Hole v. Unity Petroleum Corp.

• Decision Date: 19 November 1942
• Docket Number: 28660.
• Citation: 15 Wn.2d 416,131 P.2d 150
• Parties: HOLE v. UNITY PETROLEUM CORPORATION.
• Court: Washington Supreme Court

131 P.2d 150

15 Wn.2d 416

HOLE v. UNITY PETROLEUM CORPORATION.

No. 28660.

Supreme Court of Washington

November 19, 1942

Department 1.

Action by B. V. Hole, Jr., against Unity Petroleum Corporation to recover damages for breach of contract. From a judgment for plaintiff on the first cause of action for defendant's failure to supply plaintiff with gasoline as agreed defendant appeals, and from that part of judgment denying plaintiff recovery for defendant's alleged failure to employ plaintiff to operate tanker truck and denying recovery for purchase price of tanker truck, plaintiff cross-appeals.

Affirmed.

Appeal from Superior Court, Spokane County; Ralph E. Foley, judge.

Brown &amp Brown, of Spokane (Louis P. Donovan, of Shelby, Mont., of counsel), for appellant.

George W. Young and B. A. Farley, both of Spokane, for respondent.

DRIVER Justice.

Plaintiff brought this action to recover damages for the breach of a written contract with defendant corporation, which operates a gasoline refinery at Kalispell, Montana. The material provisions of the contract, dated October 21, 1940, may be summarized as follows:

The plaintiff represented that he was the owner of a lease on a tract of land in the city of Spokane and agreed to assign the lease to defendant. Plaintiff further represented that he was the owner of a Studebaker truck and Gunderson semi-trailer, equipped with a tank of 4,500 gallons capacity and a pump for hauling gasoline and other petroleum products, subject to a chattel mortgage given to secure an indebtedness on which there was an unpaid balance of $1,402.10. Plaintiff agreed to transfer the truck and trailer to defendant oil company, subject to the mortgage, which the latter agreed to pay.

Defendant agreed to sell to plaintiff at cost, on conditional bill of sale, four steel storage tanks to be installed upon the Spokane tract. The purchase price was to be paid in specified monthly installments, and defendant agreed that, when the price was fully paid, it would assign the lease back to plaintiff and convey the tanks to him by a bill of sale.

Plaintiff agreed to sell defendant's manufactured petroleum products exclusively (lubricating oils and greases excepted). The prices to be paid for leaded gasoline, white gasoline stove oil, and fuel oil were specified, and the minimum monthly amounts which plaintiff agreed to purchase, and the maximum monthly amounts which he was entitled to demand, were stated. It was agreed that, if the service station retail price of gasoline as maintained by the major oil companies in Spokane should be advanced, the amount of such advance would be added to the prices named in the contract.

Plaintiff was allowed a credit of $1,830 for the tanker truck transferred to defendant, which credit was to be applied upon the purchase price of products bought by plaintiff under the contract.

Defendant employed plaintiff to transport gasoline and other petroleum products from defendant's refinery in Kalispell to its bulk plant in Spokane for one and one-half cents a gallon, plaintiff to be allowed the free use of the tanker truck. It was agreed that defendant might withhold from plaintiff's compensation $250 a month for the first six months and $300 a month thereafter, and apply such sums to reimburse defendant for the chattel mortgage indebtedness of $1,402.10 to be paid by defendant and for the credit of $1,830 advanced to plaintiff for the purchase of petroleum products; and, when such sums were fully repaid, defendant agreed to transfer the truck and trailer back to plaintiff.

The contract was to be in effect for the term of one year commencing November 1, 1940, and plaintiff was given the right, at his option, to extend if for an additional year.

In the first cause of action of his complaint, plaintiff set out the written contract as an exhibit, alleged that it had been breached by defendant, and asked for damages for the latter's failure to perform the contract and provide bulk storage tanks and petroleum products as agreed. The second cause of action was for damages for defendant's failure to employ plaintiff to operate the tanker truck to transport petroleum products from Kalispell to Spokane. The third cause of action was for the purchase price of the tanker truck, it being plaintiff's theory that the transaction provided for in the contract, with reference to the equipment, was, in effect, a sale thereof from plaintiff to defendant.

