
    COOPER-WEIR, INC. v. Harvey J. COOPER and Cooper-Weir of Louisiana, Inc.
    No. 6555.
    Court of Appeal of Louisiana, Fourth Circuit.
    March 12, 1975.
    
      Sessions, Fishman, Rosenson, Snellings & Boisfontaine, Max Nathan, Jr., New Orleans, for plaintiff-appellant.
    Adams & Reese, Sam A. LeBlanc III, Louis A. Wilson, Jr., New Orleans, for defendants-appellees.
    Before SAMUEL, GULOTTA, STOU-LIG, BOUTALL and SCHOTT, JJ.
   GULOTTA, Judge.

Plaintiff, Cooper-Weir, Inc., appeals from a judgment dismissing its suit for a preliminary injunction in which plaintiff seeks to enjoin defendant from using a deceptively similar corporate name, Cooper-Weir of Louisiana, Inc.

The record reveals that Cooper-Weir, Inc. is a Mississippi corporation licensed to do and doing construction business in Louisiana and Mississippi. The only stockholders of the corporation are James Weir, owner of 56 percent of the stock, and Harvey Cooper, owner of 44 percent of the stock. Prior to August, 1972, Weir served as President with his office in Mississippi and Cooper as vice-president with his office in Louisiana.

Before August, 1972, Weir and Cooper agreed to split the corporation, and a plan was tentatively agreed upon in which Cooper would gain the ownership of the corporation’s business in Louisiana, and Weir would retain control and ownership of the corporation’s business in Mississippi. In order to maximize the tax advantages for both parties, the parties agreed to divide the corporation utilizing a “spin-off.” To initiate the plan, Cooper was to set up his own Louisiana corporation, and all the stock of that corporation was to be issued to Cooper-Weir, Inc., in exchange for the transfer of its Louisiana assets to the new corporation. After that transaction was completed, Cooper-Weir, Inc. was to transfer all of the stock it had just acquired to Cooper in exchange for Cooper’s transfer to Weir of the 44 percent of the stock that he owned in Cooper-Weir, Inc., thereby creating two separate and independent corporations. Cooper also agreed to pay to Cooper-Weir, Inc., the difference between the value of the stock that he owned in Cooper-Weir, Inc., and the value of the Louisiana assets owned by that corporation and transferred to him.

On August 10, 1972, Cooper had formed and incorporated in Louisiana the second corporation, Cooper-Weir of Louisiana, Inc. On September 30, 1972, the parties and their attorneys met to consummate the proposed “spin-off.” At the time of the meeting, Cooper was prepared to transfer all of the stock of that corporation to Weir, but that transfer was not made because the value of Cooper’s stock in Cooper-Weir, Inc. could not be determined to the satisfaction of both parties. However, Cooper had taken over the Louisiana assets of the Mississippi corporation and was actively engaged in business in Louisiana. All parties testified that at no time during that meeting, nor at any subsequent meeting, did Weir ever object to the use by Cooper of Cooper-Weir of Louisiana, Inc. as a corporate name. However, negotiations were carried on for the purposes of trying to resolve the differences between the parties concerning value on the stock and the value of the assets in Louisiana. Only after it became apparent that the parties could not agree, Weir filed suit for an accounting and for injunctive relief.

Plaintiff seeks the injunction on the basis of LSA-R.S. 12:23(B) which states in pertinent part:

“ * * * The corporate name shall not be the same as, nor deceptively similar to, a name reserved pursuant to subsection G of this section; and shall not be the same as, nor deceptively similar to, the name of any other corporation unless :
“(1) The other corporation is about to change its name, or to cease doing business, or is being liquidated, or, if a foreign corporation, is about to withdraw from doing business in this state, and the written consent of the other corporation to the adoption of .its name, or a deceptively similar name, has been given and is filed with the articles; * * * ”
(emphasis ours)

LSA-R.S. 12:23(F) in pertinent part states:

“ * * * the court having jurisdiction may, * * * enjoin a corporation from doing business under a name assumed in violation of this section, * * *»

Plaintiff claims that Cooper-Weir of Louisiana, Inc. is using a deceptively similar name without written consent as provided for in'LSA-R.S. 12 :23(B) (1). On that basis, injunctive relief is sought under LSA-R.S. 12:23(F).

Exceptions of no cause of action and no right of action were overruled by the trial judge. However, after hearing, a plea of waiver and estoppel filed in answer to the rule for preliminary injunction was maintained.

The trial judge in maintaining the plea of estoppel and waiver concluded that the creation of the defendant Louisiana corporation was with the consent and knowledge of the stockholders of Cooper-Weir, Inc., and that no objection was raised to the use of the corporate name over a period of approximately a year and a half.

In seeking reversal, plaintiff, citing LSA-C.C.P. art. 3601 in conjunction with LSA-R.S. 12:23(B) and (F), contends that a preliminary injunction may issue without the necessity of showing irreparable injury in a case, such as the instant one, where a deceptively similar corporate name is used. According to plaintiff, the mere use of the corporate name is sufficient for a preliminary injunction to issue. Plaintiff alternatively argues, however, that irreparable injury was shown in the hearing for a preliminary injunction.

