Sheraton Corp. of America v. Kingsford Packing Co., Inc.

• Decision Date: 17 December 1974
• Docket Number: No. 3--773A85,3--773A85
• Citation: 319 N.E.2d 852,162 Ind.App. 470
• Parties: SHERATON CORPORATION OF AMERICA, and Sheraton Operating Corporation, Defendants-Appellants, v. KINGSFORD PACKING COMPANY, INC., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 852

319 N.E.2d 852

162 Ind.App. 470

SHERATON CORPORATION OF AMERICA, and Sheraton Operating

Corporation, Defendants-Appellants, v. KINGSFORD PACKING COMPANY, INC., Plaintiff-Appellee.

No. 3--773A85.

Court of Appeals of Indiana, Third District.

Dec. 17, 1974.

Milford M. Miller, Edward L. Murphy, Jr., Fort Wayne, for defendants-appellants; Livingston, Dildine, Haynie & Yoder, Fort Wayne, of counsel.

Thomas S. Locke, Maxwell P. Smith, Parry, Krueckeberg & Smith, Fort Wayne, for plaintiff-appellee.

HOFFMAN, Chief Judge.

The instant appeal is brought by defendant-appellant Sheraton Operating Corporation (Sheraton) from a judgment in favor of plaintiff-appellee Kingsford Packing Company, Inc. (Kingsford) in an action to recover the purchase price of certain foodstuffs furnished by Kingsford to the Sheraton-Fort Wayne Motor Hotel (the Hotel).

Kingsford's complaint alleged that Sheraton had refused to pay for meat and other food items ordered from Kingsford by the Hotel and delivered to the Hotel, and sought the balance due on the Hotel's account of $1,077.69, plus interest. The trial court entered a judgment against Sheraton in the sum of $1,202.31 after a trial to the court. Sheraton timely filed a motion to correct errors, which was overruled, and this appeal was perfected.

The facts and inferences most favorable to appellee Kingsford in the record before us establish that Kingsford furnished foodstuffs to the Hotel from the time of its initial opening in 1968 to May, 1971, when the non-payment of the Hotel's bill apparently caused Kingsford to cease furnishing such items.

This relationship between the parties commenced when Kingsford's sales manager, 'Russ' Fahl (Fahl) contacted one Thomas James Porter (Porter) with regard to furnishing foodstuffs to a new Sheraton Hotel which was about to open in Fort Wayne, Indiana. Porter had come to Fort Wayne to hire employees for the new hotel. After being contacted by Fahl, Porter inspected Kingford's facilities, stating that he was 'food and beverage manager' with the Sheraton, and that certain Sheraton meat cutting specifications had to be met to secure their business. Following his visit, the Hotel began to order food items from Kingsford.

At about this time, Porter introduced Kingsford salesman Guy Hall (Hall) to the Hotel chef. Hall then frequently visited Porter and the chief in the Hotel to service the account during the time that Kingsford delivered food items to the Hotel kitchen. At a later time, Porter represented to Hall that because he (Poter) worked for Sheraton, he could obtain meat from it in Chicago at a price lower than Kingsford's.

The Hotel was billed monthly under the name 'Sheraton.' This extension of credit to the Hotel through the month was approved by Kingsford's Vice-President and Treasurer, Laurel J. Short (Short) on the basis of past dealings with appellant-Sheraton. Payments on the account here at issue were received in the form of checks which bore the name 'Sheraton-Fort Wayne Motor Hotel', and usually Sheraton's registered trademark.

Early in 1971, the Hotel failed to pay several invoices which were billed to it by Kingsford, and Short discussed the matter on several occasions with the Hotel's accounts payable bookkeeper. Later, Kingsford received a 'bankruptcy notice' which listed it as a creditor of Fort Wayne Investment Company, Inc. (Investment Company) by reason of its transactions with the Hotel. Prior to this time, the Investment Company's name had never been mentioned to Kingsford through conversation, correspondence, checks, or otherwise.

Sheraton and the Investment Company had entered into an intricate 27-page contract with regard to the construction and operation of the Hotel. Pursuant to such contract, the Investment Company constructed the Hotel under the direction of Sheraton and designated Sheraton as the 'exclusive operator' of the Hotel.

This contract also provided that prior to the opening of the Hotel, Sheraton would perform the following services:

'ARTICLE IV

'Pre-Opening Services by Operator

'Operator (Sheraton) shall do the following:

'A. Recruit, train, direct and employ an initial staff for the Hotel.

'B. Initiate and prosecute promotion, publicity and other like functions designated to attract guests to the Hotel on and after the Opening Date.

