Novack v. Cities Service Oil Co.

• Decision Date: 07 April 1977
• Parties: Stanley NOVACK, Plaintiff, v. CITIES SERVICE OIL COMPANY, a corporation, Defendant.
• Court: New Jersey Superior Court

Page 542

149 N.J.Super. 542

374 A.2d 89

Stanley NOVACK, Plaintiff, v. CITIES SERVICE OIL COMPANY, a corporation, Defendant.

Superior Court of New Jersey,

Law Division.

April 7, 1977.

Paul R. Melletz, Camden, for plaintiff (Klein, Melletz & Sonstein, Camden, attorneys).

David H. Dugan, III, Collingswood, for defendant (McCullough & Dugan, Collingswood, attorneys).

WEINBERG, J.D.C., temporarily assigned.

This matter is presently before this court on defendant's motion for summary judgment. Plaintiff's complaint alleges causes of action grounded in contract and tort (defamation) for the allegedly wrongful revocation of plaintiff's Cities Service credit card. Defendant contends plaintiff has failed to state a justiciable cause of action. For the reasons expressed herein, this court concurs.

A motion for summary judgment is appropriate where 'the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.' R. 4:46--2. See generally, Jackson v. Muhlenberg Hospital, 53 N.J. 138, 249 A.2d 65 (1969); Judson v Peoples Bank and Trust Co. of Westfield, 17 N.J. 67, 110 A.2d 24 (1954); Allen v. Planning Board of Evesham, 137 N.J.Super. 359, 349 A.2d 99 (App.Div.1975).

The material facts alleged by the litigants are not in dispute ¹ and, therefore, it is appropriately before this court on a motion for summary judgment. The facts leading up to this litigation are relatively simple and best recounted in chronological fashion.

Plaintiff applied for and obtained a Cities Service credit card in September 1972. Included with the card, when mailed to plaintiff, was a pamphlet describing generally the terms of the account. One such term was that the account could be cancelled at any time and that upon written request the card was to be returned to Cities Service. On February 4, 1974 plaintiff's account had a substantial balance which was then more than 40 days past due. On that same date, defendant mailed a notice to the operator of one of its service stations which plaintiff had used on a regular basis. The notice informed the operator that plaintiff's card was no longer to be honored and that a reward would be paid for its return. ²

Plaintiff thereafter instituted this suit, alleging that this procedure of account cancellation was a breach of contract and that the notification sent by defendant to the station operator was defamatory. On either ground, plaintiff has failed to state a cause of action cognizable in law.

I. Action Based in Contract

Plaintiff's argument under contract theory is that defendant, by cancelling plaintiff's credit card account without prior notice, and contrary to established intercompany procedures, breached an express term of the contract between them. This term, according to plaintiff, is to be found in the brochure supplied by defendant, specifically;

The card(s) shall remain the property of Cities Service, may be cancelled by it at any time, and upon its written request, you will wurrender and mail same to it at its address set out below.

Both parties have expended considerable time and effort in attempting to give varying interpretations to this language. Plaintiff contends that before defendant cancancel the credit card it is required to give plaintiff written notice. In fact, during oral argument plaintiff stated that if he refused to return the credit card, defendant's only recourse would be by an action in replevin. Defendant states that the account may be revoked at any time by any means.

The initial question to be answered is whether the issuance and receipt of a credit card creates a contractual relationship.

There does not appear to be any reported New Jersey cases on this precise point. Assistance can be had from a few reported decisions in foreign jurisdictions as well as analogous New Jersey case law.

The most direct response to the issue appears in a Georgia appellate court opinion, City Stores Co. v. Henderson, 116 Ga.App. 114, 156 S.E.2d 818 (App.Ct.1967), wherein plaintiff alleged a cause of action grounded in wrongful termination of a credit card account. Responding to plaintiff's breach of contract claim, the court held The issuance of a credit card is but an offer to extend a line of open account credit. It is unilateral and supported by no consideration. The offer may be withdrawn at any time, without prior notice, for any reason or, indeed, for no reason at all, and its withdrawal breaches no duty--for there is no duty to continue it--and violates no rights. Acceptance or use of the card by the offeree makes a contract between the parties according to its terms, but we have seen none which prevents a termination of the arrangement at any time by either party. If notice of termination is required by either party, it must be so provided in the contract. As a rule there is no requirement of prior notice for termination by the issuer. A request to the person holding the card that it be surrendered upon termination of the extension of credit by the issuer is reasonable, and if he has the card it should be surrendered. (156 S.E.2d at 823).

