Doric Company v. Leo Jay Rosen Associates, Inc.

• Decision Date: 14 June 1962
• Docket Number: No. 19085.,19085.
• Citation: 303 F.2d 817
• Parties: The DORIC COMPANY, Appellant, v. LEO JAY ROSEN ASSOCIATES, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

303 F.2d 817 (1962)

The DORIC COMPANY, Appellant, v. LEO JAY ROSEN ASSOCIATES, INC., Appellee.

No. 19085.

United States Court of Appeals Fifth Circuit.

June 14, 1962.

Richard S. Banick, Miami, Fla., Fowler, White, Gillen, Humkey & Trenam, Miami, Fla., of counsel, for appellant.

Abraham H. Shukat, Miami Beach, Fla., for appellee.

Before TUTTLE, Chief Judge, and BROWN and BELL, Circuit Judges.

GRIFFIN B. BELL, Circuit Judge.

Leo Jay Rosen Associates, Inc., a Florida Corporation, brought suit against The Doric Company, a Washington Corporation, for advertising services rendered the Saxony Hotel, Miami Beach, Florida, recovering by jury verdict the stipulated amount of the account, and this appeal followed.

The Doric Company was engaged in managing real estate including hotel properties owned by it and others. Tom Muggleston purchased the Saxony Hotel with title being vested in Saxony Properties, Inc., a Delaware Corporation formed for the purpose of the ownership. That corporation at the same time entered into a management contract with The Doric Company to operate and manage the hotel, and whereunder the accounting was done in the Seattle central office of Doric, trade invoices were paid from there, various daily reports were made to the Seattle office by those in charge of the Saxony, and with Doric having complete authority to hire all employees, and in general to supply management as experts. All funds were deposited in a Miami Beach bank with transfers being made to Doric in Seattle for use in meeting trade invoices and other obligations with the exception of the payroll which was paid locally.

Mr. Hilsenberg, then engaged in managing a Doric hotel in California, was engaged by Mr. Muggleston with the assistance of Mr. Clodfelter, president of Doric, as executive director of the Saxony at the time of the acquisition, and was paid by Saxony Properties, Inc.

At the time of the purchase Messrs. Clodfelter, Hilsenberg, Muggleston, the Doric auditor, and the real estate broker handling the matter were together at the Saxony. Mr. Clodfelter called a news conference and distributed a news release to the members of the press present and these included Mr. Paul M. Bruun, a writer for the Miami Beach Sun. The release announced the acquisition of the Saxony by Doric. Mr. Clodfelter stated to Mr. Bruun that Mr. Hilsenberg would be the manager. The news release and conference became the subject of a news story by Mr. Bruun, and also the basis for an article, hereinafter discussed, in the Sax Sunny News, a hotel house organ, repeating the news release, including the statement that the Saxony was being acquired by Doric.

At this point enters Mr. Rosen, president and owner of appellee. He was acquainted with Max Sax, brother of the former owner, who was retained by the new régime. The new management desired the services of an advertising agent, and Rosen wanted the business. Several agents were considered, numerous conferences were held between Mr. Rosen, Mr. Hilsenberg and members of his staff, and Rosen was finally selected.

Mr. Rosen testified that he had previously read the news article by Mr. Bruun, another to the same effect in the Miami Herald, and the article in the Sax Sunny News regarding the acquisition by Doric. He dealt with Hilsenberg as the managing director of the hotel, which title was on his office door.

One of the problems of an advertising agency is to be certain of reimbursement of sums advanced for accounts. Mr. Rosen testified that Mr. Hilsenberg assured him that his selection would be cleared with Doric, and that Doric would pay such sums as might be due. He was then advised by Hilsenberg that the president of Doric had awarded him the account. Statements were rendered to the Saxony Hotel, stipulated not to be a legal entity, and were paid by Doric from the Seattle office. Copies of materials prepared by Rosen were by direction of Hilsenberg forwarded to Doric in Seattle by the printer. Rosen knew nothing of the management contract.

At any rate the association lasted only a few months; the Saxony first being put into receivership, and later into bankruptcy. In the meantime Saxony Properties, Inc. sold the Saxony, the services of Mr. Hilsenberg were terminated and he was again employed by Doric.

The issue as submitted to the jury in charge was whether Rosen carried the burden of establishing that the Doric Company held itself out to Rosen to be the owner, lessee or operator, and therefore the principal in the operation and management of the hotel at the time the agreements for advertising were made, and that Rosen in the exercise of reasonable prudence and in reliance on such conduct performed the services in question at the instance and request of Doric.

Appellant contends...