Arkansas Amusement Corporation v. Kempner, 9258.

• Decision Date: 26 February 1932
• Docket Number: No. 9258.,9258.
• Citation: 57 F.2d 466
• Parties: ARKANSAS AMUSEMENT CORPORATION v. KEMPNER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

57 F.2d 466 (1932)

ARKANSAS AMUSEMENT CORPORATION v.KEMPNER et al.

No. 9258.

Circuit Court of Appeals, Eighth Circuit.

February 26, 1932.

G. B. Rose, of Little Rock, Ark. (L. M. Rice, of Dallas, Tex., and Ben D. Brickhouse, L. L. Brickhouse, D. H. Cantrell, J. F. Loughborough, A. W. Dobyns, and A. F. House, all of Little Rock, Ark., on the brief), for appellant.

Joe T. Robinson and Harry E. Meek, both of Little Rock, Ark. (C. H. Moses and J. W. House, Jr., both of Little Rock, Ark., on the brief), for appellees.

Before KENYON, VAN VALKENBURGH, and GARDNER, Circuit Judges.

KENYON, Circuit Judge.

This action was brought by Ike Kempner in the United States District Court for the Eastern Division of Arkansas to recover salary claimed to be due him by virtue of a certain written contract made on the 20th day of July, 1925, between Southern Enterprises, Inc., of Texas, Little Rock Amusement Company, and Kempner.The Little Rock Amusement Company was engaged in the movie picture business in Little Rock, Ark., owning or controlling in 1925 practically all the movie theaters in that city.The Arkansas Amusement Corporation(appellant) is corporate successor to the Little Rock Amusement Company and assumed the obligations of the contract upon which this suit is based.The jury returned a verdict for Kempner in the sum of $17,595.95, for which amount judgment was entered against appellant.Since the submission of this case Kempner has died and A. J. Kempner and Stella Kempner, administrators of his estate, have been substituted as appellees.

A number of corporations appear as parties to the various contracts in evidence.We shall designate them as follows: Southern Enterprises, Inc., as the Southern Company, Little Rock Amusement Company as the Little Rock Company, Arkansas Enterprises, Inc., as the Arkansas Company, Arkansas Amusement Corporation as appellant.Southern Enterprises, Inc., was a subsidiary of Famous-Players Lasky Corporation.

We quote from the contract of July 20, 1925, as follows:

"Whereas, by a contract dated as of December 29th, 1923, between Southern, Saul S. Harris, Kempner and Little Rock (hereinafter called the contract of December 29th, 1923) by paragraph numbered 5 thereof, Little Rock agreed to employ Kempner at a salary of $10,000 a year, for a period of fifteen (15) years from and after June 28, 1924, or so long as Kempner should live, whichever period should be the shorter, with a provision providing for the purchase of Class A capital stock of Little Rock by Southern from the estate of Kempner in accordance with the provisions of said paragraph; said contract containing other terms; and

"Whereas, Kempner desires to sell and Southern desires to buy the Class A capital stock of Little Rock (being the number of one thousand (1,000) shares and/or all or any right or interest therein possessed by Kempner, in accordance with the provisions of this contract; and

"Whereas, the parties hereto desire to terminate, cancel and render void and of no effect the provisions of paragraph No. 5 of the contract of December 29, 1923, except as expressly stated herein."

Section 1 of said contract provides for the sale by Kempner to the Southern of his 1,000 shares of class A capital stock of Little Rock for the sum of $100,000, payable in different installments running over a period of time ending April 20, 1931.

Section 2 is the cause of this lawsuit.It is as follows: "Little Rock agrees to employ Kempner either as Vice-President or, at its option, in other executive capacity, for the period between the date of this contract and November 1, 1939, and Kempner agrees to accept said employment and to give to Little Rock and its affairs such of his time, attention and services as it requests of him.Little Rock agrees to pay to Kempner in return for said services salary at the rate of Eight Thousand ($8,000) Dollars a year from the date hereof to November 1, 1939, and said salary to be paid in weekly installments of One Hundred Firty-three Dollars and Eighty-five cents ($153.85) each."

Southern Company guaranteed to Kempner the faithful performance on its part of the undertaking.This contract cancels certain provisions of a contract of December 29, 1923.We quote from the latter as follows:

"Agreement between Southern Enterprises, Inc. of Texas, a Texas corporation (hereinafter called `Southern'), Saul S. Harris, of Little Rock, Arkansas (hereinafter called `Harris'), Ike Kempner, of Little Rock, Arkansas (hereinafter called `Kempner'), Arkansas Enterprises, Inc., a Delaware corporation (hereinafter called `Arkansas') and Little Rock Amusement Company, a Delaware Corporation(hereinafter called `Little Rock'), made and executed as of the 29th day of December, 1923.

