State ex rel. Fatzer v. Zale Jewelry Co. of Wichita

• Decision Date: 09 June 1956
• Docket Number: No. 39148,39148
• Citation: 298 P.2d 283,179 Kan. 628
• Parties: STATE of Kansas, on the Relation of Harold R. FATZER, Attorney General, Plaintiff, v. ZALE JEWELRY COMPANY OF WICHITA, Inc., a Corporation, Defendant.
• Court: Kansas Supreme Court

Page 283

298 P.2d 283

179 Kan. 628

STATE of Kansas, on the Relation of Harold R. FATZER Attorney General, Plaintiff, v. ZALE JEWELRY COMPANY OF WICHITA, Inc., a Corporation, Defendant.

No. 39148.

Supreme Court of Kansas.

June 9, 1956.

Syllabus by the Court.

In an original action in quo warranto to oust a corporation from practicing optometry, the record of the dealings between the defendant corporation on the one hand and a registered optometrist and an optical company on the other is examined and it is found as a matter of fact that the optometrist is actually an employee of the defendant corporation and the corporation is practicing optometry.

Glenn J. Shanahan, Wichita, Sp. Asst. Atty. Gen., argued the cause and Harold R. Fatzer, Atty. Gen., Wendell L. Garlinghouse Topeka, Sp. Asst. Atty. Gen., and Dale M. Bryant, Wichita, Sp. Asst. Atty. Gen., were with him on the briefs for plaintiff.

Dale M. Stucky, Wichita, argued the cause and Howard T. Fleeson, Homer V. Gooing, Wayne Coulson, Paul R. Kitch, Donald R. Newkirk, Robert J. Hill, Garrit H. Wormhoudt, and Theodore C. Geisert, Wichita, were with him on the briefs for defendant.

SMITH, Chief Justice.

This is an original action in quo warranto brought by the state on the relation of the attorney general wherein the state asks that the defendant corporation be ousted from engaging in the practice of optometry. Plaintiff also asks that the charter of the corporation be forfeited and a receiver appointed. Our commissioner found in favor of the defendant. The state asks us to read the record and make findings of fact and conclusions of law in its favor. The cause has been submitted on the merits.

The petition alleged that Zale was a corporation and had forfeited its corporate rights by practicing optometry in the state within the meaning of G.S.1949, 65-1501 and 65-1502; that it had never been licensed to so practice optometry; that it had further violated G.S.1949, 65-1501, relating to optometry, by unlawful acts set out.

The petition further alleged that unless the defendant corporation should be ousted from unlawfully exercising the right and privilege to practice optometry it would continue to so engage; that the acts described amounted to a forfeiture of its corporate rights.

The prayer was that it be ousted from practicing optometry and it should be dissolved and a receiver appointed to close out its business, and for costs.

Defendant's motion to dismiss was denied.

The defendant answered first that the petition did not state facts sufficient to constitute a cause of action; second, that the extraordinary remedy of quo warranto would not lie since there were other adequate remedies at law or in equity; third, it denied the allegations in the petition which were in any way inconsistent with the allegations of the answer; fourth, that defendant admitted its existence; fifth, admitted it never had been licensed to practice optometry; sixth, defendant denied any and all allegations of the petition which were intended to allege that Marks or Carp had been employed by, were agents for, or partners of the defendant and denied that defendant had held them out as such and denied that Marks or Carp operated their businesses under any authority from defendant. Defendant alleged it leased space to Marks and Carp; that none of its activities were within either the letter or the spirit of the optometry law and that if the law should be construed as such it would be unconstitutional for reasons set out.

The answer prayed that plaintiff take nothing by this action. The reply of the state was a general denial.

We appointed a commissioner who proceeded to hear and receive evidence. He made findings of fact and conclusions of law.

There were many facts about which there was no dispute. The question actually is what conclusion should be reached as to the ultimate facts.

