Hoyt v. Horst

• Citation: 201 A.2d 118,105 N.H. 380
• Parties: Cecile Gosselin HOYT v. Victor F. HORST, d/b/a Arthur Murray Studio of Manchester, et al.
• Decision Date: 02 June 1964
• Court: Supreme Court of New Hampshire

Page 118

201 A.2d 118

105 N.H. 380

Cecile Gosselin HOYT v. Victor F. HORST, d/b/a Arthur Murray Studio of Manchester, et al.

Supreme Court of New Hampshire.

Argued April 7, 1964.

Decided June 2, 1964.

Sheehan, Phinney, Bass, Green & Bergevin, Manchester, (Gerard O. Bergevin, Manchester, orally), for plaintiff.

Sullivan, Gregg & Horton and Charles F. Kazlauskas, Jr., Nashua, for defendant Victor M. Horst.

David A. Brock and Devine, Millimet, McDonough, Stahl & Branch, Manchester, for defendant Charles T. Collins.

BLANDIN, Justice.

A fundamental issue before us is whether the Court properly left it to the jury to decide whether the defendant Horst was an undisclosed principal in the dealings between the plaintiff Mrs. Hoyt and the defendant Collins. To determine this requires a somewhat detailed examination of the facts.

Viewing the evidence and all reasonable inferences therefrom in the light most favorable to the plaintiff (Shimkus v. Caesar, 95 N.H. 286, 62 A.2d 728; Lamarche v. Granite State Fire Ins. Co., 101 N.H. 210, 138 A.2d 674), the jury could find the following: For many years prior to and including the period of the happenings which gave rise to this case, Horst had been associated with the Arthur Murray Studios, Inc. He was the sole owner, by lease from this organization, of the franchise rights of a number of Arthur Murray Studios operating in various places in New England. Under the term of his contract with the Murrays, owners of the studios, Horst had the duty 'to maintain the highest standard of behavior among the personnel employed by the lessee [Horst] and lessee agrees to use all efforts to maintain existing standards to this effect.'

In the exercise of his franchise, Horst from time to time contracted away so-called studio managerial rights in different cities to various persons. These persons, in turn, often employed assistant or sub-managers. He specifically contracted such rights in Manchester by a written agreement to one Theodore Wettig by a contract dated January 8, 1959, and upon termination of this arrangement, to the defendant Collins by a similar instrument dated May 25, 1959. Neither Wettig, Collins nor any other person could actually purchase a studio--all they could obtain was the privilege of running it as 'employees' of Horst, who reserved the power to hire and fire all employees of the studio. Wettig and Collins were bound by their contracts with Horst to observe all conditions therein and 'in general, supervise the operation of said studios in strict accordance with * * * the rules and regulations given to the employee[s] [Wettig and Collins] by the employer [Horst].' Among other regulations included in the standard of behavior as prescribed by the contracts was one to the effect that no manager should obtain a loan from a customer.

All employees whom the so-called managers Wettig and Collins hired had to be approved by Horst. Wettig and Collins were bound to pay all running expenses of the studio. To insure that they did so, they were obligated to deposit the gross receipts in a bank from which Horst would take three per cent weekly until an escrow sum of $12,500 was on hand. This was to be used by Horst, if necessary, to satisfy obligations to creditors or others, and when these obligations were satisfied, the balance, if any, due the managers was paid them.

Although Horst insisted that he remain in the background and that his name should not be used by his employees in any dealings with other persons, he registered in New Hampshire as 'Victor F. Horst, doing business as Arthur Murray Studio of Manchester.' In the event that the studio bills were not paid by a manager, Horst conceded that he was bound to satisfy the creditors.

In summary, the jury could find that studio managers, including Collins, Wettig, and in turn their employees, were all, in the last analysis, employees of Horst, subject to strict and detailed control in their actions, and that Horst kept a firm hand on the managerial reins of the entire studio operations.

Collins first came to Manchester in late 1957 and finally left Horst's employ in September, 1962. Throughout the years that he remained in Manchester, he was working for the Arthur Murray Studio of Manchester. When he first came to Manchester, two persons named respectively Belmore and Bradley had general managerial rights in both Worcester and Manchester studios. The Manchester studio opened in February of 1958. Belmore and Bradley did not actually work in Manchester and Collins, while there, attended to the running of the operation, either alone or, as hereinafter described, for a time as co-manager with Wettig. When Collins entered the employ of Belmore and Bradley, who owned only the general managerial rights in the Manchester operation, he also had a contract with Horst, the real owner of the studio, whose authority was superior to that of Belmore and Bradley. The reason for this was that Horst not only retained the power under his contract with Belmore and Bradley to approve or disapprove anyone they might hire, but also, it was stipulated as to Belmore's and Bradley's contract with Collins that this 'agreement shall be signed by employer [Horst] if he approves such selection.' Horst did approve the employment of both Collins and Wettig.

