Diamond Drill Contracting Co. v. International Diamond Drill Contracting Co. , 106 Wash. 72 ( 1919 )

Mackintosh, J.

The respondent was incorporated under the laws of the state of Washington in the year 1900, the incorporators being Knight and Stone, who organized their company nnder the name of “Diamond Drill Contracting Company”. The appellant was incorporated nnder the laws of this state in 1913, the incorporators being one Mitchell, his wife, and son, the name nnder which they incorporated being “International Diamond Drill Contracting Company”. The respondent commenced this action, to permanently enjoin the appellant from the nse of the latter name, or any name containing the words “Diamond Drill” or “Diamond Drill Contracting Company”.

For many years prior to 1900, the tool known as the diamond drill had been in nse thronghont the world, the feature which distinguishes the diamond drill from other drills being the use of a cutting surface set with carbon diamonds, the drill being used to secure a core of the rock in the line of the drill hole, this core being brought to the surfa'ce through the drill for examination. Prior to 1900, Knight and Stone had been employed by the Sullivan Machinery Company, which was engaged in the manufacture and sale of mining supplies, among them the diamond drill, and, incidentally, was contracting to drill with diamond drills for different individuals or companies desiring to have their properties prospected. Knight and Stone, leaving the employ of the Sullivan Machinery Company, engaged as partners in the business of drilling by contract with diamond drills for owners of property desiring to have mineral prospecting done by means of drilling. They then incorporated the respondent, ninety-five. per cent of the activity of which is contracting business, the other five per cent consisting of the manufacture and sale of diamond drills. Since 1904 these drills had been known as the “double tube return water core barrel drills”, patent for which was issued to Knight and Stone.

The respondent in its business had acquired a reputation for ability and reliability and had paid out large sums of money in advertising its business under the name of “Diamond Drill Contracting Company”, and had become well known in the diamond drill contracting business by the name of “Diamond Drill Contracting Company”. Mitchell for some years had oeen a diamond driller in the employ of the Sullivan Machinery Company and, after leaving that company, had been employed by the respondent for a few months in the year 1911 as a drill foreman. After he had organized the appellant company, it engaged, in Spokane, within a very few blocks of the main office of the respondent, in the diamond drill contracting business. It, also, as a minor portion of its business, engaged in the manufacture and sale of diamond drills of a design similar to that manufactured by the respondent, but made under what is known as the Jenkins’ patent. The„ appellant for sometime conducted its operations with drills manufactured by the respondent and purchased from it; but a few months before the beginning of this action, the appellant began to engage in the manufacture and sale of machines on its own account under the Jenkins’ patent.

At the time of the trial, there were in the United States and Canada some half dozen or more firms or corporations which were taking contracts to drill with diamond drills; but only one or two of these companies, other than the two involved in this litigation, included in their names the words “Diamond Drill Contracting Company,” one company so doing being the Smith & Travers Diamond Drill Contracting Company, of Canada. Respondent predicates its right to enjoin the nse of the words “Diamond Drill Contracting Company”, first, npon section 3680, Rem. Code; and, second, upon the fact which it alleges that the name “Diamond Drill Contracting Company” had acquired a secondary meaning, and respondent had therefore a right to its exclusive use as a trade-name, and should he protected from the use of a similar and misleading name by the appellant.

Section 3680, Rem. Code, reads, so far as material to this controversy, as follows:

“No corporation shall take the name of a corporation theretofore organized under the laws of this state, nor . . . one so nearly resembling the name of such other corporation as to be misleading. The secretary of state shall refuse to file said articles of incorporation of any association or corporation violating the provisions of this section.”

The secretary of state, having accepted the filing of the articles of appellant, has exercised his discretion and determined that the two names are not misleading. The appellant argues therefrom that the respondent is bound by that determination, and in this action cannot collaterally attack the action of the secretary of state, and that such action can only be reviewed in a direct proceeding, and then only for mistake, abuse, or want of jurisdiction; and if there was ground for an honest difference of opinion, the secretary of state, having exercised his judgment, that exercise cannot be here reviewed. State ex rel. Megler v. Forrest, 13 Wash. 268, 43 Pac. 51.

