Monsanto Co. v. Cochran, 43692

• Decision Date: 06 December 1965
• Docket Number: No. 43692,43692
• Parties: MONSANTO COMPANY and Lion Oil Company v. James S. COCHRAN and James R. Cochran.
• Court: Mississippi Supreme Court

Page 624

180 So.2d 624

254 Miss. 399

MONSANTO COMPANY and Lion Oil Company v. James S. COCHRAN and James R. Cochran.

No. 43692.

Supreme Court of Mississippi.

Dec. 6, 1965.

Brunini, Everett, Grantham & Quin, George P. Hewes, III, Jackson, for appellant.

Shannon Clark, Louis Bishop, Waynesboro, for appellees.

RODGERS, Justice:

This suit was brought to cancel a lease on a filling station upon the ground of fraud, and for an accounting for rent due, and for punitive damages. It was filed in the Chancery Court of Wayne County, Missippi, by the appellees against James H. Brownlee, J. P. Thornton, Monsanto Company, and the Lion Oil Company. Monsanto Company and Lion Oil Company are actually one company, and is hereinafter called Lion Oil Company.

A careful examination of this record reveals that this case grows out of an unfortunate misunderstanding. James R. and James S. Cochran, father and son, built a filling station on a corner lot they owned in Waynesboro, Wayne County, Mississippi. They leased the property to J. P. Thornton for a term of ten years, with an option to renew. It was agreed in the lease that Mr. Thornton would pay the owners, appellees, the sum of $100 per month, plus one cent per gallon of gasoline over 8,000 gallons sold at the service station. Mr. Thornton went into possession of the property and employed Mr. J. R. Richie to operate the station. Mr. Thornton also owned two other filling stations. Less than a year later, on April 15, 1964, Mr. Thornton, with the consent of appellees, sold his entire operation to the Lion Oil Company (except gasoline in the pumps), including an assignment of the lease on the property belonging to appellees. Mr. J. R. Richie continued to operate the service station, selling Lion Oil products, instead of 'Conoco' products previously sold by Mr. Thornton.

The Assistant District Manager of the Lion Oil Company wrote a letter to appellees on May 1, 1964, requesting that the rental of one cent per gallon be computed on the number of gallons delivered to the station, rather than reading the meters on the pumps each month to determine the amount of rent due. The Lion Oil Company amended the contract of its agent James H. Brownlee of Laurel, Mississippi, so as to permit him to service the station purchased from Mr. Thornton. Appellees received the $100 rental for May 1964, but did not receive any rental for the gasoline sold over 8,000 gallons. They talked to Mr. Richie about the matter and discovered that Mr. Brownlee was delivering two sets of invoices to Mr. Richie. These invoices indicated a discrepancy in the number of gallons sold to Mr. Richie. Mr. James R. Cochran called Mr. Brownlee's attention to this fact and advised he had received no rental on the excess gasoline sold. Thereafter, Mr. Cochran received a small check ($10.27 dated July 20, 1964). Mr. Thornton learned of the situation and informed Mr. Cecil Jones, Assistant District Manager for Lion Oil Company. The assistant manager and district salesman called on the Cochrans and obtained copies of the invoices. The Lion Oil Company sent the Cochrans checks for the full amount of the excess gasoline rental due. Appellees were dissatisfied and wanted to have a fixed rental of $175 or sell the Lion Oil Company the filling station. The Lion Oil Company would not agree to renegotiate the Thornton contract; whereupon, the appellees sued in the chancery court to cancel the contract. The chancellor entered the decree, cancelling the contract and awarding appellees a monetary judgment against the Lion Oil Company for $304.61 rental--the total sum of the checks admitted to be due by the Oil Company--and also the sum of $1,500 punitive damages. The decree is based upon the alleged fraud of James H. Brownlee in not reporting the excess gallonage sold to the station, and also upon the theory that Brownlee was acting as the agent of the Lion Oil Company and it had notice, and was therefore liable for the fraudulent acts.

We have reached the conclusion that the decree rendered by the chancellor in the instant case was manifestly in error and it must be reversed and rendered for the following reasons.