Parenthetically, it is recognized that once notice of theft or loss is given to the issuer, the holder is no longer liable for subsequent purchases made. 26 Am.Jur. Proof of Facts, 497, 501, 'Liability for Unauthorized Use of Credit Card.' Accord, Read v. Gulf Oil Corp., 114 Ga.App. 21, 150 S.E.2d 319 (App.Ct.1966). Certainly, if the card holder can terminate at will, any contractual relationship is, at best, illusory and hence, not enforceable.

The decision in the City Stores case accords with generally held notions of what the tangible object, a credit card, itself signifies. As stated in 50 Am.Jur.2d 428, Letters of Credit and Credit Cards, § 38:

Basically, however, a credit card is nothing more than an indication to sellers of commodities that the person who has received a credit card from the issuer thereof has a satisfactory credit rating and that if credit is extended, the issuer of the credit card will pay (or see to it that the seller of the commodity receives payment) for the merchandise delivered.

See also Lit Brothers v. Haines, 98 N.J.L. 658, 121 A. 131 (Sup.Ct.1923); Jordan v. J. C. Penney, 114 Ga.App. 822, 152 S.E.2d 786 (App.Ct.1966); see generally; 46 A.L.R.3d 1383, 'Credit Card Issuer's Liability for Wrongfully Refusing to Honor Card.'

The conclusion that the issuance of a credit card does not create a contract includes an analysis of the concept of consideration. It is well settled that to be enforceable a contract must be supported by valuable consideration. Coast National Bank v. Bloom, 113 N.J.L. 597, 174 A. 576 (E. & A. 1934); Fryns v. Fair Lawn Fur Dressing Co., 114 N.J.Eq. 462, 168 A. 862 (Ch.1933); Levine v. Blumenthal, 117 N.J.L. 426, 189 A. 54 (Sup.Ct.1936). Consideration involves a detriment incurred by the promisee or a benefit received by the promisor, at the promisor's request. In the credit card relationship, neither status is created. The holder of the card (promisee) is free to cancel or not use it, and has gratuitously received an opportunity to purchase without incurring any detriment. Additionally, there does not appear to be any benefit bargained for or received by the issuing company (promisor). Lacking consideration, the credit card account is, as stated in City Stores, a continuing offer to purchase which may be withdrawn by either party at any time.

Our Supreme Court has had occasion to discuss this concept, although in a different context, viz, specific performance of a realty contract. In the case of Friedman v. Tappan Development Corp., 22 N.J. 523, 126 A.2d 646 (1956), the court stated:

And where an offered promise receives no return promise, but can be accepted piecemeal by rendering a requested part performance, thus constituting a unilateral contract on the offered terms, such part performance, unless so rendered as to justify the implication of a promise to render the full performance proposed in the offer, leaves the offer revocable at the will of the offeror as to all but the rendered part performance. Corbin, Ibid., section 152. (at 534, 126 A.2d at 652.)

Accordingly, this court finds as a matter of law that no contractual relationship was created by the issuance and receipt of the credit card. Therefore, even if the court accepts plaintiff's contention that the statement in the brochure required a written request before the account could be cancalled by defendant, since no contract existed Ab initio, the statement cannot be incorporated into any prospectively created contract, ³ and hence has no binding effect.

II. Action Based in Tort (Defamation)

Plaintiff alleges in his complaint that the notice forwarded to the Cities Service station dealer was libelous in that it implied that plaintiff was a bad credit risk.

Actions alleging damages for libel are most appropriately considered on a motion for summary judgment. As stated in Herrmann v. Newark Morning Ledger Co., 48 N.J.Super. 420, 429, 138 A.2d 61, 66 (App.Div. 1958), 'it is the function of the court, not the jury, in the first instance to determine whether the language used is reasonably susceptible of a defamatory meaning.' See also Leers v. Green, 24 N.J. 239, 131 A.2d 781 (1957); Barbetta Agency v. Evening News Pub. Co., 135 N.J.Super. 214, 343 A.2d 105 (App.Div.1975).

The statement, when viewed in its entirety, is not capable of a defamatory meaning. The notice to cancel which was communicated to the station operator must be viewed in its entirety and within the context in which it was made. Dressler v. Mayer, 22 N.J.Super. 129, 132, 91 A.2d 650 (App.Div. 1952). Additionally, as stated in Dressler:

In determining whether words are capable of a defamatory meaning under the circumstances, the court...