It is probably true that the action of the secretary of state in allowing the filing of the appellant’s articles cannot be brought into question in this proceeding; and, in a direct action against the secretary of state for the purpose of securing the cancellation of such, filing, the court would not interfere with the exercise of his discretion; for, as we said in State ex rel. Progressive Motion Picture Co. v. Howell, 96 Wash. 163, 164 Pac. 917:

“It may also be true that had the names of these corporations, instead of being exactly alike, only resembled each other with a difference such as to furnish room for an honest difference of opinion as to whether they so resembled each other ‘as to be misleading,’ thus presenting a question for the exercise of judgment on the part of the secretary for decision, we would not award relator relief by mandamus.”

But this view of the action of the secretary of state does not exclude the consideration of the other phase of § 3680, which provides that no corporation shall take the name of a corporation theretofore existing, nor a name so closely resembling the name of such other corporation as to be misleading. In other words, the section provides that no corporation shall take a misleading name, and that the secretary of state shall not allow the filing of the articles of incorporation of such company. As we have said, we cannot, in this action, interfere with the filing which has already taken place; but if the second company has taken the •name of a corporation theretofore existing or taken a name which is so similar thereto as to be misleading, we can prevent, in this action, the second company from continuing to use such name. Grand Lodge A. O. U. W. v. Graham, 96 Iowa 592, 65 N. W. 837, 31 L. R. A. 133; Society of the War of 1812 v. Society of the War of 1812, etc., 46 App. Div. 568, 62 N. Y. Supp. 355; Edison Storage Battery Co. v. Edison Automobile Co. etc., 67 N. J. Eq. 44, 56 Atl. 861.

This presents to us a question of fact as to whether the prefixing of the word “International” to the name theretofore used by the respondent is the adoption by tbe respondent of a name “so clearly resembling tbe name of” the respondent “as to be misleading”. It may be tbat tbe use of these two names would result in some confusion. Tbe testimony disclosed by tbe record on tbe question of tbe confusion tbat arose by reason of tbe similarity of names of tbe two companies is embraced in these incidents: Tbe officers of tbe respondent testify tbat tbe appellant, so far as they know, has never obtained any business tbat was intended for respondent, and tbat tbe appellant made no effort to represent itself as tbe respondent, nor did it make any fraudulent representations to secure contracts; they further testify tbat, at numerous times, telegrams addressed to Mitchell were delivered to respondent and tbat a great many local and long distance calls, telegrams, invoices and express packages intended for appellant bad been delivered at respondent’s office.

Tbe employees of tbe appellant testified tbat, from tbe time of appellant’s organization until tbe time of trial, two letters, one telegram, but no telephone calls, bad been received at tbe office of appellant which were intended for tbe respondent; tbat tbe attention of tbe mail carrier having been called to tbe mis-delivery of these letters, no trouble of tbat character thereafter occurred. There was no evidence produced showing tbat there bad been any loss of business to tbe respondent by reason of this confusion which has been shown, nor has tbe appellant obtained any information concerning the respondent’s business, nor has tbe appellant taken advantage of tbe confusion, such as it was, to benefit thereby.

But confusion is not what is inhibited by tbe statute; “misleading” is tbe term, and tbat means, calculated to lead astray or lead into error, and must refer not to casual mistakes, as to identity, but to the leading into error of persons contemplating or engaged in transactions with the respondent. In determining whether names are misleading by reason of similarity, attention must be paid in each case to the nature and extent of the business being conducted. It may be that names used in certain places or lines of business, or among certain classes of people, would be greatly misleading; while, if used in other places, or lines or among other people, there could be no one misled.

The testimony here shows that the drill contracting business is confined to a very narrow field; the general public never is a customer. The activities of these companies is confined nearly exclusively to operating for mining men and concerns, and among such customers it is generally known who are available in the drilling field, and the corporate name does not mean as much as the reputation of the individual who does the actual drilling. No commodity or service is being offered to a large class of prospective customers by the respondent and appellant, but a very small group ever is in the market for this service, and this group is engaged in such business and is composed of such persons that the chance of any of them being misled by such similarity as exists in the two names here involved is remote indeed. The evidence does not disclose that there has been any such misleading, and we cannot say, as a matter of fact, that the evidence satisfies us that the names are so similar as to be misleading. Pacific Coast Condensed Milk Co. v. Frye & Co., 85 Wash. 133, 147 Pac. 865. 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 meaning, hut this protection is always against the use of a name “so clearly resembling” the prior name “as to be misleading”.

