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Corporate name, is necessary to the very existence of a corporation. The general rule is that each corporation must have a name by which it is to sue and do all legal acts. The right to use its corporate name is as much a part of the corporate franchise as any other privilege granted. Rights to the exclusive use of a corporate name will be protected, on principles applied in trademark cases, against use by another concern where the circumstances are such that deception or confusion may result.
Whether a creation by the state is or is not a corporation, however, depends
upon its character, and not on its name. The character of a corporation is not controlled by its name.
State laws differ as to what name a corporation is generally permitted to use, whether a word denoting a corporation must be included in the corporate name, whether certain words may not be issued in the name, how a name is reserved for use, and the effect of state approval or
disapproval of its name.
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Selecting a corporate name. Obviously, a name must be chosen before incorporation, and as a practical matter, several more alternatives names. A corporation can assume virtually any name,
provided that the name is available (not so similar to the name of another corporation, person, firm, association, trust, trademark or service mark so as to confuse or deceive the public) and provided that, in the
judgment of the secretary of state, the name indices that the venture is incorporated.
Choosing corporate name, checklist:
In some cases the founders may not know what name they want to use and will seek the incorporator's advice.
The following factors should be considered:
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If a preexisting business is to be incorporated, it is usually advisable, at least where the preexisting business has a good reputation, to choose a corporate name as similar as possible to the name under which the business
is conducted.
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If a new business is being incorporated or a change in the name of a preexisting business is desired, consideration should be given to using a corporate name which will tell potential customers what the primary business of the corporation is.
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Use of the name of one of the founders in the corporate name, if the business to be conducted
is in a locale where the founder is well known, should also be considered.
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If there is some difficulty in finding an available name, the use of the initials of one of the founders or some combination of the letters containing the initials of one or more founders
should be considered.
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Use of "corporation" necessity of. Some states have statutory provisions
governing corporate use, which requires that the corporate name contain words meaning corporation or the
abbreviation of one of these words. Some states allow the use of the word
"company" and other states have no such requirement.
Though a word
implying corporate status may not be required by the state of
incorporation, a corporation may be required to use such a word in
another state in which it wishes to qualify to do business.
When a statute may require a corporate name to contain the word
"corporation," such a statute has been
interpreted as relating only to the secretary of state's discretion in establishing corporate names and the ability of similarly named corporations to challenge the name as confusing, and such a state has never been
interpreted to require that the corporate moniker must appear on all signage, letterheads, company forms, phone listings and the like. Moreover, assuming
arguendo that such a statute had that meaning, its violation could not be said
to automatically give rise to anything more than those
sanctions that the state may choose to impose, and certainly the loss of all protections and
advantages of the corporate form, including limiting liabilities, cannot be said to spring spontaneously from the
failure to comply.
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Names available or unavailable. In the absence of statutory provision, a corporation formed under the general laws may, as a general rule, adopt any name desired, subject to the qualification that an existing body, even though an unincorporated association, may have a property right in its name of which
it cannot be deprived.
Most
jurisdictions forbid the use of certain described names, such as "bank", "insurance", "trust", or the like to guard against the placing of confidence by the public in corporations holding themselves out as subject to the governmental supervisions
and controls imposed upon quasi-public corporations such as banks and insurance companies, when they are not actually subject to such control. Provisions may also state that a name may not imply that a corporation is an agency or instrumentality for the state or the U.S. Further, a corporate name cannot contain any word or phrase that
indicates, or implies that it is organized for any purpose other than one or more of the purposes contained in its articles of incorporation. A statute may not provide that the name of a domestic corporation contains any word or phrase that indices or implies that the corp. is authorized for any purpose other than the purpose for which a corporation may be formed.
Use of the word
"Engineering," most states specifically proscribe by law the practice of using a trade name that suggest that they are a licensed engineer. Based on the statutes
this is prohibited, however, the mere wording "engineering" is not always sufficient to place a trade name use to mean professional engineering.
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Incorporation name as creating exclusive use. Under some decisions, the mere incorporation of a company under a particular name creates such a right to preempt its use by another. But another view is that mere incorporation under
a particular name does not preempt the subsequent use of such a name by another, and that actual use is also required.
