Prather v. Colorado Oil & Gas Corp.

• Decision Date: 08 November 1975
• Docket Number: No. 47745,47745
• Citation: 218 Kan. 111,542 P.2d 297
• Parties: Robert L. PRATHER, Appellant, v. COLORADO OIL & GAS CORP., Appellee.
• Court: Kansas Supreme Court

Page 297

542 P.2d 297

218 Kan. 111

Robert L. PRATHER, Appellant, v. COLORADO OIL & GAS CORP., Appellee.

No. 47745.

Supreme Court of Kansas.

Nov. 8, 1975.

Syllabus by the Court

1. A sublessor is bound by the provisions of a sublease and cannot interfere with the sublease and defeat the sublessee's rights.

2. The mere cashing of a check for liquidated sums of money due or for money previously earned, whose value is not disputed, does not, standing alone, bar relief in every case.

3. While in the ordinary business transactions of life, men are expected to exercise reasonable prudence, this requirement is not to be carried so far that the law shall ignore or protect positive, intentional fraud successfully practiced upon the simple minded or unwary.

4. Where one fraudulently induces a false impression in the mind of another as to the legal nature of their transaction, a subsequent reliance on the fraudulently induced false impression by the one misled does not bar relief under theories of ratification, waiver or estoppel.

5. In an action to recover damages for termination of a sublease, the record is examined on appeal and it is held: (1) There is substantial evidence from which it could be found a valid sublease was in force between the parties despite the false representations to the contrary by the appellee; (2) the appellant has not, under any theory, ratified the appellee's termination of the sublease; and (3) the trial court erred in granting the appellee's motion for summary judgment.

Russell E. Grant, Saums & Grant, Wichita, argued the cause, and was on the brief for appellant.

Joseph W. Kennedy, Morris, Laing, Evans, Brock & Kennedy, Chartered, Wichita, argued the cause, and Ken M. Peterson, Wichita, was with him on the brief for appellee.

SCHROEDER, Justice:

This is an action for damages by Robert Prather (plaintiff-appellant) against the Colorado Oil and Gas Corporation, d/b/a Derby Refining Company (defendant-appellee) for terminating a sublease to a Derby gas station in Wichita, Kansas. Appeal has been duly perfected by the plaintiff from the trial court's order sustaining the defendant's motion for summary judgment.

The defendant (hereinafter Derby) defends on two grounds: First, that no valid written sublease was in force; and second, that the plaintiff ratified the defendant's termination of the sublease.

The motion for summary judgment was submitted to the trial court on the files, the pleadings, the request for admissions and the reply thereto and the deposition testimony of the plaintiff, Mr. Prather. Derby relies primarily upon the admissions and the deposition testimony of Mr. Prather.

Reviewing the record, as we must on a motion for summary judgment, it discloses Robert Prather had operated various gas stations since 1959. From September 1970 until April 1973 he subleased a Derby gas station at 3001 South Broadway in Wichita. In April of 1973 Derby officials decided to close the South Broadway station because the property owner wished to retake possession of the property. Mr. Wille, Derby's field supervisor, discussed with Mr. Prather the leasing of Derby's station No. 9193 located at 1001 West 31st Street South. At that time Mr. Wille unsuccessfully tried to convince Mr. Prather to operate the station as a self-service station.

On April 8 or 9, 1973, Mr. Prather entered into a mutual cancellation of his sublease agreement on his South Broadway station and signed a one year sublease on the West 31st Street station, No. 9193, on the form lease submitted to him by Mr. Wille. Mr. Prather thought this sublease agreement was the same normal service station sublease as on the South Broadway station. The South Broadway sublease required Mr. Prather to deposit with Derby the sum of $500 as security for faithful performance. This $500 was not returned to Mr. Prather upon the cancellation of the South Broadway sublease, but was retained by Derby and applied to the deposit on the new sublease of the West 31st Street station, No. 9193. The West 31st Street station sublease, submitted as an exhibit to the trial court, required Mr. Prather to deposit the sum of $1,000 as security for faithful performance. This fact was never called to Mr. Prather's attention, and he was not aware of it.

At the time Mr. Prather signed the West 31st Street station sublease, Mr. Wille had informed Mr. Prather that Derby had changed its mind about running the station on a self-service basis-that Derby was going ahead to operate it as a leasing operation. Mr. Prather thought Mr. Wille signed the sublease on the 31st Street station when he signed it.