Section 9492, Bern. Code, prohibiting the counterfeiting or taking of similar trade-marks is analogous to § 3680; and under it we have held that any character of words may be trade-marked independently of the restrictions of the general trade-mark law.

“Bespondent’s second assertion is based on the ground that the word ‘groceteria’ is descriptive of the grocery business, and therefore is not such a word as could become the subject of a trade-mark. It would seem that the statute above quoted would be controlling here and answer this argument contrary to respondent’s contention.” Groceteria Stores Co. v. Tibbett, 94 Wash. 99, 162 Pac. 54, L. R. A. 1917C 955.

Bespondent says that it embarked upon what was virtually a new course of business when it entered into the diamond drill contracting business; that, prior to that time, although there had been contracting done, it had only been done as the incidental and minor operations of concerns primarily engaged in the manufacture and sale of drills; that, having thus entered into such business, it, in reality, created a new business, and therefore was privileged to take and hold a word descriptive of that business as its corporate name; and that, through the creation and development of its business, those words have now become possessed of a secondary meaning; that they now constitute a trade-name of the corporation, and that the name has acquired among mining men and the public generally a meaning different from the obvious meaning of the words, and that it now signifies the respondent company itself. The testimony of Knight, one of the two incorporators of respondent, discloses the following’:

“Q. Were you and Mr. Stone partners in the diamond drill contracting business? A. Well, yes, we came out here as agents and partners of the Sullivan Machinery Company. Q. Then afterwards you quit the Sullivan Machinery Company and went in business for yourselves? A. We did. Q. As partners, Knight & Stone? A. Knight & Stone, yes. Q. You continued in that relation until you incorporated in 1900? A. Yes, a couple of years. Q. During the time that you were partners, Mr. Knight, you were representing the Sullivan Machinery Company, and after that you were diamond drill contractors, weren’t you? A. Yes. Q. Mr. Knight, the words ‘diamond drill’ is a description of the drill that was exhibited there in your office this morning? A. Yes. Q. That is known as a diamond drill, isn’t it? A. That is known as a diamond drill, yes. Q. And the reason of that is because diamonds are used instead of steel for cutting the rock? A. I suppose that is the reason they call them diamond drills. Q. It is generally known and has been known for a long time? A. Yes, it is. Q. Where dicf that name originate? A. I think it was really originated in France. I think that is where the first diamond drill was made that I can find out. Q. How long ago? A. O, I cannot tell. Q. A couple of hundred years ago? A. No, about forty years ago, something like that. Q. Who were the first companies to use that in this country? A. Well, I don’t know. The Sullivan Machinery Company of Claremont, New Hampshire was the first and' the Toole Manufacturing Company of Chicago. Q. And the Toole Manufacturing Company was absorbed by the Sullivan Machinery Company, and it is now one and the same thing, isn’t it? A. Yes, it is now one and the same thing. Q. Were you in the employ of the Sullivan Machinery Company at that time? A. No. Q. When did you go into the employ of the Sullivan Machinery Company? A. In 1886. Q. Were they using the name diamond drill then in designating their diamond drills? A. They called themselves the Sullivan Machinery Company. Q. I understand. They designated this particular machine as a diamond drill, didn’t they? A. They advertised that they were manufacturing and selling diamond drills, yes, sir, certainly. Q. When you were with the Sullivan Machinery Company any person or association of persons that were doing a contracting business and using one of these machines were called diamond drill contractors, weren’t they? A. Yes, they have been called diamond drill contractors. Q. And they have been called that all over the world? A. All over the world, yes. Q. And that name did not originate with you? A. The Diamond Drill Contracting Company did. Q. I say the words diamond drill or diamond drill contractors did not originate with you? A, No, it did not originate with us. Q. How would you term a firm or association of people that were using diamond drills and doing* a diamond drill contracting business? A. I would call myself diamond drill contractors for prospecting mineral lands with a diamond drill. Q. Why didn’t you select your name as a corporate name? A. We thought that was a pretty good name. Q. Why did you select the name Diamond Drill Contracting Company? A. It was a euphonious, harmonious name. Q. Now, Mr. Knight, when you selected that name it was a name that was known generally by diamond drill salesmen, by diamond drill employes, and by people who contemplated having diamond drilling as a name given to designate a certain kind of business, didn’t you? A. Well, the fact of the matter is-Mr. Voorhees: Wait a minute. Q. I will ask it again. You knew, Mr. Knight, when you selected that name, that it was a name designating a given line of business, didn’t you? Just answer that question, yes or no? A. No, I don’t know as I did. Q. You don’t know that it did? A. No. Q. Didn’t you just testify a while ago that the machine was known as a diamond drill? A. Yes. Q. Didn’t you testify a while ago that ever since you had known anything about the business that men who collected themselves together were known as diamond drill contractors? A. Yes, sir. Q. And didn’t you testify a while ago that any association of men were known as the diamond drill contracting company? A. These fellows were all- . . . Q. Didn’t you testify a while ago that when an association of men got together and went into this business they were known as diamond drill contractors? Just look at me. . . . A. Not entirely . . . They are not all called diamond drill contractors. Some are called exploration companies, and some call themselves diamond drill contractors, and some contractors for prospecting mineral lands with a diamond drill, and all the way down the line you can form one hundred combinations with those words. Q. But they are most generally known, Mr. Knight, as diamond drill contractors? A. I suppose you might say they are generally known as diamond drill contractors. Q. Now, Mr. Knight, isn’t it a fact that when you took that name you did not take it for its beautiful sound, but you took it because it is simple and generally designated the business you were engaged in? A. It certainly does designate the business we were in. When we took that name there were very few diamond drill contractors in this country. That was in the early days, and there was very little known about diamond drilling’ at that time, and all of these other fellows have come in since that time. Q. All of them? A. Every one.”

