Miskimen v. Kansas City Star Co.
| Decision Date | 07 November 1984 |
| Docket Number | No. WD,WD |
| Citation | 684 S.W.2d 394 |
| Parties | 11 Media L. Rep. 1649 Robert S. MISKIMEN, et al., Appellants, v. The KANSAS CITY STAR COMPANY, et al., Respondents. 34230. |
| Court | Missouri Court of Appeals |
Laurence R. Tucker (argued), Steven G. Emerson, Kansas City, for appellants.
John T. Martin, Sam L. Colville (argued), Gary L. Whittier and Dennis R. Dow, Kansas City, for respondents.
Before PRITCHARD, P.J., and MANFORD and NUGENT, JJ.
In a declaratory judgment action tried to the court without a jury upon a stipulation of facts and submitted exhibits, the court declared that the defendant newspaper publisher, The Kansas City Star Company, had the right and the power to terminate its contracts with the plaintiffs, independent subscription carriers of the company's newspapers. The court further declared that the company by its conduct over the years had created an expectation that the carriers who had purchased their routes would have a reasonable time in which to recoup their investments before the company could exercise its right to cancel a carrier's contract. The carriers claim that they have a property interest in their subscription routes, that their contracts are terminable only for cause and that they are not the company's agents but independent contractors. Relying upon an express termination clause in its contracts, the company contends that it has the power and right to terminate the carriers' contracts. The carriers appeal. We reverse.
The carriers raise six points on appeal. First, the trial court erred in declaring that the company has the right and power to cancel the contracts at issue since it waived its express contractual right to cancel the contracts upon four days notice and is estopped from invoking that provision. Similarly, the carriers contend that custom, usage and course of dealing between the parties have modified the contracts so that the contracts are only terminable for cause. Their third point is that they are agents of the newspaper who have an interest in their routes, making their relationship not terminable at will. Finally, they contend that the recoupment is not the proper remedy and that the carriers have a right to recover the fair market value of their routes as a result of the defendant's cancellation. We find merit in their first point and therefore address only that point.
The Kansas City Star Company, owned by respondent Capital City Communications Company, is the publisher of the major evening and morning newspapers in Kansas City, Missouri. The plaintiffs are independent subscription carriers of the company's newspapers and its exclusive distributors in designated territories. The carriers deal directly with the subscribers in their respective areas and are responsible for building up a list of subscribers, obtaining the necessary equipment and hiring needed employees to service their routes. Each carrier purchases the needed number of papers at a wholesale price set by the company, and since 1968 the carriers have set their own retail subscription rates.
The carriers have all signed form contracts that varied only in their respective designations of the routes and the wholesale prices. All of the contracts contain an explicit provision that reads as follows, "Second Party [the company] shall have the right to cancel the contract at any time, by giving four days notice of its intention to do so," or a similar termination clause requiring thirty days notice. The company prepared and furnished the form contracts. The forms of the contracts were never the subject of independent negotiations; they were tendered to the carriers on a take-it-or-leave-it basis. Before 1977, the company had regularly exercised its right under the foregoing clause to terminate whenever it raised the wholesale price, but only then. Over the years, the company's practice was to inform the carriers that it was terminating the contracts then in force but was willing to sign new contracts with the carriers with an increase in wholesale rates. The forms of the new contracts would be identical to existing contracts except for the change in the wholesale price. Once again, the contracts were offered on a take-it-or-leave-it basis not subject to negotiation. The relationship between the carriers and the publisher began in the 1880's and remained virtually unchanged until 1977 when the company sought to implement a new delivery system.
The stipulation of facts includes excerpts from the deposition of Roy D. Wasmer, the company's circulation clerk from 1933 to 1940 and circulation manager from 1952 to 1962. He testified that during the thirty-two years he worked in city circulation the form and wording of the contracts did not change except for the wholesale price. William L. Cook, one of the plaintiff carriers, first entered into a contract with the company on April 4, 1923, and signed his tenth and the last one on June 1, 1974. The first nine contracts, dating from 1923 until 1957, are identical in wording and form except for differences in wholesale prices. The 1974 contract has some changes in form but its provisions are similar to the earlier contracts. The parties have agreed that Mr. Cook's contracts are representative of the contracts used during the period they cover.
The essence of the carriers' contentions is that they have more than a mere contract right to deliver the defendant's newspapers, that they have a proprietary interest in their routes or at least have been induced by the company's conduct to expect that they have such an interest and to rely upon having it. This proprietary interest or expectation, they contend, prevents the company from exercising the termination clause in a way it has never before done. In its memorandum opinion, the trial court found that the carriers do have a proprietary interest in their routes.
For decades, the parties have treated the carriers' interests in their routes as more than mere contract rights terminable at the company's will. Over the years, the practice has been for the carriers to buy and sell their routes. As a rule, a sale occurred this way: first, the carrier would enter into a separate sales agreement with a proposed buyer. The carrier would then propose to the company that the buyer take over the carrier's route and enter into a contract with the company to service the route. The company would check the buyer's credit references and ability to service the route. Once it had satisfied itself that the buyer was credit-worthy and able and the buyer posted a bond, the company would contract with the buyer. In almost every case, the company would accept the buyer offered by the carrier. In the few cases where it did not accept a proposed buyer, the company allowed the carrier to find a new buyer.
In many instances, the company took a more active role in the sales of routes. The trial court found that the company gave advice to prospective buyers 1 on the values of routes and on occasion proposed that the carriers sell unprofitable segments of their routes. The company also put potential buyers in touch with sellers and published classified advertisements announcing the sales of routes. Upon a sale, it would provide the carrier with the legal forms used to transfer the route.
[t]hrough the years the value of these routes increased substantially. The purchase price of a route increased from approximately $5.00 per subscriber in the 1940's to $50.00 per subscriber in the mid-sixties to over $100.00 per subscriber in May of 1974. The observation was made that the routes were going for as high as $200,000.00 to $300,000.00 at the time of cancellation. The immediate, direct and foreseeable effect of the Star's announcement was the destruction of the market for sale of the carriers' routes and contracts.
The trial court further found that the carriers used their routes as collateral for loans. Once a carrier and a lender had agreed on a secured loan, the lender would inform the publisher in writing of its security interest in the route. The company would place the letter in the carrier's file and inform the lender of any sale of the route that occurred before the loan was fully paid. At least on one occasion, the company acknowledged in writing that the lender had a security interest in the route. In 1977, however, the company changed its practice. After that, upon being advised of a security agreement concerning a route, it would inform the lender that it did not acknowledge the lender's claimed security interest.
The Star also allowed and encouraged the carriers' designation of their spouses or children as successors to their routes upon a carrier's death. The company provided the forms used in making such designations. If a carrier failed to make a designation, it would offer the carrier's route to the carrier's surviving spouse or children. If the survivors did not want to operate the route, they had the option to sell the route.
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