Cities Service Oil Co. v. Griffin

• Citation: 357 So.2d 333
• Parties: CITIES SERVICE OIL COMPANY, a corporation v. Thomas F. GRIFFIN. SC 2505.
• Decision Date: 07 April 1978
• Court: Supreme Court of Alabama

Page 333

357 So.2d 333

CITIES SERVICE OIL COMPANY, a corporation v. Thomas F. GRIFFIN.

SC 2505.

Supreme Court of Alabama.

April 7, 1978.

John H. Morrow, Birmingham, Barry N. McCrary, Talladega, for appellant.

Robert S. Vance and James N. Brown, III, Birmingham, for appellee.

BEATTY, Justice.

This is an appeal by Cities Service Oil Company (Citgo) from a judgment entered against it based upon a jury verdict awarding the plaintiff, Griffin, $70,000.00 damages. We affirm.

The plaintiff filed this action obviously intending to charge Citgo with legal fraud as it is defined under Tit. 7, § 108, Alabama Code (Recomp.1958) (now Code of 1975, § 6-5-101):

Misrepresentations of a material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitute legal fraud.

His complaint included the following allegations:

3. That prior to, to-wit, June 1, 1972, plaintiff learned that defendant Cities Service was terminating some of its smaller distributors in other states.

4. That on or about June 1, 1972, and from time to time thereafter until to-wit, October 1, 1972, plaintiff inquired of defendant Cities Service whether his distributorship would be terminated.

5. That at the time of plaintiff's said inquiries, defendant Cities Service, by and through its agents or employees, made representations to plaintiff to the effect that plaintiff had no reason to worry regarding being cut-off or terminated by Cities Service, but would retain his said distributorship.

6. That the representations in the above paragraph made by defendant Cities Service were false and that defendant Cities Service knew that they were false.

7. That at the time of plaintiff's aforesaid inquiries to defendant, plaintiff's distribution business was a profitable, valuable and readily saleable business and that plaintiff then had the capacity or opportunity to make arrangements for the distribution of competing petroleum products; but that shortly after October 1, 1972, plaintiff's said opportunity to make other supply arrangements was no longer available, the business was no longer saleable and plaintiff was then unable to make arrangements for the distribution of competing petroleum products.

8. That plaintiff believed the aforesaid representations of defendant, Cities Service, and relied upon said representations and in reliance thereon continued doing business with Cities Service, continued selling said defendant's products as a branded distributor, did not sell his said business and did not make arrangements for the distribution of competing petroleum products.

9. That on or about the 10th day of October, 1972, defendant Cities Service informed plaintiff that Cities Service was exercising its option to terminate plaintiff's contract with defendant Cities Service in accordance with the terms of the March 9, 1972 contract, and that on or about October 24, 1972, plaintiff received a registered letter dated October 18, 1972, formally terminating his contract as of, to-wit, March 1, 1972; that thereafter one Bob Moore, Cities Service's agent and its Marketing Vice President represented to plaintiff that Cities Service would not let anyone else in plaintiff's sales area before plaintiff was able to effect a sale of his business.

10. That subsequent to the conversation between Bob Moore and plaintiff, but before Plaintiff had been able to sell his business, defendant Cities Service and defendants Boone Oil Company and D. C. Boone entered into an arrangement or agreement under which defendants Boone Oil Company and D. C. Boone moved into plaintiff's sales area, set up Cities Service branded dealers and otherwise interfered with the contract and business relationship between Cities Service and plaintiff, and between plaintiff and retail dealers who had theretofore purchased petroleum products from plaintiff.

11. That the aforesaid representations made by the said Bob Moore, acting as an agent for defendant Cities Service, were false and were known by said defendant to be false or were made by said defendant without knowledge of the true facts, recklessly for the purpose of deceiving plaintiff.

12. Plaintiff believed the representations made by Cities Service's agent, Bob Moore, and in reliance upon said facts, did not sell his business prior to the time defendants Boone Oil Company and D. C. Boone moved into plaintiff's sales area.