While individuals or corporations may do business under names which consist merely of descriptive words, or generic or geographical words, or words in common use, or words out of their common tise, or may create new words or new combinations of letters which cannot be properly designated as accepted words; yet, an individual or corporation taking as a business name words which are merely descriptive of the business in which he or it is engaged will not be protected in the exclusive use of that name, unless, being tbe first in tbe field, be or it can be said to bave originated tbat fine of business and applied a name to sucb business, and tbat tbe words wbicb were merely descriptive of tbe business may bave tbus acquired a secondary meaning, and bave, by reason of tbe originality of tbeir application to a new line of endeavor, come to stand for tbe individual or corporation first using tbem.

We are not beré concerned witb tbe question of tbe infringement of a trade-mark nor witb tbe question of a trade-name as applied to a class of commodities, but this case only presents tbe question of a trade-name as it relates to a business. Northwestern Knitting Co. v. Garon, 112 Minn. 321, 128 N. W. 288. Tbe respondent, while it contends tbat it was tbe first one to engage as a company in tbe diamond drilling contracting business, does not claim tbat, by reason thereof, it occupied any exclusive field. It concedes, as it must, tbat any one possessed of a diamond drill and tbe desire to contract for service therewith may do so, but merely contends tbat it is entitled to tbe exclusive use of tbe name “Diamond Drill Contracting Company”. It must be conceded tbat a corporation cannot adopt words purely descriptive of an already existing business and tbus acquire an exclusive right to tbeir use. Elgin Butter Co. v Elgin Creamery Co., 155 Ill. 127, 40 N. E. 616; Industrial Mutual Deposit Co. v. Central Mutual Deposit Co., 112 Ky. 937, 66 S. W. 1032.

In its final analysis, then, this point in tbe case is resolved into tbe determination of a question of fact. If tbe respondent, when it organized, can be said to bave been tbe discoverer, promoter, and pioneer in a new business, it might then bave given to tbat business a name wbicb it could exclusively enjoy as against all others who might subsequently engage in that line of business. But if, on the other hand, at the time of its organization, the business of drilling with diamond drills was known and being carried on by individuals or by corporations, the respondent could not then, by merely first combining the words into the name, acquire exclusive ownership of that name.. The first corporation which engaged in the dry goods business might have had the right to the use of the words “Dry Goods Company”; but, if the dry goods business had been known and carried on for sometime, a company could not then be organized and take the name of the “Dry Goods Company” and exclude from the use of those words any other company engaged in the same business which desired to use those words in combination with any others which it might see fit to adopt. The respondent admits that, at the time of its organization, the diamond drill manufacturing business was being conducted incidentally by some machinery companies, and that the diamond drill contracting business was being conducted by certain individual contractors; but it says that, so far as the companies were concerned which were engaged in the business, they were only so engaged incidentally to the manufacture and sale of mining machinery; and that so far as the individual contractors were concerned, they were engaged in the business in a small way, and not as companies, and that the respondent is the first company to engage in the business as its principal and primary object.

