M & M Rental Tools, Inc. v. Milchem, Inc.

• Decision Date: 22 May 1980
• Docket Number: No. 4282,4282
• Citation: 612 P.2d 241,94 N.M. 449,1980 NMCA 72
• Parties: M & M RENTAL TOOLS, INC., a corporation, Plaintiff-Appellant, v. MILCHEM, INC., a corporation and Theodore Briggs, an Individual, Defendants- Appellees.
• Court: Court of Appeals of New Mexico

Page 241

612 P.2d 241

94 N.M. 449

M & M RENTAL TOOLS, INC., a corporation, Plaintiff-Appellant, v. MILCHEM, INC., a corporation and Theodore Briggs, an

Individual, Defendants- Appellees.

No. 4282.

Court of Appeals of New Mexico.

May 22, 1980.

R. W. Gallini, Heidel, Samberson, Gallini, Williams & Harrington, Lovington, for plaintiff-appellant

Lowell Stout, Hobbs, Lynn Pickard, Pickard & Singleton, Santa Fe, for defendants-appellees.

OPINION

WOOD, Chief Judge.

This appeal involves interference with prospective contractual relations. Plaintiff contended it was about to rent a centrifugal pump to a customer and defendants wrongfully interfered with this prospect. Defendants rented the pump to the customer, but had plaintiff install the pump. Plaintiff complains that the trial court improperly permitted defendants to cross-examine concerning plaintiff's charge for the installation. We disagree. The cross-examination tended to show that plaintiff overcharged for installing the pump. This was relevant to the reasonableness of plaintiff's claimed damaged from loss of the rental, it being undisputed that plaintiff sought to charge a higher rental than its competitor. After reviewing the evidence and stating the pertinent findings of the trial court, we discuss: (1) the tort; (2) "improper" interference; and (3) who proves what.

The customer was Baker of Maddox Energy Company. Swaco, plaintiff and defendants were competitors in the rental of pumps. Baker telephoned Owens of Swaco to rent a centrifugal pump; Owens did not have one available; Owens told Baker, "I would get them a pump out there."

Owens telephoned to plaintiff's office in Carlsbad. The telephone was answered by Salmon, an employee of plaintiff. Owens "asked if we had any centrifugal pumps, you know. I knew we had pumps, but the word 'centrifugal' threw me off. That was the first time I had heard it called that. So, I asked Mike to take the phone * * *."

Mike Meyers was a former employee of plaintiff. He was present on plaintiff's premises doing welding on an office building pursuant to contract. Briggs was also a former employee of plaintiff; on the day of the telephone call, Briggs was working for defendant. Briggs was on plaintiff's premises "(j)ust visiting."

Salmon handed the telephone to Meyers; Owens asked if plaintiff had a pump. Meyers said he did not know, looked out of the window and did not see one; Meyers said he would call Power on the radio. Power was the Carlsbad manager for plaintiff. During this conversation between Owens and Meyers, Briggs learned from Salmon that Owens was the person who had telephoned. Briggs said: " 'Let me talk to him.' " Meyers handed Briggs the telephone and picked up the microphone to radio to Power. Meyers heard Briggs say: " 'Do you need a pump?' Then, he said, 'Well, I've got one.' Then, he says, 'Okay, when do you want it.' " Meyers decided not to radio to Power; he put the microphone down.

After Briggs told Owens that Briggs had a pump available, Owens told Briggs: "I had already told Bill Baker that I was going to call M & M. If he wanted to provide one, he would have to contact Bill Baker and get the okay from him." Briggs asked if it would be all right for Briggs to contact Baker; in response, Owens gave Briggs the telephone number of Baker.

When Owens telephoned to plaintiff's office, his intention was to rent a pump from plaintiff. On cross-examination, Owens agreed that he told Briggs he did not care if Briggs furnished the pump "as long as they got a pump out there (.)"

The basis for plaintiff's claim is the interference by Briggs in asking to talk to Owens just as Meyers picked up the microphone to radio to Power as to whether plaintiff had a pump available. Meyers testified he voluntarily handed the telephone to Briggs; Briggs did not grab the telephone. At that point in time, neither plaintiff's employee, Salmon, nor plaintiff's former employee, Meyers, knew whether plaintiff had a pump available to rent. Neither Salmon nor Meyers objected when Briggs asked to talk to Owens. Briggs did no more than make the inquiries set forth above; he made no representations as to whether plaintiff had a pump available. Briggs' inquiries were not objectionable to Owens; Owens supplied Briggs the telephone number of Baker.

Defendant, through Briggs, rented its pump to Maddox Energy Company, the customer. The evidence is that plaintiff did have a pump available for rent.