The mere incorporation of a company under a particular name has been held to
preempt the use of the name by subsequent users for a reasonable period of time in which to allow the business to begin, or where a statute gives a fixed time within which to organize a corporation, for the period of time fixed by statute.
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Checking
availability of corporate name. Availability can be checked with the secretary of state. There is normally a charge
for this service and such confirmation does not absolutely confirm the availability. The use of the name in question should also be checked in states where the business might register as a foreign corporation.
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Reservation of a corporate name. Once a name has been confirmed in the state of incorporation and other states of use, the name may be reserved for a limited time, for a fee. Further, in the event the corporation
name is not filed during the reservation period it may be reserved on the day of expiration,
but you risk losing the reservation. When the incorporation is filed, whoever reserved the name must give authorization for the corporation to use the name in question. This must be in writing and submitted with the filing.
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Effect of transfer of assets of corporation. The transfer of the assets of a corporation does not necessarily carry the name of the corporation to the company that purchases the property. However, the right of a corporation to the use of its name may be lost on a transfer that includes the good will of its business. Also, the purchasers of all the stock in a professional service corporation and their successors may not practice exclusively under the name of the founder of such a corporation.
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Use of other than true corporate name. A corporation may have or be known by several names in the transaction of its general business so that it may enforce, as well as be bound by, contracts entered into in an adopted name other than regular name under which it was incorporated. In some states, a corporation may acquire a fictitious name by either use of reputation, and may do business under an assumed name or under
a name differing from its true corporate name. Many statutes expressly permit a corporation to do so. Some states prohibit the use of any name other than
what the corporation was organized under. In such a state, a corporation may not, either in its articles of incorporation or by amendment thereto, obtain the right to conduct its business under an assumed name or a trade name or series of trade names in addition to its corporate name and title. A corporation cannot legally change its name except in the manner prescribed by law. Professional corporations may be prohibited from using assumed names.
The use, in written contract, of a name other than the regular corporate name by which the corporation was incorporated, without any agency to make the contract being disclosed, makes the contact Prima facie not that of the corporation, but the presumption may be rebutted by extrinsic evidence.
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Assumed name. An assumed name statute may require an application be filed by a corporation that conducts business under any other name or designation. The fictitious name must be filed in a designated public office,
such as the county clerk or city or court following prescribed procedures.
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1.10 |
Change of name. A corporation has no right
of power of itself to change or alter the name it originally selected without
recourse to such formal proceedings as are prescribed by law. However, an unauthorized change of the name does not destroy the corporate identity or render its officers or stockholders who thereafter contract in the new name liable as partners. A corporation is not relieved from liability on its contracts by the fact that they are entered into under a name that it has attempted to assume without complying with the requirements to affect a change of name. In fact, a corporation may generally do business under an assumed name and be bound by obligations entered into under such a name.
A general method by which corporations may change their name is usually expressly provided for by statute. A general power to alter or amend the charter of a corporation necessarily includes the power to alter the name.
A corporate name change is routinely accomplished by merely amending the articles of incorporation. Said amendment does not cause a new corporation to come into existence. The procedure in applying for a new name is the same in reference to the secretary of state. Upon assumption of the new name the corporation may not reference its old name in any way.
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Similarity of names. A number of statutes have enacted states
forbidding the adoption of a name so nearly resembling that of an existing corporation as to be calculated to deceive, or name so similar thereto as to lead to
uncertainty and confusion.
Consent will sometimes be given when the proposed corporation will engage in an entirely different business from the possessor of a similar name.
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Remedies against wrongful use of name. As a general rule, parties organizing a corporation must choose a name at their peril,
or the use of the same name as, or a name similar to, one adopted by another corporation, if misleading and likely to injure it in the exercise of its corporate function regardless of intent, may be prevented by the corporation having a prior right, by suit for injunction against the new corporation to prevent the use of the name. Protection of a corporate name may be sought and will be given without regard to the existence of technical trademark where the name chosen by a defendant is the same as or deceptively similar to one already in use. Restraint for wrongful assumption of name by a corporation does not annull the corporation, it may choose another name. The corporation found to be in conflict may choose another word or phrase that will clearly distinguish its business from that of the other.