By its answer, defendant generally denied the material allegations of each of the three causes of action of the complaint, and set up three affirmative defenses, which need not be considered further as their rejection by the trial court has not been assigned as error on the appeal.

After a trial without a jury, the court found that the parties had entered into the contract and that it was breached by the defendant. The court reached the conclusion that the plaintiff was entitled to recover damages on the first cause of action for defendant's failure to supply plaintiff with gasoline as agreed for the period of one year; that plaintiff had failed to prove that he had been damaged as alleged in his second cause of action; and that plaintiff was not entitled to recover on his third cause of action for the purchase price of the truck and trailer alleged to have been sold to the defendant.

From a judgment accordingly entered, defendant has appealed, and plaintiff has cross-appealed as to the amount of his recovery under his first cause of action and from denial of his right to recover under his third cause of action.

Despite the cross-appeal, for convenience, we shall refer to the defendant as the appellant and to the plaintiff as the respondent throughout the remainder of this opinion.

The facts as generally found by the court and supported by a preponderance of the evidence may be summarized as follows:

Before entering into the contract upon which the present action was based, respondent had for many years engaged in the production and retail and wholesale distribution of petroleum products. At one time he had, in Spokane, a bulk storage plant, and, during the year 1939, he distributed a considerable quantity of such products in the vicinity of that city, although, for the most part, his sales were in small lots and the orders were not repeated.

Respondent purchased the Studebaker truck and tanker trailer in December, 1939. Prior to that time, he had been buying his products from appellant and had been transporting them by motor freight common carrier from Kalispell to Spokane. During the year 1940, and prior to about October 15th, with several substantial exceptions, respondent's business was limited to supplying gasoline to the Red Devil Fuel Company, which operated a large retail service station in Spokane and another station in Coeur d'Alene, Idaho. Respondent purchased this gasoline from the Yale Oil Company, which operated a refinery in Kalispell, and transported it to Spokane in his own tanker truck. The average amount sold roughly approximated the maximum monthly quantities of both grades of gasoline specified in respondent's contract with appellant.

Respondent had been buying gasoline tax-paid and taking delivery thereof in Montana. He had no distributor's license for Washington, and, it appears from the record, some objection was made by the state as to his method of operation, which caused the Yale Oil Company to stop selling its products to him about October 15, 1940. He then went to Kalispell and, on October 19th, entered into negotiations with appellant for the purchase of his supply of gasoline. The negotiations ripened into the contract dated October 21st. Respondent tendered appellant instruments of transfer of his interest in the tanker truck and an assignment of his lease to the Spokane real property, but, when he took his tanker to Kalispell for a load of gasoline, appellant refused to sell it to him except on a cash basis. The appellant also failed to pay the chattel mortgage on the truck and trailer, and institution of foreclosure proceedings followed. The proceedings were still pending at the time of the trial of the instant case.

After October 15th, the Red Devil Fuel Company purchased its gasoline directly from the Yale Oil Company. Just prior to that date, it had been getting its entire supply through the respondent. According to the testimony of the president of the corporation which owned the Red Devil Fuel Company, he knew that respondent had entered into a contract with appellant, and it was his intention that the fuel company would continue to buy gasoline from respondent provided respondent could furnish the quality and quantity required.

Respondent produced his books and records showing the amounts of gasoline sold by him during the year 1940 and the prices which he received. He and a certified public accountant who had examined his books and records both testified as to what his margin of profit was and also estimated the profit he would have made under the contract with appellant had it not been breached.

The principal contention advanced by appellant's assignments of error is that respondent is not entitled to recover damages for breach of the contract for the reason that he did not have an established business and did not prove loss of prospective profits...