This evidence is not such as to establish the status of the respondent as the originator of the business, and cannot entitle it to the exclusive use.of the words which it has adopted as its name. The fact that there were diamond drill contractors at the time respondent commenced as a diamond drill contracting company puts it ont of the class of originators, and puts it into the class of imitators. More than this, the evidence is not compelling that the words have, in their nse by the respondent, acquired a secondary meaning. While the words are descriptive and in common use, they yet may be combined into a trade-name, and that trade-name will be protected, when it has acquired a meaning identifying the particular corporation using it and its business. 38 Cyc. 765; Nims, Unfair Competition and Trade-Marks (2d ed.), 70. Or, differently stated, words publici juris are not protected from use in their primary sense but only in their secondary sense. The evidence does not show that the words “Diamond Drill Contracting* Company” have ceased to have their usual meaning as indicating* a company engaged in the business of contracting to drill with diamond drills, and have now the meaning and are generally understood by the public as referring only to the respondent. The only evidence tending to show this was the evidence of one witness for the respondent, who testified that he knew of no other company by the name of “Diamond Drill Contracting* Company”, and that to his mind that name meant the respondent. This evidence is not sufficient. The public interested must have been shown to have understood these words to have acquired a new meaning. The evidence only went to the extent of showing* that the respondent had become favorably and extensively known and enjoyed a good reputation for integrity and ability. There is no question of fraud in any representations made by the appellant. As we have seen, there is no representation made by the appellant that its business was the business of respondent. The name it was using was being used without deception, and the words, of that name, in so far as they were identical with respondent’s name, were merely descriptive of the business in which they were both engaged. Pacific Coast Condensed Milk Co. v. Frye & Co., 85 Wash. 133, 147 Pac. 865. The appellant had a right to use words which were descriptive of the business in which it was mutually engaged with the respondent, those words being ones which the public still used to indicate the business followed by both of them.

Those cases in which we have heretofore protected a trade-name from unfair competition are cases in which, to the words descriptive of the business, has been added some fanciful word, or a word of personal or geographical significance, and partaking of the nature of a fanciful name, the entire name thus becoming something more than a mere description of the business in which the company using it was engaged. In these cases, the originality of such combination has been protected. These cases are distinguished from the case at bar by the fact that here the respondent has added nothing to words merely descriptive of its business. Eastern Outfitting Co. v. Manheim, 59 Wash. 428, 110 Pac. 23, 35 L. R. A. (N. S.) 251; Rosenburg v. Fremont Undertaking Co., 63 Wash. 52, 114 Pac. 886; State ex rel. Collins v. Howell, 80 Wash. 649, 142 Pac. 1157; Martell v. St. Francis Hotel Co., 51 Wash. 375, 98 Pac. 1116; Wright Restaurant Co. v. Seattle Restaurant Co., 67 Wash. 690, 122 Pac. 348; San Francisco Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921; New York Life Insurance Co. v. Orpheum Theater & Realty Co., 100 Wash. 573, 171 Pac. 534.

A case illustrative of the use of words not descriptive of the business at all but purely fanciful or original is Groceteria Stores Co. v. Tibbett, 94 Wash. 99, 162 Pac. 54, L. R. A. 1917C 955, which case presents a similarity to the instant case in that it dealt with the establishment of a new business or a new form of an old business, but to describe the new industry a new word was coined. Of course, the cases are dissimilar in that the Groceteria Stores case arose under the trade-mark statute.

The decree of the lower court is cancelled and the action dismissed.

.Tolman, Mount, Mitchell, Main, Parker, and Holcomb, JJ., concur.