Frye and Smith, Ltd. v. Foote

113 Cal.App.2d Supp. 907 (1952) FRYE AND SMITH, LTD. (a Corporation) et al., Respondents,

v.

WILLIAM A. FOOTE et al., Appellants.

California Court of Appeals.

Aug. 21, 1952. J. A. Hamman, Thomas Sherrard and F. W. Powell for Appellants.

Miller, Higgs & Fletcher for Respondents. [113 Cal.App.2d Supp. 909]

BURCH, J.

Plaintiffs, Frye and Smith, Ltd., a corporation, and Roy H. Jasper and Agnes G. Jasper, doing business as Jasper's Mailing Service and Motor Service and Motor Vehicle Publishing House, with others who have since dismissed, filed their verified complaint in several counts for goods and services rendered, the value thereof, and on open accounts therefor, and had judgment thereon. The several defendants against whom the judgments were rendered were The Yale Foundation, a corporation, The Church of the Merciful Saviour, an unincorporated association, and The Church of the Merciful Saviour, a corporation. Frye and Smith had judgment for $1,219.19 and Roy H. Jasper and Agnes Jasper for $1,531.32, each judgment running against all the defendants. The defendants appeal.

No question is raised that the charges are incorrect in amount or that the goods and services were not rendered. Defendants chiefly maintain that their relation to plaintiffs were such as to absolve them from liability.

The Yale Foundation authorized its codefendant, William A. Foote, to incur the obligations which might be necessary in promoting a public subscription campaign to raise $1,500,000 with which to build and maintain a 500-bed hospital on lands owned by it. It was planned that the subscription begin December 1, 1949. On or before September 1, 1949, the foundation employed Foote, set up offices for him in their building on the grounds where it was proposed to build the hospital, and agreed to furnish the funds to defray initial expenses, looking to the start of the subscription campaign.

Mr. Foote entered upon his duties and incurred indebtedness which the foundation liquidated. Anticipating sales resistance should the campaign be conducted under the sponsorship of The Yale Foundation, the officers and directors of that corporation organized themselves as an unincorporated association about July 23, 1949, under the name of The Church of the Merciful Saviour, which was publicized as the sponsor, and acted as such until a corporation of the same name could be organized by the same persons. The association, though itself without funds or property, so operated until the defendant, The Church of the Merciful Saviour, a corporation, was organized on December 29, 1949. In the meantime, the association was held out as the sponsor, received some funds from The Yale Foundation, and paid bills incurred by Foote with plaintiffs and others under his contract of employment with The Yale Foundation. Other bills, including those of [113 Cal.App.2d Supp. 910] plaintiffs now in suit, were not paid because The Yale Foundation found itself financially unable to effect its promise as to most of the charges incurred after the first six weeks of the precampaign period. The wide contact and extensive publicity effected by defendant Foote in furtherance of his duty to the foundation created a good will for the subscription campaign which was destroyed by the financial embarrassment of the foundation which, in turn, caused it to breach its promise to pay the bills incurred by defendant Foote. As a result, the whole enterprise came to naught.