Plaintiff further claims that the trial judge erroneously maintained the plea of waiver and estoppel. According to plaintiff, the use of the corporate name by defendant was based upon the consummation of an agreement for distribution of the corporate assets of the plaintiff corporation between Weir and Cooper which never took place. Plaintiff suggests that objections to the use of the name were made after extended negotiations failed to resolve the differences which existed regarding the value of stock of Cooper-Weir, Inc., as compared to the value of the assets which had been transferred to Cooper-Weir of Louisiana, Inc. According to plaintiff, when it became apparent no amicable settlement could be reached, this suit was expeditiously filed. Therefore, plaintiff claims there was no waiver and no es-toppel.

Defendant, on the other hand, argues that LSA-R.S. 12:23(F) provides that the issuance of an injunction is discretionary. He claims that no abuse exists in the denial of a preliminary injunction. We agree. Accordingly, we affirm.

It is significant that this matter was heard only on a preliminary injunction. The question of waiver and estoppel to the use of a deceptively similar corporate name addresses itself to a hearing on the merits for a permanent injunction, the purpose of the preliminary injunction is to preserve the status quo until a determination can be made on the merits of the controversy. In Employers Overload Company v. Employers Overload Company of New Orleans, Inc., 266 So.2d 546 (La.App. 4th Cir. 1972), we stated: •See also West Publishing Company v. Intrastate Pipeline Corporation, 254 So.2d 643 (La.App. 4th Cir. 1971).

“The preliminary injunction is an interlocutory procedure, usually conservatory in nature, which has the object and purpose of maintaining or adjusting the existing status of litigants upon a prima facie showing that to do otherwise would result in irreparable injury, pending decision on the permanent injunction, which is dispositive of issues on the merits.”

The pertinent provisions of the statute upon which plaintiff bases its claim for in-junctive relief provides discretion on the part of the trial judge in granting injunc-tive relief. See LSA-R.S. 12:23(F) which provides that the court having jurisdiction may enjoin a corporation from doing business under an assumed name in violation of the statute. See also LSA-C.C.P. art. 3601.

We are confronted, therefore, with the question of whether or not the trial judge abused his discretion when he refused to issue the preliminary injunction. Plaintiff seeks not only injunctive relief but also an accounting. It is conceivable that if a preliminary injunction is not issued pending a hearing on the merits that the Mississippi corporation might be damaged by the use of the corporate name by the Louisiana corporation pending a final determination of this matter. It is also conceivable that if a preliminary injunction does issue that the Louisiana corporation can be damaged because of the inability to use the corporate name in Louisiana pending a hearing on the merits. At any rate, the trial judge in his wisdom concluded that a preliminary injunction should not issue. We cannot say from the record that the trial judge abused his discretion in denying the request for a preliminary injunction.

It is apparent from the record that a dispute exists between the parties concerning the value of the stock of the Mississippi corporation and the value of the assets in Louisiana. Upon a resolution of the dispute after a hearing on the merits, and after an accounting is made as requested, presumably inequities that might have resulted by the failure to issue the preliminary injunction might be rectified. Having concluded that the trial judge did not abuse his discretion in the denial of the request for a preliminary injunction, we affirm the judgment of the trial court. Judgment affirmed.

Affirmed.

SCHOTT, J., concurs with written reasons.

SCHOTT, Judge

(concurring).

The evidence shows that Messrs. Cooper and Weir set up a three step procedure for severing their relationship as owners of all of the stock in plaintiff corporation:

(1) Cooper was to have defendant corporation incorporated in the State of Louisiana ;

(2) All of the stock of the newly formed defendant corporation was to be issued to plaintiff corporation and simultaneously therewith the Louisiana assets of the plaintiff corporation were to be transferred to the defendant corporation;

(3) All of the stock of defendant corporation was to be transferred by plaintiff corporation to Cooper and simultaneously therewith Cooper’s stock in plaintiff corporation was to be transferred to Weir with the understanding that a cash payment would be made between Cooper and Weir to offset any difference between the value of the Louisiana assets of plaintiff corporation now owned by defendant corporation and that of Cooper’s stock in plaintiff corporation.

Pursuant to the agreement Step 1 was accomplished as well as the second part of Step 2, namely, the assumption of plaintiff’s Louisiana assets by defendant corporation. But the first part of Step 2, namely, the issuance of the stock in defendant corporation to plaintiff was not accomplished although the record shows that a stock certificate of defendant corporation was actually prepared in the name of plaintiff. At this point a stumbling block to the consummation of the entire agreement was encountered when the parties could not agree on the value of the Louisiana assets of plaintiff and the value of Cooper’s stock in plaintiff, preventing the accomplishment of Step 3 of the agreement.

The narrow issue on this appeal is whether plaintiff may now invoke the provisions of LSA-R.S. 12.-23B requiring its written consent when defendant corporation was formed or whether under these circumstances it waived its right to insist upon such written consent. I concur in affirming the judgment of the trial court for the reason that plaintiff waived such right.

