Title: Tri-County Funeral Serv., Inc. v. Eddie Howard Funeral Home, Inc.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

TRI-COUNTY FUNERAL SERVICE, INC., d/b/a
Howard Funeral Home v. EDDIE HOWARD FUNERAL
HOME, INC.

97-220                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 18, 1997


1.   Injunction -- grant or denial of -- statute providing terms
     that constitute grounds for issuing injunction may
     circumscribe chancellor's discretion. -- Generally speaking,
     the granting or denying of an injunction is a matter within
     the discretion of a chancellor, and the supreme court does not
     reverse unless there has been a clearly erroneous factual
     determination, or unless the decision is contrary to some rule
     of equity or the result of improvident exercise of judicial
     power; however, when a statute provides terms that constitute
     grounds for issuing an injunction, a chancellor's discretion
     is somewhat circumscribed.

2.   Business & commercial law -- acquiring trade name as property
     right -- trade-mark distinguished. -- A person acquires a
     property right in a trade name merely by using the name in
     connection with a particular business for a period of time;
     generally, the word trade name applies to a business and its
     good will, while the word trade-mark applies to the commodity
     to which it is affixed; trade names are afforded protection
     under the law of unfair competition; they are protected by a
     registration statute and by the common law; when a name, mark
     or symbol has acquired a "secondary meaning," the original
     user has a property right which equity will protect against
     unfair appropriation by a competitor.  

3.   Business & commercial law -- unfair competition -- secondary
     meaning as acquired by use of trade name -- concept of
     secondary meaning discussed. -- The concept of "secondary
     meaning" has been explained as follows: there are certain
     names, marks, and symbols which in their primary sense are
     merely generic or descriptive and do not ordinarily indicate
     the origin of goods or services; such names, marks, or
     symbols, when used in their primary sense, cannot form the
     subject matter of a trade or service mark; however, a name,
     mark, or symbol by long and exclusive use and advertising by
     one person in the sale of his goods and services may become so
     associated in the public mind with such goods or services that
     it serves to identify them and distinguish them from the goods
     or services of others; when such an association exists, the
     name, mark, or symbol is said to have acquired "secondary
     meaning" in which the original user has a property right which
     equity will protect against unfair appropriation by a
     competitor.


4.   Business & commercial law -- unfair competition -- property
     right of trade name -- how acquired. -- A person may acquire
     a property right in a trade name by purchasing the name; one
     may, however, acquire a protectable interest in a trade name,
     without purchasing the rights to it, simply by using the name
     in connection with a business over the course of time and
     giving a "secondary meaning" to the name.

5.   Business & commercial law -- unfair competition -- appellant
     had acquired name as valid trade name with obvious secondary
     meaning -- purported revocation of permission to use name
     without effect. -- Where appellant had used the appellee's
     name continuously in connection with its business since 1984,
     and prior owners of the business used the name continuously
     since 1968; no one else in the area used that name or a
     similar name in connection with any business; the appellees,
     themselves, had never used their own name in connection with
     a business they owned; the appellant funeral home was one of
     only two funeral businesses in the area, and its share of the
     funeral business was nearly seventy percent before appellee
     opened his business in 1996; and appellant advertised and
     promoted its name in various ways, it was clear that appellant
     went through the necessary steps of acquiring this name as a
     valid trade name with obvious "secondary meaning"; this
     occurred irrespective of any "permission" initially given to
     appellant's predecessor-in-interest in 1968 by the appellees
     and irrespective of the fact that this permission was later
     purported to be revoked with respect to the appellant, after
     it had used the name beginning in 1984.

6.   Business & commercial law -- unfair competition -- name not
     previously appropriated when appellant began using it -- no
     protection given surname until it acquires secondary meaning.
     -- The name was not previously appropriated when it was first
     used in connection with the appellant's business in 1968; it
     was just a surname, and there is no protection given to a
     surname until it acquires a secondary meaning; thus, it was
     not necessary for the appellees to "permit" appellant or
     anyone else to use their name in the business because the
     appellees had not established a protectable interest in their
     name.

