The opinion of the court was delivered by: YOUNGDAHL
Plaintiff's claim, defendant's counterclaim, and defendant's third party claim against third party defendant came on to be heard before the Court sitting without a jury. Upon consideration of the briefs submitted by all parties both before and after the trial, and the evidence presented and arguments made in open court, the Court has reached the following conclusions, which shall be considered as findings of fact and conclusions of law pursuant to Rule 52(a), Federal Rules of Civil Procedure.
Plaintiff is a corporation engaged in the business of promoting, publishing, selling and distributing a book under the trade name of 'Showtime -- d.c.' (hereinafter referred to as 'Showtime Book'), which contains various coupons which, when presented to the box office of the entertainment facilities listed on such coupon, entitled the holder to one free admission when accompanied by a guest who purchases a ticket of equal value at regular prices.
Defendants are corporations which own and operate two motion picture theatres in the District of Columbia: the Trans-Lux Playhouse at 727 15th Street, N.W., and the Trans-Lux Theatre at 736 14th Street, N.W. Both defendants are part of a chain of seventeen theatres individually operated by seventeen affiliated companies in Baltimore, Philadelphia, New York City, Boston, Detroit, and Washington, D.C. All of the affiliated companies, including the two defendants, have their home offices in New York City.
Third party defendant, Edwin Rosenfeld, was district manager for the two defendant corporations in the Baltimore-Washington area at all pertinent times.
On November 21, 1963, Rosenfeld signed an 'Advertising Agreement' between plaintiff and 'Trans-Lux Theatres,' by which plaintiff, at its own expense and without charge to Trans-Lux, would print and insert in its Showtime Book six coupons, three for the Trans-Lux Theatre and three for the Trans-Lux Playhouse. Each of these tickets entitled the holder to one free admission 'when accompanied by a guest who purchases one (admission) at regular price.' It was stated in the agreement that Trans-Lux Theatres authorized these six insertions 'with the understanding that not more than 5,000 (Showtime Books) will be sold.' It was further stated that the theatres agreed to honor all coupons presented, and that plaintiff would pay all advertising, printing and other costs incidental to the sale of the Showtime Book. Each book was to be marked to expire one year from date of sale to the purchaser. In fact, the books which were printed and offered for sale noted on the tickets for defendants' theatres that the offer was 'good thru October 31, 1964.' Rosenfeld signed the agreement as 'Owner, Partner or Authorized Agent.' Daniel D. Richard, plaintiff's general manager, signed for plaintiff.
On December 17, 1963, following an extensive advertising campaign in Washington newspapers to promote the Showtime Book,
plaintiff received the following telegram from Thomas E. Rodgers, vice president of each defendant (and of all of the other affiliated theatres), sent from New York City:
On December 19, 1963, plaintiff acknowledged receipt of the telegram, refused to cease distribution of the Showtime Books, and threatened legal action if defendants in any way impaired the continued sale of Showtime Books or refused to honor the Showtime tickets when presented at the box office. The letter contained the following paragraph:
'I note your statement that Mr. Ed Rosenfeld whom you identify as the 'manager of (your) Washington District' and who executed the contract on behalf of Trans-Lux Theatres was not authorized to enter into such agreement. As you yourself point out, Mr. Rosenfeld was your manager. He was in complete charge of the Trans-Lux operations and as far as my client knows, no one in Washington had any higher authority. As such, I believe that Mr. Rosenfeld would be deemed legally to have apparent authority to enter into a contract of this type.'
On January 10, 1964, after notice to defendants, plaintiff filed a complaint in this court for injunction, a temporary restraining order, and damages for breach of contract. On the same day, Judge Keech issued a temporary restraining order restraining defendants 'from refusing or otherwise failing to honor the coupons contained in said Showtime Books for the Trans-Lux Playhouse Theatre and the Trans-Lux Theatre when presented in accordance with terms stated on said coupon.' On January 24, 1964, following a hearing on the motion for a preliminary injunction, Judge Hart issued a preliminary injunction enjoining defendants from refusing to honor the coupons contained in the Showtime Books. In his order, Judge Hart reached the following conclusion of law, inter alia:
'The contract entered into between plaintiff and defendants * * *, reduced to writing on November 21, 1963, is valid and binding upon defendants since Edwin Rosenfeld, District Manager of defendants' theatres, who entered into the said contract, had apparent authority to so act.'
After certain discovery and pre-trial procedures, the case was advanced on the calendar, and trial before this Court followed.
1. This Court has concluded that Rosenfeld had apparent authority to enter into the agreement with plaintiff.
In July, 1962, Rosenfeld, after gradually gaining responsibility in the Trans-Lux operations since his employment in 1951, was named district manager in charge of the Baltimore-Washington area, which contains six theatres. His duties included supervising the theatres and engaging in advertising, publicity and promotion. He had the authority to issue various types of free passes to the theatre, and undertook various ...