Propane Indus., Inc. v. General Motors Corp.
| Citation | 429 F. Supp. 214 |
| Decision Date | 03 March 1977 |
| Docket Number | Civ. A. No. 74CV375-W-3. |
| Parties | PROPANE INDUSTRIAL, INC., Plaintiff, v. GENERAL MOTORS CORPORATION, Defendant. |
| Court | U.S. District Court — Western District of Missouri |
Robert F. Deis, Moore, Lay & Deis, Platte City, Mo., for plaintiff.
Paul Scott Kelly, Jr., Gage & Tucker, Kansas City, Mo., for defendant.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL JUDGMENT IN FAVOR OF PLAINTIFF
Plaintiff, Propane Industrial, Inc., brought this action to recover the sum of $18,276.62 allegedly due and owing by defendant, General Motors Corporation, for the purchase of 75,572 gallons of propane delivered by plaintiff on December 31, 1973, and January 2 and 3, 1974. Plaintiff charged defendant $0.4048 per gallon for the propane, for a total of $30,591.54 (and sales tax of $917.75) which plaintiff contends was the reasonable price. Defendant has paid plaintiff the sum of $0.17 per gallon, or $12,847.25, and $385.42 sales tax. Defendant raises as a defense, set-off and counterclaim provisions of a contract alleged to have been entered into between plaintiff and defendant in March, 1973.
The pretrial proceedings have been completed. Pretrial Order No. 2, including a stipulation of all uncontroverted material facts, has been filed. The parties have each filed a brief setting forth their respective factual and legal contentions. Neither party desires a jury trial.
On the basis of the stipulation of uncontroverted facts, the exhibits, and designated portions of depositions, which the parties have stipulated can be considered as admissions of the deponents as agents of the parties, the following findings of fact and conclusions of law are made.
Plaintiff Propane Industrial, Inc. is a Missouri corporation, having its principal place of business in Kearney, Missouri. At all times material, plaintiff was engaged in the sale and distribution of propane, a liquefied petroleum gas. At all times material, James E. Ferrell (hereinafter "Ferrell") was the president and principal stockholder of plaintiff, and was authorized to enter into and to execute contracts on behalf of plaintiff.
Defendant General Motors Corporation is a Delaware corporation, having its principal place of business in the State of Michigan. Defendant owns and operates an assembly plant at 100 Kindelberger Road, Kansas City, Kansas (hereinafter "Fairfax plant"). At all times material, E. M. Ironsmith (hereinafter "Ironsmith") was the purchasing agent at defendant's Fairfax plant, and was authorized by defendant to make contracts for the purchase and procurement of goods and supplies for the Fairfax plant.
The Fairfax plant ordinarily uses natural gas for heating during the winter. The primary supplier of natural gas to the plant is the Gas Service Company, a public utility. However, the Gas Service Company periodically interrupts the flow of natural gas to the plant, requiring the defendant to maintain a standby supply of propane for use at the plant when the supply of natural gas is interrupted.
On March 9, 1973, Ferrell, by letter, advised Ironsmith of the terms upon which plaintiff would supply propane to the Fairfax plant for the September 1, 1973 to April 30, 1974 heating season. The letter stated:
On March 21, 1973, after his receipt of the March 9, 1973 letter from Ferrell, Ironsmith issued purchase order no. KC-33109.1 This purchase order was on a General Motors Corporation form, and provided in pertinent part:
The purchase order expressly provided that its terms were to be governed by the law of the state "from which the order issues", which is the State of Kansas.
Several copies of the purchase order were made. One copy was signed on behalf of defendant by Ironsmith on March 21, 1973. This copy was retained by plaintiff. A second copy was signed on behalf of plaintiff by Ferrell on March 24, 1973. This copy was retained by defendant.
The factual and commercial context in which purchase order no. KC-33109 was executed is material to construction of the terms of the order. Plaintiff had supplied standby propane to the Fairfax plant since approximately 1970. In each of the years prior to March, 1973, a purchase order form similar to purchase order no. KC-33109 was issued and executed by the parties. However, prior to March, 1973, plaintiff was not the sole supplier of propane to the Fairfax plant of defendant. For example, for the 1972-1973 heating season, defendant executed purchase orders similar to purchase order no. KC-33109 with both Consolidated Fuel Oil Company and Modern Gas Company in addition to plaintiff. And during that season defendant obtained propane from all three suppliers in the following amounts: 115,409 gallons from Consolidated; 182,146 gallons from Modern; and 576,277 gallons from plaintiff. For the 1973-1974 season, for which purchase order no. KC-33109 was issued, defendant also executed a similar purchase order with Enterprise Products Company for propane requirements from November 1, 1973 through March 31, 1974, under which defendant agreed to purchase 1,600,000 gallons at $0.15463 per gallon, with an option to be relieved of the obligation to purchase by payment of $0.035 per gallon or to delay delivery until the 1974-1975 heating season by payment of an additional $0.045 per gallon, plus freight charges.
On August 25, 1973, Ferrell by letter advised Ironsmith that "the facts as outlined in my letter to you of July 30, 1973 have not changed."
Despite Ferrell's July 30, 1973 letter, on September 11, 1973, defendant issued a release (order for a definite amount) against purchase order no. KC-33109 for 8,000 gallons of propane. On September 19, 1973, Ferrell advised Ironsmith that under a proposed mandatory allocation program concerning propane being considered by the federal government, and with which the government had requested voluntary compliance prior to enactment, defendant was a non-priority user "and until all priority customers' needs are fulfilled, we cannot deliver to you."
On October 3, 1973, the Energy Policy Office Propane Allocation Program went into effect.2 These regulations were followed by procedural rules for administration of the program on October 24, 1973.3 Under this program, propane suppliers were directed to supply "priority customers" as defined by the regulations before supplying non-priority users. Special provision was made for persons who suffered "exceptional hardships" because of the mandatory allocation to priority users.
Defendant's Fairfax plant did not qualify as a priority user under the program. Nevertheless, on November 1, 1973, Ironsmith advised Ferrell that the anticipated propane requirements of the Fairfax plant for the 1973-1974 heating season would be:
December, 1973 261,000 gallons
January, 1974 292,000 gallons
February, 1974 201,000 gallons
March, 1974 75,000 gallons
April, 1974 51,000 gallons.
Ferrell did not respond in writing to Ironsmith's letter, but advised Ironsmith by telephone that he had submitted Ironsmith's request to the Kansas City Office of the Energy Policy Office for consideration and that no propane was available for the Fairfax plant at that time.
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