"Whereas, by a contract between Southern, Kempner and Harris, made in the year 1920, (hereinafter called the `1920 contract') it was agreed that Arkansas should be formed and that various leases upon theatre properties situated in the City of Little Rock, Arkansas, should be transferred to it, Arkansas assuming the payment of certain amounts specified therein; and. * * *

"5.Little Rock shall pay Kempner salary at the rate of Ten Thousand ($10,000) Dollars per year for a period of fifteen years from June 28, 1924, or so long as he shall live, whichever period is the shorter — such salary to be paid weekly.At any time after the death of Kempner (if such event shall happen before fifteen years from June 28, 1924) if Little Rock is unwilling to pay, or to continue to pay, Abe or Dave Kempner, of Little Rock, Arkansas, brothers of Kempner, salary at the rate of Ten Thousand ($10,000) Dollars per year until the expiration of fifteen years from June 28, 1924, for the performance of the same services that Kempner is to perform hereunder, the Estate of Kempner may elect to sell to Southern, and it will buy, Class `A' capital stock of Little Rock belonging to said Estate, and Southern will upon on such election pay for said capital stock the sum of One Hundred Thousand ($100,000) Dollars which the number of years and fraction thereof between the date of this agreement and the date of a written notification to it of said election bears to fifteen years."

Also: "Kempner, Harris and Southern agree that said bonus and debts specified in this Article (4), and any interest accrued thereon, are hereby cancelled and discharged."

Under this contract Little Rock assumed the liabilities of the Arkansas Enterprises, Inc., with some exceptions set forth in section 4 thereof, among which were the payment of $7,500 due Kempner for moneys advanced to the Arkansas Company, and bonus or rentals due Kempner and Harris, as specified in article 6 of the 1920 contract, made between Southern Company of the first part, and Kempner and Harris of the second part.This contract of 1920 provided for formation of a new corporation to take over the movie picture theatres in Little Rock, 50 per cent. of the stock to be owned by Southern Company and 50 per cent. by Kempner and Harris.The name of the new company was "Arkansas Enterprises, Inc."Section 6 of the contract, referred to in the 1923 contract, is as follows: "It is understood and agreed that the Second Party shall receive from the said new corporation as a bonus or rental the sum of Twenty Thousand ($20,000.00) Dollars per year, payable quarterly in advance, for a period of ten years, without interest, and that the first party shall advance, as of August 1st, 1920, in behalf of the said new corporation the first two and one-half (2½) year's bonus or rental, aggregating Fifty Thousand ($50,000.00) Dollars, which is to be re-paid to the First Party with Six Per Cent interest thereon by the new corporation out of the earnings, and the First Party may negotiate loans for and in behalf of the said new corporation to reimburse the First Party for the said Fifty Thousand ($50,000.00) Dollar advancement, until the earnings of the new corporation shall pay the same."This contract provided that Kempner should receive a salary of $50 per week as president of the corporation.

Four or five theaters owned by Kempner and Harris and two owned by the Southern Company were put into the new corporation, Arkansas Enterprises, Inc., and the bonus that Kempner and Harris were to receive from the new corporation ($20,000 per year for ten years) was to equalize their contribution to the new holding company with that of the Southern Company.They were paid in cash $50,000 at the time of the transaction.This section of the contract of 1920 provided for the amount Kempner claims he released, together with an indebtedness to him on account of cash advanced to the Arkansas Company, as a consideration for the salary of $10,000 provided in the 1923 contract for a period of fifteen years.Kempner in the meantime had acquired Harris' interest in the bonus.

September 28, 1927, an agreement was made between the Southern Company, owners of all the capital stock of the Little Rock Company, and Wertheimer and Rowley, who owned and controlled all of the outstanding stock of the Home Amusement Company, and who were operating the Palace Theatre in Little Rock, whereby there was a consolidation of the movie picture houses in Little Rock under the Arkansas Amusement Corporation, appellant, and Wertheimer and Rowley took over the 1925 contract from Little Rock Company in behalf of said corporation, which was organized when they purchased their interest from the Southern Company.Kempner had no stock in this company.The theater properties of the Southern Company and Little Rock Company in the city of Little Rock were transferred to it.Rowley was secretary and general manager of this company and Wertheimer occupied an executive position.In this contract of September 28, 1927, it is recited, section 22: "22.Wertheimer and Rowley each for himself agrees that he has personal knowledge of and has examined and is fully familiar with the...