7.   Business & commercial law -- unfair competition -- appellee's
     argument irrelevant -- bill of sale need not specify right to
     trade name -- secondary meaning present in years after sale. -
     - It was irrelevant that the bill of sale was silent on the
     matter of whether the right to the appellant's trade name
     passed in the transaction between the previous and present
     owners of the funeral home; appellant continued to use,
     advertise, and promote the funeral home name since 1984; even
     if appellant did not "acquire" the right to that name at the
     precise point of the 1984 transaction, appellant most
     certainly gave the name a "secondary meaning" in the years
     thereafter.

8.   Business & commercial law -- injunction -- grounds for under
     Ark. Code Ann.  4-71-113. -- According to Ark. Code Ann.  4-
     71-113 (Repl. 1996), grounds for an injunction exist if a
     party's actions have created a likelihood of injury to
     business reputation or of dilution of the distinctive quality
     of a trade name valid at common law; that "likelihood," if
     established, shall be grounds for injunctive relief
     notwithstanding the absence of competition between the parties
     or the absence of confusion as to the source of goods or
     services. 

9.   Business & commercial law -- injunction -- trade name --
     infringement on may be restrained by injunction. -- An
     infringement on a trade name is such a colorable imitation of
     the name that the general public, in the exercise of
     reasonable care, might think that it is the name of the one
     first appropriating it; where such a similarity occurs, it
     tends to divert trade from a business rival who has previously
     adopted its name and operates as a fraud which may be
     restrained by injunction, although the prior users may not
     have an exclusive right to the use of the name; the issue is
     one of the likelihood of dilution of the value of the trade
     name as an asset by its use by someone other than the owner.

10.  Business & commercial law  -- sufficient proof presented --
     appellant entitled to injunctive relief. -- Appellant
     demonstrated all that the statute required it to demonstrate
     to be entitled to injunctive relief when it established at
     least a likelihood of harm or dilution, given the fact that
     the names were sufficiently similar, the name in issue had
     long established a secondary meaning, and -- although
     seemingly made unnecessary by the statute -- there was
     testimony about name confusion and a decrease in the appellant
     funeral home's business following the opening of appellee's
     business.

11.  Business & commercial law -- unfair competition -- use of
     one's own name in connection with business -- sacred-right
     theory rejected. -- A junior user is no longer held to have an
     absolute or "sacred" right to use his or her own name in
     business if a first comer has been using that name and has
     established a secondary meaning; because it may become a trade
     name subject to the rule of priority in order to prevent
     deception of the public, one has no absolute right to use
     one's own name, even honestly, as the name of a business if
     there is a likelihood of dilution of the trade name used by
     the party having established a secondary meaning or injury to
     the business reputation of the first user; a showing of a
     likelihood of injury to the trade name is sufficient for the
     issuance of an injunction; when a surname is used as a trade
     name, it risks becoming a symbol of the business and losing
     its individual identity. 

12.  Business & commercial law -- chancellor's decision reversed --
     appellee enjoined from using appellant's trade name as part of
     his business name. -- The decision of the chancellor declining
     to issue an injunction was reversed; the appellee funeral home 
     was enjoined from using the disputed trade name as part of the
     name of its business or to identify its business.


     Appeal from Izard Chancery Court; John N. Harkey, Chancellor;
reversed.
     Horne, Hollingsworth & Parker, by:   Allan W. Horne and Mark
H. Allison, for appellant.
     Blair & Stroud, by:  J. Scott Davidson and Robert D. Stroud,
for appellee.

