Thacher Hotel, Inc. v. Economos

• Decision Date: 04 February 1964
• Citation: Thacher Hotel, Inc. v. Economos, 197 A.2d 59, 160 Me. 22 (Me. 1964)
• Parties: THACHER HOTEL, INC. v. Mardelle S. ECONOMOS.
• Court: Maine Supreme Court

Page 59

197 A.2d 59

160 Me. 22

THACHER HOTEL, INC. v. Mardelle S. ECONOMOS.

Supreme Judicial Court of Maine.

Feb. 4, 1964.

Waterhouse, Spencer & Carroll, Biddeford, for plaintiff.

J. Armand Gendron, Sanford, for defendant.

Before WILLIAMSON, C. J., WEBBER, TAPLEY, SULLIVAN, SIDDALL and MARDEN, JJ.

WILLIAMSON, Chief Justice.

On appeal. This is an action on a 'management contract' between the plaintiff corporation and the defendant relating to the operation of dining rooms in the plaintiff's hotel. The defense is that the contract was illegal in light of the liquor licensing statute, and hence the plaintiff may not recover thereon.

The case was heard in the Superior Court upon an agreed statement of facts. The defendant admits (assuming the legality of the contract) the claims of the plaintiff for minimum payments and expenses incurred for sales, social security, state and federal unemployment and withholding taxes for which judgment was entered for $1267.77 with interest and costs.

In the absence of oral testimony, the rule that findings of fact below stand unless clearly erroneous is not applicable. We are free to find the ultimate facts from the agreed primary facts without giving weight to findings inherent in the decision of the sitting Justice. Allen v. Kent, 153 Me. 275, 136 A.2d 540. The rule is not altered by the Maine Rules of Civil Procedure. See Rule 52; Field & McKusick Maine Civil Practice §§ 52.7 and 52.8.

For the period in question in 1958, and indeed from the commencement of the 'management contract' in 1955, the plaintiff held and exercised a hotel license as a bona fide hotel for the sale of liquor for consumption on the premises. The pertinent provisions of R.S. c. 61, entitled 'Laws Relating to Liquor' are:

'Sec. 1. Definitions.--* * * 'Hotel' shall mean any reputable place operated by responsible persons of good reputation, where the public, for a consideration, obtains sleeping accommodations and meals under one roof and which has a public dining room or rooms operated by the same management open and serving food during the morning, afternoon and evening, and a kitchen, apart from the public dining room or rooms, in which food is regularly prepared for the public on the same premises.'

'Sec. 42. Licenses for consumption sale.--Licenses for the sale of spirituous and vinous liquor to be consumed on the premises where sold may be issued to clubs and to bona fide hotels * * *.'

The argument of the defendant in substance is: (1) that the plaintiff under the 'management contract' with the defendant did not have 'a public dining room or rooms operated by the same management'; (Emphasis supplied) (2) that the plaintiff, for this reason alone, was not a bona fide hotel and so was not entitled to a liquor license; (3) that the 'management contract' thus dealt with an unlawful enterprise, and (4) that public policy denies recovery thereon.

The Key words in the controversy are 'operated by the same management.' The decision turns upon the meaning of these words in the statute, and their application to the 'management contract' as we construe its terms.

Before discussing the facts and the contract in detail we may eliminate certain questions from consideration.

First--As we shall see, there is nothing whatsoever inherently wrongful or unlawful about the 'management contract.' If it were not for the applicability of the liquor law, liability of the defendant would not be questioned. In such case it would be immaterial whether management of the dining room was in the plaintiff corporation or the defendant.

Second--The 'management contract' was unquestionably entered into with the operation of dining rooms to meet the requirement of the liquor laws in the minds of the parties. In short, the contract was in furtherance of the operation of the hotel with a liquor license.

Third--If the contract was in furtherance of an unlawful purpose, that is, to obtain a liquor license by subterfuge with management of the dining rooms not in the plaintiff, it would be an illegal contract on which plaintiff could not recover.