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Particular Consideration affecting rights to use or relief against. The law as applied to corporate names closely follows the law relative to use of name as trademarks. When a suit is brought to enjoin a corporation from the wrongful assumption of a corporate name to the injury of an individual or another company, it is not necessary to show actual damages or
that there was a fraudulent intent to deceive. A court of equity may grant injunctive
relief against a defendant corporation wrongfully using a name similar to a plaintiff's even when hardship or damage to the defendant is not great.
Use of an individual's name in the absence of contract, fraud, or estoppel.
Any person may use his name in all legitimate ways, and as the whole or a part of corporate name.
Use of
a defunct name will be
enjoined at the instance of a party whose rights therein are infringed by such use, but not at the instance of one who has no rights in such corporations. The name of a charter of which has expired is not an asset in the hands of the receiver and therefore cannot be protected from appropriation by another organization.
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Wrongful name defenses. A corporation by laches loses its right to
equitable protection against the unfair use of its corporate name, thought mere delay in bringing suit will not necessarily bar injunctive relief.
Acquiescence in the use of a similar name by other corporations, the failure to sue other corporations guilty of infringement, have held not to constitute a good
defense, though the use of similar names by other corporations has been considered in some cases in determining whether equitable relief should be granted.
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Seal. A corporation has the power to use and adopt any seal. A typical statutory provision is found to give a corporation the power to have a corporate seal, which may be altered at pleasure, and to use the
seal by causing the seal, or facsimile of it, to be impressed or affixed or
reproduced in any other manner. A seal may be adopted by a resolution of the directors.
A power to have and use a corporate seal should include the power to use
a facsimile; otherwise, the use of the seal on large issues of stocks or bonds, if desired or required, would not be feasible.
Any corporate seal may be adopted on a particular instrument not withstanding that the corporation has a special seal that it ordinarily uses, and if the corporation adopts a seal different from its corporate seal for a special occasion, or if it has no corporate seal, the seal adopted is the corporate seal for the time and the occasion.
A corporate seal has been impressed upon was, a wafer or other impressible substance, but this rule has been relaxed, so that in most jurisdictions a scroll, a printed impression, or the letters "L. S."
enclosed in brackets, is sufficient. It has been said that a corporate seal may consists of anything that is found upon paper and which appears to have been put there by due authority or to have adopted and used by such authority as and for the seal of the corporation. A statement by the signer that has affixed his hand seal does not cure the defect of the absence of a seal.
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Necessity of a seal. Today, a corporate seal is not an essential corporate attribute and in the absence of charter or
statute to the contrary, a corporation may bind itself by a writing not under seal to the same extent as an individual. Thus, a corporate seal is not essential to the execution or transfer, by a corporation, of
commercial paper, the execution of a contract, not otherwise requiring a seal, by an authorized officer, the appointment of an
attorney or agent, a chattel mortgage, an instrument authorizing the confession of a
judgment against a corporation or instrument and agreements relating to the conveyance of seal property.
But though not necessary, the reason it is desirable to attest all contracts and other acts of the corporation with its seal, when this is possible, is that the precedence of such seal establishes, prima facie, that the instrument to which it is affixed is the act of the corporation. Ordinarily, in the absence of a corporate seal, there is no presumption of authority. Private seals have been abolished by statute and are of no affect.
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Authority to affix. No officers or agents have inherent power to affix the corporate seal to an instrument. However, unless the power to affix the seal is confined by the charter or articles of incorporation to a particular officer or member, it may be delegated by the proper corporate officers, who are themselves authorized to enter into the contract, to a part of their number or other officer or agent. The authorized officers of a corporation need not themselves affix the seal, but may adopt the corporate seal as affixed by another person. Thus, if the seal is affixed by the direction of the officer of the corporation, who substantially sign and issue the instrument , the seal is duly made and the instrument becomes obligatory upon the corporation. Without proof the seal was improperly used or was not used without knowledge of its requirement to be used, signing are is considered sealed.
