Kingsbery v. Phillips Petroleum Co.

• Decision Date: 02 July 1958
• Docket Number: No. 10585,10585
• Citation: 315 S.W.2d 561
• Parties: E. G. KINGSBERY et al., Appellants, v. PHILLIPS PETROLEUM COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 561

315 S.W.2d 561

E. G. KINGSBERY et al., Appellants, v. PHILLIPS PETROLEUM COMPANY et al., Appellees.

No. 10585.

Court of Civil Appeals of Texas, Austin.

July 2, 1958.

Rehearing Denied July 30, 1958.

Tisinger & Sloan, Hollers & O'Quinn, Austin, for appellant.

Rayburn L. Foster, Harry D. Turner, Bartlesville, Okl., R. K. Batten, E. H. Brown, Houston, Black & Stayton, Austin, for appellees Phillips Petroleum Co., E. S. Nelson, J. P. Welch and R. D. Evans.

F. L. Kuykendall, Austin, for appellees John Beasley and Capitol City Oil Co.

HUGHES, Justice.

Appellants are E. G. Kingsbery, Everett D. Bohls, Ed D. Bridges and Reed-Phillips Oil Company, Inc.

Appellees are Phillips Petroleum Company, a private corporation, E. S. Nelson, J. P. Welch and R. D. Evans, employees of Phillips, and John D. Beasley and the Capitol City Oil Company, a private corporation.

Appellants' alleged cause of action is for damages for (1) breach of an oral contract entered into between Phillips and Kingsbery on or about February 22, 1955, orally amended January 16, 1956, whereby it was agreed that Kingsbery and his associates would have a jobber agency for the sale of Phillips' products in Austin for a period of twenty years from February 22, 1955; (2) alleged conspiracy of appellees to violate Art. 7428 Vernon's Ann. (Antitrust Act); (3) (alternatively) alleged tortious interference on the part of individual appellees to bring about a repudiation of the contractual relations between Phillips and appellants and a conspiracy among all appellees to effect such repudiation; (4) alleged malicious interference on the part of appellee Beasley to bring about a breach of contractual relations between Phillips and appellants.

This case was tried to a jury which was unable to agree on a verdict and was discharged by the Court, following which the Court granted motions for judgment filed by appellees based primarily on their previously filed motions for instructed verdict.

We will view the evidence in a manner most favorable to appellants and will, for the most part, take our statement of the case from appellants' brief.

Prior to 1955, Phillips did not have any retail outlets for the marketing and sale of its products in Travis County, because it had no pipeline arrangement in this area. Such an arrangement was made in either the latter part of 1954 or the early part of 1955. Phillips desired a distributor for its products in this area with sufficient finances and experience to compete in a highly competitive marker; that is, to pioneer the sale of Phillips products. After an investigation by Phillips, it was ascertained that Kingsbery had operated as a jobber in the retail of gasoline and other petroleum products for many years in Austin and had sufficient finances to establish a jobber agency. Numerous negotiations were had between representatives of Phillips and Kingsbery, which culminated in a written contract and contemporaneous oral agreements.

Orally it was agreed that Kingsbery would have a jobber agency for twenty years in the sale of Phillips' products at jobber prices and in such quantities as might be determined by the merchandizing requirements of Kingsbery as purchaser of Phillips' branded products.

Kingsbery also orally agreed to organize a corporation to be known as Reed-Phillips Oil Company and to finance its operations for the first three years in a sum of not less than $200,000.

It was further orally agreed between the parties that after Kingsbery had leased or built five filling stations, that Phillips would then come into Austin and match him station for station and dollar for dollar; the locations of stations to be built were to be determined by the parties and built according to Phillips' plans and specifications. The stations to be built by Phillips would be leased to Kingsbery or the corporation for twenty years. It being understood between the parties that it would take approximately twenty years to amortize the land and building costs of a new service station.

It was further orally agreed that Kingsbery would personally guarantee all of the obligations of Reed-Phillips Oil Company to Phillips Petroleum Company in the purchase of such products bought from Phillips and Phillips orally waived any right of cancellation of the jobber agency contract for a period of twenty years.

Phillips, acting through Nelson, its agent, represented that it never cancelled a jobber agency contract. This representation was shown to be false upon the trial of the case and that its falsity was known to Nelson at the time that it was made; further such representation was relied upon by Kingsbery as true, and he would not have invested the money he did nor accepted a jobber agency, but for such representations.

