Murphy v. Holiday Inns, Inc., 740818

• Decision Date: 01 December 1975
• Docket Number: No. 740818,740818
• Court: Virginia Supreme Court
• Parties: , 81 A.L.R.3d 756 Kyran MURPHY v. HOLIDAY INNS, INC. Record

Page 874

219 S.E.2d 874

216 Va. 490, 81 A.L.R.3d 756

Kyran MURPHY v. HOLIDAY INNS, INC.

Record No. 740818.

Supreme Court of Virginia.

Dec. 1, 1975.

Franklin W. Nutter, Alexandria (James I. Burkhardt, Alexandria, on brief), for plaintiff in error.

Michael W. Moncure, III, Richmond (M. Wallace Moncure, Jr., Moncure & Cabell, Richmond, on brief), for defendant in error.

Before I'ANSON, C.J., and CARRICO, HARRISON, COCHRAN, POFF and COMPTON, JJ.

POFF, Justice.

On August 21, 1973, Kyran Murphy (plaintiff) filed a motion for judgment against Holiday Inns, Inc. (defendant), a Tennessee Corporation, seeking damages for personal injuries sustained on August 24, 1971, while she was a guest at a motel in Danville. Plaintiff alleged that 'Defendant owned and operated' the motel; that 'Defendant, its agents and employees, so carelessly, recklessly, and negligently maintained the premises of the motel that Plaintiff did slip and fall on an area of a walk where water draining from an air conditioner had been allowed to accumulate'; and that as a proximate result of such negligence, plaintiff sustained serious and permanent injuries.

Defendant filed grounds of defense and a motion for summary judgment 'on the grounds that it has no relationship with regard to the operator of the premises . . . other than a license agreement permitting the operator of a motel on the same premises to use the name 'Holiday Inns' subject to all the terms and conditions of such license agreement'. That agreement, filed as an exhibit with defendant's motion for summary judgment, identifies defendant's licensee as Besty-Len Motor Corporation (Betsy-Len).

Upon a finding that defendant did not own the premises upon which the accident occurred and that 'there exists no principal-agent or master-servant relationship between the defendant corporation and Betsy-Len Motor Hotel Corporation', the trial court entered a final order on April 25, 1974, granting summary judgment in favor of defendant.

Plaintiff's sole assignment of error in that the trial court erred 'in holding that no principal-agent or master-servant relationship exists.'

On brief, plaintiff argues that the license agreement gives defendant 'the authority and control over the Betsy-Len Corporation that establishes a true master/servant relationship.' Alternatively, plaintiff argues that'(b)y holding out the operation of the motel as a 'Holiday Inn' motel (defendant) . . . has created the appearance that a master/servant relationship exists, and where a third party so relies, the principal should be estopped to deny the existence of this relationship'.

We look first to plaintiff's alternative argument. The trial court was afforded no fair opportunity to rule upon a theory of liability based upon ostensible agency. Thus, plaintiff alleged no 'holding out' by defendant or 'reliance' by plaintiff; plaintiff registered no grounds of objection to the final order based upon that theory; and plaintiff did not invoke that theory in a motion to set aside the order. On appeal, plaintiff assigns no error addressed to that theory. We are of opinion that the issue posed by plaintiff's alternative argument is not properly before us, and we do not consider it. Rule 5:7.

Plaintiff argues that actual agency was a question of fact and that the trial court exceeded its authority in failing to submit that question to a jury.

Where as here, a question of agency Vel non rests upon written documents and the inferences deducible therefrom, the question is a question of law, for '(t) he construction of written documents is exclusively for the court.' Fulton v. W. R. Grace & Co., 143 Va. 12, 22, 129 S.E. 374, 377 (1925).

Moreover, Rule 3:18 empowers a trial court to enter summary judgment on the pleadings, pretrial conference orders, and admissions in the proceedings, provided that 'it appears . . . that the moving party is entitled to judgment' and that no 'material fact is genuinely in dispute.' The facts determinative of the question of actual agency were those contained in the license agreement, none of which was in dispute. Accordingly, we hold that the trial court did not exceed its authority in granting summary judgment.

Actual agency is a consensual relationship.

'Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.' Restatement (Second) of Agency § 1 (1958).

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'It is the element of continuous subjection to the will of the principal which distinguishes the agent from other fiduciaries and the agency agreement from other agreements.' Id., comment (b).

See also Raney v. Barnes Lumber Corp., 195 Va. 956, 966, 81 S.E.2d 578, 584 (1954).

When an agreement, considered as a whole, establishes an agency relationship, the parties cannot effectively disclaim it by formal 'consent'. '(T)he relationship of the parties does not depend upon what the parties themselves call it, but rather in law what it actually is.' Chandler v. Kelley, 149 Va. 221, 231, 141 S.E. 389, 391--92 (1928). See also Thaxton v. Commonwealth, 211 Va. 38, 43, 175 S.E.2d 264, 268 (1970). Here, plaintiff and defendant agree that, if the license agreement is sufficient to establish an agency relationship, the disclaimer clause ¹ does not defeat it.

Plaintiff and defendant also agree that, in determining whether a contract establishes an agency relationship, the critical test is the nature and extent of the control agreed upon.

The subject matter of the license defendant granted Betsy-Len is a 'system'. As defined in the agreement, the system is one 'providing to the public . . . an inn service . . . of distinctive nature, of high quality, and of other distinguishing characteristics'. Those characteristics include trade names using the words 'Holiday Inn' and certain variations and combinations of those words, trade marks, architectural designs, insignia, patterns, color schemes, styles, furnishings, equipment, advertising services, and methods of operation.

In consideration of the license to use the 'system', the licensee agreed to pay an initial sum of $5000; to construct one or more inns in accordance with plans approved by the licensor; to make monthly payments of 15 cents per room per day (5 cents of which was to be earmarked for national advertising expenditures); and 'to conduct the operation of inns . . . in accordance with the terms and provisions of this license and of the Rules of operation of said System'.

Plaintiff points to several provisions and rules when he says satisfy the control test and establish the principal-agent relationship. These include requirements.

That licensee construct its motel according to plans, specifications, feasibility studies, and locations approved by licensor;

That licensee employ the trade name, signs, and other symbols of the 'system' designated by licensor;

That licensee pay a continuing fee for use of the license and a fee for national advertising of the 'system';

That licensee solicit applications for credit cards for the benefit of...