Mastercar, Inc. v. Amoco Oil Co.

• Decision Date: 16 January 1992
• Docket Number: No. 90CA2104,90CA2104
• Parties: 1992-1 Trade Cases P 69,707 MASTERCAR, INC., Plaintiff-Appellant, v. AMOCO OIL COMPANY, Bill Horn and Kermit Teske, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 534

835 P.2d 534

1992-1 Trade Cases P 69,707

MASTERCAR, INC., Plaintiff-Appellant, v. AMOCO OIL COMPANY, Bill Horn and Kermit Teske, Defendants-Appellees.

No. 90CA2104.

Colorado Court of Appeals,

Div. II.

Jan. 16, 1992.

Rehearing Denied Feb. 27, 1992.

Certiorari Denied Aug. 24, 1992.

Thomas E. McCarthy, Denver, for plaintiff-appellant.

Kirkland & Ellis, Frank Cicero, Jr., P.C., Scott R. Bauer, Denver, for defendants-appellees.

Opinion by Judge JONES.

Plaintiff, Mastercar, Inc., appeals the summary judgment entered against it in its action to enjoin defendants, Amoco Oil Company, Bill Horn, and Kermit Teske, from offering free car washes with the sale of a minimum of ten gallons of gasoline. We affirm.

Plaintiff contends that defendants' offer of a free car wash with the purchase of gasoline constitutes an illegal gift under the Colorado Unfair Practices Act, § 6-2-105, C.R.S., because defendants will receive no additional consideration for the wash. Defendants contend that the car wash is not a gift under § 6-2-105, but is, instead, a legal concession pursuant to § 6-2-113, C.R.S., wherein the sales price charged for the gasoline constitutes the consideration for both the car wash and the gasoline. We hold that defendants' offer of a free car wash in conjunction with a gasoline purchase is not a gift pursuant to § 6-2-105, C.R.S.

Section 6-2-105(1), C.R.S., of the Colorado Unfair Practices Act states:

It is unlawful for any person, partnership, firm, corporation, joint stock company, or other association engaged in business within this state to sell, offer for sale, or advertise for sale any article or product or service or output of a service trade for less than the cost thereof to such vendor, or give, offer to give, or advertise the intent to give away any article or product or service or output of a service trade for the purpose of injuring competitors and destroying competition. A vendor who violates this section is guilty of a misdemeanor and, upon conviction thereof, shall be subject to the penalties provided in section 6-2-116. (emphasis supplied)

Plaintiff argues that summary judgment was improvidently granted because, once it is established that a product is being given away under § 6-2-105(1), a question of fact arises as to whether the offer was made with the "purpose of injuring competitors and destroying competition." However, as defendants correctly argue, before any question of fact regarding intent need be considered, it must first appear that the car wash was a gift pursuant to the statute.

There is no Colorado case law that construes this provision of the Unfair Practices Act, but the trial court adopted the rationale employed in an August 13, 1981, opinion by the Colorado Attorney General which relied on case law from other jurisdictions to determine whether an offer to give away a lottery ticket comprised a gift or a sale.

The Attorney General adopted the rationale enounced in E.I. DuPont DeNemours & Co. v. Kaufman & Chernick, 337 Mass. 216, 148 N.E.2d 634 (Mass.1958), wherein a retailer advertised that it would provide a free can of antifreeze with the purchase of automobile tires. There, for purposes of applying the state's fair trade law, the Massachusetts Supreme Court determined that the delivery of the antifreeze to a customer in connection with and as part of the sale of a tire was not a "gift." The court held that the money paid the defendant by the purchaser was paid not for the tire alone, but for both items, and that legally and economically, the transaction amounted to a combined sale of both the antifreeze and the tires for a single price. See also Independent Journal Newspapers v. United Western Newspapers, Inc., 15 Cal.App.3d 583, 93 Cal.Rptr. 299 (Dist.Ct.App.1971); Sheppard v. Revlon, Inc., 267 So.2d 662 (Fla.App.1972).

We conclude that the trial court properly adopted this rationale for the purpose of applying the Colorado Unfair Practices Act here. We, therefore, hold that when consideration is paid for one product that is sold in conjunction with another product described to be "free" or otherwise offered at no cost to the consumer, the transaction constitutes a combined sale, and thus, the product is not a gift pursuant to § 6-2-105, C.R.S.

Our conclusion is supported by the fact that the General Assembly has...