Ex parte Rice

• Decision Date: 29 October 1953
• Docket Number: 5 Div. 562
• Citation: 259 Ala. 570,67 So.2d 825
• Parties: Ex parte RICE et al.
• Court: Alabama Supreme Court

Page 825

67 So.2d 825

259 Ala. 570

Ex parte RICE et al.

5 Div. 562.

Supreme Court of Alabama.

Oct. 29, 1953.

J. A. Walker, Jacob Walker, Jr., and Walker & Walker, Opelika, for petitioner.

Denson & Denson and Yetta G. Samford, Jr., Opelika, for respondent.

PER CURIAM.

We have here the same question of law as we had in Ex parte Rice, 258 Ala. 132, 61 So.2d 7, and between the same parties. It appears that after the petition was denied in that proceeding petitioner amended his answer and then sought to have interrogatories answered, such as were submitted before.

Reference is made to the case of Rice v. Sinclair Refining Co., 256 Ala. 565, 56 So.2d 647, as well as to Ex parte Rice, supra, for the situation as it now appears in connection with the amended answer.

So that the question now, as then, is whether the answer presents a valid defense to the equity of the bill for specific performance. The answer seeks to invoke as a defense, as before, that complainant Sinclair Refining Company had the intent, in making the contract and now in enforcing it, to use the property to accomplish an unlawful purpose. Bement & Sons v. National Harrow Co., 186 U.S. 70, 22 S.Ct. 747, 46 L.Ed. 1058. The purpose was to engage in a monopoly in violation of the state and federal law. The monopoly is alleged to have two aspects as set up in the answer as originally filed and as amended. The first aspect is that the intent to acquire a monopoly relates to the nation-wide character of its business of producing, refining and distributing gasoline and other petroleum products; and to acquire the property here involved, which is a filling station, was to add another station to those which it operated throughout the land and was a step in perfecting a virtual petroleum monopoly; and that the acquisition of this property was with the intent to control this retail outlet and restrain a competitor from using it; that 'complainant was a large corporation nationally engaged in the leasing of real estate for use in distribution of its gasoline and other oil products; it was a large owner and lessee of oil lands' and 'a nation wide distributor of gasoline by pipelines, rail and ship in interstate commerce, * * * and a wholesale and retail dealer throughout the United States and particularly in Alabama'; and supplied its products to service stations known as leased out stations, dealer stations and otherwise.

We cannot see that the allegations as to this aspect are equal in legal effect to those stated in United States v. Richfield Oil Corp., D.C., 99 F.Supp. 280. That case was affirmed by the United States Supreme Court on the authority of Standard Oil Co. of Cal. and Standard Stations v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371, to which reference will be made later in this opinion.

We assume that this aspect of the answer undertakes to charge complainant with monopolizing the petroleum industry throughout the nation, or contracting so as to tend to such monopoly in violation of the Sherman Act of Congress, Title 15 U.S.C.A. §§ 1, 2 and 3. This Act prohibits a contract in restraint of trade. The answer has not been amended in respect to that claim. Apparently that aspect of the answer is not that the contract tends to a monopoly or to restrain trade in the Auburn Alabama territory, but throughout the nation, and that the Auburn unit, here involved, was a part of that broad scheme.

In Ex parte Rice, supra, we noted that to be a good defense in that respect the use made of the property as alleged must have been directly, and not merely incidentally, influential in effecting a monopoly; and that the answer shows that the use made of this property is only incidental to such alleged monopoly or as a restraint of trade. It must be more than collateral to that result. Such principle was also said to be applied cautiously. It might also be added that one small such station could scarcely substantially lessen competiton or create a monopoly on a nation-wide or even state-wide basis. In fact, it is not alleged that it so tends in the territory of Auburn. Non constat, all the large and small refiners are in full competition with Sinclair in that territory. It is not shown that the performance of the contract here in question is material in that respect.

The second theory or aspect of the answer would invalidate the contract of purchase on account of alleged monopolistic arrangements between Sinclair and its tenants in the use of the property. The tenants do not complain, but this respondent is saying that because of complainant's monopolistic status with its tenants, he will not carry out his agreement with Sinclair. He says Sinclair's purpose and use of the property is contrary to the public policy of the United States as expressed in the Clayton Act, Title 15 U.S.C.A. § 14, and for that reason the contract, otherwise enforceable, should not be performed by the court. The amended answer deals with that status. It alleges that the first lease of the station was completed in 1936. Sinclair leased it to one Jolly by tenancy at will on condition express or implied that he was limited to the sale at said station of Sinclair gasoline, oil, grease, tires, batteries, and like accessories, and had instructions to that effect, and by that means Sinclair restrained trade and exercised a monopoly of goods of that sort. In 1937 Jolly sold his effects at the station to Blackburn who became a subtenant of Sinclair; and that he was limited at said station to the sale of Sinclair products and of Goodyear tires, batteries and accessories which Sinclair had agreed to handle. This limitation was by instructions to him from Sinclair or its agents. In 1938 Blackburn delivered possession of the station to McMillan who operated it as a subtenant until 1941 when he died. In 1941 Shine entered into possession as subtenant of complainant and was so occupying it at the expiration of the lease from Rice to Sinclair. That each of said subtenants was limited by complainant to the sale of Sinclair products, and the station is so used at the present time.

The answer is that by this means, complainant restrained and is still restraining trade and exercised and is still exercising a monopoly in the use of its property. That the operators of the station have been unable to buy competitive products for resale at that station; that other refiners have secured like arrangements for their products at Auburn and have limited their operators in the same manner. Thereby the public is limited in its ability to handle products of independent dealers. That respondents did not know of this until shortly before the filing of this suit. That the conditions named have been directly influential in effecting a monopoly or restraint of trade. The details thus expressed were not set out in the original answer.

Reliance is had, as it was before, on the case of Standard Oil Co. of Cal. and Standard Stations v. United States, 337 U.S. 293, 69 S.Ct. 1051, 1053, 93 L.Ed. 1371. That is a suit by the United States against Standard Oil Company for a declaratory judgment that its exclusive supply contracts with independent dealers in petroleum products are illegal, and sought and obtained an injunction. Standard sold gas at retail at its own stations and to independent service stations and to industrial users in California and other western states. 'In 1946 its combined sales amounted to 23% of the total taxable gallonage sold there in that year: sales by company-owned service stations constituted 6.8% of the total, sales under exclusive dealing contracts with independent service stations, 6.7% of the total'; the remainder to industrial users. The retail sales by its six leading competitors absorbed 42.5% of the total taxable gallonage. 'The remaining retail sales were divided between more than seventy small companies. * * * Standard's major competitors employ similar exclusive dealing arrangements.' There were in issue in that case about 8,000 exclusive supply contracts made by Standard. 'Two types, covering 2,777 outlets, bind the dealer to purchase of Standard all his requirements of gasoline and other...