Gilbert Hotel No. 4 Inc. v. Jones

In passing on a general demurrer to a petition, the allegations will be construed most strongly against the pleader, and allegations of matters essential to a good cause of action will not be implied from the pleading, but must be distinctly set up therein.

DECIDED SEPTEMBER 19, 1945. Gilbert Hotel No. 4 Inc., in a suit against Johnny J. Jones, alleged in substance that, on July 13, 1937, it leased from the defendant, for a term of approximately fourteen years, certain property in Augusta to be used and operated by it as a hotel, on terms and conditions set out in a copy of a contract attached to the petition as exhibit "A"; that on January 3, 1938, the plaintiff employed Frank E. Hailey and Lula Ann Hailey as agents, operators, and managers of the hotel, and sold to them certain furniture and equipment used in the hotel, on terms and conditions set out in a written contract, which included a provision that the Haileys would keep strict books of account, subject to inspection and audit by the plaintiff, and would make certain daily and monthly reports and statements to the plaintiff, and would pay monthly to the plaintiff 5 per cent of the gross receipts of the hotel and 20 per cent of all room receipts from a named class of guests, a copy of this contract identified as exhibit "B" being attached to the petition; that on November 1, 1938, the Haileys transferred to Jones, the defendant, a half interest in and to the contracts attached to the suit as exhibits "A" and "B" as shown by a writing marked exhibit "C" attached to and made a part of the petition; that on March 23, 1939, the Haileys transferred the other half interest in and to the contracts identified as exhibits "A" and "B" to the defendant Jones, as shown by a writing marked exhibit "D" attached as a part of the petition; that the defendant has failed and refused to account to the plaintiff for the receipts from the operation of the hotel according to the terms of the contracts attached, that is, 5 per cent of the gross receipts and 20 per cent of all room receipts received from certain guests, although the defendant has mailed checks monthly for what he contended represented the 5 per cent, but which the plaintiff charges is not correct; that the defendant has denied the plaintiff's auditor access to the books and records of the hotel, and has received large sums, amounting to $10,000 or other large amounts, for which there has been no accounting, and which are now due to the plaintiff. The prayer was for a judgment for $10,000.

The contract of January 3, 1938, between the plaintiff and the Haileys, in which the latter were employed as agents, operators, and managers of the plaintiff in the operation of the hotel, provided that the Haileys could not sell, transfer, or convey their interest in the contract to any person without the consent of the plaintiff. The contract also recited that it was expressly understood and agreed by both parties that the agreement was not in any way an assignment of the lease made by the defendant Jones to the plaintiff. The contract of November 1, 1938, between the Haileys and the defendant Jones, provided in part that Jones was employed as agent, operator, and manager for the Haileys in the operation of the hotel, and that the contract was not to be construed as a partnership. It also conveyed to Jones a half interest in the hotel, its furniture, fixtures, fittings, equipment, and good will. The contract of March 23, 1939, between the Haileys and Jones, merely conveyed to Jones the other half interest in the hotel property, formerly owned and held by the Haileys.

The defendant demurred to the petition on several grounds, those which are material being substantially as follows: That the petition did not set out a cause of action, and did not set forth facts authorizing either equitable relief or equitable jurisdiction; that it did not show that the defendant was under any contractual obligations to the plaintiff, or that the defendant had in writing assumed and agreed to pay the obligations of Frank E. Hailey and Lula Ann Hailey, alleged to be due under their contract with the plaintiff; and that there was a nonjoinder of necessary parties, namely, Frank E. Hailey and Lula Ann Hailey.

The trial court sustained the defendant's demurrer and dismissed the petition. The exception here is to that ruling. The case was first carried to the Supreme Court, and was transferred to this court because "it does not come under any of the type of cases over which the Supreme Court is given jurisdiction." SeeGilbert Hotel No. 4 v. Jones, 199 Ga. 339 (34 S.E.2d 443). In transferring the case to this court, the Supreme Court held that it was not an equity case, otherwise that court would have had jurisdiction. Code, § 2-3005. The order of the trial court sustaining the demurrer and dismissing the action contains these recitals: "In none of the contracts attached as exhibits to the petition did the defendant ever assume any obligations or agree to discharge or carry out any contract or obligation existing between the Haileys and the plaintiff;" and "The defendant is in no wise connected with any obligations running from the Haileys to plaintiff." It is true that the first contract between the Haileys and Jones recites that the Haileys are "to employ the second party (Jones) as their agent, operator, and manager in the operation of said hotel in accordance with terms and conditions of franchise or agreement made by said first parties with the said Gilbert Hotel No. 4." This recital is the only provision that we have found in either of the contracts which might be construed as imposing on the defendant an obligation to account to the plaintiff, and we do not think that it is sufficient. "An accounting may be had at law," and this is a legal action. Burress v. Montgomery,148 Ga. 548 (97 S.E. 538). The defendant took complete possession, custody, and control of the hotel under the contracts with the Haileys, after purchasing from them all personal property and effects in the hotel, but he did not expressly assume any monetary obligations to the plaintiff. Whether or not the defendant's course of action would make him liable to the plaintiff in a suit in equity for an equitable accounting, we do not decide. In passing on a general demurrer the allegations of the petition attacked by the demurrer will be construed most strongly against the pleader. Johnston v. Atlanta, 71 Ga. App. 552 (31 S.E.2d 417). "Allegations of matters vitally essential to set up a good cause of action will not be implied from the pleading, but must be distinctly made therein." Evans v. Dickey, 50 Ga. App. 127 (177 S.E. 87). Under these well-settled rules of law, we think, as did the trial judge, that the plaintiff failed to state a cause of action against the defendant, and the general demurrer to the petition was properly sustained.

Judgment affirmed. Sutton, P. J., concurs. Felton, J.,concurs in the judgment.