Indiana State Fair Bd. v. Hockey Corp. of America, 2--1273A269

• Citation: 333 N.E.2d 104,165 Ind.App. 544
• Decision Date: 28 August 1975
• Docket Number: No. 2--1273A269,2--1273A269
• Court: Court of Appeals of Indiana
• Parties: INDIANA STATE FAIR BOARD and Estel Callahan as Secretary-Manager Indiana State Fair Board, Defendants-Appellants, v. The HOCKEY CORPORATION OF AMERICA, Plaintiff-Appellee, The Winter Club of Indianapolis, Inc., Amicus Curiae.

Page 104

333 N.E.2d 104

165 Ind.App. 544

INDIANA STATE FAIR BOARD and Estel Callahan as Secretary-Manager Indiana State Fair Board, Defendants-Appellants, v. The HOCKEY CORPORATION OF AMERICA, Plaintiff-Appellee, The Winter Club of Indianapolis, Inc., Amicus Curiae.

No. 2--1273A269.

Court of Appeals of Indiana, Second District.

Aug. 28, 1975.

Rehearing Denied Sept. 22, 1975.

Theodore L. Sendak, Atty. Gen. of Indiana, J. Gordon Gibbs, Jr., Deputy Atty Gen., Indianapolis, for defendants-appellants

Dean E. Richards, Indianapolis, for The Hockey Corp. of America.

William M. Osborn, Bingham, Summers, Welsh & Spilman, Indianapolis, for The Winter Club of Indianapolis, Inc.

SULLIVAN, Presiding Judge.

Appellee, Hockey Corporation of America (Hockey), commenced this action on May 22, 1973 in the Marion County Superior Court seeking injunctive relief and damages. From a judgment in favor of Hockey Corporation, the appellant, Indiana State Fair Board (Fair Board) appeals.

The operative facts, as viewed most favorably to the trial court's judgment, establish the following:

The Fair Board is a governmental instrumentality statutorily denominated as 'the sole agency of the state of Indiana to administer said trust property (the State Fairgrounds) for and on behalf of the state of Indiana.' ¹ Since 1964, Fair Board has operated a public ice skating rink and a retail and rental skate shop at the Coliseum on the Fairgrounds. Generally, Fair Board has shown a profit in its skating and shop operation, and, according to appellant Estel L. Callahan, Secretary-Manager of the Fair Board, all revenues are placed in the Fair Board account for maintenance and improvement of the Fairgrounds. ²

Hockey Corporation is an Indiana forprofit corporation chartered under state law to operate ice skating rinks in the Indianapolis area. Since 1969, it has operated two rinks in Indianapolis. The scope of its corporate activity includes public and private group skating, skating lessons, and retail sales of skates and skating equipment. According to its financial records, Hockey has shown annual net profits from these activities.

The gravamen of Hockey Corporation's claim for injunctive relief, as gleaned from the complaint, is that the activities of the Board in operating the rink and shop exceed the powers conferred by the General Assembly; that such activities are ultra vires; and that they deprived Hockey of its due process rights under the Fourteenth Amendment to the United States Constitution in that such activities constituted 'unfair competition' by the Board which, by virtue of its preferred tax status, was enabled to conduct such activity in a manner unfair to private corporations engaged in similar activities. Furthermore, Hockey contended that it was directly injured by the Board's activity and sought damages for such injury.

Following a bench trial, the court, on November 30, 1973, ruled that the Fair Board was unfairly competing with Hockey, and was operating outside the scope of the Indiana State Fair Board Act. ³ The court's judgment enjoined the Fair Board's operation of the skating rink and retail skate shop, ordered the Board to take competitive bids for operation of those activities, and awarded Hockey damages in the sum of $19,350.00.

On appeal, Fair Board properly perfected and presents the following contentions for our consideration:

1. The trial court erred in holding that Fair Board is not a corporate entity separate from the State.

2. The court's finding that Fair Board was engaged in 'unfair competition' with Hockey is contrary to law and contrary to the evidence; and that 3. The court lacked subject matter jurisdiction due to Fair Board's attempted change of venue.

the court's finding that the Fair Board's activities were outside the scope of the Act, and therefore ultra vires, is erroneous.

4. The trial court erred in granting Hockey a temporary restraining order, in extending the temporary order, and in failing to grant Fair Board a hearing on its motion to vacate the order.

I STATUS OF STATE FAIR BOARD

Our initial consideration is whether the Fair Board is a separate corporate entity, as the Board contends; or an agency of the State of Indiana, as contended by Hockey.