The evidence further shows that on or about February 22, 1955, the Phillips Petroleum Company entered into an agency instrument executed by Phillips on the one hand and by the Reed-Phillips Oil Company, Inc., signed by F. M. Reed, its president, on the other, although the Reed-Phillips Oil Company was not incorporated until March 9, 1955. ¹ This latter instrument Kingsbery testified he never saw prior to its execution. It provided for a sixty day cancellation notice and ran from year to year and was terminated by Philips by letter dated January 30, 1956. Kingsbery testified that the written instrument dated February 22, 1955, was not nor was it intended to be the contract between the parties, that the oral agreement was the contract between them.

Within the first 12 or 13 months of the operation of said jobber agency, Kingsbery and his associated expended in connection with the agency, the sum of $198,852.10, and in reliance upon the good faith of Phillips and its representatives that he had a jobber agency for twenty years, Kingsbery and his associates expended more than $164,000 in the actual purchase of property, building a bulk plant, and constructing filling stations. All of such station sites, prior to their purchase, were approved by representatives of Phillips Petroleum Company. In one instance, on July 1, 1955, Phillips' agent, Nelson, suggested that Kingsbery buy a location for a station site on the Burnet Road costing the sum of $28,000. After this property was purchased, Nelson rejected this site and suggested that Kingsbery purchase another site, which he did.

Kingsbery and his associates also entered into leases for the following filling stations: On or about October 4, 1955, they acquired a lease on the premises at 214 Congress Avenue for a term of ten years and eleven months at a rental in excess of $60,000; at 11th and Red River Street on or about June 14, 1955, for a period of ten years at a rental in excess of $10,500; on May 25, 1956, on the premises on Burnet Road from Hilliare Nitschke for a term of fifteen years at rentals in excess of $63,000; at 2617 East 7th Street, a lease on part of the premises for twenty years at a rental in excess of $15,590; on June 1, 1955, a lease at 4014 South Congress Avenue for three years at a rental in excess of $6,300; at 8603 N. Lamar Blvd. on a month to month contract and agreed to pay rentals based on the gallons of gasoline sold; on May 1, 1956, a lease at 609 Airport Blvd. on a month to month basis, with rentals based upon the gasoline sold; in 1955, a station site on Barton Springs Road for a period of ten years at a rental in excess of $18,000; July 11, 1956, a lease on the filling station at 1811 Chicon Street for 12 months with rentals to be paid on the basis of the gallons sold.

In addition to the $198,852.10 expended by appellants during approximately the first year of operation as Phillips' jobber they became obligated to pay rentals over a period of twenty years in a sum in excess of $171,840.

Towards the latter part of 1955, Phillips Petroleum Company was not wholly satisfied with the operation of the jobber agency in Austin. Phillips' representative suggested capitalization of Reed-Phillips be raised from $25,000 to $50,000. Appellant Bridges was placed in charge of the Reed-Phillips Oil Company as President, and Kingsbery purchased the stock of F. M. Reed in the corporation. The corporation capital was raised from $25,000 to $50,000 by amendment of charter on January 10, 1956.

At a meeting held at Kingsbery's office in Austin on January 16, 1956, in which Phillips Petroleum Company was represented by appellees, J. P. Welch and R. D. Evans, it was expressly agreed between Phillips and Kingsbery that if Kingsbery would complete a filling station on East 7th Street and also on the Burnet Road and purchase the property at 42nd and Lamar Streets, that when the construction of a station at that latter location was substantially under way, then Phillips would come in and build three stations at locations to be determined between the parties and according to Phillips' plans and specifications; such stations to be leased to Reed-Phillips Oil Company and to be amortized over a period of twenty years. The agreement between the parties provided that the three stations to be built by appellants would be completed during the year 1956. It was contemplated that in the future, after Kingsbery and Phillips had each built three stations, that thereafter the parties would match each other station for station and dollar for dollar.

The stations on East 7th Street and Burnet Road were completed, and both of those stations were formally opened on June 23, 1956, at which openings Phillips sent about fifteen or twenty representatives to aid in such openings. Kingsbery bought the property at 42nd and Lamar Blvd. at an expenditure of $22,500. Phillips also sent its engineers to Austin, and they prepared a plot plan for a jobber-built service station at 42nd and Lamar Blvd. in Austin, and on or about May 9, 1956, construction began.

After the meeting on January 16, 1956, no complaint was made by Phillips, either to Kingsbery or to his associates, as to their...