Theodore Wettig came to the Manchester studio in November of 1958, having been sent there by Belmore and Bradley as a sort of efficiency man. Horst was aware of this. The plan was for Wettig to take over the full management there upon Collins anticipated move to Lawrence, Massachusetts. Until this should occur, Wettig and Collins were to work together as co-managers, in order to give Wettig a chance to become acquainted with the Manchester operations. Horst knew this and at this time, in effect, both men were employees of the Manchester studio and of Horst.

Shortly after Wettig came to Manchester, both he and Collins began to 'talk' to the plaintiff, then Mrs. Cecile Gosselin, now Mrs. Cecile Gosselin Hoyt, to the effect that the studio was for sale, that it was a fine investment, and that Wettig wished to buy it. They represented to the plaintiff that the Murray Studio never closed its doors, that it was making money, that Wettig was an experienced man, and that if she would loan him $15,000 to 'buy' the Manchester studio, she would get $21,000 in two years' time. In brief, they persuaded her that it was a 'wonderful' deal. They finally induced her to make the loan of $15,000 to Wettig. The check she drew for this was dated January 7, 1959, and certified January 8, 1959. Wettig never actually purchased the studio, although, as previously stated, he signed an agreement on January 8, 1959, with Horst, to manage it; in other words, he bought managerial rights, as previously described. The $15,000 check which the plaintiff gave to Wettig, he in turn gave to Horst. Most of the proceeds of the check went to pay the creditors of the Worcester studio, including Horst himself. Within two months after the plaintiff made her loan to Wettig and he had taken over the studio, she 'sensed' that something was wrong and found that Wettig had left Manchester. He had made some payments on the loan, reducing it from $15,000 to $13,100, and then payments had ceased.

The plaintiff became very disturbed and got in touch with Collins, who in the meantime had not gone to Lawrence as planned, but instead had taken over the management of the Worcester, Massachusetts, studio, directly under Horst and replacing Belmore and Bradley, after leaving Manchester early in February, 1959. Collins found that the Worcester studio was in financial difficulties and owed creditors, including Horst, in excess of $13,000. When Mrs. Hoyt first called Collins, she asked him to take over the Manchester studio. He told her he could not do this, as he was 'strapped' financially and obligated to the Worcester studio.

At about the time the plaintiff called Collins, Hector Alexander, a lawyer employed by Horst as his regional manager and director, learned of the troubles in Manchester. He telephoned Collins, and with Horst on the line, a 'three way' conversation ensued. In this conversation, Horst himself instructed Collins to go to Manchester, 'get Wettig out of there, and take over the studio.' He further told Collins to arrange to reimburse the plaintiff for the amount of Wettig's loan by paying her five per cent of the gross regularly and interest at six per cent.

Collins went to Manchester and talked with the plaintiff and her husband along the lines which he had been instructed to follow by Horst. She asked Collins if he would put the proposal in writing. He did so, in his own handwriting, on May 25, 1959, written on the stationery of Mr. Hoyt, in an instrument which provides as follows:

"Principal amount 13,100.00

Mrs. Hoyt and I agree as follows

(In the event that I take

over the Manchester studio)

That the principal amount of

money to be pd. back to Mrs.

Hoyt is 13,100.00. It will be pd.

as follows. 5% of the monthly

gross to pd. by 5th of the

month for the preceding month.

6% interest will be charged

annually on the principal amount.

13100 For example--If 5000.00 were

6 to be pd. to Mrs. Hoyt in the final

----- year 786 would be deducted for

786.00 interest and 4214 would be deducted

from the prinicpal leaving

8,886 to be figured at 6% or

445.16 to be deducted from the

gross amount pd. to Mrs. Hoyt

in the second year and the balance

of that to be deducted from

the principal.

/s/ C. T. Collins

/s/ Mrs. Hoyt"

Although there was some conflict in the testimony as to whether this was an 'integrated' contract, the conflict was for the jury to resolve. The parties appear finally to have interpreted the instrument in a practical way according to its terms until the breach. From the evidence, the jury could and did properly construe from the words and actions of the parties that their intent was to make...