The commissioner found that Zale operated its business in a building at the rear of which was an enclosed balcony; that it used its first floor for its jewelry business; that on April 1, 1952, it rented Marks, who was a Kansas licensed optometrist, space on the balcony for $100 a month; it agreed to handle his accounts receivable, including his collections, and to do his bookkeeping. Marks also agreed not to engage in any business in competition with that of Zale, and that his business should be confined to the examination and refraction of eyes, the prescription of lenses and visual training to correct defects of eyes. He agreed not to engage in the sale of lenses or glasses; his accounts were handled by Zale until the arrangement was terminated; that on April 1, 1952, Zale leased Carp doing business as the Douglas Optical Company the space for a term of three years at a rental per month of 20 percent of his monthly gross sales. It also agreed to handle his accounts receivable, including his bookkeeping, clerical work and other services and he agreed not to engage in any business in competition with that of the lessor; that the Douglas Optical Company engaged only in the business of manufacture of lenses, ground to prescription furnished by those qualified and licensed to make such prescriptions and did not engage in the practice of optometry. The commissioner found it operated solely within a field of business endeavor not regulated by law; that defendant, Marks and the Douglas Optical Company each expected that each would benefit financially from their respective locations in proximity to each other; that this was a proper consideration but neither Marks nor the Douglas Optical Company were employees of defendant; it did not benefit directly in or have any right to any part of fees charged by Marks for his professional services; did not exercise direction or control over Marks or over the time or manner when, or how he practiced optometry; that the mere fact of the location of his office within the building in which defendant conducted its business was of no legal significance.

The commissioner found that much testimony was received as to definition of such terms as optometrist, optician, refractionist, ophthalmologist, dispenser and the field and scope of operation, work and service performed and done by each but that these differences were not involved in the issues raised by the pleadings; that at the issues fendant began business it had a sign placed over the entrance to its place of business with the legend 'Zale's Jewelers' placed thereon and permitted Douglas Optical Company to attach to its sign a sign of its own carrying its name 'Douglas Optical Company;' that in connection with the name of Douglas Optical a neon outline of frames of eye glasses was included with an accompanying legend 'Glasses Fitted.' In April or May, 1953, at the suggestion of defendant Douglas Optical removed the outline of the frames of eye glasses and the legend 'Glasses Fitted,' retaining only on its sign the words 'Douglas Optical Company;' these signs referring to the optical business and to Douglas Optical were the property of Douglas Optical; that the change in the signs was made by Douglas Optical at its own expense; the sign was so designed that it could be removed, detached and changed without damage to defendant's sign; that beneath the sign of Douglas was a window in which defendant permitted Douglas to have a display of frames for eye glasses; that the display included at least on occasion a placard carrying the legend 'We Have The Finest Quality Glasses. Lowest Prices. Easiest Credit'; that this display was changed from time to time by employees of Douglas; that the entrance to the balcony in Zale's building was on the first floor at the rear of Zale's sale floor; that it was not possible to see any of the merchandise or employees of Douglas Optical or the office of Marks from the sles floor; that there appeared over the entrance to the balcony a sign erected by Douglas Optical Company carrying the legend 'Optical Dept.;' that the sign was not the sign of Zale; the word 'Dept.' as used therein had a place connotation to the public, and obviously had reference to the optical department of Douglas Optical Company; that Douglas Optical was not a department of defendant and was never so held by it; that at the suggestion of defendant in May, 1953, Douglas changed the sign to read 'Douglas Optical;' that in April, 1952, Douglas prepared, published and paid for certain advertisements in the Wichita Beacon and Wichita Eagle which were introduced in evidence; that each advertisement carried the name 'Douglas Optical' upon it and described Douglas Optical as 'Dispensing Opticians'; that during the first ten days said ads were published and there was reference made to eye care and to the fitting of glasses; that no reference was made after April 20, 1952, a year prior to filing this action; that the ads referred only to glasses or eye wear advertising savings on glasses and emphasized easy credit terms; that after August 1, 1952, the ads quoted prices for glasses; that almost universally the ads stated to the effect 'we can fill your doctor's or optometrist's prescriptions exactly as prescribed * * *;' that the name 'Zale' was placed on the ads by the Douglas Optical only in connection with and immediately adjacent to the address of defendant's building at 318 East Douglas; that on April 22, 1952, the words 'offices at' were inserted before Zale's name and its address and even earlier the words 'located at' were used in connection with Zale's name. The words 'offices at' were omitted by Douglas Optical in some of the ads, but at all times the name of Zale appeared only as a place of identification of Douglas Optical whose name was clearly stated; that no ad complained of appeared after March 6, 1953, more than a month prior to the filing of this action; that defendant did not authorize, prepare or pay for the ads complained of and was not responsible therefor; that it did run jewelry ads of...