'C. Negotiate leases, licenses and concession agreements for stores, office space and lobby space at the Hotel subject to Owner's (Investment Company) approval. All leases, licenses or concessions shall be in Owner's name and executed only by officers of Owner on its behalf.

'D. Apply for, process and take all necessary steps to procure (in Operator's name or Owner's name or both as may be required by the issuing authority) all licenses and permits required for the operation of the Hotel, and its related facilities including, without limitation, liquor and restaurant licenses.

'E. Do all other things necessary for the proper opening of the Hotel, including without limiting the foregoing, the purchase of all inventories, supplies and provisions.'

The rights and duties of Sheraton and Investment Company after the opening of the Hotel were governed, in part, by the following language in the contract:

'ARTICLE V

'Operation of the Hotel on and After Opening Date

'On and after the Opening Date the Operator shall have the exclusive right to direct, supervise, manage and operate the Hotel and determine the programs and policies to be followed in connection therewith, all in accordance with the provisions of this Agreement.

'Without limiting the generality of the foregoing, Operator shall be and is hereby granted the authority to do the following:

'A. In the name and on behalf of the Owner to employ, pay, supervise and discharge all employees and personnel necessary for the operation of the Hotel, including the manager of the Hotel. Each person so hired shall be the employee of Owner and not of Operator except that the Hotel manager and other executive personnel may be on the payroll of 'Sheraton' and their salaries and other related expenses charged to the Hotel's operation. In no event shall any employee be paid a salary greater than at the rate of $15,000 per year without Owner's approval of the pay rate.

Permission is hereby given to the Operator to enter into a contract or contracts with an applicable union or unions in Owner's name.

To the extent that Operator deems advisable and in Owner's best interests, such authority to employ, pay, supervise and discharge, or any part thereof, may be delegated by Operator to one or more persons in its general employ or to the manager of the Hotel. Each person to whom any such duty is delegated shall be the agent of Owner and not of Operator for the purpose of employing, paying, supervising and discharging.

Every person performing services in connection with this Agreement, including any agent or employee of Operator, 'Sheraton' or their affiliates or any agent or employee of Owner hired by Operator, shall be acting as the agent of the Owner.

Operator in its discretion may provide food and lodging for Hotel employees, and allow the general manager of the Hotel suitable living quarters within the Hotel and the use of all Hotel facilities.

'C. Negotiate leases, license and concession agreements for stores, office space and lobby space at the Hotel subject to Owner's approval. All such leases, licenses or concessions shall be in Owner's name and executed only by officers of Owner on its behalf.

'F. Supervise and purchase or arrange for the purchase in the most economical manner of all inventories, provisions, supplies and Operating Supplies which in the normal course of business are necessary and proper to maintain and operate the Hotel. In Operator's discretion, all or any part of such purchases may be made in Operator's or Owner's name.' (Emphasis supplied in part.)

The contract further provided:

'ARTICLE XVI

'Use of Name Sheraton

'During the term of this Agreement, the Hotel shall at all times be known and designated as the 'Sheraton Motor Inn' or such other name as, from time to time may be selected by the Operator subject to the approval of Owner. During such term, Owner shall not use or refer to the word 'Sheraton' other than in connection with the Hotel. Upon the termination of this Agreement, such portion of the name as does not contain the word 'Sheraton' and the right to the use thereof shall continue to be the exclusive property of Owner. However, thereafter neither Owner nor any other owner or operator of the Hotel shall have the right to use the word 'Sheraton' or other Sheraton trademarks, emblems, insignias, slogans, or distinguishing characteristics in connection with the operation of the Hotel.

* * *.' (Emphasis supplied.)

The trial court herein rendered a general finding in favor of plaintiff-appellee Kingsford. Consequently, this court is bound to affirm the decision of the trial court on any theory which is supported by the evidence. In re Estate of Barnett (1974), Ind.App., 307 N.E.2d 490; Lindenborg v. M & L Builders & Brokers, Inc. (1973), Ind.App., 302 N.E.2d 816.

The essence of plaintiff's cause of action herein was breach of contract. It is undisputed that Kingsford and the Hotel had ongoing business dealings, and that Kingsford sold the food items that are the quid pro quo for which it sought compensation through this lawsuit. Thus, the central issue confronting the trial court was whether Sheraton should be held responsible for the debts of the Hotel.

In our opinion, there was ample evidence admitted without objection to allow the trial court to find that by reason of its acts, Sheraton should be estopped to deny that it and its franchisee are a single entity for the purposes of the instant case.

In order to establish an equitable estoppel or estoppel in pais in Indiana it must be shown that there existed a false representation or concealment of material facts made with actual or...