Crystal Gas Co. v. Oklahoma Natural Gas Co.

• Decision Date: 12 March 1974
• Docket Number: No. 45648,45648
• Parties: CRYSTAL GAS COMPANY, a corporation, Appellee, v. OKLAHOMA NATURAL GAS COMPANY, a corporation and Max L. Knotts, Appellants.
• Court: Oklahoma Supreme Court

Page 987

529 P.2d 987

CRYSTAL GAS COMPANY, a corporation, Appellee, v. OKLAHOMA NATURAL GAS COMPANY, a corporation and Max L Knotts, Appellants.

No. 45648.

Supreme Court of Oklahoma.

March 12, 1974.

As Amended on Denial of Rehearing Dec. 10, 1974.

Fitzgerald, Houston & Worthington, by Donald L. Worthington, Stillwater, for appellee.

Huffman, Arrington, Scheurich & Kihle by John L. Arrington, Jr., C. Burnett Dunn, Tulsa, for appellants.

BERRY, Justice:

Crystal Gas Company (Crystal) brought this action against Oklahoma Natural Gas Company and officers and employees of the corporation alleging they interfered with Crystal's contractual and business relations. Crystal sought $500,000 actual damages and punitive damages. The trial court sustained a demurrer to Crystal's evidence as to all parties except O N G and Max L. Knotts, an officer of O N G (defendants). The jury awarded $50,000 compensatory damages to Crystal and judgment was entered accordingly. Defendants appeal.

Crystal is a public utility which sells natural gas at retail. In January 1966, it commenced gas service to the town of Westport.

Westport is a housing development located in the peninsula area of Pawnee County, Oklahoma. The peninsula area is an area of several square miles bounded on three sides by Keystone Lake. In April 1966, Westport annexed several separate sections of land within the peninsula area and a 100 foot strip of land connecting the separate sections of land with the original town. The entire peninsula area was not annexed, but the annexed areas 'fenced in' the entire peninsula area.

Westport's Board of Trustees passed an ordinance calling an election on whether to grant Crystal a 25 year franchise to use the streets, alleys and public grounds of the town for the purpose of supplying gas to inhabitants of the town.

Prior to the election Knotts and other officials of O N G attended a meeting held in Westport.

At the meeting they stated O N G did not intend to serve Westport. However, they stated O N G might not serve the unannexed portions of the peninsula area if Crystal were granted a franchise.

At the trial they explained why they made this statement. They testified they intended to serve the peninsula area by constructing a pipeline over the Highway 64 Bridge. The bridge crossed the 100 foot strip annexed by Westport. Furthermore, the end of the bridge on the peninsula side, and the road leading therefrom, were within an annexed area. They were of the opinion a franchise holder might be able to prevent them from crossing the annexed areas unless O N G also acquired a franchise. O N G did not desire to do this because it had no desire to serve Westport.

There was evidence that at the meeting Mr. Knotts gave the following opinion concerning Crystal's plastic lines:

'We do not believe plastic lines are safe. Plastic lines cannot carry more than 80 pounds of pressure. We do not believe that the present lines in Westport could adequately serve 500 homes but we couldn't be sure about that.'

Subsequently the voters denied the franchise.

The parties agree that the loss of the franchise election does not prevent Crystal from continuing to serve the town of Westport.

Furthermore, the court in its instructions informed the jury that Crystal's failure to obtain a franchise was not an element of damages in this case.

However, Crystal asserts after the election it lost existing and potential customers and lost its financing.

On appeal defendants first contend the trial court erred in refusing to either sustain defendants' demurrer to Crystal's evidence or grant defendants' motion for a directed verdict. In this regard defendants argue Crystal did not present sufficient evidence to support a finding defendants' statements were the proximate cause of harm to Crystal.

We have previously held that one has the right to carry on and prosecute a lawful business in which he is engaged without unlawful molestation or unjustified interference from any person, and any malicious interference with such business is an unlawful act and an actionable wrong. National Life & Accident Ins. Co. v. Wallace, 162 Okl. 174, 21 P.2d 492; Stebbins v. Edwards, 101 Okl. 188, 224 P. 714; Schonwald v. Ragains, 32 Okl. 223, 122 P. 203. However, we have held plaintiff must establish the defendant's wrongful acts were the proximate cause of plaintiff's injury. Owens v. Automotive Engineers, 208 Okl. 251, 255 P.2d 240; Emery v. A & B Commercial Finishing Company, Okl., 315 P.2d 950.

Arlie J. Nixon, Crystal's president, testified concerning damages suffered by Crystal as a result of defendants' statements and the loss of the franchise election. On direct examination he offered no testimony concerning loss of specific existing customers.

On cross-examination he testified after the election Crystal lost three customers other than those who had moved away. He did not state any of these customers had assigned defendants' statements or the loss of the franchise election as a reason for ceasing to purchase gas from Crystal. Furthermore, none of these customers were called to give their version of why they ceased purchasing gas from Crystal.

In Erlich v. Etner, 224 Cal.App.2d 69, 36 Cal.Rptr. 256, the court considered an action brought upon the theory of trade libel. However, the court indicated the following statement would also be applicable to actions for interference with contractual relationships:

'Except as to the Beverly Hilton account, there was a total failure to show that any loss, even of gross business, was attributable to the publications for which Etner was responsible. True plaintiff himself testified in broad terms that he had lost over-the-counter trade, naming some customers * * * because of the publicity given to his arrest and trial. But this was a mere conclusion on his part. He did not testify that any customer had ever assigned the publicity as a reason for ceasing to trade with him, nor, although the purchasing agents of his commercial accounts were available, were any called to give their own version of why they ceased dealing with plaintiff. While * * * plaintiff may Allege causation in general terms, he must still Prove that fact by something more than his own guess as to what had gone on in his former customers' minds, where that mental operation was entirely uncommunicated to him or (so far as here appears) to anyone else.'

We conclude the evidence was insufficient to support a finding defendants' statements or the loss of the franchise election caused Crystal to lose existing customers.

Insofar as concerns loss of prospective customers, Crystal's theory is that it lost potential customers with whom it had agreements and it will not be able to serve future customers who move into the area.

On direct examination Mr. Nixon made no reference to specific potential customers who had refused to accept Crystal's service as a result of defendants' statements or the loss of the franchise election.

On cross-examination defendants' counsel referred to an interrogatory wherein Crystal had listed persons who refused to accept gas from Crystal and inquired as to whether three specific names were on that list. Mr. Nixon stated the names were on the list.

On redirect examination Mr. Nixon stated there were approximately 100 names on the list. He further stated he had applications from several people who cancelled their applications 'because they said they were going to get gas from Oklahoma Natural.'

Mr. Nixon did not testify any of these potential customers refused service from Crystal as a result of defendants' statements or the loss of the franchise election. Furthermore, Crystal did not call any of these potential customers to explain why they had refused to accept service from Crystal.

Defendants called three persons whose names were included upon the list and each testified he had never been offered gas service by Crystal and had never refused to accept gas from Crystal.

45 Am.Jur.2d, Interference, § 6, states:

'* * * Where there is no existing contract, as in the tort of interference with business relations, the plaintiff must show either that prospective economic advantage would have been achieved had it not been for such interference or that there was, in view of all...