Cappetta v. Atlantic Refining Co., 159.

• Decision Date: 03 December 1934
• Docket Number: No. 159.,159.
• Citation: 98 ALR 418,74 F.2d 53
• Parties: CAPPETTA v. ATLANTIC REFINING CO.
• Court: U.S. Court of Appeals — Second Circuit

98 ALR 418, 74 F.2d 53 (1934)

CAPPETTA v. ATLANTIC REFINING CO.

No. 159.

Circuit Court of Appeals, Second Circuit.

December 3, 1934.

George E. Beers and William L. Beers, both of New Haven, Conn. (Basil O'Connor, of New York City, on the brief), for defendant-appellant.

Edward L. Reynolds and George J. Grady, both of New Haven, Conn., for plaintiff-appellee.

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The plaintiff's mother, Raffaela Cappetta, leased to the defendant certain land in New Haven, Conn., for the term of five years from June 8, 1933, with a provision for holdover renewal from year to year unless either party should elect to cancel upon written notice given ninety days prior to the expiration of any current yearly term. For present purposes the leased premises are sufficiently described as Nos. 240-246 Wooster street. The defendant is a corporation engaged in producing and selling petroleum products and acquired the land so leased for the purpose of maintaining a gasoline station for the sale of its gasoline and kindred products to the public at retail. The rental payable under the lease was, subject to a fixed minimum, an amount equivalent to one cent per gallon for all gasoline or other motor fuel sold on the premises.

The plaintiff's mother also owned and, on June 8, 1933, leased to the defendant a plot of land across the street from the first location. This lease, known as "Atlantic Garage Lease Agreement," ran for five years with provision for hold-over extensions from year to year unless terminated by either party as therein provided. It also contained a clause providing that the lessor might, at her option and upon the payment of $400 to the lessor for the repurchase of certain named property on the premises which the lessor had purchased of her, cancel the lease on thirty days' notice.

The plaintiff, on June 8, 1933, entered into an agreement with the defendant which is called "Type B Atlantic Authorized Dealer's Agreement," and thereby the plaintiff was made the defendant's "authorized dealer for the sale of the Company's Atlantic White Flash, motor fuels, lubricants, other petroleum products and specialties at the Dealer's place of business at 240-246 Wooster Street, New Haven, Connecticut." It provided that the defendant would sell to the plaintiff and that the plaintiff would buy of the defendant all of her requirements of the above-mentioned products to be sold on the premises at an agreed price less an agreed commission or discount. This agreed price, from which was deducted the commission or discount, was the defendant's open market service station price prevailing at the time and place of each delivery. There was no agreement as to the price at which these products would be sold to the public by the plaintiff. The contract in terms was to remain in full force for five years from its date unless the Atlantic Garage lease agreement should be canceled prior to June 8, 1938, in which event the defendant might, at its option, at any time terminate its contract with the plaintiff by giving the notice therein provided. If this happened, it was agreed that the defendant might repossess the premises forthwith and, if it did, that it would account to the plaintiff for any of its products in merchantable condition which the plaintiff might have purchased from it and have on hand.

Following the execution of the above contract, the plaintiff, through her agents, acted as the defendant's authorized dealer at the premises named to the satisfaction of all concerned until the plaintiff began to sell gasoline at prices lower than the defendant's open market service station price. This greatly increased the plaintiff's sales though her profit per gallon was lessened. It also had a tendency to disrupt the defendant's marketing of its products in the affected area and led to complaints by the defendant's competitors. The district manager of the defendant testified in part as follows concerning the effect of what the plaintiff was doing: "From my experience in the business and my knowledge of conditions, my contact with competitors and others, the effect of the maintenance of a cut rate posted price at this station doing the business that this station has been doing and making a cut of 1½¢ a gallon will be ruinous upon market conditions because no doubt as in the past our competitors will meet the price posted at this station and in defense of the other customers that we have in the same vicinity we would be forced to reduce our price in which case the customer has repeatedly said that he will again cut the price and drag the market down again."

There was also some evidence that the plaintiff had substituted and sold other gasoline as that of the defendant, but that was disputed, and it is apparent that the basic reason for the attempt of the defendant to terminate the contract was the plaintiff's conduct in...