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Davies v. Arthur Murray

APRIL 27, 1970.




Appeal from the Circuit Court of Cook County; the Hon. ELMER G. HOLMGREN, Judge, presiding. Judgment affirmed.


Rehearing denied June 11, 1970.

The plaintiff instituted this action to recover money paid on contracts for unused hours of dancing instruction which were allegedly unusable because of plaintiff's physical incapacity. The suit sought cancellation of the contracts and a return of the money paid. Plaintiff's action was premised upon executory contract law and the fact that the contracts were void as against public policy having been proscribed by a Federal Trade Commission Order. Trial was held without a jury and the court entered judgment for the defendant. Plaintiff seeks to reverse this judgment upon the same grounds that were urged before the trial court.

Suit was commenced against two corporate entities and Albert R. Vente, a licensee of Arthur Murray, Inc., a Delaware Corporation. At the trial the corporate defendants were either dismissed or had not been served with process and the case proceeded only against defendant Vente who had operated an Arthur Murray Dance Studio as a licensee of Arthur Murray, Inc., located in Chicago during the years 1953 to 1966.

The plaintiff, William G. Davies, subscribed for lessons commencing in 1958 and continued to take lessons until September of 1964. He discontinued dancing instruction because of his alleged illness and surgery. Plaintiff was 62 years of age when he commenced taking lessons and had retired. Prior to his surgery, the plaintiff spoke with the defendant on two occasions and requested a refund for prepaid but unused lessons. Plaintiff stated that due to his physical incapacity and on his doctor's advice he would be unable to complete the lessons contracted for. According to plaintiff's testimony, the defendant allegedly stated his willingness to comply with the request if it were economically possible in the future. After plaintiff's surgery, a written demand for a refund was made. The present action was commenced when no refund was received.

The complaint alleged that Albert R. Vente, as a franchise holder from Arthur Murray, Inc., had entered into certain contracts with plaintiff. These contracts were entered into while plaintiff was taking lessons under prior contracts. Copies of several contracts for dance instruction were attached to the complaint, which were dated beginning on September 16, 1960, with the last contract dated August 30, 1963. The plaintiff alleged that these contracts were in direct violation of a Federal Trade Commission Order, dated July 27, 1960, of which the following was set forth in the complaint:

"Contracting with a pupil or prospective pupil for a specific course of dancing instruction and thereafter, prior to completion of the given course, subjecting such pupil or prospective pupil to sales effort toward the purchase of additional lessons, unless (a) any contract for additional lessons is subject to cancellation by such pupil or prospective pupil, with or without cause, at any time up to and including one week after completion of the units of dancing instruction previously contracted for, without cost or obligation, except that a charge may be made for not in excess of two additional lessons furnished during such week and (b) all of such units previously contracted for shall be used or completed prior to the commencement of additional lessons." 57 FTC 306, 314-15 (1960).

Plaintiff alleged that defendant willfully and maliciously induced him to contract for future lessons while prior contracts had not been completed, all subsequent to the effective date of that order. Finally, the complaint alleged that plaintiff's illness precluded him from completing these lessons and that defendant Vente had refused plaintiff's demand for a refund.

The defendant's answer denied the binding effect of the FTC order as to him on the grounds that the defendant was not a party to that proceeding and had refused to comply with several requests of his licensor to agree to the terms of the order. A copy of a letter from Arthur Murray, Inc. to defendant was attached to the answer. The letter was a notice of the issuance of the FTC order and a request that the licensee assent to be bound by the order which would thereby amend the franchise agreement. Defendant denied the plaintiff's allegations of inducement and stated that plaintiff voluntarily entered into the contracts in question. Defendant denied knowledge of plaintiff's illness and denied that he had agreed to refund the monies paid on said contracts. The defendant recalled having a conversation with plaintiff regarding a refund. Defendant said that he only expressed a willingness to comply with the requested refund if he could afford to do so in the future. The defendant also denied that any of his salesmen induced plaintiff into said contracts by a method of "relay selling" as alleged in the complaint. It was established that this type of salesmanship involved having another salesman attempt a sale if the first salesman had failed. Defendant stated that the plaintiff had made the request for additional lessons after talking with his instructor.

Evidence regarding plaintiff's physical incapacity was introduced through plaintiff's testimony. On cross-examination, the plaintiff admitted that prior to beginning his lessons in 1958, he had a problem with high blood pressure. It was also disclosed that sometime in 1959, plaintiff had been hospitalized for a hernia condition. Plaintiff acknowledged that sometime in 1960 or 1961 he had been informed of the FTC order by some fellow students. Despite this knowledge, he purchased the lessons which are the disputed contracts involved. Plaintiff stated that he was satisfied with his lessons and only discontinued them due to his ill health.

On these facts and evidence the court found for the defendant. In rendering its opinion the trial judge stated:

"After considering the evidence in this case, having read the brief of the parties and done some research on my own, I have come to a certain conclusion, one, that the defendant in this case was not bound by the FTC order against Murray, Inc., and among reasons for this conclusion is the fact that the FTC order was a consent order, and did not purport to find the respondent had violated any law."

Furthermore, the trial court declared that there was no violation of public policy, based on either the FTC order or the subsequent legislation enacted in this state. (Ill Rev Stats 1965, c 29, §§ 51-52.)

The plaintiff's first argument deals with the right to rescind and recover the money paid on these contracts. His briefs and argument rest on two contentions. First, that the provisions of the FTC order were binding upon the defendant. Therefore, according to the pertinent language set forth above, the plaintiff was entitled to rescind the contracts for unused lessons. The order itself is a consent decree representing an agreement of the parties and orders that the following parties were to cease and desist from certain business practices:

"That respondent Arthur Murray, Inc., a corporation, and its officers, and respondents . . . individually and as officers of the corporation, and respondent's agents, representatives and employees, directly or through any corporate or other ...

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