The terms of the South Broadway service station sublease under which Mr. Prather had been operating required Derby to supply the products for sale. Mr. Prather's profit on gasoline was five and one-half cents on regular gasoline and six cents on premium gasoline. Derby received two cents per gallon as rental. Mr. Prather was required to carry workmen's compensation insurance and public liability insurance coverage in the amounts specified in the lease.

Upon Mr. Prather's taking possession of the West 31st Street station No. 9193, operations under the new sublease were carried on in the same manner as at the prior station. Mr. Prather provided the insurance which was approved by Derby officials. Derby supplied the products and the profits from these sales were computed and paid upon the same basis as under the prior sublease. From April 10, 1973, to June 27, 1973, Mr. Prather operated station No. 9193 as a subleasee of Derby's without major controversy. The only disagreement between the parties arose in May of 1973 after Derby installed some self-service pumps, but did not convert his station to a completely self-service station. Although this action is not directly involved in the present controversy, a provision in the lease reads:

'None of the provisions of the lease shall be construed as reserving to the LESSOR (Derby) any right to exercise any control over the business or operations of the LESSEE conducted upon the leased premises, or to direct in any respect the manner in which any such business and operations shall be conducted, it being understood and agreed that so long as the LESSEE shall use said premises in a lawful manner as herein provided and complies with the full terms and conditions of the lease agreement, the entire control and direction of the activities of the business carried on within said premises shall be and remain with the LESSEE.'

On June 25, 1973, Derby officials informed Mr. Prather they wanted to convert his station to a completely self-service station. They offered him a position as manager at a salary of $550 to $600 per month, which was less than Mr. Prather was making as a subleasee. Mr. Prather testified the Derby officials at first said he could decide whether to convert to a completely self-service station. But on June 26, 1973, the Derby officials made a unilateral decision to convert to a self-service station. They approached Mr. Prather at his home and informed him for the first time the sublease he signed in the field was not signed in Derby's office. They told Mr. Prather, a high school graduate, he did not have a lease. Mr. Prather's narrative deposition testimony on this point was as follows:

'And at that time Mr. Burch told me that I did not have a lease, and, of course, this kind of floored me, and I said, 'Well, I signed a lease.' And he stated, 'Well, it was signed in the field but it was not signed in the office, so consequently you don't have a lease.' That Mr. Burch and Mr. Glass and myself were present at this time and nobody else. . . .

'Of course, like I say, it floored me, that fact that I didn't have a lease. And I got up the normal time in the morning and went down to open up on the 27th and Mr. Burch was sitting there waiting for me when I arrived. And he says, 'What have you decided?' and I said, 'Well, I really haven't decided anything.' You know, I still can't afford to go to work for Derby Oil Company.

'Mr. Glass arrived approximately 8:00, shortly after, and they had a conversation between themselves that I couldn't hear because I was waiting on customers. Mr. Burch then left and Mr. Glass asked me again what I had decided and I said I still wanted to live up to the lease and was more or less ignored, and Mr. Glass went out and started auditing the pumps, which was reading the pump. . . .'

Thus, on June 27, 1973, when Mr. Prather went to work Derby officials retook possession of his station, audited the pumps, and hired his employee to run the station. Mr. Prather signed the final audit document, relinquished his keys to the Derby officials, supplied $75 of his cash for making change, supplied the combination to the safe, agreed to sell his small amount of equipment and left the station. Mr. Prather admits no physical force or threats were used, but he justifies his leaving as avoiding a fight. He testified:

'. . . As far as I am concerned, force-wise, they just come in and took over. I am not going to stand there and have a fist fight in the office with any of them. That's kind of ridiculous, a man of my age. We did not come to blows, no. They never touched me. They come in and took over the station without asking me that they may have it. They hired my help out from underneath me, and there's nothing that I could do about it unless I wanted to start a fist fight with one of them, which like I say, I don't feel a man of my age has got any business starting a fight with anybody. . . .' (Emphasis added.)

Ninety days later Derby officials sent Mr. Prather a check for $626.11 which he cashed. This represented a $500 security deposit on the station, commissions from sales and the value of Mr. Prather's equipment left at the station less credit card charge-backs.

In his reply to Derby's request for admissions Mr. Prather stated:

'12. It is admitted that I received a check in the amount of...