The record discloses that Griffin became the distributor of Cities Service products in Talladega and St. Clair Counties in 1947 under a series of standard year-to-year contracts. These contracts did not renew if either party gave the other written notice of non-renewal at least 120 days before expiration. On the contract in question the renewal date was March 1, 1973.

Citgo had formulated a new marketing policy in 1971 which, when implemented, would reduce the number of their distributorships, including that of Griffin. In the summer of 1972 the company experienced supply shortages and began to implement the new program. Having become aware of some distributorship cancellations in other areas, about March of that year Griffin made inquiries to Citgo representatives on the possibility of his contract being terminated. In response he was given assurances of contract renewal. However, on or about October 10, 1972 he was told by Ira Hughes, a Citgo employee, that his contract would not be renewed, and this was followed "a few days" after October 19, 1972 by a written notice to Griffin from Citgo of its election not to renew their distributorship contract. When he received this notice Griffin immediately contacted Bob Moore, the marketing vice-president of Citgo, concerning that decision. Griffin expressed to Moore his concern over the possibility of other people coming into his territory in competition with him before he had an opportunity to sell his business. A couple of weeks later (approximately November 4) he was assured by Moore that such a situation would not occur. Nevertheless, about two weeks later (approximately November 18) Citgo signs were being displayed in his territory by other dealers who were selling gasoline for less than Griffin's dealers were selling it. Thereafter his attempts to obtain another source of supply were unsuccessful due to the gasoline shortage, and the value of his business was harmed. Ultimately he sold his business for the aggregate amount of $32,000.00, although during the previous summer and up to October it had been worth $100,000.00, calculated by an industry-recognized method of valuation which allowed $1.50 per monthly gallon.

The trial court denied Citgo's motion for a directed verdict and its motion for judgment N.O.V., in both of which Citgo maintained that the fraud claim was barred by the statute of limitations of one year. We quote from the defendant's motion for a directed verdict:

7. Any effort to recover on any claimed misrepresentation made by this defendant fails because the evidence establishes without dispute that plaintiff knew of the falsity of such claimed misrepresentation more than one year prior to the commencement of this action.

8. Any effort on the plaintiff's part to recover on the basis that the defendant represented that plaintiff's contract would be renewed is defeated by the statute of limitations of one year because the complaint and the evidence show without dispute that plaintiff learned the defendant was not going to renew its contract more than one year prior to the commencement of this action.

And the following grounds were asserted in the defendant's motion for judgment N.O.V.:

7. Any effort to recover on any claimed misrepresentation made by this defendant fails because the evidence establishes without dispute that plaintiff knew of the falsity of such claimed misrepresentation more than one year prior to the commencement of this action.

8. Any effort on the plaintiff's part to recover on the basis that the defendant represented that plaintiff's contract would be renewed is defeated by the statute of limitations of one year because the complaint and the evidence show without dispute that plaintiff learned the defendant was not going to renew its contract more than one year prior to the commencement of this action.

17. The evidence established without dispute that plaintiff knew of the falsity of the representation on which plaintiff based his suit more than one year prior to the commencement of plaintiff's suit.

It is Citgo's position that Griffin's action for misrepresentation fails because of the application of Tit. 7, § 42, Alabama Code (Recomp.1958) (now Code of 1975, § 6-2-3):

In actions seeking relief on the ground of fraud where the statute has created a bar, the cause of action must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have one year within which to prosecute his suit.

As the defendant insists, it is well settled that an action based upon fraudulent misrepresentation must be brought within one year of the discovery thereof or within one year of the time when it should have been discovered. Johnson v. Shenandoah Life Insurance Co., 291 Ala. 389, 281 So.2d 636 (1973); State Security Life Insurance Co. v. Henson, 288 Ala. 497, 262 So.2d 745 (1972).

When did the plaintiff discover that the defendant's representations to him were fraudulent? The defendant contends that the plaintiff knew of the misrepresentations with regard to the termination of his distributorship no later than October 10, 1972. Because the action was not brought until October 18, 1973, defendant maintains that it is barred by § 42. If there was no evidence supporting an inference that plaintiff's discovery of the fraud occurred after October 18, 1973, a jury question would not have been established and the defendant would have been entitled to a directed...