Gold Fuel Service, Inc. v. Esso Standard Oil Co.

• Decision Date: 21 December 1959
• Docket Number: No. C--1933,C--1933
• Citation: 59 N.J.Super. 6,157 A.2d 30
• Parties: GOLD FUEL SERVICE, INC., a corporation of the State of New Jersey, Plaintiff, v. ESSO STANDARD OIL COMPANY, a corporation of the State of Delaware, et al., Defendants.
• Court: New Jersey Superior Court

Page 6

59 N.J.Super. 6

157 A.2d 30

GOLD FUEL SERVICE, INC., a corporation of the State of New Jersey, Plaintiff, v. ESSO STANDARD OIL COMPANY, a corporation of the State of Delaware, et al., Defendants.

No. C--1933.

Superior Court of New Jersey Chancery Division.

Dec. 21, 1959.

Pollis, Williams & Pappas, Elizabeth (Sam Weiss, Newark, appearing), for plaintiff.

Stryker, Tams & Horner, Newark (Burtis W. Horner, Newark, appearing), for defendant Esso Standard Oil Co.

SCHERER, J.S.C.

The amended complaint alleges that the predecessor of the plaintiff was, for many years prior to December 10, 1957, in the business of fuel oil distribution to industrial and other consumer-level users in this vicinity; that on December 10, 1957 the plaintiff corporation was formed, which absorbed all of the business, good will and assets of the predecessor partnership and continued the business of the partnership, and, in particular, the servicing of the accounts of the defendants Cooper Alloy Corporation and Stainless Engineering & Machine Works (hereinafter jointly referred to as 'Cooper'); that this account constituted the majory portion of the business and income of the plaintiff and its predecessor, to the extent that the loss of the account would cause plaintiff to suspend or cease operations; that plaintiff and its predecessor, for 24 years, sold fuel oil to Cooper at an average margin of profit of 3cents per gallon (wherever figures are given, they refer to the rate per gallon), which fuel oil it purchased from independent suppliers at a rate permitting such profit; that said profit rate has been standard in the industry, and independent suppliers and major companies, including the defendant Esso Standard Oil Company (hereinafter referred to as 'Esso'), have been selling fuel oil to wholesalers and distributors on such profit margin; that on or about December 13, 1958 Esso induced Cooper to terminate its relations with plaintiff by offering to sell fuel oil to Cooper at a rate below that at which Esso and other major companies and independent suppliers had been selling to distributors like plaintiff; that Esso sold to Cooper at 10.2cents, a rate substantially below that at which plaintiff could purchase fuel oil from any suppliers in the industry, whether major or independent; that such action on the part of Esso constituted unfair competition, a malicious interference with the business and profits of the plaintiff, and a violation of public policy. The complaint further charges that such sale is not fair and lawful competition and therefore violates 15 U.S.C.A. § 1; that it is but one of a series of similar sales to ultimate consumers at prices lower than those at which wholesalers or distributors can purchase fuel oil for resale, and thus is an attempt by Esso to monopolize a part of interstate commerce in fuel oil, in violation of 15 U.S.C.A. § 2; that Esso is engaged in interstate commerce; that the sale was without legal justification and therefore is not fair and lawful competition and constitutes a violation of 15 U.S.C.A. § 13a; and that Esso is liable to plaintiff in the sum of $500,000 as compensatory and punitive damages.

There is a second count in the amended complaint which repeats the allegations of the first count and further alleges that Cooper knew that Esso was selling fuel oil to it at a price lower than that at which plaintiff could purchase it in the open market. An accounting of the profits on this count is sought from Esso, together with a restraint against Esso's selling at prices lower than those at which plaintiff can purchase and a restraint against the three defendants from dealing with each other.

By order dated September 30, 1959 the amended complaint was dismissed by the plaintiff, with prejudice, as against Cooper, leaving only Esso as a defendant. The latter now moves for summary judgment dismissing the amended complaint on the ground that there is no genuine issue as to any material fact and that it is entitled to a judgment as a matter of law. R.R. 4:58.

Affidavits have been filed by both sides as to the surrounding circumstances of this transaction, as a result of which Cooper terminated its relations with plaintiff and obtained its fuel oil requirements from Esso. The affidavits in my opinion, disclose clearly that there is no dispute as to any material fact and that this is an appropriate case for the entry of summary judgment (Frank Rizzo, Inc. v. Alatsas, 27 N.J. 400, 405, 142 A.2d 861 (1958)), even giving proper weight to the most favorable inference rule (Savarese v. Pyrene Manufacturing Co., 9 N.J. 595, 89 A.2d 237 (1952); McDermott v. Botwick, 38 N.J.Super. 528, 119 A.2d 776 (App.Div.1956)).

