Freeman v. Royal Shield Entertainment, Inc.

• Decision Date: 02 March 1982
• Docket Number: No. 14578,14578
• Citation: 411 So.2d 559
• Parties: S. H. FREEMAN and Kevin U. Stephens v. ROYAL SHIELD ENTERTAINMENT, INC., Samuel E. Stewart and Rick Donell.
• Court: Court of Appeal of Louisiana — District of US

Page 559

411 So.2d 559

S. H. FREEMAN and Kevin U. Stephens v. ROYAL SHIELD ENTERTAINMENT, INC., Samuel E. Stewart and Rick Donell.

No. 14578.

Court of Appeal of Louisiana, First Circuit.

March 2, 1982.

Warren L. Mengis, Baton Rouge, for plaintiff-appellant S. H. Freeman and Kevin U. Stephens.

A. G. Seale, Ronald A. Seale, Baton Rouge, for defendants-appellees Royal Shield Entertainment, Inc. and Rick Donell.

Before ELLIS, LOTTINGER and PONDER, JJ.

PONDER, Judge.

Plaintiffs appealed from the dismissal of their suit requesting damages for the breach of a contract.

The issues are the presence of actual and apparent authority and the personal liability of a corporate employee.

We affirm.

Plaintiffs, Reverend Freeman and Kevin Stephens, taped a sermon and musical prelude which they wished to have made into a record album. Reverend Freeman went to Royal Shield Entertainment, Inc., defendant, and spoke with Sam Stewart, a salesman, and Rick Donell, the production manager of Royal Shield.

Plaintiffs and Stewart signed a recording contract by the terms of which 500 albums were to be produced for $1,925.00, $800.00 down, one-half of the balance upon completion of the master tape and the remainder when the albums were completed. The initial payment was made by check signed by Mr. Stephens and made out to Stewart after Stewart said he could make the check out to him or to Royal Shield. Stephens signed as producer and the name Royal Shield Entertainment, Inc., was not on the contract.

After Stewart did some work at the Royal Shield studio with other technicians, editing and preparing the master tape, he informed Reverend Freeman that the rest of the money was needed "up front". The latter delivered a check payable to Royal Shield in the amount of $225.00 and $900.00 cash. Donell cashed the check and gave the proceeds to Stewart.

After the expiration of the time limit, Mr. Stewart stalled for more time. Later, Royal Shield informed Reverend Freeman that Stewart no longer worked there and that they had no record of the contract. Reverend Freeman explained the situation to the Board of Directors of Royal Shield and asked for a refund. Royal Shield replied they would try to work something out to produce the record if Reverend Freeman would produce the cancelled checks. Reverend Freeman refused and filed suit.

The default judgment rendered against Sam Stewart was not appealed. The court rejected plaintiffs' claim against Royal Shield and Rick Donell.

Reverend Freeman and Mr. Stephens argue that they thought they were dealing with Royal Shield at all times. However, Mr. Sheeler, the president of Royal Shield, testified that he informed Mr. Stewart that Royal Shield would charge $2,500.00 to produce Reverend Freeman's album and Mr. Stewart replied that he had informed Reverend Freeman that he could get it done cheaper. Mr. Sheeler told Stewart to make it clear to Reverend Freeman that the production would not be a Royal Shield production.

The first issue is whether Stewart or Donell had actual authority to bind Royal Shield to a contract in the amount of $1,925.78.

The testimony established that Mr. Stewart had no authority to enter into a production contract for Royal Shield for less than $2,500.00. He was specifically informed that the production undertaken by him for a lower price would be his own, and not Royal Shield's. Mr. Donell also understood that there was no express or implied authority to contract the lower price for Royal Shield. The trial judge was correct in finding no actual authority.

Plaintiffs next argue that Stewart and Donell had apparent authority to bind Royal Shield. The principal is bound if he acts in such a manner as to give innocent third...