Arabesque Studios, Inc. v. Academy of Fine Arts, Intern., Inc., 18641

• Decision Date: 18 September 1975
• Docket Number: No. 18641,18641
• Citation: 529 S.W.2d 564
• Parties: ARABESQUE STUDIOS, INC., Appellant, v. ACADEMY OF FINE ARTS INTERNATIONAL, INC., and Sarasue Harris, Appellees.
• Court: Texas Court of Appeals

Page 564

529 S.W.2d 564

ARABESQUE STUDIOS, INC., Appellant, v. ACADEMY OF FINE ARTS INTERNATIONAL, INC., and Sarasue Harris, Appellees.

No. 18641.

Court of Civil Appeals of Texas Dallas.

Sept. 18, 1975.

Rehearing Denied Oct. 16, 1975.

James K. Peden, III, Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellant.

Tom Thomas, Kolodey & Thomas, A. James Henry, III, Nelson & Dilts, Dallas, for appellees.

CLAUDE WILLIAMS, Chief Justice.

Arabesque Studios, Inc. appeals from a take-nothing judgment, rendered Non obstante veredicto in its action against Academy of Fine Arts International, Inc. and Sarasue Harris for damages arising out of a breach of an employment contract between Arabesque and Sarasue Harris. We affirm the judgment as to International and reverse and render judgment in favor of Arabesque against Sarasue Harris.

Arabesque, at all times material herein, was engaged in the business of providing dance instruction, primarily for children, at three dance studios located in the Dallas area. On January 20, 1971, Arabesque entered into an employment contract with Harris in which she agreed to serve in the capacity of a manager-teacher in the Arabesque studio located in Richardson, Texas. The written contract of employment provided that the employee would not, for a period of twelve months after the date of termination of employment, engage in the same or similar business, in any capacity within a five-mile radius of any location where the employer operated a business. The contract also contained the following provision:

Employee shall not at any time within twelve (12) months following termination of employment teach any current customer or client of the employer, nor teach any person who has been a customer of the employer within twelve (12) months prior to such termination.

Harris performed services for Arabesque under the terms of this contract until May 22, 1972, when she resigned. In September 1972, she began providing dance instruction at a studio operating under the name of Academy of Fine Arts International, Inc., which was located within five miles of the Arabesque Richardson studio. Academy of Fine Arts was a sole proprietorship of Mr. A. R. Fairchild. In November 1972, Academy of Fine Arts International, Inc. was incorporated; fifty-one percent of the stock was owned by Mr. and Mrs. Joe Taylor, and the remainder of the stock was owned by Harris.

Arabesque brought this action against both Academy and Harris, alleging that it had been damaged as a result of Harris's breach of the non-competition covenant in her contract in that she had taken away Arabesque's students and trade secrets and had caused irreparable damage to its good-will. Arabesque sought damages against Academy on the theory that Harris was its agent, servant or employee and, therefore, it was legally responsible for her conduct.

Both in her brief and before this court in oral argument, Harris agreed that her actions and conduct constitute a breach of the restrictive covenant contained in the contract with Arabesque. No question is presented concerning the reasonableness and enforceability of the restrictive provisions. In fact, the trial court granted Arabesque's motion for partial instructed verdict as to the liability of Harris. No attack is made upon this act of the court.

The case was tried before the court and a jury. In response to special issues, the jury found, Inter alia, that within twelve months after the date her employment with Arabesque terminated, Harris taught students at Academy who, within the twelve-month period prior to her termination, were customers of Arabesque; that Academy, at the time it was formed as a corporation in November 1972, had knowledge of Harris's contract with Arabesque; and that $4,400 would fairly and reasonably compensate Arabesque for its damages resulting from the occurrence in question. Academy filed a motion for judgment Non obstante veredicto, contending that there was no evidence to support the answer of the jury to special issue number five concerning its knowledge of the contract between Arabesque and Harris. As further grounds for its motion, Academy attacked the answer of the jury to special issue number six concerning the amount of damages, asserting that the answer was not supported by the evidence. Harris also filed a motion in which she contended that the answer of the jury to special issue number six should be disregarded because it is not supported by any evidence. The trial court sustained both motions and rendered final judgment, decreeing that Arabesque take nothing against either Academy or Harris.

Two questions are presented: (1) Is Academy liable for damages; and (2) does the record contain any evidence to sustain the jury's finding of damages in the sum of $4,400.

Our appellate review and resolution of these questions is necessarily governed by well-established rules relating to the validity Vel non of a judgment rendered Non obstante veredicto. It is elementary that in order to sustain the action of the trial court in granting such a judgment, it must be determined that there is 'no evidence' of probative force upon which the jury could have made the findings relied upon by appellant Arabesque. The point presented is one of 'no evidence,' and our determination of the question is controlled by the following rule: An issue of fact is raised if, discarding all adverse evidence, giving credence to all evidence favorable to the party opposing the motion, and indulging every legitimate conclusion favoring that party, the jury might have found in favor of that party. Leyva v. Pacheco,163 Tex. 638, 358 S.W.2d 547 (1962); Lynch v. Ricketts, 158 Tex. 487, 314 S.W.2d 273 (1958); Shelton v. Belknap, 155 Tex. 37, 282 S.W.2d 682 (1955); Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194 (1952); and Franklin v. Safeway Stores, Inc., 504 S.W.2d 514 (Tex.Civ.App.--Dallas 1973, writ ref'd n.r.e.).

Liability of Academy

In the trial court appellant Arabesque asserted two theories to predicate liability upon Academy. It first contended that Harris was acting as the agent of Academy. They state that there was a continuing breach of contract by Harris and that Academy participated in that breach after the date of its incorporation. The jury, in answer to special issue number five, found that Academy, at the time it was formed in November 1972, had knowledge of Harris' contract with Arabesque. It is upon this finding that Arabesque relies to cast liability upon Academy. We cannot agree.

The record is undisputed that in May 1972, Harris voluntarily left the employment of Arabesque and admittedly breached the contract with that company. In September she began to render services in competition with Arabesque for a sole proprietorship operating under the name of Academy. Appellee Academy was not incorporated until November 1972. Admittedly, there is no privity of contract between Academy and Arabesque. Furthermore, there is no evidence that Academy ratified or confirmed Harris' admitted breach of the agreement with Arabesque. Therefore, Academy cannot legally be held liable on a breach of contract theory. House v. Houston Waterworks Co., 88 Tex. 233, 238, 31 S.W. 179 (1895); Jones v. George, 61 Tex. 345, 364 (1884); Moore v. Sussdorf, 421 S.W.2d 460, 466 (Tex.Civ.App.--Tyler 1967, writ ref'd n.r.e.).

Arabesque argues that since Harris' restrictive covenant continued for a fixed period, each day of her employment by Academy must be taken as a new breach in which Academy participated. There is no evidence, however, that any officer or agent of Academy, other than Harris herself, was aware of such a continuing breach of contract. The knowledge of an agent cannot be imputed to a principal if the agent has a personal adverse interest in not revealing it. Goldstein v. Union National Bank, 109 Tex. 555, 213 S.W. 584 (1919). The corporation, representing the interests of those who invested their money in it, cannot be charged with knowledge of facts that she had a personal interest in not revealing.

Arabesque also alleged a cause of action in tort based upon Academy's alleged wrongful interference with Harris' contractual obligations to Arabesque. There was no jury issue submitted, and, therefore, no finding that Academy knowingly induced Harris to breach her contract thereby damaging appellant. To hold Academy liable for interference with the contractual relationship between Harris and Arabesque, it was incumbent upon Arabesque to demonstrate that Academy...