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Proof of seal. Competent proof of a seals authenticity, further evidence that such seal of the company was used the act in question is considered prima
fascia that the seal was duly affixed, the absence to the contrary, dispenses with the necessity of positive proof.
A
declaration in a corporate instrument that a seal is affixed thereto as the seal of the corporation is
conclusive as to its character and affect. A presumption that the signer is intended to adopt the printed word seal as his own seal, or as the deal of the corporation on whose behalf he signed, may arise when the signature is placed to the left of the seal.
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Effect of seal. The attachment of the corporate seal to an instrument signed by corporate officers generally shows prima facia that it is the act of the corporation. Said signing does not require further proof of the authority for this signing and it considered lawful. However, in the event the officers or individuals did not have authority for signing of sealed agreement with proof from the corporation, the use of the seal in itself is not proof of authenticity fo corporate signing. And where the issue is raised that the seal was, in fact, affixed by persons having no authority, the question whether the seal was duly affixed is generally one for the consideration of the jury. The mere affixation of a corporate seal to a document does not automatically raise it to the status of an instrument under seal. Further, the mere presence of a seal without more, does not convert the document into specialty. The presumption of a corporate deedof trust for benefit of creditors raised by the corporate seal is overcome by proof that the directors were interested as creditors in the transaction.
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Domicil, Residence, or Place of Business. Registered office and agent. The
domicile of a corporation belongs exclusively to the state in the sovereignty under the laws of which it is created. It exists only by force of the law of its creation, must dwell in the place of its creation, and cannot migrate to another sovereignty. But while a corporation must live and have its being in the state of its creation only, it does not, by any means, follow that its existence there will not be recognized in other places. Its
domicile in one state creates no insuperable objection to its power of contradicting in another.
Residence is said To be an attribute of a natural person, and can be predictable of an artificial being only by a more or less imperfect analogy.
Strictly speaking, therefore, a corporation can have no local residence or habitation. A corporation is mere ideal
existence, subsisting only on contemplation of an law-an invisible being that can have, in fact, no locality and can occupy no space, and therefore cannot have dwelling. However, the sovereignty creating the corporation may five it a local habitation or residence law, if no in fact. The legislature may, for instance, declare residence of a corporation for the purpose of suit. Since the identity of the corporation is distinct from that of its stockholders or members, the residence of its officers, agents, stockholders, or incorporators can have no influence in regard to the local residence of the corporation.
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Place of doing business or principal office as residence. The residence of a corporate by virtue of doing business there, depends on the connection with how question arises. A corporation residence of
domicile is generally where its principal office or place of business is, regardless whether it is domestic or foreign. The place designated in a charter or certificate of incorporation as the principal place of business of a particular corporation is controlling as to the residence of the entity. Where by statute, a domestic corporation is deemed a resident of the county where its principal or registered office is maintained, this means the county designated in its certificate of incorporation as the place where the office of the corporation is to be located. The mere fact that a corporation has an office in a county other than that designated in its certificate does not change its residence. On the other hand, according to some cases, a domestic corporation is regarded as having a residence within the state at any place where it is engaged in the particulars of the corporate enterprise, and not only at its chief place
to home office. In other words, a domestic corporation may be regarded as having more than one place of residence within the state. Furthermore, corporations may, under some circumstances and for come purposes be considered residents of more than one jurisdiction. Whether a corporation has established a residence in a foreign jurisdiction depends on the aim and context of the statute in which the residence requirement is contained and the extent and character of its business transacted there. No presumption exists that the corporations residence is that of its president, and the mere residence of a subsidiary or affiliate does not, without more, establish the residence of its parent organization.
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Registered office and agent. All jurisdictions have statutory provisions relating to registered office or agent, or both whether designated by such terms or otherwise. A number of states have statutory provisions requiring each corporation to have and continuously maintain in the state in which it was
established such a registered office. Which may be but need not be, the same as its place of business. States statutes direct who may act as such an agent. Said agent is required to be contained in the original articles of incorporation.
The primary reason for this requirement is to provide for service of process within the jurisdictions, the resident agent should be described by a street address which gives its physical location. Most jurisdiction do not accept P.O. box.
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Change of registered agent. Corporations may change such, by giving notice to the state per the statutes of that state.
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