Crim Truck & Tractor Co. v. Navistar Intern. Transp. Corp.

• Court: Texas Supreme Court
• Writing for the Court: Ron Adkison; CORNYN; Dissent by MAUZY; MAUZY
• Citation: Crim Truck & Tractor Co. v. Navistar Intern. Transp. Corp., 823 S.W.2d 591, 35 Tex. Sup. Ct. J. 342 (Tex. 1992)
• Decision Date: 22 January 1992
• Docket Number: No. D-0092,D-0092
• Parties: CRIM TRUCK & TRACTOR CO., Travis Crim, and Tim Farley, Petitioners, v. NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, Respondent.

Page 591

823 S.W.2d 591

52 A.L.R.5th 919

CRIM TRUCK & TRACTOR CO., Travis Crim, and Tim Farley, Petitioners, v. NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION, Respondent.

No. D-0092.

Supreme Court of Texas.

Jan. 22, 1992.

Ron Adkison, J. Mitchell Beard, Henderson, for petitioners.

Stephen F. Fink, Steven W. Sloan, Dallas, for respondent.

OPINION

CORNYN, Justice.

The Motion for Rehearing is overruled. The original opinion in this case is withdrawn and the following opinion is substituted therefor.

This case presents the question of whether there is evidence of a confidential relationship, giving rise to a fiduciary duty, between the parties to a franchise agreement. Plaintiffs are the franchisee, Crim Truck and Tractor Company, Travis Crim and Tim Farley (the Crims). The defendant is the franchisor, Navistar International Transportation Corporation (Navistar), formerly known as International Harvester Corporation. The trial court rendered judgment for the Crims based on jury findings of breach of contract, breach of fiduciary duty and fraud. The court of appeals found no evidence of a confidential relationship which would give rise to a fiduciary duty. 791 S.W.2d 241, 243. The court of appeals also found no evidence of an actionable misrepresentation, an essential element of the Crims' fraud cause of action. Id. at 245. The court of appeals, however, found some evidence that Navistar breached its contract with the Crims, but reversed the trial court's judgment because of insufficient evidence to support the damages awarded by the jury on that theory. Id. Consequently, the court remanded the case for a new trial on the contract issues. Because we also find no evidence of a confidential relationship, ¹ or of an actionable misrepresentation, we affirm the judgment of the court of appeals.

Crim Truck and Tractor's relationship with Navistar's predecessor, International Harvester, began in 1943. The parties enjoyed a mutually beneficial working relationship for years before reducing their agreement to writing in 1958. The written agreement was amended in 1964 and again in 1979. The 1979 revision of the franchise agreement, at issue here, allows the Crims to terminate the franchise at will. However, Navistar could not unilaterally terminate the franchise unless the Crims breached any of eleven conditions of the contract. The contract, furthermore, grants the Crims a reasonable opportunity to cure any claimed breach.

The sometimes stormy ² relationship between the parties further deteriorated in September 1983. In 1983 Navistar decided to establish a nationwide dealer communications network to share computerized information between Navistar and all of its dealers. This system was designed to facilitate distribution of supplies among dealers, and the provision of warranty and repair services to customers. Navistar called a meeting of all of its dealers in September 1983 to introduce the dealer communications network system. The Crims declined to send a representative to this meeting.

Thereafter, Navistar asked its dealers to sign and return a sales and service agreement that obligated them to purchase the computer equipment required to implement the dealer communications network system. The Crims elected not to sign the contract. In October 1984, Navistar notified the Crims that it considered participation in the dealer communications network mandatory. Navistar also informed the Crims that it considered them to be in anticipatory breach of the contract, but gave them an opportunity to cure the alleged breach by signing and returning the sales and service agreement by November 26, 1984. The Crims never signed and returned the contract.

Finally, on December 10, 1984, Navistar reiterated its intention to terminate the franchise agreement effective April 1, 1985. Once again the Crims were given an opportunity to sign and return the sales and service agreement before the effective date and avoid termination. Because the Crims did not comply with Navistar's repeated requests, the franchise was terminated April 1, 1985.

Thereafter, the Crims brought this suit seeking damages for breach of contract, breach of fiduciary duty and fraud. The alleged loss of past and future profits, diminution of the value of the business, loss of investment, mental anguish, and exemplary damages. The trial court rendered judgment in favor of the Crims in accordance with the jury's verdict. Navistar appealed.

