Temperato v. LaBrot

• Decision Date: 12 June 1962
• Docket Number: No. 31078,31078
• Citation: 358 S.W.2d 106
• Parties: Samuel J. TEMPERATO (Plaintiff) Respondent, v. Vernon E. LaBROT and Alma M. LaBrot (Defendants) Appellants.
• Court: Missouri Court of Appeals

Page 106

358 S.W.2d 106

Samuel J. TEMPERATO (Plaintiff) Respondent, v. Vernon E. LaBROT and Alma M. LaBrot (Defendants) Appellants.

No. 31078.

St. Louis Court of Appeals, Missouri.

June 12, 1962.

Charles W. Medley, McClintock & Medley, Flat River, for appellants.

Blumenfeld, Abrams & Daniel, Harold J. Abrams, St. Louis, Roberts & Roberts, J. Richard Roberts, Farmington, for respondent.

W. M. KIMBERLIN, Special Judge.

This is a suit to enjoin the use by the defendants of the trade name 'Dairy Queen' in Flat River, Missouri, upon the ground it constitutes unfair business competition.

Plaintiff, Samuel J. Temperato, brought this suit in two counts against the defendants, Vernon E. LaBrot and Alma M. LaBrot. The first count prayed for an injunction to enjoin the use by the defendants of the name 'Dairy Queen' in the operation of their store at Flat River, St. Francois County, Missouri. The second count prayed for damages.

Plaintiff alleged in substance that he was the sole and exclusive owner of the 'Dairy Queen' franchise in the territory in question and that the defendants were using the trade name in the operation of their business which constituted unfair competition; that the trade name had acquired a secondary meaning in the minds of the public; that since plaintiff had no adequate remedy at law the defendants should be enjoined from the use thereof.

Separate answers were filed by each of the defendants alleging substantially the same defenses; namely, the contract entered into on April 26, 1952, wherein J. A. LeGrand was first party, Vernon L. LaBrot and Alma LaBrot were second parties, and R. E. Rice and Garnet Rice were third parties, was illegal because it violated the statutes dealing with unlawful restraint of trade and further denied that plaintiff or any other persons owned or had the exclusive right to the use of the trade name 'Dairy Queen,' following the expiration of a patent on the 'Dairy Queen' machine.

Defendants filed a motion for judgment on the pleadings which was by the court overruled. Since this case is being decided on the merits this ruling will not be further discussed.

The case was tried to the court. At the conclusion of the hearing the defendants requested of the trial court findings of fact and declarations of law. These were made by the court and judgment entered for the plaintiff granting injunctive relief on Count I, but against the plaintiff on Count II for damages. Defendants' motion to set aside verdict and to enter judgment in their favor or in the alternative for a new trial or rehearing was overruled. Hence the defendants perfected this appeal.

The facts are that R. E. Rice and Garnet Rice for a number of years prior to this litigation owned the 'Dairy Queen' freezer franchise covering a large territory in Missouri and more particularly the territory involved in this controversy. This territory is described as the corporate limits of the City of Flat River, Missouri, and within a four mile radius of the 'Dairy Queen' store located therein. The store was owned originally by Paul and Lois Fullop.

The freezer machine was used in the store to make soft ice cream or iced milk on which the patent expired on May 18th, 1954. R. E. Rice, Garnet Rice and the Fullops subsequently sold their interest in the 'Dairy Queen' franchise and store in the above described territory to J. A. LeGrand. R. E. and Garnet Rice retained royalty rights in the franchise.

On the 26th day of April, 1952, J. A. LeGrand, R. E. Rice and Garnet Rice, and Vernon E. LaBrot and Alma M. LaBrot, his wife, entered into a contract wherein these defendants purchased from J. A. LeGrand the exclusive right to the use of the 'Dairy Queen' freezer for the territory above described. Defendants were to continue to make royalty payments to the Rices for the balance due on the freezer and after the freezer was paid for to pay fifteen cents a gallon as a royalty as long as the freezer was in operation and the name 'Dairy Queen' used. The contract contained the following clause:

'The parties of the Second Part will purchase all necessary supplies, accessories, and other equipment, and including, but not limited to mix, cones, cartons, topping, flavoring, cleaning supplies, mix cooler, and related compressor, hot-water heater, topping cabinet, and cone trays, at no expense to the Parties of the Third Part; and the Parties of the Second Part recognize the right of the Parties of the Third Part to reserve the right and privilege to select the brands and/or source of mix, topping, flavoring, cartons, or other like commodities used.'

