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HATCHER v. HERRING

October 7, 1969

Evelyn E. HATCHER et al., Plaintiffs,
v.
Frank HERRING et al., Defendants



The opinion of the court was delivered by: PRATT

 PRATT, District Judge.

 This cause having come on to be heard on the plaintiffs' motion for preliminary injunction, and upon consideration thereof, the verified complaint, the evidence adduced at the hearing, and argument of counsel for plaintiff and defendant Herring pro se, the Court enters the following findings of fact and conclusions of law.

 Findings of Fact

 1. Plaintiffs Evelyn Hatcher and George Stonestreet each owned 50% of the stock of Commercial Enterprises, Inc., a District of Columbia corporation, which operated a restaurant at 3530 Georgia Avenue, N.W., Washington, D.C. and jointly held an unexpired lease upon said premises.

 2. Defendants Herring and Bostic are individuals, and defendant Red Door Lounge, Inc., is a District of Columbia corporation.

 3. On July 10, 1968, by written agreement amended by subsequent agreement dated October 16, 1968, the plaintiff Hatcher sold her stock in Commercial Enterprises, Inc. to defendant Herring for $6,000 of which $500 was to be paid down and the balance by monthly installments. She received $700 under the terms of this contract, which provided that the Hatcher stock should be held in escrow pending payment of the purchase price and that Herring could vote half of it. Plaintiff Stonestreet sold his stock in Commercial Enterprises, Inc. to defendant Herring for all cash.

 4. Thereafter defendants permitted the liquor license held by the Commercial Enterprises, Inc. to expire, organized Red Door Lounge, Inc., applied for a new liquor license in that corporate name, and transferred the assets of Commercial Enterprises, Inc. to the new corporation. Subsequent to the organization of Red Door Lounge, Inc., defendant Herring procured from plaintiff Stonestreet an assignment of his interest in the aforesaid unexpired lease, in consideration for which he agreed to pay Stonestreet $100 cash and $900 in two equal installments and to issue to Stonestreet 15% of the stock of Commercial Enterprises, Inc. Substantially all of this amount is outstanding.

 5. Defendants applied to the Alcoholic Beverage Control Board to issue a liquor license to the Red Door Lounge, Inc. for use in the business acquired from Commercial Enterprises, Inc. Plaintiffs protested the issuance of such a license on the ground that their security for payment would be lost, whereupon the defendant Herring presented to the Alcoholic Beverage Control Board a document guaranteeing payment to the plaintiff Hatcher, admittedly signed by himself individually and as an officer of the Red Door Lounge, Inc., and purportedly signed by defendant Bostic and one Perkins. Under the terms of said guaranty agreement the Red Door Lounge, Inc., Perkins and defendants Herring and Bostic each agreed individually and as officers of the corporation to become responsible to Mrs. Hatcher for payment of the balance due for the purchase of her stock in Commercial Enterprises, Inc.

 6. Plaintiffs are now suing for breach of contract and for an accounting.

 Conclusions of Law

 1. The plaintiffs have demonstrated a substantial likelihood they will succeed on the merits at trial. Defendants have outstanding contractual obligations which have not been satisfied.

 2. Plaintiffs will sustain irreparable injury unless the defendants are enjoined from transferring the assets of the Red Door Lounge, Inc., since they have recourse to no other funds in satisfaction of their claims.

 3. Little inconvenience will result to defendants and the public interest lies in preserving the assets of the defendants to ...


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