     David Newbern, Justice. 
     This is a trade-name infringement case.  The appellant, Tri-
County Funeral Service, Inc. ("Tri-County"), which does business as
Howard Funeral Home in Melbourne, sought an injunction pursuant to
Ark. Code Ann.  4-71-113 (Repl. 1996) to prohibit the appellee,
Eddie Howard Funeral Home, Inc., also located in Melbourne, from
using the name "Howard" in connection with its funeral business.
The Chancellor declined to issue the injunction.  Our determination
in this de novo review is that Tri-County was entitled to the
relief sought; thus we reverse the Chancellor's decision.
     In 1949, Roman and Wilma Howard began working for the Roller
Funeral Home in Melbourne.  At some point in the 1950s they left
that employment.  The funeral home changed hands several times, and
Mr. and Mrs. Howard returned as employees in 1961.  A Mr. Robinson
purchased the business while it was being operated as "McCollum
Funeral Home," and in 1968 Mr. Robinson asked the Howards for
permission to operate as "Howard Funeral Home," although the
Howards owned no interest in the business.   Permission was
granted.  
     In 1974, Billy Howard, Mr. and Mrs. Howard's son, joined them
as an employee of Howard Funeral Home.  In 1978, the business was
sold to Justin Jones who, in 1984, sold it to Rhodes-Madden, Inc.,
the parent company of Tri-County.  In the sales agreement, there
was a provision selling the name, "Howard Funeral Home."  The
ensuing bill of sale, however, did not mention the sale of the
name.  Tri-County continued to operate the business as Howard
Funeral Home.
     Roman Howard retired sometime during the 1980s.  Billy Howard
left his employment with the business in 1984.  Wilma Howard
remained until 1989 when her employment was terminated because of
rumors that Billy Howard was attempting to open a competing funeral
business.
     In 1991, Billy Howard was rehired by Tri-County to manage the
business, and he rehired Wilma Howard as an employee.  In 1992,
Billy Howard hired his younger brother, Eddie Howard, to work in
the business.  Billy Howard died, and Eddie Howard became the
manager in 1994.  In 1996, Eddie Howard's employment was terminated
due to his apparent efforts to begin a competing business.  Wilma
Howard then resigned from her employment with Tri-County.
     Eddie Howard established "Eddie Howard Funeral Home, Inc.," a
corporation of which he and his wife are the only shareholders. 
Tri-County sued to prevent that corporation from using the Howard
name, alleging that the name had acquired a secondary meaning and
that it constituted an interest protectable in accordance with  4-
71-113.
     Eddie Howard and Wilma Howard intervened in the proceeding
with a complaint seeking to enjoin Tri-County from using the name
"Howard," alleging that they had not been compensated for the use
of the name and seeking to revoke the permission given to Tri-
County's predecessor.
     At the trial, Robert Eichelberger, secretary-treasurer of the
parent company of Tri-County, testified that when his company
purchased a funeral home it attempted to keep the same name and
employees in the operation so that people may not even realize that
a change in ownership has taken place.  He testified further that
there had been a slight decrease in the business of Howard Funeral
Home since the Eddie Howard Funeral Home commenced operations and
that some confusion had resulted from the fact that two funeral
businesses are now using the Howard name.  
     The first of two orders issued by the Chancellor denied
temporary relief to Tri-County.  The Chancellor emphasized that the
Howards had not been compensated for the use of their name and that
Tri-County had failed to show that any property interest had been
"damaged" by use of the name by Eddie Howard Funeral Home, Inc. 
The subsequent order denied permanent relief but ordered Eddie
Howard to return a customer list to Tri-County.  In his order
denying relief to Tri-County, the Chancellor dismissed the Howards'
claim in intervention, and no appeal has been taken from that
aspect of the order.  Nor has the order to return the list been
appealed by Eddie Howard.
     The relevant language of  4-71-113 is as follows: "Likelihood
of injury to business reputation or of dilution of the distinctive
quality of . . . a trade name valid at common law, shall be grounds
for injunctive relief notwithstanding the absence of competition
between the parties or the absence of confusion as to the source of
goods and services."  Eddie Howard Funeral Home, Inc., concedes
that the Chancellor applied the wrong standard in holding that
there had been no showing of "damage" to an interest held by Tri-
County, as the statute imposes no such requirement.  The question
for us is thus whether Tri-County had a "trade name valid at common
law," and if so, whether there was "likelihood of injury" to Tri-
County's "business reputation" or "dilution" of its trade name.  In
addition, we consider whether Eddie Howard has an inherent right to
use his own name in his business even if it runs afoul of an
established secondary meaning and the protection offered by the
statute.
     Generally speaking, the granting or denying of an injunction
is a matter within the discretion of a chancellor, and we do not
reverse unless there has been a clearly erroneous factual
determination, Warren v. Robinson, 288 Ark. 249,