At the close of plaintiff's case-in-chief, defendants moved for dismissal under R.Civ.Proc. 41(b). The motion was granted. The trial court found:

3. Defendants did not wrongfully or improperly interfere with any contractual or prospective contractual relation of Plaintiff's.

6. Plaintiff's evidence failed to establish that Defendants intentionally and wrongfully caused any third party not to enter into a prospective contractual or business relation with Plaintiff. 7. The rental of the pump involved the competitive relationship between Plaintiff and Defendants. Defendants did not employ any wrongful means to rent the pump and any acts by Defendants in renting the pump were a legal competitive right and not an improper interference with any business relations or expected business relations of Plaintiff.

Plaintiff's contentions on appeal are that 1) Briggs "had no legal justification or excuse to intercede and interfere in Plaintiff's business by interrupting a telephone order for Plaintiff's equipment"; 2) "Briggs took advantage of the fact that Jack Power was out of the office and the only ones there were" Salmon "who had not worked there long * * * and Mike Meyers, a former employee * * * who had no apparent loyalty or feeling of responsibility to Plaintiff"; 3) if "Briggs had minded his own business and conducted himself as the guest he was supposed to be then Mike Meyers would have contacted Jack Power by radio and informed him that Ray Owens wanted to rent an M & M pump"; and 4) "there is no question but that the Plaintiff had proven that Defendants wrongfully and intentionally interfered with its business relations and contractual relations * * *. Defendants had no right, excuse or legal justification to speak to one of Plaintiff's customers who had called Plaintiff's place of business to place an order for a centrifugal pump. * * * Therefore, as against the Motion to Dismiss, the Plaintiff made such a case for interference * * * that it was incumbent upon the Defendants to go forward with their proof and establish, if they could, the fairness of their actions and conduct, together with their justification or privilege, if any."

The Tort

In discussions of the type of situation involved in this case, terms such as "economic expectancies" and "prospective advantage" have been used. 1 Harper & James, The Law of Torts (1956), § 6.11; Prosser, Law of Torts (4th ed. 1971), § 130. See Wolf v. Perry, 65 N.M. 457 at 463, 339 P.2d 679 (1959). A less general term was used in Williams v. Ashcraft, 72 N.M. 120, 381 P.2d 55 (1963); the term used was "interference with the business relations of another." Restatement of Torts 2d (1979), in its Introductory Note to Chapter 37, is more specific. The Introductory Note refers to "the tort of interference with existing or prospective contractual relations". This case does not involve some general interference matter, nor does it involve existing contractual relations because no contract was proved. This case involves prospective contractual relations.

Wolf v. Perry, supra, recognized the tort of interference with an existing contract. Other New Mexico decisions have involved either a contract or the absence of a contract. Shriners Hosp. for Crippled Ch. v. Kirby Cattle Co., 89 N.M. 169, 548 P.2d 449 (1976); Williams v. Ashcraft, supra; Acme Cigarette Services, Inc. v. Gallegos, 91 N.M. 577, 577 P.2d 885 (Ct.App.1978); Bynum v. Bynum, 87 N.M. 195, 531 P.2d 618 (Ct.App.1975).

The tort of interference with prospective contractual relations is well recognized. Annot., 9 A.L.R.2d (1950) at 228; Harper & James, supra; Prosser, supra; Restatement of Torts 2d, supra, § 766B. We also recognize the tort; a claim of interference with a prospective contractual relation states a claim upon which relief may be granted.

How is the tort to be described?

The first Restatement of Torts described both interference with existing contract and interference with a prospective contract in terms of interference " 'without a privilege to do so' ". Top Serv. Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 582 P.2d 1365 (1978). The second Restatement of Torts describes both torts in terms of "improper interference". See Restatement of Torts 2d, supra, § 766. Why was this change made? Restatement of Torts 2d, Introductory Note, supra, explains that "interference" is an intentional tort that does not fit the pattern for other intentional torts, that in the tort of interference there is no clear-cut distinction between the requirements for a prima facie case and the requirements for a recognized privilege, that "the law in this area has not fully congealed but is still in a formative stage." A neutral single expression was chosen in an effort to avoid meanings and connotations developed in connection with other intentional, but non-interference torts. "The word adopted for use * * * neutral enough to acquire a specialized meaning of its own * * * is 'improper.' "

New Mexico decisions involving interference with existing contracts have relied on the commentary in the first Restatement of Torts. Williams v. Ashcraft, supra; Wolf v. Perry, supra. Yet in describing the tort of contract interference, Wolf v. Perry, supra, did not limit its description to that of the first Restatement of Torts; rather, the contract interference must have been "without justification or privilege". Restatement of Torts 2d, Introductory Note, supra, states: " 'Justification' is a broader and looser term than 'privilege,' and the...