A clause very similarly worded was held by the Missouri Supreme Court to have vitiated a contract relative to the sale of a 'Dairy Queen' franchise. The style of that case is Temperato v. Horstman, Mo.Sup., 321 S.W.2d 657. It was held in this case that a similar clause constituted an unlawful restraint of trade and of competition under the Missouri Statutes and more particularly was a violation of Section 416.040, Missouri Revised Statutes of 1949, V.A.M.S. These defendants admit and agree that by virtue of this Supreme Court case this clause makes illegal and void this contract dated April 26, 1952.

On January 15, 1959, R. E. Rice and Garnet Rice sold their interest to J. A. LeGrand. Subsequently J. A. LeGrand died and in May of 1960 this plaintiff purchased from R. B. Manley, executor of the LeGrand Estate all of deceased's interest in the 'Dairy Queen' franchise for St. Francois County, which included this particular territory involved in this controversy.

Plaintiff testified that he had been in this 'Dairy Queen' business since 1949, granting franchises to retail operators, obtaining locations, assisting operators with advertising and training operators in the territory embracing two counties in Illinois and approximately 26 counties in Southeast Missouri, including the County of St. Francois. He further testified that he advertised throughout the area in the form of hand bills, newspapers, radio and television with the aim and intent of enhancing the name 'Dairy Queen.' That the name, 'Dairy Queen' 'was advertised nationally' by the Dairy Queen National Development Company.

R. E. Rice testified that the term 'Dairy Queen' meant a store having that merchandising name on the window, the appearance of the store and the operator, and the ingredients of the product and the form that they took.

The defendant Vernon E. LaBrot testified he had been running a 'Dairy Queen' store serving 'Dairy Queen' products in Flat River since 1951. The first operation was under a lease from J. A. LeGrand until the latter part of 1951, and then subsequently in 1952 he purchased from LeGrand the store and franchise under the contract of April 26, 1952.

Plaintiff talked to Vernon LaBrot in June or July of 1960 and told him he had taken over the LeGrand franchise. Plaintiff further told LaBrot that he couldn't operate under the franchise unless defendants paid to him fifteen cents per gallon royalty. The defendants had been paying fifteen cents per gallon royalty before the expiration of the patent and continued so to do after the expiration of the patent until some time in 1958. After plaintiff's discussion with Vernon LaBrot the defendants refused to pay to plaintiff the fifteen cents per gallon royalty, but continued to operate the store in Flat River. The 'Dairy Queen' store had two signs upon it, one being a pole sign displaying the name 'Dairy Queen' and the other a plastic lettering sign on the building spelling out 'Dairy Queen.' Defendants continued to use the eight ounce 'Dairy Queen' cups. Plaintiff and defendants never entered into any contractual relationship. After defendants refused to pay to plaintiff the royalty plaintiff on November 17th, 1960, through his attorneys requested the defendants by letter to cease the use of the name 'Dairy Queen' in their business. Defendants refused to comply and this injunction suit ensued.

The defendant Alma LaBrot has not been active in the business for the last five or six years. She has been teaching school for the last two or three years. She signed the contract of April 26th, 1952, with her husband and with LeGrand and R. E. and Garnet Rice. On May 3, 1959, Vernon LaBrot wrote a letter to Mr. Rice repudiating the contract, stating, 'We feel that you people have been well paid for all that we have received and have no intentions of making any further payments.'

On this appeal the defendants contend that the judgment of the court below is erroneous because no showing was made that Alama LaBrot was using the trade name 'Dairy Queen'; that the defendants are the owners of the trade name 'Dairy Queen' in the Flat River area and acquired the name prior to and from the same source that plaintiff claims; and that the name 'Dairy Queen' was dedicated to the public on the expiration of the patent on the 'Dairy Queen' freezer.

This being an injunction suit it was tried to the court and on this appeal it is our duty on review to try the case de novo and reach our own conclusions on the facts and the law. In so doing we give due regard to the findings of the trial chancellor since he had an opportunity to personally see and hear the witnesses and to judge of the weight and credibility to give to their testimony. The judgment will be not set aside unless clearly erroneous. Sec. 510.310 RSMo 1949, V.A.M.S.; Shrout v. Tines, Mo.App., 260 S.W.2d 782; Davidson v. Fisher, Mo.App., 258 S.W.2d 297; Midland Realty Co. v. Manzella, Mo.App., 308, S.W.2d 326.

As to the defendants' first assignment of error that there is no substantial evidence showing that defendant Alma LaBrot was using the trade name 'Dairy Queen' it must be borne in mind that she was a party to and signed the contract of April 26th, 1952, conveying the interest in the franchise and store to her and her husband. There is no evidence she ever executed an instrument divesting herself of any...