Perkins v. Standard Oil Co.

• Decision Date: 19 June 1963
• Parties: Clyde PERKINS, Appellant, v. STANDARD OIL COMPANY of California, a corporation, and Harris Oil Company, a corporation, Harris Distributing Company, a corporation, and Lee Powell, Respondents.
• Court: Oregon Supreme Court

Page 107

383 P.2d 107

235 Or. 7

Clyde PERKINS, Appellant, v. STANDARD OIL COMPANY of California, a corporation, and Harris Oil Company, a corporation, Harris Distributing Company, a corporation, and Lee Powell, Respondents.

Supreme Court of Oregon, In Banc.

Argued before Department No. 1 and Submitted Dec. 3, 1962.

Reargued En Banc and Submitted May 3, 1963.

Decided June 19, 1963.

Roger Tilbury, Portland, argued the cause and filed the brief for appellant.

James H. Clarke, Portland, argued the cause for respondent Standard Oil Co. of California. With him on the brief were Koerner, Young, McColloch & Dezendorf, Clarence J. Young and Wayne Hilliard, Portland.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN, GOODWIN, DENECKE and LUSK, JJ.

ROSSMAN, Justice.

This is an appeal by the plaintiff, Clyde Perkins, from a judgment which the Circuit Court entered in favor of the defendants, four in number. The identity and circumstances of three of the defendants is immaterial upon this appeal; therefore, when we use the term 'defendant' we will refer to the only defendant-respondent which is concerned with the appeal: Standard Oil Company of California.

The challenged judgment dismissed the Fifth Amended Complaint. The initial complaint was filed March 8, 1960. The Fifth Amended Complaint, that is the one that is now under attack, was filed January 8, 1962. It alleged that on April 6, 1953, the plaintiff who since 1945 had been a jobber of Standard's products in an area specified in the pleading signed a renewal contract with Standard which reappointed him jobber in the area. It further alleged that in violation of an implied condition of the contract Standard solicited directly the plaintiff's principal customer, Truax Oil Company. The words of the averment are 'directly solicited and procured Truax Oil Inc., (Jess Truax) as its direct customer without the consent of plaintiff thereby eliminating plaintiff as a jobber from this account which was his largest single distributor. Plaintiff would have sold said products to Truax Oil, Inc. (Jess Truax) except for Standard's appropriation of Truax Oil Inc. (Jess Truax) as a direct customer.'

A second cause of action appeared for the first time when, on September 14, 1961, the plaintiff filed his Fourth Amended Complaint. We turn to it as it appears in the Fifth Amended Complaint. It was based upon an alleged promise made by Standard to plaintiff subsequent to its appropriation of Truax Oil Company that it would replace for a consideration the gallonage which plaintiff had lost as a result of a cessation of his dealings with Truax. The Circuit Court struck both causes of action, dismissed the complaint and awarded judgment to the defendant. The plaintiff attacks those rulings as erroneous.

The motion to strike which was sustained reads as follows:

'Defendant * * * moves the court for an order striking the first alleged cause of action for plaintiff's fifth amended complaint. The same is sham and frivolous in that it offers no material allegations not contained in, and it realleges, without material change or alteration, the first cause of action alleged in plaintiff's third amended complaint in respect to which this court on August 17, 1961 entered an order sustaining this defendant's demurrer to plaintiff's third amended complaint. (Bliss v. Southern Pacific Company, 212 Or. 634 at 653, 321 P.2d 324 [at 333]) (Plaintiff's fourth amended complaint to which this same objection was made was disposed of by an order dated January 4, 1962 allowing Standard's alternative objection to that complaint based on plaintiff's failure to state his causes of action separately.)

'Defendant Standard also moves the court for an order striking the second alleged cause of action from plaintiff's fifth amended complaint upon the ground that it constitutes an entirely new, additional and substituted cause of action, namely an alleged agreement to replace the Truax gallonage, which new, additional and substituted cause of action is interposed for the first time two and one-half years after the original complaint was filed and is not in any way germane to the controversy previously sought to be litigated. (Talbot v. Garretson (1897) 31 Or. 256 at 265, P. 978 [at 210-211]; Ross v. Robinson (1944) 174 Or. 25 at 43, 147 P.2d 204 [at 980]).'

