Clark Advertising Agency, Inc. v. Tice

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: THORNBERRY, GODBOLD and CLARK, Circuit
• Citation: Clark Advertising Agency, Inc. v. Tice, 490 F.2d 834 (5th Cir. 1974)
• Decision Date: 08 March 1974
• Docket Number: No. 73-1244.,73-1244.
• Parties: CLARK ADVERTISING AGENCY, INC., Plaintiff-Appellee, v. James TICE, Defendant, American Hot Rod Association, Defendant-Appellant.

490 F.2d 834 (1974)

CLARK ADVERTISING AGENCY, INC., Plaintiff-Appellee, v. James TICE, Defendant, American Hot Rod Association, Defendant-Appellant.

No. 73-1244.

United States Court of Appeals, Fifth Circuit.

March 8, 1974.

Hugh Russell, Robert R. Sanders, Amarillo, Tex., Bernard L. Balkin, Kansas City, Mo., for defendant-appellant.

Jerry F. Lyons, Amarillo, Tex., for plaintiff-appellee.

Before THORNBERRY, GODBOLD and CLARK, Circuit Judges.

THORNBERRY, Circuit Judge.

In this diversity action, Clark Advertising Agency sued the American Hot Rod Association (A.H.R.A.) and its president, James Tice, for payment under a contract for advertising and promotional services. Defendant Tice's motion for a directed verdict was granted, but the jury returned a verdict against A.H.R.A. for both contractual services and attorney's fees. A.H.R.A. attacks the admission of evidence as to contract terms negotiated between Clark and A. H.R.A. officers other than Tice, the form of the jury instructions, the denial of its request to make an opening argument, and the award of attorney's fees. We affirm the district court on all four issues.

Under a previous written contract, Clark supplied advertising services for the Winter Nationals Race in Phoenix, Arizona, in February, 1971. The total cost under that contract was $12,729.76. During negotiations for the oral contract that forms the basis of this suit, which provided for services in connection with a race to be held in West Palm Beach, Florida, it was initially agreed that the cost would be approximately the same. Tice had refused to sign a written contract submitted by Clark because its terms deviated from those of the prior contract, for example by providing for a $50 per day promotional fee. When Clark presented a total bill of $18,102.10 under the present contract, A.H.R.A. refused payment, and this suit ensued.

There is no dispute that the initial talks held between Tice and Clark, had established in a general way that the expenditures under the oral contract would approximate those under the prior written contract. All discussions as to any increase in fees and costs were held between Clark and either Jerry Ballah, the Vice President of A.H.R.A. and the man primarily in charge of arrangements for the West Palm Beach race, or Bob Harkins, the Comptroller of A.H.R.A. A.H. R.A. contends that evidence of additional contract terms negotiated between Clark and either Ballah or Harkins should have been excluded, since they had no authority to contract for the organization.

Whether or not either of these officers actually had express or implied authority to bind A.H.R.A., we hold that there is ample evidence to find that they had apparent authority to do so and also that A.H.R.A. is estopped to deny their authority. Apparent authority exists whenever a principal manifests to a third person that an officer or agent may act in its behalf, and the third person in good faith believes that the authority exists. When that third person reasonably relies upon that apparent authority to his detriment, the principal is estopped to deny the authority. Restatement (Second) of Agency § 8 (1958); H. Henn, Law of Corporations, § 226 (2d ed. 1970). Tice testified that he did not know all the terms of the "loose verbal agreement," since he ceased to be personally involved and left the negotiations to Ballah and Harkins. Similarly, after the race Tice left it to Harkins to negotiate with Mr. Clark for a settlement of his services in Florida. By leaving the detailed negotiation work to Ballah and Harkins, Tice created the appearance that they had authority to conduct those negotiations, on which authority Clark relied in carrying out his part of the contract. A.H.R.A. cannot now be heard to say that it is not bound by the contract terms worked out between Clark, Ballah and Harkins. Evidence of those terms was properly admitted.

A.H.R.A. next contends that it was error to instruct the jury that Clark should recover for "reasonable and necessary" charges, since this language is usually used in reference to recovery on an implied contract, whereas the plaintiff's theory here was that of an express contract. Thus, A.H.R.A. contends that the only proper award could be for sums authorized by the express terms of the contract. However, A.H.R.A. failed to make a timely objection under Fed.R. Civ.P. 51. By the express terms of that Rule, "no party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict . . . ." This prohibition is not hard and fast, however. We will recognize error "so fundamental as to result in a miscarriage of justice" in the absence of a timely objection, but that power is only exercised in the most exceptional cases. Delancey v. Motichek Towing Service, Inc., 5 Cir. 1970, 427 F.2d 897. Since there are no exceptional circumstances here, we hold that A. H.R.A. has waived any errors in the form of the jury instructions.

