Essex v. Getty Oil Co.
| Decision Date | 30 August 1983 |
| Docket Number | No. WD,WD |
| Citation | 661 S.W.2d 544 |
| Parties | 1983-2 Trade Cases P 65,621 Arlo ESSEX and Arlo Essex, Inc., Appellants, v. GETTY OIL COMPANY, Successor to Skelly Oil Company, Respondents. 33749. |
| Court | Missouri Court of Appeals |
Gene P. Graham, Michael W. Manners, Independence, for appellants.
Charles L. Bacon, John T. Martin and Laurel H. Corn, Shook, Hardy & Bacon, Kansas City, William T. Robbins, Tulsa, Okl., for respondents.
Before CLARK, P.J., and DIXON and NUGENT, JJ.
Plaintiffs-Appellants Essex had jury verdicts on a multi-count petition for $23,300.00 actual damages and $2,150,000.00 punitive damages. On the post-trial motions of defendant-respondent Skelly, the trial court entered judgment n.o.v. for defendant and, in the alternative, ordered a new trial. We affirm in part, reverse in part and remand for further proceedings.
Plaintiffs pleaded two causes of action in four counts, the first three counts based on fraudulent misrepresentations and the fourth count for unfair competition. All claims grew out of agreements whereby plaintiffs had leased automobile service stations from Skelly to operate at two locations in Independence. For convenience, the facts are separately summarized as to each location. In stating the facts, evidence and inferences favorable to the jury's verdicts are accepted as true and contrary evidence and inferences are disregarded. Grant Renne & Sons, Inc. v. J.E. Dunn Construction Company, 633 S.W.2d 166, 168 (Mo.App.1982).
In 1968, Arlo Essex 1 was a successful service station operator in the Independence area having acquired a following of customers through the conduct of that business for more than ten years. Essex was approached in 1968 by one Jerry Meadors, a territorial representative for Skelly, to seek Essex out as a lease operator for a Skelly station then under construction. (Referred to hereafter as the 23rd Street Station). After discussions lasting several months, Essex agreed to terminate his existing lease of an Apco station and enter into a lease with Skelly for the 23rd Street station. Before the transaction was completed, Meadors was replaced as Skelly territorial representative by one Gary Leabo. The lease arrangement was actually finalized December 1, 1969 between Essex and Leabo.
During the course of negotiations, Essex expressed concern to Meadors and Leabo about a clause in the proposed Skelly lease giving either party the option to cancel the lease on 30 days notice. Essex was reluctant to leave his successful operation under Apco without security that Skelly would According to Leabo, at the Skelly training program for territorial representatives, he and others were instructed to overcome resistance prospective lessees might express about the cancellation clause by saying that the clause would not be used to terminate a lease unless good cause by reason of unsatisfactory performance of the lessee gave actual grounds to seek another station operator. Essex operated the 23rd Street Station to the apparent satisfaction of Skelly until April, 1973 when he was contacted by one McKinney, the successor representative to Leabo. McKinney informed Essex that Skelly was assuming control of the station and was terminating Essex's lease the next day. No charge of unsatisfactory operation of the station was made against Essex and, as subsequent events demonstrated, the reason for the termination was a decision by Skelly to convert the station into a self-service operation under the name of a Skelly subsidiary, Surfco.
not arbitrarily exercise the cancellation privilege. Both Meadors and Leabo assured Essex the language in the lease was merely a formality and if Essex ran a good operation, he could remain in the location until he decided to retire.
Essex refused to vacate the station on one day's notice and refused to sign a mutual termination agreement tendered to him by Skelly a few days later. On April 30, 1973 Skelly delivered to Essex a formal termination notice in accordance with the lease provision requiring Essex to vacate in 30 days. Essex complied. As evidence of damage, Essex offered proof of the expense required for him to relocate his business and the loss he sustained on an inventory of Skelly products which Skelly refused to repurchase.
