National Newspaper Enterprises v. Chitwood

• Decision Date: 27 January 1934
• Docket Number: No. 11346.,11346.
• Citation: 68 S.W.2d 264
• Parties: NATIONAL NEWSPAPER ENTERPRISES, Inc., v. CHITWOOD.
• Court: Texas Court of Appeals

68 S.W.2d 264

NATIONAL NEWSPAPER ENTERPRISES, Inc., v. CHITWOOD.

No. 11346.

Court of Civil Appeals of Texas. Dallas.

January 27, 1934.

Rehearing Denied February 24, 1934.

Appeal from District Court, Dallas County; Claude M. McCallum, Judge.

Suit by Mrs. Ida M. Chitwood against the National Newspaper Enterprises, Inc. From a judgment for plaintiff, defendant appeals.

Affirmed.

Elihu E. Berwald, of Dallas, for appellant.

Eugene De Bogory and Owen T. Lewis, both of Dallas, for appellee.

JONES, Chief Justice.

Appellee, Mrs. Ida M. Chitwood, in a suit instituted in a district court of Dallas county against appellant, was awarded a judgment of $2,000, and also a decree canceling a contract for merger of the cooking school known as the "Chitwood School of Cookery," owned by appellee, and the cooking school owned by appellant. Appellee was also awarded an injunction, perpetually enjoining appellant and its officers from using the name of appellee and her school in connection with the schools to be conducted by appellant. An appeal has been duly prosecuted, and the following are the facts:

Appellant is a corporation, duly incorporated under the laws of the state of Texas, with its principal office in the city of Dallas, and for some time prior to the summer of 1930 had conducted schools of cookery as one of its business enterprises. Its territory covered a large portion of the United States. Appellee, for approximately five years previous to the summer of 1930, had conducted cooking schools known as the "Chitwood School of Cookery." The territory in which she operated was much more limited, being mainly confined to Texas and other states nearby.

A cooking school of the kind conducted by the parties to this suit was commonly put on by a newspaper in its city, and continued for four or five successive days. It would be attended by the women of the city and immediate vicinity to the place where it was conducted, and there would be a woman lecturer explaining how certain dishes of food should be prepared, the recipes for same, and an actual preparation by the lecturer of food from the recipes. The one in charge of the cooking school would be paid by the newspaper under whose auspices the school was conducted, and the ingredients entering into the dishes used would be furnished by the manufacturers of such ingredients. The consideration to the newspaper came from paid advertisements of the manufacturer of the food products used by the lecturer in her demonstrations. In schools conducted by appellee, she was usually the lecturer, and her profits came from the sum paid by the newspaper for conducting the school. The same manner was observed by the schools conducted by appellant; it using its own lecturer and demonstrator and its remuneration coming from the same source.

There were what is termed "fall" and "spring" terms of these schools. The fall term would begin in the early days of September, and last ordinarily through November; the spring term would begin in January and last to June. The owner of the school of cookery would secure from the manufacturers of food products, to be used in demonstration of recipes, a certain amount of advertising of their respective products for the newspaper, which was to conduct the school. Ordinarily, the advertising would amount to 10,000 lines of the advertising space of the newspaper, to be paid by the manufacturer at the established rates of such newspaper. The newspaper would then secure the hall in which the school was to be conducted and put on an advertisement in its paper for the school, so as to acquaint the women with both the fact that a school was to be held and with the character of such school. Contracts for conducting schools for the fall term would be signed in the early summer, and contracts for schools for the spring term would be signed during the fall months. It would be known by the end of summer approximately the number of schools that would be conducted during the fall term, and the amount the conductor of each school would receive for the work. It would be known by the end of the fall term the number of schools that would be conducted in the spring, and the amount the owner of the school would receive for the schools in the spring term.

As early as June, 1930, conferences were held between appellee and appellant, through Mr. George Provine, appellant's president and manager, looking to the merging of the two schools. These conferences continued at times during the summer and into November of 1930, before an agreement was finally reached. The conferences were usually sought by appellant, and appellee, according to her testimony and which appears to have been adopted by the jury, did not become interested until just before the contract to merge was entered into, November 10, 1930. The cause of appellee's changed attitude in respect to the merger was that, about September 1, 1930, appellant had taken over the Ella Lehr, Inc., cooking school, operating on the West Coast, which was represented to appellee as widely extending the operation of appellant in its West Coast division, embracing about ten states. An agreement was reached between the parties to include the West Coast division in the merger, in consideration that appellee would pay to appellant the sum of $1,500. The written contract included this West Coast division with the Ella Lehr School, Inc., in such division, and provided that the parties would share equally in the profits of the merged schools. It provided that separate accounts should be kept of the income and expenditures of the cooking school combination thus formed, the income and expenditure to be handled separately from appellant's other business. It was further provided in the contract that the organization as a whole and the individuals composing it were to do everything reasonably practicable to maintain the high business and financial standing of the organization; that both parties of the contract should have access to the books of the organization; that the bills and assets of either organization, previous to the merger, were not to apply against the merged organization, but should remain as assets and liabilities of the old organizations, National Newspaper Enterprises, Inc., and Chitwood School of Cookery. This contract was to run for a period of 20 years.

It was represented to appellee by appellant, through Provine, its president and manager, that a profit of $5,000 would result to appellant from the operation of the fall term of schools on the West Coast division, and that over 150 schools had been signed up on the West Coast division for the spring term, and that a profit of $10,000 would be the result of conducting said schools. Appellee believed these representations, relied upon their truthfulness, and was induced thereby to execute the contract of merger, and to pay the cash consideration of $1,500, as per the contract. It was agreed by the parties, at the time the contract was entered into, that there would be a subsequent agreement as to the name to be given the partnership thus formed, and that such name would be a composite of the two schools. This agreement was not carried out by appellant.

After the contract had gone into effect, by agreement between the parties, each party to the merger deposited in a Dallas bank the sum of $500, to be used as a joint fund to finance the schools in the Dallas division; it being understood that the West Coast division would be financed from the San Francisco office. Virtually this entire sum was used by appellant for the West Coast division, without the knowledge or consent of appellee.

It was later discovered by appellee that the representations that the fall schools of the West Coast division would make a profit of $5,000 was untrue, and that no profit was made from the operation of such schools. It was likewise later discovered by appellee that, instead of an excess of 150 schools having been signed for the spring term of the West Coast division, only 95 schools had been so signed, and that the profit made by the conduct of such schools was...