A.H.R.A. next contends that the district court's refusal to allow an opening argument to the jury constitutes reversible error, citing Aladdin Oil Burner Corp. v. Morton, 1936, 117 N.J. L. 260, 187 A. 350; Conner v. Flaska, 1927, 32 N.M. 162, 252 P. 1001, and Stolpher v. Bowen Motor Coaches, Tex. Civ.App.1945, 190 S.W.2d 376. These cases do not support the contention, since they deal with the denial of the right to make an argument to the jury after the presentation of evidence has been closed, not with the refusal to allow an opening argument. More fundamentally, we feel this is strictly a matter of the conduct of the trial, best left to the discretion of the district court, and governed by federal rather than state rules. The only federal authority in point, United States v. 5 Cases, Etc., 2 Cir. 1950, 179 F.2d 519, accords with our view that the grant or denial of the privilege rests within the sound discretion of the district court. We find no abuse here, particularly in view of the fact that A.H.R.A. did make a full closing argument.

Finally, A.H.R.A. contends that there should have been no award of attorney's fees. Although the Texas statute¹ provides for attorney's fees in certain enumerated instances, it has been held that there can be no award of attorney's fees in a suit on a service contract where the charges are not primarily for personal services performed by the contractor or his employees. In Radio KOKE v. Tiemann, Tex.Civ.App.1964, 378 S.W.2d 952, attorney's fees were denied in an action to recover the cost of moving household goods. The court acknowledged that some personal services were involved, but observed that the contribution of machinery and equipment employed in the moving was in great disproportion to the amount of labor and personal services involved. Since the charges here were primarily for media expenses, traveling and living expenses, A.H.R.A. contends that this is not a service contract and will not support an award of attorney's fees.

This argument fails to take into account the 1971 amendment to Article 2226, which deleted the requirement that the claim be for personal services rendered by the claimant himself. Instead, Article 2226 now provides for an award of attorney's fees in a suit by "any person, corporation, partnership, or other legal entity having a valid claim . . . for services rendered" or any of the several other enumerated types of claims. The amendment apparently changes the result of Tenneco Oil Co. v. Padre Drilling Co., Tex.1970, 453 S.W.2d 814, where the court held that a corporation could not have a claim for personal services, since it could not render services personally but could only do so through its employees. We think the Texas legislature, in amending the statute to delete the requirement that the services need be "personal," was adopting the broad meaning of "services" first spelled out by the Texas Supreme Court in Van Zandt v. Fort Worth Press, Tex. 1962, 359 S.W.2d 893, and reaffirmed in Tenneco. In Van Zandt, the court distinguished the two terms as follows:

Webster\'s Third New International Dictionary gives a general definition of "service" as "action or use that furthers some end or purpose: conduct or performance that assists or benefits someone or something: deeds useful or instrumental toward some object." The same source defines "personal services" thusly: "economic service involving the either intellectual or manual personal labor of the server rather than a salable product of his skill (physicians, architects, and garbage collectors equally sell personal services)." In construing the state\'s Unemployment Compensation Act the Supreme Court of Utah had occasion in Creameries of America v. Industrial Commission, 98 Utah 571, 102 P.2d 300, 304, to differentiate "services" and "personal services". The court said:

"In ordinary usage the term `services\' has a rather broad and general meaning. It includes generally any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed. The general definition of `service\' as given in Webster\'s New International Dictionary is `performance of labor for the benefit of another\'; `Act or instance of helping, or benefiting\'. The term `personal service\' indicates that the `act\' done for the benefit of another is done personally by a particular individual."

359 S.W.2d at 895.

There is no doubt that, in changing "personal services" to "services," the legislature was broadening the coverage of the statute. Thus, despite the oft-repeated assertion that the statute is penal and should be construed narrowly, Van Zandt v. Fort Worth Press, supra; W. G. Tufts and Son v. Herider Farms, Inc., Tex.Civ.App.1972, 485 S.W. 2d 300, we hold that it is broad enough to cover actions on contracts for the sort of advertising and promotional services provided here, even though many of those services were not provided...