Mobil Oil Corp. v. Rubenfeld

• Decision Date: 19 December 1972
• Citation: 339 N.Y.S.2d 623,72 Misc.2d 392
• Parties: , 1973-1 Trade Cases P 74,306 MOBIL OIL CORPORATION, Plaintiff, v. Paul RUBENFELD, Respondent.
• Court: New York City Court

Page 623

339 N.Y.S.2d 623

72 Misc.2d 392, 1973-1 Trade Cases P 74,306

MOBIL OIL CORPORATION, Plaintiff, v. Paul RUBENFELD, Respondent.

Civil Court of the City of New York, Queens County, Trial Term, Part XVI.

Dec. 19, 1972.

Frey & Harkow, Jamaica (Lincoln D. Harkow, Jamaica, of counsel), for plaintiff.

Anderman, Povman & Warren, Forest Hills (Morton Povman, Forest Hills, of counsel), for respondent.

DECISION

EDWIN KASSOFF, Judge.

This is an action by the Mobil Oil Corporation (petitioner) to recover possession of a gasoline station located at 75-02 260th Street, Glen Oaks, New York from Paul Rubenfeld (respondent). Petitioner, the prime lessee, sublet the premises to the respondent for a period of three years. The sub-lease expired on September 30, 1972. Rubenfeld refused to vacate the premises and Mobil commenced this action to recover possession of the property. Respondent's answer contained six affirmative defenses. The fifth affirmative defense claims the petitioner may not terminate the retail dealer agreement and lease without proof of good cause. The sixth affirmative defense asserts that the petitioner seeks to control and fix the retail sales price of gasoline through means of coercion and cancels or threatens to cancel leases of those Mobil dealers, including the respondent, who refuse to cooperate.

Prior to 1955, the respondent was an employee of a Mobil gasoline station in Brooklyn. Sometime in 1955 the respondent discussed obtaining a Mobil dealership with the District and Assistant Managers of the Mobil Oil Corporation. As a result of these conversations, and upon completion of a training program, the respondent was given a Mobil gasoline station located at 254-02 Hillside Avenue, Queens, New York. At the inception of his relationship with Mobil, it was represented to him, by petitioner, that he would be building a good future for himself and his family and that he would be an independant businessman. Respondent was presented with a printed form 'Retail Dealers Contract' and a printed form lease. Respondent testified that he was told by the petitioner that he could not have an attorney present when he executed these agreements. The reason given by Mobil was that they would not tolerate changes in any of the provisions of the printed agreements.

Rubenfeld testified that he made an initial investment of four thousand dollars and that during the next ten years he invested about fifty thousand dollars in the dealership for machinery and trucks. During this period the station was open from 6 a. m. to 2 a. m. The original dealer agreement and lease were for a one year period. Mobil told Rubenfeld that if he proved to be a good dealer during the first year, future dealer agreements and leases would be for three year terms. Thereafter, there were three renewals of the agreements, each for a period of three years. Rubenfeld was not represented by legal counsel when any of these renewal agreements were executed.

In 1965, the respondent opened a second Mobil station which is the subject of this action. The initial dealer's contract and lease were for a one year period. A representative of Mobil told Rubenfeld that it was company policy to issue one year contracts and leases for new stations. This applied to Rubenfeld even though he had been a Mobil dealer for ten years. He was told that he would get three year renewals if he proved to be a good dealer. Rubenfeld was not represented by legal counsel when he executed the contract and lease for the second station. The same reasons were given by Mobil for not permitting respondent to be represented by legal counsel. Rubenfeld executed a printed form dealer agreement, and an eleven page printed form lease containing numerous riders, both of which were drafted and prepared by Mobil and presented to the respondent on a take it or leave it basis.

Respondent operated both stations for six months and then discontinued operation of the first station. It appears that this was done by mutual agreement. Upon the expiration of the one year dealer contract and lease, the parties entered into a three year agreement. This agreement was renewed on October 23, 1969 for another three year period. Rubenfeld was not represented by legal counsel when any of these renewal agreements were executed.

Respondent testified that during the seven years that he operated this second station, he invested about $25,000 for machinery, furniture, trucks, and two-way radios. This second station is open seven days a week from 7 a. m. to midnight. Both stations were always operated at a profit. Rubenfeld testified that he spends between seventy and eighty hours each week at the station.

