A B C Stores v. T. S. Richey & Co.

• Decision Date: 25 October 1924
• Docket Number: (No. 1129.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 266 S.W. 551
• Parties: A B C STORES, Inc., et al. v. T. S. RICHEY & CO.
• Court: Texas Court of Appeals

Page 551

266 S.W. 551

A B C STORES, Inc., et al. v. T. S. RICHEY & CO.

(No. 1129.)^*

Court of Civil Appeals of Texas. Beaumont.

October 25, 1924.

Rehearing Denied November 12, 1924.

Appeal from District Court, Jefferson County; Geo. C. O'Brien, Judge.

Suit by T. S. Richey & Co. against the A B C Stores, Inc., and others. Decree for plaintiff, and defendants appeal. Affirmed.

Boyles, Brown & Scott, of Houston, for appellants.

A. L. Shaw and F. M. Sheffield, both of Beaumont, for appellee.

O'QUINN, J.

This is an appeal from a judgment perpetuating an injunction. The record discloses the following:

In September, 1919, appellant the A B C Stores, Inc., was incorporated under and by virtue of the laws of the state of Texas. The original incorporators were Ernest Alexander, W. D. Bell, and Edward Boyles; Boyles owning 70 of the 100 shares of stock. Alexander was president of the company from the time of its incorporation to January 12, 1923. Boyles has at all times been its secretary. Appellant opened its original and first store in Galveston, Tex., and later added a second store at Houston, Tex., and still later added another store at Houston. Some time in the year 1920, appellant adopted and began using as its advertising paraphernalia the A B C blocks appearing thus: NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

In June, 1921, Alexander and Wm. A. Ryan, under a joint-stock association, organized the Texas Food Shop and opened a store at Beaumont, Tex. In October, 1922, the Texas Food Shop was incorporated under the laws of Texas, and Alexander was its president at all times, until it was sold to appellee, about January 1, 1923. Alexander owned practically one-half of the stock. By permission of the appellant the A B C Stores, Inc., the Texas Food Shop used the A B C blocks in advertising in Beaumont, and its store was known and advertised as the A B C Store.

January 5, 1923, the Texas Food Shop, through Alexander, its president, made a bill of sale to T. S. Richey & Co., a partnership composed of T. S. Richey and Paul White, conveying to them the Beaumont store, fixtures, merchandise, and the right to use the trade-name "A B C Store" in the city of Beaumont for a period of 25 years, from May 28, 1921 (the date of the organizing of the Texas Food Shop), for a consideration of $22,570.46.

T. S. Richey, on June 21, 1921, became an employé of the Texas Food Shop, and was placed in control of, and had the control and management of, the Texas Food Shop store, known as the "A B C Store" of Beaumont from the time of its opening up to and until it was sold to T. S. Richey & Co., about January 1, 1923. During all of its operations, the Texas Food Shop, known as the "A B C Store" at Beaumont, was managed from Houston, and all books, both of appellant, the A B C Stores, Inc. (including the store at Galveston and the two stores at Houston), and the Texas Food Shop, or A B C Store at Beaumont, were kept in Houston and by the same employés. Alexander, president of both the A B C Stores, Inc., and the Texas Food Shop, or A B C Store at Beaumont, resided in Houston and supervised the operation of all the concerns from Houston. Richey, as manager of the Beaumont A B C Store, received all supplies, groceries, etc., and all orders, from Alexander, at Houston. Richey knew that the A B C Stores, Inc., at Galveston and Houston used no other trade-name or advertising medium other than the A B C blocks and accompanying insignia.

The by-laws of the A B C Stores, Inc., provide that the board of directors shall have absolute control of its affairs. The by-laws further provide that the president of the corporation shall be the chief executive officer and in entire control of any and all affairs of the corporation, subject to the direction and control of the board of directors and the by-laws, and that all deeds, mortgages, bills of sale, and all other formal instruments, outside of the regular course of its business, shall be signed by the president and attested with its corporate seal by its secretary.

On January 5, 1923, Alexander informed Boyles that he and Ryan had sold the Beaumont store to Richey and White. The next day Boyles went to Beaumont to see Richey, and, upon learning from Richey that he had a bill of sale from the Texas Food Shop, undertaking to convey the right to use the name "A B C Store," he advised Richey that Alexander did not have the authority to convey the trade-name of "the A B C Stores" for a period of 25 years, or any other time. Richey immediately went to his bank and made inquiry, and found that the money paid into the bank the day before for the purchase of the A B C Store of Alexander had been drawn out. Boyles and Richey then went to the law office of A. L. Shaw, who represented Richey, and the matter was there discussed, and that evening Richey and Shaw went with Boyles to Houston, and that night there was a meeting in the office of Fulbright & Crooker, lawyers, and Alexander was present. At that meeting, Boyles stated to Richey and Shaw that there had been no authority from the board of directors of the A B C Stores, Inc., authorizing Alexander to sell the trade-name of the corporation, or of the right to use it. Later, on the 10th day of January, 1923, Boyles, as secretary of the A B C Stores, Inc., sent a telegram to Richey and White, advising them that the corporation had never authorized the granting of the use of the name "A B C Stores" to Richey, White, or any one else, and repudiated the transaction of Alexander with them, and confirmed the telegram with registered letters, which were duly received by the parties. On January 12, 1923, the board of directors of the A B C Stores, Inc., passed a resolution expressly repudiating Alexander's sale of the right to use the name "A B C Stores" to Richey and White, and Boyles went to Beaumont the next day and exhibited the original resolution of repudiation to Richey and his lawyer, Mr. Shaw, and again stated to them that the A B C Stores, Inc., would not sell or permit to be sold its trade-name or the use thereof for any period of time.

In November, 1923, the A B C Stores, Inc., opened a store in Beaumont and on November 26, 1923, filed and had registered in the office of the secretary of state, under provision of article 706, Revised Statutes, the A B C blocks and trade-name (being the advertising paraphernalia in controversy herein) as its trade-name and advertising paraphernalia.

The A B C Store of Beaumont was opened in June, 1921, by the Texas Food Shop, a joint-stock association composed of Alexander and Ryan, and, with the permission of the A B C Stores, Inc., was operated in the name of the "A B C Store" and used the advertising paraphernalia in question. Richey was the manager of the A B C Store in Beaumont from its inception until he and White purchased it from Alexander, about January 1, 1923. During all this time the trade-name of the store was "A B C Store," and the A B C blocks and advertising paraphernalia were used to advertise its business. After the sale of the store to Richey and White, the store, notwithstanding the controversy with appellant over the sale of the use of the trade-name, was continued to be run and operated in the name of "A B C Store," and the same advertising paraphernalia, the A B C blocks, used until the...