The following cases in which no recovery was allowed illustrates the principle: Brown v. Tuttle, 80 Me. 162, 13 A. 583 (for services or money furnished in furtherance and for continuance of living together unlawfully as husband and wife); Morris v. Western Union Telegraph Co., 94 Me. 423, 47 A. 926 (on failure to deliver a telegram sent in furtherance of a gambling contract); Jolovitz v. Redington & Co., Inc., 148 Me. 23, 88 A.2d 589 (contract involving chance); Stacy v. Brothers, 93 Conn. 690, 107 A. 613 (by purchaser of saloon under contract to operate unlawfully under seller's license); Turner v. Schmidt Brewing Co., 278 Mich. 464, 270 N.W. 750 (under contract with brewery to remodel retailer's beer gardens when statute prohibited aid by wholesaler to retailer). See also cases in which without the required license there can be no recovery for services. Randall v. Tuell, 89 Me. 443, 36 A. 910, 38 L.R.A. 143 (innkeeper); Black v. Security Mutual Life Asso., 95 Me. 35, 49 A. 51, 51 A.L.R. 939 (insurance agent); Harding v. Hagar, 60 Me. 340 (freight). See also 5 Williston, Contracts § 1766 (rev. ed.); 6A Corbin, Contracts § 1518, p. 750. Compare Tillock v. Webb, 56 Me. 100 (Sunday contract).

A contract in furtherance of obtaining a hotel liquor license unlawfully is plainly against our public policy. That such a contract may not be in direct contravention of a statute does not lessen the force of the public policy against its enforcement.

Fourth--'The law leaves the parties to an illegal contract 'where it finds them." Jolovitz v. Redington & Co., Inc., supra, 148 Me. p. 29, 88 A.2d p. 592. The public policy, expressed in law, is designed not to protect the defendant as here from an apparently improvident bargain, but to deter others from entering into like illegal contracts.

We are not concerned with our conception of fairness between the parties. The defendant does not deny that she owes the plaintiff what it claims under the contract. She does not more than say that the power of the State is not available to the plaintiff to establish its claim and to enforce judgment thereon.

Fifth--To invalidate a contract on the ground of public policy, the 'impropriety of a transaction,' to use Professor Williston's words, must be clearly established. 5 Williston, supra, § 1629A. Our Court in Bell v. Packard, 69 Me. 105, in which the issue was whether Maine or Massachusetts law controlled, said, 69 Me. at p. 111: '* * * no contract must be held as intended to be made in violation of the law, whenever by any reasonable construction it can be made consistent with the law * * *'

'In general and unless restrained by valid statutes, competent persons have the utmost liberty of making contracts. Agreements voluntarily made between such persons are to be held sacred and enforced by the courts, and are not to be lightly set aside on the ground of public policy or because as events have turned it may be unfortunate for one party.' Crimmins & Peirce Co. v. Kidder Peabody Accept. Corp., 282 Mass. 367, 185 N.E. 383, 388, 88 A.L.R. 1122, and annot. 1131.

See also 12 Am.Jur. Contracts § 251; 17 C.J.S. Contracts § 211d.

We summarize the contract, headed 'management contract,' between Thacher Hotel, Inc., the plaintiff corporation, called the 'Owner,' and the defendant, called the 'Food Manager,' as follows:

'1. The Owner shall employ the Food Manager for the term of five (5) years from [January 3, 1955] until the close of business on the Saturday following [January 3, 1960], as manager of the Coffee Shoppe and Dining-Cocktail Room located in the premises of the Owner known as Thacher Hotel. * * *

'2. The Food Manager shall well and faithfully serve the employer in such capacity, and shall at all times devote her whole time, attention, and energies to the management and improvement of said business, and shall perform all such services, acts and things as the Owner shall from time to time direct as hereinafter set forth:

'(a) The Food Manager will have exclusive direction and responsibility of purchasing, storage, preparation and service of all food within the Thacher Hotel, specifically set forth as the kitchen, Coffee Shoppe, Dining-Cocktail Room, and in the rooms of the Hotel whenever such is required by guests of the Hotel.'

(b) Limits the use of the Dining-Cocktail Room for parties and banquets.

'(c) The service of beer, wines and liquors will be made by the waiters or waitresses, and such sales of beer, wines and liquors shall be accurately recorded on a separate check from the food check, and such separate checks shall be identified as Cocktail Bar checks, and payment of such Cocktail Bar checks shall be made after each serving in a manner prescribed by the Owner, and shall not constitute in any manner a part of food income.'

(d) Owner is responsible for charges by hotel guests.

'(e) The Food Manager will have the exclusive responsibility for the food operation without undue interference by the Owner, except in such cases specifically referred to herein. However, at times mutually agreeable, the Food Manager and the Owner or the Owner's representatives shall discuss and consider matters which may be of mutual interest in maintaining efficient and profitable operation.

'(f) The food operation shall be conducted under the name and style of 'Thacher Hotel Coffee Shoppe'.'

(g) All receipts from the food operation shall be...