Shaw v. Jeppson

239 P.2d 745, 121 Utah 155, 1952 Utah LEXIS 118
CourtUtah Supreme Court
DecidedJanuary 12, 1952
Docket7741
StatusPublished
Cited by20 cases

This text of 239 P.2d 745 (Shaw v. Jeppson) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shaw v. Jeppson, 239 P.2d 745, 121 Utah 155, 1952 Utah LEXIS 118 (Utah 1952).

Opinions

CROCKETT, Justice.

Plaintiff procured an injunction against the defendant from teaching dancing in competition with her. The controversy on this appeal is over an effort of the defendant to get another plaintiff in, so she can show it is disqualified from suing her.

Ara M. Dimond (now Jeppson) was hired as a dancing instructor by the plaintiff, Helene Shaw. The contract of employment provided that if she left plaintiff’s employ she would not teach nor dance for hire within a certain area, that is, in Salt Lake County, or any county adjacent to it or within 25 miles of any Arthur Murray dance studio for a period of two years; if she breached this covenant, she agreed (1) to pay on demand a promissory note in the sum of $500 as compensation for dancing instruction and training she would receive; and (2) that she recognized that it would cause irreparable injury to the plaintiff’s business and consented to an injunction against her breaching said covenant. After approximately one and one-half years employment, she quit without stating any reason therefor and began teaching dancing within the proscribed area.

[158]*158The plaintiff commenced this action seeking three things: (a) to collect the promissory note, (b) for money damages for violating the covenant, and (c) to enjoin her from continuing to do so. Upon the trial, the parties stipulated that the defendant had breached the covenant; the plaintiff waived any money damages caused prior to the trial; and also waived any right to collect on the promissory note. The only issue presented was as to plaintiff’s right to the injunction. The trial court ruled for the plaintiff and entered a decree ordering the defendant to discontinue violation of the covenant. Defendant appeals.

The defendant makes no claim that the restriction is not a reasonable and lawful one and, necessary to protect the good will of the plaintiff’s business. The only defense she asserts to the action is based on these two propositions: that plaintiff, Helene Shaw, is not the real party in interest but that Arthur Murray, Inc., is such in fact; and that it is a foreign corporation doing business in Utah without complying with Sections 18-8-1 and 2, U. C. A. 1943, and is therefore disqualified from suing herein by Section 18-8-5.

Defendant admits that Arthur Murray, Inc. is a foreign corporation and' that it has not qualified to do business in the State of Utah and does not dispute that if such corporation were the real party in interest and doing business in the State of Utah it could not maintain this suit. First National Bank of Price v. Parker, 57 Utah 290, 194 P. 661, 12 A. L. R. 1373; Dunn v. Utah Serum Company, 65 Utah 527, 238 P. 245; Franklin Building & Loan Company v. Peppard, 97 Utah 483, 93 P. 2d 925.

Consideration of the defendant’s challenge that the plaintiff is not the real party in interest in the suit requires a brief, factual survey of the relationship between the parties as shown by the contracts between them and their methods of operation. The plaintiff, Helene Shaw, has a licensing agreement with Arthur Murray, Inc. of New York per[159]*159mitting her to use the name, dances, instruction books and methods of the licensor, but she is obliged to do so within certain limitations. For this she pays 10% of her gross receipts, plus 5% to go into a fund for advertising and certain other contingencies.

The plaintiff is the originator and entrepreneur of the business she is conducting. She filed an affidavit that she personally was doing business under an assumed name, Arthur Murray Studios, and registered that name for herself in the office of the Secretary of State. She procured her own studio, made all the arrangements about rental, utilities and other incidentals which it is her sole responsibility to pay; she owns all of the assets of the business including the furniture, fixtures, files, records and instruction books, the lease, accounts receivable and the licensing agreement referred to. The hiring of personnel, the payment of their salaries and all of the expenses of the business is upon her. In fact, she has full responsibility for managing all phases of the business, arrangements for lessons, group dances, and courses. And it is she who gets the benefits of any profits made or suffers any loss that may be incurred in the business.

It is true that in order to protect the name and good will of the licensor, the licensing agreement places some restrictions upon the plaintiff in that Arthur Murray, Inc. has the right to make certain requirement with respect to types of dancing taught, the character of the studio, salaries paid and not employing personnel found to be objectionable. It also requires plaintiff to keep records and to make reports of a general nature showing the lessons taught and the gross receipts which is the basis of payment for the license. This report does not show the wages paid nor the operating expenses in connection with the business because the licensor does not share in the profits and is not responsible for the loss and therefore is not concerned whether the plaintiff’s business is profiable or otherwise. The contract [160]*160expressly provides that the licensor is not responsible for salaries or other debts incurred by the plaintiff. The evidence is that the licensor has never exercised any of its prerogatives of supervisory control over the plaintiff’s business. Actually no representative of Arthur Murray, Inc. has ever been at the studio. The fact is that it has no direct supervisory control over the plaintiff’s business; the requirements imposed by the agreement are conditions under which the plaintiff can continue to use the name and methods of Arthur Murray, Inc., a breach of which could only become the basis of a cancellation of the license upon certain notice specified in the contract. Only in this indirect way of cancelling the license, could licensor interfere with the management and operation of the plaintiff’s business.

The defendant Ara M. Dimond Jeppson is not a party to the license agreement and has no direct contractual relationship with Arthur Murray, Inc. The plaintiff hired the defendant, fixed her hours, specified the terms and conditions of employment and set and agreed to pay her salary. The defendant’s contract with the plaintiff was one of employment for the plaintiff in connection with which the defendant agreed to the covenant we are concerned with. The mutual obligations of the contract run between the plaintiff and the defendant, and Arthur Murray, Inc. is referred to in it as a third party, and under its provisions, there is no theory upon which the defendant could have held Arthur Murray, Inc. responsible for her wages or have imposed any other obligation upon it.

Upon the facts as delineated above the court found that the plaintiff was not the alter ego, agent, servant or employee of Arthur Murray, Inc.; that such corporation was not doing business in the State of Utah and ruled that the plaintiff in her own right was entitled to enforce the covenant against the defendant and upon such findings granted the injunction.

[161]*161The phase of this case under review, that is, pertaining to the injunction is equitable. Therefore, although the court will review the evidence, it will not disturb the findings of the trial court unless they are clearly against the weight of the evidence. Stanley v. Stanley, 97 Utah 520, 94 P. 2d 465.

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Shaw v. Jeppson
239 P.2d 745 (Utah Supreme Court, 1952)

Cite This Page — Counsel Stack

Bluebook (online)
239 P.2d 745, 121 Utah 155, 1952 Utah LEXIS 118, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shaw-v-jeppson-utah-1952.