Rubenfeld testified that on various occasions in 1971 and 1972, he was warned by Mobil representatives that his dealer contract and lease would not be renewed, unless he agreed to sell his gasoline at prices fixed by Mobil, and to resume purchasing his tires, batteries, and accessories (TBA) from Mobil.

In 1972, respondent filed a complaint with the Attorney General of the State of New York regarding Mobil's coercive attempts to force him to enter into a price fixing scheme for the sale of his gasoline and Mobil's insistence upon his purchasing petitioner's TBA.

John Leone, a Mobil dealer for twenty-one years, and another dealer named Allan Madnich, were called as witnesses for respondent. The attorneys for the respective parties stipulated on the record that both witnesses would testify that they were Mobil dealers and that their leases were not renewed because of their refusal to agree to fix the retail sales price of their gasoline, and to purchase TBA from Mobil, without admitting the truth of their statements.

Petitioner's witnesses testified that they sent a notice of non-renewal to respondent and that respondent refused to vacate the premises.

Mobil's district sales manager, Mr. Candeloro, testified that the dealer agreement and lease are executed together, and that Mobil would not issue a lease unless the retail dealer contract was executed at the same time.

Petitioner's witnesses also testified that there are over two hundred Mobil stations in the Queens-Long Island area that sell one hundred million gallons of gasoline each year, and that there are over twenty-four thousand Mobil service stations in the United States.

Mobil set forth in its petition to recover possession of real property that it is a corporation, organized and existing under and by virtue of the laws of the State of New York. Respondent in his answer denied knowledge or information sufficient to form a belief as to this allegation, and as an affirmative defense alleged that the petitioner did not offer proof that the petitioner was either a domestic corporation or a foreign corporation duly licensed under the laws of New York State. As the Court wanted to decide the case on its merits, it ordered the case to be reopened to prove that Mobil was a domestic corporation. The attorneys for the respective parties then entered into a stipulation that petitioner was, at the time the dealer agreement and lease were executed and at the time of the commencement of this proceeding, a corporation duly organized and existing under and by virtue of the laws of the State of New York.

Petitioner places great reliance on the Division of Triple T v. Mobil Oil Corp. case, 60 Misc.2d 720, 304 N.Y.S.2d 191, aff'd. 34 A.D.2d 618, 311 N.Y.S.2d 961, and suggests that this case is governed by that decision. I disagree. The fact pattern of both cases is different. In the Triple T case the defendant sought to terminate a lease with a service station dealer upon 90 days' notice for the sole purpose of converting the property into a diagnostic and repair service center. None of the issues raised in this case were before the Court when it decided the Triple T case. The service station dealer in the Triple T case had executed a retail dealer agreement and a three year lease. Also, both cases involve gasoline service station franchises.

The Court, while holding that the retail dealer contract and lease were non-distinguishable and therefore must be read as one, sought to apply the Uniform Commercial Code, and reached the conclusions that the code would only apply to the retail dealer contract and not to the lease, and therefore even if the Court were able to separate the two agreements, the lease would still be enforceable. The Court faced with the problem that no other statutes were applicable, was forced, 'despite the apparent inequities,' to dismiss plaintiff's motion and to grant defendant's motion dismissing the action. In so doing, the Court called for the enactment of appropriate legislation to end these 'inequities' and stated that 'this very case may provide the stimulus necessary to enactment.' Unfortunately, this call has not been heard by our legislature, but has been heard in other states, including the State of New Jersey which has enacted: The Franchise Practices Act, N.J.S.A., 56:10-1, et seq. (effective December 21, 1971).

The Court, throughout its opinion, cites circumstances which might cause it to reach a different conclusion, but dismisses each because the facts do not make them applicable. A close look at each of these points will show that the case at bar is clearly distinguishable from the Division of Triple T case and that its decision should not govern this Court in reaching a decision on the case at bar.

First, the cause of action in the Triple T case was for a permanent injunction to restrain defendant, lessor, from terminating a franchise agreement. This case involves a holdover proceeding in which equitable affirmative defenses have been interposed and credible evidence given to support them, thus creating issues of fact that were not present in the Division of Triple T case.

Second, the Court there stated at 60 Misc.2d 722, 304 N.Y.S.2d 194:

'Plaintiff thereafter learned that defendant's proposed reason...