Ind.Ann.Stat. § 15--1--1--1 (Burns Code Ed.1973) describes the Fair Board as 'the sole agency of the state of Indiana to administer said trust property (State Fair-grounds) for and on behalf of the state of Indiana.' This enactment and other provisions of the Indiana State Fair Board Act were surveyed by the Federal District Court in Chicago Stadium Corp. v. State of Indiana (S.D.Ind.1954), 123 F.Supp. 783, modified on other grounds, 220 F.2d 797 (7th Cir. 1955). The court, applying state law in a diversity contract action, held '. . . that the Indiana State Fair Board is an inseparable agency and not a separate entity of the State of Indiana . . ..' 123 F.Supp. at 790. Interestingly, in the instant case, the Fair Board asserts a position directly contrary to the one it advanced in Chicago Stadium Corp. In any event, like the Federal District Court, we find that the Fair Board is an agency of the State of Indiana in the context of this case. See also Busby v. Indiana Bd. of Agriculture (1927), 85 Ind.App. 572, 154 N.E. 883 (Fair Board predecessor held to be governmental agency).

II

WHILE THE FAIR BOARD DID NOT ENGAGE IN UNFAIR COMPETITION,

ITS OPERATION OF SKATING RINK AND SHOP WAS OUTSIDE

BOARD'S STATUTORY AUTHORITY

Fair Board asserts error in the trial court's finding that Fair Board was engaged in 'unfair competition' to the detriment of Hockey. Further, the Board argues that Hockey showed no acts of unfair or unlawful competition. Finally, the Board contends that its operation of the skating rink and shop is within the ambit of the State Fair Board Act. Hockey, on the other hand, asserts the manifest unfairness of a governmental agency, with its attendant and substantial tax base advantages, competing in the private sector. Hockey also contends that the Board's operation of the skating rink and shop is not authorized by the Act and therefore ultra vires.

As a threshold matter, we note that Hockey has the requisite standing to maintain the present suit in its status as both an 'injured' competitor and a citizen taxpayer. At common law, a resident taxpayers has had the right to bring an action in equity to contest governmental tax spending policies. Glosser v. City of New Haven (1971), 256 Ind. 33, 267 N.E.2d 67; Zoercher v. Agler (1930), 202 Ind. 214, 172 N.E. 186; Crampton v. Zabriskie (1879), 101 U.S. 601, 25 L.Ed. 1070. Similarly, Hockey's assertion of injury in fact resulting from the Fair Board's competitive conduct is sufficient to confer standing. Board of Comm's of County of Howard v. Kokomo City Planning Comm. (1975), Ind., 330 N.E.2d 92. See also State ex rel. Haberkorn v. DeKalb Circuit Court (1968), 251 Ind. 283, 241 N.E.2d 62; State v. Clark (1966), 247 Ind. 490, 217 N.E.2d 588.

A. 'UNFAIR COMPETITION'

Historically, the common law tort of 'unfair competition' was considered a subspecies of the class of torts known as tortious interference with business or contractual relations. Prosser, Law of Torts, § 130 (4th ed. 1971). The court, in Jones v. Roshenberger, Admr. (1924), 82 Ind.App. 97, 99--100, 144 N.E. 858, defined it as follows:

'Unfair competition consists in passing off, or attempting to pass off, upon the public, the goods or business of another. It consists essentially in the conduct of a trade or business in such a manner that there is either an express or implied representation to that effect. And it may be stated broadly that any conduct, the natural and probable tendency and effect of which is to deceive the public so as to pass off the goods or business of one person as and for that of another, constitutes unfair competition. The definition is comprehensive enough to reach every possible means of effecting the result.'

See also Minas Furniture Co. v. Edward C. Minas Co. (1929), 96 Ind.App. 520, 165 N.E. 84; Deister Concentrator Co. v. Deister Machine Co. (1916), 63 Ind.App. 412, 112 N.E. 906, 114 N.E. 485; Hartzler v. The Goshen Churn and Ladder Co. (1914), 55 Ind.App. 455, 104 N.E. 34.

Somewhat more broadly, Dean Prosser defined 'unfair competition' in the following manner:

'Though trade warfare may be waged ruthlessly to the bitter end, there are certain rules of combat which must be observed. 'The trader has not a free lance. Fight he may, but as a soldier, not as a guerrilla.' In the interests of the public and the competitors themselves, boundaries have been set by the law, and numerous practices have been marked out as 'unfair' competition, for which, in general, a tort action will lie in favor of the injured competitor, although very often the tort is given some other name.

'Included in the list are defamation of the competitor, disparagement of his goods and his business methods, intimidation, harassing and annoyance of his customers or his employees, obstruction of the means of access to his place of business, threats of groundless suits, commercial bribery, and inducing employees to commit sabotage.' Prosser, Law of Torts, § 130, p. 956 (4th ed. 1971). See also Restatement, Torts, §§ 709, 710.

Neither Hockey's complaint nor the trial court's judgment are predicated upon any recognized form of tortious interference with business relations. Furthermore, in the instant case, it is readily apparent that a claim for damages resulting from any presumable tortious conduct by Fair Board has not been established. The evidence establishes that Fair Board conducted the rink and shop operations for five years prior to Hockey's incorporation. It also appears that the Fair Board has not meterially altered its manner of operation for the purpose of driving Hockey out of the market or to injure Hockey's competitive position. Rather, the evidence adduced at trial merely establishes the normal and...