There seem to be few exceptions to the general rule that the courts of equity will not assess punitive damages. This rule is set out in 19 Am.Jur. Equity section 125 at page 125 (1939) as follows: 'Exemplary or punitive damages will never be awarded, it seems, the theory being that the complainant, by having applied to a court of equity, must be deemed to have waived all claim to recovery other than compensatory damages.' This point in annotated in 48 A.L.R.2d section 4, at page 953 (1956), wherein the textwriter points out that 'Some courts have based their denial of punitive damages upon the theory that an award of such damages is wholly incompatible with the basic principles of equity.' And again it is said in section 5 at page 954 that 'Some courts have denied punitive or exemplary damages in equitable proceedings on the theory that when a litigant seeks equitable relief, he thereby waives all claim to such damages.' See also 15 Am.Jur. Damages Sec. 278 (1938). Mississippi has adopted this rule in the following cases: Capital Electric Power Ass'n v. McGuffie, 226 Miss. 227, 83 So.2d 837, 84 So.2d 793, 56 A.L.R.2d 403 (1955); Wilborn v. Balfour, 218 Miss. 791, 67 So.2d 857 (1953); Neal v. Newburger Co., 154 Miss. 691, 123 So. 861 (1929); Hines v. Imperial Naval Stores Co., 101 Miss. 802, 58 So. 650 (1912); Annot. 48 A.L.R.2d 958 (1956).

The record in the instant case does not show any evidence of an intentional wrong on the part of the Lion Oil Company, nor do we find facts to justify an inference that the acts of the Lion Oil Company were of such a character as to show any of the essential elements necessary to establish exemplary damages, such as willfulness, wantonness, malice, oppression, insult or gross fraud.

It is said in 15 Am.Jur. Damages section 278 at pages 713, 714, 715 (1938) that:

'While every legal wrong entitles the party injured to recover damages sufficient to compensate for the injury inflicted, not every legal wrong entitles the injured party to recover exemplary damages. The greater portion of actionable wrongs furnishes no basis whatsoever for the recovery of such damages. It is universally recognized that punitive or exemplary damages, if recoverable at all, may be recovered only in cases where the wrongful act complained of is characterized by, or partakes of, some circumstances of aggravation, such as wilfulness, wantonness, malice, gross negligence or recklessness, oppression, contumely and indignity, outrageous conduct, insult, or gross fraud.'

This rule is well-settled in Mississippi. See Interstate Oil Pipeline Co. v. Valentine, 236 Miss. 400, 110 So.2d 369 (1959); Lynn v. R. G. LeTourneau, Inc., 237 Miss. 124, 113 So.2d 659 (1959); Bradley v. Associates Discount Corp., 230 Miss. 131, 92 So.2d 468 (1957).

It is the primary contention of the appellees that the decree of the chancery court should be affirmed and the lease contract cancelled, because, it is charged, the Lion Oil Company's distributor, James S. Brownlee, acting as the agent of the Oil Company, attempted to defraud them by not reporting to the Oil Company the actual number of gallons of gasoline sold from appellee's filling station.

The gist of appellees' contention is that the distributor was acting as the agent of the Oil Company, and that it had notice of the fraud and for that reason it is liable.

Mr. Brownlee admitted that he was making two invoices for a period of three months, but explained this by showing that the gasoline in the pumps at the time the lease was transferred belonged to him because he purchased it from Mr. Thornton, and contends that it was necessary for him to report this gasoline to the Lion Oil Company, as having been sold to Mr. Richie, except as to the number of gallons sold through the pumps. It is admitted that Mr. Brownlee paid for this gasoline, and that nothing was due for the month of April. He testified that there were certain people who were working for the Shell Oil Company who were purchasing gas from Mr. Richie at appellees' service station on the Shell courtesy card and that the Lion Oil Company did not honor the Shell card. There were other customers who were purchasing gasoline on 'Conoco' courtesy cards. It was therefore necessary for the distributor to collect the indebtedness directly from the Shell Oil Company and Conoco before reporting this cash collection to the Lion Oil Company, and for that reason he did not make the report until he collected the money. There were also bulk sales made by the distributor through the service station, for which Mr. Richie did not want to pay, because he objected to paying rental on the bulk sales to others. Mr. Brownlee also testified that he was not familiar with some of the forms on which he was required to report to the Oil Company, and for that reason the rental report was delayed.

The records show that the Oil Company paid all that was due for rentals to the appellees and Mr. R. J. Cochran admitted that they did not charge in their original bill of complaint that they had not received all that was due to them as lessors under the contract before the suit was filed.

Appellees have cited two cases on which they base their contention that the Oil Company is liable for the alleged fraud of James S. Brownlee. The first of these is Billups Petroleum Company v. Hardin's Bakeries Corporation, 217 Miss. 24, 63 So.2d 543, 64 So.2d 764 (1953). In that case a driver of one of the bakery delivery trucks was actually delivering less bread to the customer than he was collecting for, and at the same time, he was paying the bread company the proper amount for the bread actually delivered. This Court held in that case that the bread company was liable for the loss caused by the fraud of its agent. We said:

'We think that the trial judge...