Waiver is a voluntary and intentional relinquishment or abandonment of a known existing legal right, advantage, benefit, claim, or privilege, which except for such waiver the party would have enjoyed. Breaux v. Laird, 230 La. 221, 88 So.2d 33, Michel v. Efferson, 223 La. 136, 65 So.2d 115. It is clear from these cases and the cases cited therein that the doctrine of waiver is recognized and applied by our courts in appropriate cases. It hardly seems debatable that the narrow technical right available to plaintiff under R.S. 12:23B to make the use of its name by defendant corporation conditioned upon written consent being given and filed with the Secretary of State could be waived by plaintiff. At 28 Am.Jur.2d Estoppel and Waiver, § 164, it is said that “as a general thing, rights granted by statute may be waived unless the statute is intended to protect the general rights of the public rather than private rights. While one cannot waive a public obligation created by a statute, he may waive a statutory requirement the purpose of which is to confer a private right or benefit . . .” That annotation then provides a number of examples where technical requirements of statutes may be waived by the party for whose benefit such statutes were enacted. At the time Step 1 of the agreement was confected plaintiff had every intention of implementing the formation of defendant corporation, was charged with the knowledge that R.S. 12:23B required its written consent to the use of its name by defendant corporation and must be said to have intentionally waived this requirement. The absence of the written consent in no way affected the validity of the corporate existence and defendant remained viable and unassailed from date of its creation in August, 1972, until this suit was filed in January, 1974. Step 1 was a fait accompli. Plaintiff knew defendant had been formed and that defendant was viable throughout a 16-month period. Plaintiff waived any rights it had to insist upon the defendant having its written consent as a condition to its formation of existence during this time.

But the principal thrust of plaintiff’s case is that the formation of defendant corporation was only one of several parts of an agreement and when it became apparent that the other parts of the agreement could not be accomplished it became patently unfair and inequitable for defendant to be using plaintiff’s name and its Louisiana assets and property while negotiations dragged on between the parties to bring about a conclusion of the agreement. The suggestion is made that plaintiff is at a complete disadvantage as a result of its completing Step 1 in good faith while defendants now have no incentive to complete Step 3.

This position finds support in Breaux v. Laird, supra, where the following was said:

“. . . [Waiver]
Should not be applied where it will serve as an instrument of, or operate as, a fra.ud, be against good conscience, work injustice or accomplish a wrong. Gonsoulin v. Equitable Life Assurance Society of the United States, 152 La. 865, 94 So. 424; C.J. Sec. Vol. 31, p. 242, et seq; 42 C.J.S. p. 380.
“The promotion and enforcement of fair dealing and the prevention of undue advantage are equally involved in the application of the equitable doctrine of waiver or estoppel, and pleas of this doctrine can be of no avail to the party urging same unless he has been clearly misled to his detriment or injury by the actions or conduct of the party against whom the plea is urged. In re Clover Ridge Planting & Mfg. Co., Inc., 178 La. 302, 151 So. 212.”

From my appreciation of the evidence there is no way that plaintiff can be victimized as a result of the defendants continuing to operate under plaintiff’s name in Louisiana. It is clear that plaintiff is the rightful owner of all of the shares of stock in defendant corporation notwithstanding the fact that a stock certificate signifying such has not yet been issued. See Volker v. Crescent City Wholesale Florist, 17 So. 2d 372 (La.App.Orl.1944). Plaintiff is therefore in the same position it was in even before Step 1 of the agreement was accomplished. Whatever business is being conducted in Louisiana, whatever contracts are signed and performed and whatever profits are derived by the defendant corporation all redound to the benefit of plaintiff. Thus, there is no equitable basis for holding that the doctrine of waiver should not apply under the circumstances of this case.

Much is said about the application and meaning of R.S. 12:23F which provides as follows:

“The assumption of a name in violation of this section shall not affect or vitiate the corporate existence, but the court having jurisdiction may, upon application of the state or of any person, unincorporated association or corporation interested or affected, enjoin a corporation from doing business under a name assumed in violation of this section,

In my opinion this section has no application to the facts of this case. This section, recognizing the power of the court to enjoin a corporation from doing business under a name assumed in violation of this section, is not intended to grant any relief to a corporation which initially agreed to a second corporation using its name and in fact aided, abetted and assisted the second corporation in the assumption of the first corporation’s name and thereafter acquiesced in the use of that name for a period of 16 months without objection.

If plaintiff had shown by a preponderence of the evidence that an injustice was being done to it by virtue of defendants’ failure or refusal to proceed with the remaining steps of the agreement after plaintiff had cooperated in the accomplishment of Step 1, the court under its general equitable jurisdiction could enjoin defendants from reaping the benefits of Step 1. But as has already been discussed the facts do not show that plaintiff is now suffering or will continue to suffer any irreparable injury as a result of defendants’ actions so that the first paragraph of LSA-C.C.P. Art. 3601 is not applicable. Furthermore, even if the facts did not so clearly militate in favor of defendants the law is clear that the trial judge has much discretion in the granting or refusing of injunction and plaintiff has not shown that the trial judge abused such discretion so as to warrant our reversal of judgment.

I concur in the result.  