Robinson v. Shell Oil Co.

• Decision Date: 19 April 1933
• Docket Number: 24137.
• Citation: Robinson v. Shell Oil Co., 172 Wash. 611, 21 P.2d 246 (Wash. 1933)
• Court: Washington Supreme Court
• Parties: ROBINSON et al. v. SHELL OIL CO.

21 P.2d 246

172 Wash. 611

ROBINSON et al. v. SHELL OIL CO.

No. 24137.

Supreme Court of Washington

April 19, 1933

Department 1.

Appeal from Superior Court, Yakima County; Charles H. Leavy, Judge.

Action by K. F. Robinson and another, doing business as a partnership under the name of the Robinson Boys Service Station, against the Shell Oil Company. From a judgment in favor of the plaintiffs, the defendant appeals.

Reversed and cause remanded with directions.

Hyland Elvidge & Alvord, of Seattle, and Lafe H. Bond, of Yakima for appellant.

J Arnold Cobley, of Sunnyside, and Grady & Velikanje and Stanley P. Velikanje, all of Yakima, for respondents.

MILLARD Justice.

The plaintiffs brought this action to recover as rental an amount equal to 2 cents a gallon on each gallon of gasoline purchased by the plaintiffs from the defendant. The cause was tried to the court, which found that 'Between the first day of March, 1929, and the 31st day of March, 1931, the defendant sold and delivered to the plaintiff 107,503 gallons of Shell Gasoline and by the terms of said service station lease the plaintiffs became entitled to the sum of 2¢ per gallon as rental thereunder, but during said time no part of said sum was either credited on any month's merchandise statement for the previous month's purchases or paid in any other manner and the sum of $2150.06 is now due and owing from defendant to the plaintiffs.'

Judgment was entered accordingly, and the defendant appealed.

By written contract executed May 28, 1928, the respondents leased their service station at Sunnyside, Wash., to the Shell Oil Company for a period of five years. The respondents remained in possession of, and operated, the station. Under the terms of the contract, the respondents were obligated to handle exclusively appellant's gasoline, oils, etc. The appellant was obligated to sell gasoline to respondents at a price of at least 4 cents per gallon less than the appellant's prevailing full market price at the time and place of delivery. The contract also provided for payment of $45 monthly by the appellant to respondents, as rental for the premises during the life of the lease. On November 15 1928, the parties executed a 'Termination Agreement,' by which the contract of May 28, 1928, was 'cancelled and annulled and made of no further force or effect whatsoever from and after the date hereof, and each of the parties hereto fully releases and relieves the other of and from all obligations thereunder hereafter accruing.'

On the same date the parties executed a contract entitled 'Service Station Lease,' under which the premises were leased by respondents to appellant for a term of five years. The provisions for payment of rental by the appellant to respondents read as follows: 'The rental for the said premises shall be a sum equal to 2¢ per gal. for each gallon of Shell Gasoline purchased by the lessor from the lessee herein, during the term of this agreement. The lessor to be credited on each month's merchandise statement for the previous month's purchases.'

At the time of the execution of the foregoing contract, the parties executed a 'License and Consignment Contract.' Under this agreement the appellant subleased the same premises covered by the two contracts above described, to the respondents for the purpose of using the same as a service station for handling exclusively Shell gasoline, oils, etc. The license and consignment contract further provided for payment by the appellant to the respondents of a commission of 4 cents for each gallon of gasoline sold at the respondents' service station; and that, for the gasoline and oils purchased by respondents from appellant, the respondents '* * * shall pay for the same the company's wholesale prices in accordance with the company's wholesale price list as posted by it date of delivery at its depot at Grandview, Washington, payment to be made cash on delivery or subject to such credit as the Company may allow.'

That contract was canceled on or about March 1, 1929. The agreement evidencing the cancellation is entitled 'Service Station Sublease.' It was executed March 29, 1929. By that contract the appellant, as sublessor, leased to the respondents the same premises described in the above-mentioned contracts, for a period of four years, seven months, and sixteen days, or for the remainder of the unexpired five-year term for which the premises were originally leased, and which would expire November 14, 1933. The rental payable under the sublease executed March 29, 1929, was $1 per annum, payable annually in advance.

'As a further consideration for this covenant and agreement, the sublessor promises and agrees at all times while this agreement shall be and remain in full force and effect to sell and deliver to the sublessee for resale from the demised premises gasoline at a price to sublessee not greater than the tank wagon price for commercial gasoline effective date of sale at Sunnyside, Wash., said tank wagon price being no cents per gallon more (than) the sublessor's tank wagon price for commercial gasoline as determined and posted at sublessor's depot at Grandview, Wash., including Wash. Stat Motor Vehicle Fuel Tax. * * *

'It is further understood and agreed that the certain contract bearing date of (15th) Fifteenth day of November, 1928, is hereby declared to be terminated and rendered null and void.'

On or about March 1, 1929, the appellant agreed to deduct an additional 1 cent from the then existing price basis of gasoline. Confirmatory of that deduction is the appellant's letter of March 29, 1929, to the respondents, stating: 'Supplementary to that lease bearing date the 15th day of November, 1928, and that sublease bearing date the 29 day of March, 1929, the undersigned hereby agrees to pay you each month, a sum equivalent to one cent per gallon for each gallon of Shell Gasoline purchased under and during the term of said sublease.'

About June 1, 1929, appellant gave to respondents another deduction of 1 cent a gallon. That additional deduction was confirmed by appellant's letter of September 4, 1929, to the respondents. In that letter, which reads as follows, it will be noted that the total rental or allowance under the lease and sublease was limited to a deduction of 4 cents for each gallon of gasoline purchased by the respondents from the appellant:

'Supplementary to that certain lease bearing date the 15th day of November, 1928, and that sublease bearing date the 29th day of March, 1929, the undersigned hereby agrees, effective June 1st, 1929, to pay you each month an additional sum equivalent to one cent (1¢) per gallon for each gallon of Shell Gasoline purchased during the term of said sublease.

'However, it is expressly understood that your total rental or allowance under the above lease and sublease in no event exceed a sum equivalent to four cents (4¢) per gallon for each gallon of Shell Gasoline purchased during the term thereof.'

That is, under their contract with appellant, respondents were entitled to receive, from March, 1929, to June, 1929, 2 cents for rent and an additional allowance of 1 cent from the posted tank wagon price at Grandview; and from June 1, 1929, until March, 1931, when appellant and respondents discontinued business with each other, the respondents were entitled to rental of 2 cents for each gallon of gasoline sold to them and an additional deduction of 2 cents a gallon from the posted tank wagon price. When the appellant made a delivery of gasoline to respondents, an invoice of the items delivered was received by the respondents, who receipted for the gasoline, oils, etc., covered by the invoice. We note among the exhibits an invoice of March 1, 1929, for gasoline delivered by appellant to the respondents. It bears the signature of appellant's agent acknowledging payment for the gasoline delivered on that date to respondents. The price charged on that date for the gasoline was 15 1/2 cents a gallon. From that price of 15 1/2 cents a deduction of 2 cents a gallon 'less contract allowance,' and a further deduction of 1 cent a gallon 'less verbal allowance,' were made.

The invoices from March 27, 1929, until the severance of business relations in 1931, show payment by respondents for gasoline at time of delivery at the posted tank wagon price less the agreed deductions. In the column of items delivered appear the words 'Shell Gasoline,' followed by the words 'Posted Tank Wagon Price,' opposite which appear the number of gallons delivered and the price per gallon. One of such invoices, dated March 27, 1929, shows the tank wagon price to...