Historically, we have recognized that certain relationships give rise to a "fiduciary" duty as a matter of law. ³ See e.g., Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 513 (1942) (principal/agent); Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 787 (1938) (partners). More recently, we have also categorized certain relationships as "special relationships," giving rise to a tort duty of good faith and fair dealing. See, e.g., Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 212-13 (Tex.1988); Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987). Although a fiduciary duty encompasses at the very minimum a duty of good faith and fair dealing, the converse is not true. The duty of good faith and fair dealing merely requires the parties to "deal fairly" with one another and does not encompass the often more onerous burden that requires a party to place the interest of the other party before his own, often attributed to a fiduciary duty.

We have also recognized that certain informal relationships may give rise to a fiduciary duty. See, e.g., MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334 (1944). Such informal fiduciary relationships have also been termed "confidential relationships" and may arise "where one person trusts in and relies upon another, whether the relation is a moral, social, domestic or merely personal one". Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 261 (1951). Because not every relationship involving a high degree of trust and confidence rises to the stature of a formal fiduciary relationship, the law recognizes the existence of confidential relationships in those cases "in which influence has been acquired and abused, in which confidence has been reposed and betrayed". Texas Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex.1980). The existence of a confidential relationship is usually a question of fact. See MacDonald, 142 Tex. at 623, 180 S.W.2d at 339; Schiller v. Elick, 150 Tex. 363, 240 S.W.2d 997, 1000 (1951). Although we recognize that the existence of a confidential relationship is ordinarily a question of fact, when the issue is one of no evidence, it becomes a question of law. See Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex.1962).

The Crims concede that not every franchise agreement creates a fiduciary relationship. But, they argue that the facts here prove a confidential relationship giving rise to an informal fiduciary relationship, imposing the duty on Navistar, not just to seek its own economic interests, but to put the Crims' interests before its own. ⁴

But, this argument clashes with the rule that a party to a contract is free to pursue its own interests, even if it results in a breach of that contract, without incurring tort liability. See Amoco Production Co. v. Alexander, 622 S.W.2d 563, 571 (Tex.1981). The fact that one businessman trusts another, and relies upon his promise to perform a contract, does not rise to a confidential relationship. Consolidated Gas & Equip. Co. v. Thompson, 405 S.W.2d 333, 336 (Tex.1966); Thigpen v. Locke, 363 S.W.2d 247, 253 (1962). Every contract includes an element of confidence and trust that each party will faithfully perform his obligation under the contract. ⁵ Neither is the fact that the relationship has been a cordial one, of long duration, evidence of a confidential relationship. ⁶ See Thigpen, 363 S.W.2d at 253.

Travis Crim testified that he believed the relationship with Navistar was one of mutual trust and confidence. However, "mere subjective trust alone is not enough to transform arms-length dealing into a fiduciary relationship." Thigpen, 363 S.W.2d at 253. Further, the Crims point to language in the contract which they claim articulates a special trust and confidence between these parties beyond that ordinarily found in a contract. ⁷ We are unpersuaded that this language was ever intended to inject an element of personal trust and confidence above and beyond that which is ordinarily contemplated by parties to contracts of this type.

As a general rule, all contracts are assignable. Cloughly v. NBC-Bank-Seguin, N.A., 773 S.W.2d 652, 655 (Tex.App.--San Antonio 1989, writ denied); Kirby Forest Indus., Inc. v. Dobbs, 743 S.W.2d 348, 354 (Tex.App.--Beaumont 1987, writ denied); see also Tex.Bus. & Com.Code § 2.210. An exception to this rule is that a contract that relies on the personal trust, confidence, skill, character or credit of the parties, may not be assigned without the consent of the parties. Southern Community Gas Co. v. Houston Natural Gas Corp., 197 S.W.2d 488, 489-90 (Tex.Civ.App.--San Antonio 1946, writ ref'd n.r.e.); see also Moore v. Mohon, 514 S.W.2d 508, 513 (Tex.Civ.App.--Waco 1974, no writ). "Rights arising out of a contract cannot be transferred if they involve a relation of personal confidence such that the party whose agreement conferred those rights must have intended them to be exercised only by him in whom he actually confided." Mohon, 514 S.W.2d at 513. The Crims' reliance on the cited contract language as evidence of a confidential relationship is misplaced. Such "boiler plate" language is designed to give the parties some degree of control over with whom they do business, and nothing more. This language was obviously intended to render the franchise agreement unilaterally unassignable.

Alternatively, the Crims urge us, at the very minimum, to impose a common law fiduciary duty on franchisors in the termination of franchise agreements. ⁸ Howev...