In the summer of 1971 while Essex was still operating the 23rd Street Station, Leabo initiated a discussion about operation of a Skelly station at Spring and Maple Streets. (Referred to hereafter as the Spring and Maple Station). The existing building and improvements had been in place many years and were in poor condition, but Leabo told Essex a new station was to be constructed on the site that Fall or in the early part of 1972. Leabo displayed blueprints of the new structure. Because of the contemplated new construction, Essex understood no repairs would be made to the old structure.
Upon the promise a new station would be built, Essex assumed operation of the Spring and Maple station by an agreement signed September 26, 1971, adding it to his lease of the 23rd Street Station. Despite continuing assurances to Essex by Skelly representatives during the next four years, however, no new construction was commenced at the Spring and Maple location. Undisclosed to Essex was a decision made by Skelly in May, 1972 to suspend all new filling station construction. Eventually, in 1976, Essex bought the location from Skelly and renovated it himself.
During the period from 1971 to 1976, Essex encountered difficulty with the Spring and Maple station associated with the lack of repair. Only two of the four gasoline pumps operated, the roof leaked, the underground storage tanks had water seepage and the blender pumps dispensed an improper gasoline mixture. In addition, heating costs were unnecessarily high and the external appearance was unsatisfactory lacking commercial appeal. Damages claimed by Essex consisted of loss of profits and loss of customers attributable to the condition of the Spring and Maple station and the failure of Skelly to replace the structure as represented to Essex when the lease was negotiated.
The first three counts of plaintiff's petition claimed damages recoverable on the ground of fraudulent misrepresentations made by Skelly agents Meadors and Leabo, first as to the import of the lease cancellation clause and second, as to Skelly's plans for erecting a new service station at Spring and Maple. The theory underlying Counts I, II and III was the same, only the facts varied as to each count.
Count IV claimed damages by reason of unfair competition on the part of Skelly when it assumed operation of the 23rd Street Station under the Surfco subsidiary and entered into competition with Essex for customers in the area. The factual basis for the claim included the supply of products to Surfco at lower prices than Skelly charged Essex, the appearance of the Surfco station as a regular Skelly station offering self-service and the sale of an inferior and cheaper grade of gasoline branded "regular" in competition with the regular gasoline sold by Essex.
The several causes of action and the related points raised on appeal subdivide readily between the theories of fraudulent misrepresentation and of unfair competition and they will be so treated in the subsequent discussion. The sequence of counts will be followed and appropriately noted. Also in the order taken up will be first, the entry of judgment n.o.v. on the respective counts and second, as to Counts I, II and III, the alternative orders of the trial court granting Skelly new trials as to those counts.
The first count of plaintiffs' petition asserted that Skelly induced Essex to lease the 23rd Street Station by the fraudulent misrepresentation of Skelly's intention regarding the 30 day cancellation clause in the lease. Plaintiffs' evidence, if believed, supports the conclusion that Skelly's representatives told Essex the clause was merely a formality and that Essex could remain in the station as long as he chose to do so if he "ran a good operation." The evidence also supports a finding that the representation made to Essex was a calculated plan by Skelly to distract attention from the clause which Skelly fully intended to utilize if cancellation of the lease would operate to Skelly's advantage.
The trial judge in his "Findings of Fact and Conclusions of Law" entered on defendant's motion for judgment n.o.v., held that these facts, even if proven, state no cause of action on which relief may be granted. In the language of the order, "It is the belief of this Court that such statements, even if made, do not constitute a fraudulent inducement to enter into the contract." The trial judge was apparently of the opinion that the written document should prevail regardless of external proof concerning inducements, representations or circumstances. In this conclusion, the trial court was mistaken.
The effect of a written contract is to merge all prior negotiations into the contract which may not then be varied or contradicted by parol evidence. This rule, however, has no application where it is claimed that fraudulent representations induced the party to enter into the contract. Countess v. Strunk, 630 S.W.2d 246, 254 (Mo.App.1982). Where fraud is, as here, the basis for the cause of action, the submissibility of the case depends not on the content of the written agreement, as the trial court concluded, but whether the plaintiff has established the nine elements of fraud. These are: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of the truth; (5) the speaker's intent that his statement be acted upon; (6) the hearer's...
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