The contract with which we are concerned was signed April 6, 1953. It authorized the plaintiff to sell without Standard's written consent 'on a non-exclusive basis' the products which Standard consigned to him but only to service stations or consuming accounts. Standard's written consent was required before the plaintiff could sell to any other account. The plaintiff promised in the contract to use his 'best efforts to promote the sale of products consigned hereunder' and to sell a specified minimum amount during each year. The contract provided that title and risk of loss should remain with Standard. The plaintiff further agreed to account to Standard for the proceeds of all sales and to look to his commission as his sole compensation. Standard reserved 'the right to select its customers.' A provision of the contract acknowledged that the 'Consignee (plaintiff) is engaged in an independent business and nothing herein shall be construed as granting to Standard any right to control Consignee with respect to his conduct of said business.' The contract required the plaintiff to keep complete records of sales and the proceeds therefrom; and to deliver on notice statements and accounts. Standard was given a right to inspect and measure the stocks of the plaintiff on any business day. The plaintiff was required to hold all proceeds of sales made by him 'as trustee' for Standard until the proceeds were paid to it. At the inception of the contract the plaintiff was required to deliver to Standard a complete list of the names and addresses of all his distributors and submit to it the names of any new potential distributors. The plaintiff was required at his own expense to secure and maintain insurance for the protection of Standard and to secure Workmen's Compensation under our state law for the benefit of his employees. Accompanying the contract that we have just summarized was a letter which read:

'Please refer to the consignment agreement dated April 1, 1953, entered into simultaneously herewith, covering consignment of petroleum products for distribution by you in the area more particularly set forth therein * * *. Pursuant to the provisions of said paragraphs 3 and 9, we hereby approve the following accounts to whom you are currently making deliveries.'

Listed at that point were the distributors to whom Standard authorized the plaintiff to continue to sell its products; among them was the Truax Oil Company. We assume that the part of Paragraph 3 which the words just quoted deemed material were these: 'on a nonexclusive basis.' We also assume that the following words found in Paragraph 9 are deemed by the quotation material: 'Standard reserves the right to select its customers.'

Truax was located in the Albany-Corvallis territory which was a part of the larger area assigned by the contract to plaintiff. The latter had been the sole distributor of petroleum products from which the Truax Oil Company had made purchases for many years. A contract which had initially been signed between the plaintiff and Truax in 1945 was renewed five years later and was in effect when plaintiff and Standard attached to their contract the paper from which we just quoted. About the time the contract between plaintiff and Truax expired in 1954 Standard and Truax bypassed the plaintiff and began negotiating with one another directly. Their negotiations culminated in the appropriation by Standard of Truax as a direct customer to the exclusion of plaintiff. The plaintiff alleged that Standard's action in so doing constituted a breach of its contract with the plaintiff; it is that purported breach upon which the plaintiff depends as the basis of this case.

The first assignment of error charges:

'The Court erred in sustaining a motion to strike and demurrer to the first cause of action on the asserted grounds that it did not set forth a cause of action.'

In support of its first cause of action the plaintiff claims that the contract by its very nature contains an implied condition that Standard would not solicit business directly from his (plaintiff's) customers. Standard protests that such an implied condition would be contrary to the express terms of the contract since the latter (1) provides that the plaintiff was authorized to sell Standard's products only 'on a non-exclusive basis' and (2) reserved to Standard the 'right to select its own customers.' Plaintiff proposes a more restricted interpretation of the terms of the contract that we just took from Standard's quotation. He concedes that the contract reserved to Standard the right to sell to any new accounts which it found, and to accept or reject any new accounts which he (the plaintiff) might obtain, but he insists that it does not permit Standard to solicit accounts which it had approved as his customers. It will be recalled that April 6, 1953, when the plaintiff and Standard signed the renewal contract they attached to it the document of which we have taken notice and which said:

'Please refer to the consignment agreement * * * We hereby approve the following accounts to whom you are currently making deliveries.'

There Standard entered the name of the Truax Oil Company.

ORS 42.220 provides:

'In construing an instrument, the circumstances under which it was made, including the situation of the subject and of the parties, may be shown so that the judge is placed in the position of those whose language he is interpreting.'

This court has made the observation that in determining the intent of the parties to an instrument we must look to the entire paper rather than to isolated portions thereof. McCreight v....