Briefly, the facts disclosed by the affidavits and exhibits are that Cooper, in 1958, became dissatisfied with the price plaintiff was charging it for fuel oil and so advised plaintiff. Plaintiff then reduced its price from 12.7cents to 12.5cents. In October 1958 Cooper requested Esso to make a survey of its plants to determine whether or not a saving could be made in the cost of No. 2 fuel oil. Cooper was using several hundred thousand gallons of this grade oil annually. Esso made a survey and reported to Cooper, in a letter of November 6, 1958, that it should continue to use No. 2 fuel oil. It also advised that, for this grade of fuel oil in tank transport quantities, Esso's price was 10.05cents, plus .33cents for freight, or a total cost of 10.38cents. Cooper sought bids from other suppliers, including the plaintiff, and one bidder quoted a price of 10.2cents delivered at its plant. Cooper so advised Esso and stated that it would like to do business with Esso if the above quoted price could be met. Esso agreed to meet the competitive price of 10.2cents. This figure was arrived at by maintaining the basic price for the fuel oil of 10.05cents, but reducing its haulage charge from .33cents to .15cents. On this basis, Cooper awarded the contract to Esso, to become effective December 1, 1958. Plaintiff requested that its contract be continued for two weeks beyond that date in order to permit it to adjust its commitments with its suppliers. This request was granted, and Esso's contract actually became effective December 16, 1958.

Plaintiff has instituted another suit in the United States District Court for the District of New Jersey, alleging the same facts as are above set forth, and the relief there sought is based upon 15 U.S.C.A. §§ 13, 13a, 15 and 26, with a prayer for treble damages. This suit is still pending and has not come to trial.

On the argument the plaintiff conceded that there had been no unfair competition. Plaintiff also admitted that it cannot have a cause of action in this court based solely upon a federal statute, but must bring any such statutory action in the federal court. But, plaintiff argues that the federal antitrust statutes, and, in particular, the Clayton and Robinson-Patman Acts (15 U.S.C.A. § 1 et seq.), establish a standard of conduct for fair competition in business transactions in interstate commerce, and that any departure from this standard constitutes unfair competition and is actionable in the state, as well as the federal, courts. Plaintiff concedes that the acts of Esso complained of here would not give rise to a cause of action at common law. It argues that its cause of action is one of trespass on the case, based upon the actions of Esso which it alleges were not in accordance with the standard of fair competition established by the federal statutes.

The common law action of trespass on the case is regarded as in the nature of an equitable action founded on the conscience and the justice of the plaintiff's right to recover. The intent of the wrongdoer is not a conclusive factor. 52 Am.Jur., Trespass on the Case, sec. 4, p. 901 (1944). Trespass on the case for injury sustained by violation of a statutory obligation is maintainable only where the statutory remedy is unavailable or inadequate. 52 Am.Jur., Trespass on the Case, sec. 13, p. 904 (1944). It is an established principle that if a statute creating a new right or cause of action where none existed before also provides an adequate remedy for the enforcement of the right created, and the statutory remedy is not by its terms cumulative, the remedy thus prescribed is exclusive. In such case, such remedy must be pursued in the enforcement of the right to the exclusion of any other remedy. 50 Ma.Jur., Statutes, sec. 596, p. 593 (1944). As will be shown hereafter, the plaintiff's cause of action, if it has one, is a right which did not exist at common law and was created by a federal statute, in which statute plaintiff is given an adequate remedy, which is not cumulative, but exclusive.

The essence of unfair competition is aptly stated in American Shops, Inc. v. American Fashion Shops of Journal Square, Inc., 13 N.J.Super. 416, 420, 80 A.2d 575 (App.Div.1951), to be fair play, and 'The law will not permit the trespasser to take the crop away from the sower.' The law guards the good will of a business and protects against Unlawful injury. J. B. Liebman & Co., Inc. v. Leibman, 135 N.J.Eq. 288, 38 A.2d 187 (Ch.1944); Sachs Furniture & Radio Co. v. Sachs Quality Stores Corp., 39 N.J.Super. 70, 120 A.2d 477 (App.Div.1956). Except as certain conduct, which was lawful at common law, is defined as unfair competition by the federal statute, the plaintiff has no right to be protected against competition, but only to be free from malicious and wanton interference, disturbance or annoyance. Louis Kamm, Inc. v. Flink, 113 N.J.L. 582, 587, 175 A. 62, 99 A.L.R. 1 (E. & A.1934); George F. Hewson Co. v. Hopper, 130 N.J.L. 525, 33 A.2d 889 (E. & A.1943); Louis Schlesinger Co. v. Rice, 4 N.J. 169, 72 A.2d 197 (1950).

The argument that the lowering of prices by Esso below that at which plaintiff could purchase constitutes unfair competition was rejected in Secatore's Inc. v. Esso Standard Oil...