 794, (not yet reported in State Reports), involving "Old Southern Tea Room" and "Jackson Olde Southern Tea Room." The former was doing business in Vicksburg and the latter in Jackson. In the case at bar, both parties are engaged in the same business in the same community, and each has on the side of its taxicabs, in large letters, "Yellow Cab". The McKay and other cases cited by appellee along similar lines, in view of our statute, are not in point on the precise issue before us.
Appellee also argues: "It is presumed that at the time the charter of the appellee was granted that the Attorney General, Secretary of State and the Governor of this State all knew that the charter had been granted to the Appellant prior thereto, and it is also presumed that they further knew that Appellant had not engaged in business or used it's charter from November, 1945, to the granting of Appellee's Charter, and had not spent any money advertising it's business and that Section 5322 of Mississippi Code of 1942 was properly construed by them when Appellee's Charter was granted by them and when Appellee's Charter was granted in the light of the then existing circumstances and facts, and the law presumes every officer does his duty properly as required by law and that applies to the said officers that approved of and granted Appellee's Charter."
However, the authorities seem to be against the contention of appellee. It is laid down in 13 Am. Jur. 275, par. 138, that: (Hn 2) "In granting a corporate charter, the state does not thereby adjudicate the legal right of the corporation to the unlimited use of the name chosen; and the name, though derived through authority of the state, may not be used in a manner which will result in fraud or deception."
(Hn 3) This proceeding was brought, as stated supra, under our statute, Section 5322, Code 1942, which prohibits the creation of a corporation under the laws of this state "with the name of any existing corporation of this state . . . or with a name so similar thereto as to be misleading." Since we have decided that the name "City Yellow Cabs" is so similar to that of "Meridian Yellow Cab Company, Inc.", as to be misleading, this statute was transgressed to that extent, and, therefore, appellee could not lawfully operate under its misleading name in the City of Meridian, and environs, in competition with appellant in a manner that confused the public by the misleading nomenclature. We are not to be considered as holding, by what we have just said, that appellee could not operate elsewhere under its chartered name, "City Yellow Cabs", beyond the competitive sphere of the two taxicab companies, as shown in the record.
(Hn 4) The remedy of the aggrieved corporation, even in the absence of a statute, is based upon the rule that "parties organizing a corporation must choose a name at its peril; and the use of a name similar to one adopted by another corporation, . . . if misleading and calculated to injure it in the exercise of its corporate functions, regardless of intent, may be prevented by the corporation having the prior right, by a suit for injunction against the new corporation to prevent the use of the name, . . . To restrain the wrongful assumption of a name by a corporation is not to annul the corporation by depriving it of a name. If restrained from using a name chosen, it may choose another name. There can be no distinction in principle between taking the entire name of the prior corporation and taking so much of it as will mislead dealers into the belief the two corporations are the same. The mischief is of precisely the same character, differing only in degree." "Similarity and not identity is the usual recourse where one corporation seeks to benefit itself by the good name of another." 13 Am. Jur., Corporations, Sec. 135.
In a footnote to the foregoing text, it is said that in Canada, by statute, one corporation may apply to the registrar to compel a change in the name of another and need not bring suit. However, it is noted there that in the United States the statutes generally leave the injured corporation to its remedy in the courts, citing 66 A.L.R. 1021.
Therefore, we reverse the decree of the Chancery Court, and enter a decree here restraining appellee from operating its taxicab business in the City of Meridian under its name "City Yellow Cabs", and from utilizing the words "Yellow Cab or Cabs" upon its cabs, or otherwise, in its said business in the City of Meridian, or environs, so long as appellant, "Meridian Yellow Cab Company, Inc." is also engaged in the taxicab business in said area.
Reversed and decree here for appellant.