Rossow Oil Co., Inc. v. Heiman, 75--35

• Decision Date: 02 June 1976
• Docket Number: No. 75--35,75--35
• Citation: 242 N.W.2d 176,72 Wis.2d 696
• Parties: ROSSOW OIL COMPANY, INC., Respondent, v. Gerald W. HEIMAN, Appellant.
• Court: Wisconsin Supreme Court

Page 176

242 N.W.2d 176

72 Wis.2d 696

ROSSOW OIL COMPANY, INC., Respondent, v. Gerald W. HEIMAN, Appellant.

No. 75--35.

Supreme Court of Wisconsin.

Argued May 4, 1976.

Decided June 2, 1976.

James A. Hauer, Elm Grove, for appellant.

Stevens L. Riley, Eau Claire, for respondent; Losby, Riley & Farr, S. C., Eau Claire, on brief.

HANLEY, Justice.

Five issues are presented on this appeal:

1. Does the existence of a franchise or dealership arrangement, absent statutory provisions, preclude the use of summary eviction from real property?

2. Are the dealership regulations of ch. 135, Stats., in effect for the arrangement existing here?

3. Has the appellant established a valid counterclaim for damages arising from the eviction due to a fiduciary relationship or statutory duty?

4. Has the appellant established a valid and cognizable counterclaim for damages under federal regulations?

5. Is promissory estoppel available as a counterclaim remedy in this case?

General Franchise Law

As one aspect of his defense at trial, appellant Heiman attempted to establish that the relationship between himself and Rossow Oil Company involved more than a mere lease agreement. Evidence of the marketing by Heiman of gasoline, tires, batteries and accessories in 1974 under a trade name apparently owned by the respondent was offered as proof of a franchise or distributorship arrangement. Reference is made on appeal to similar activity for Gulf Oil since 1967, but the testimony rather established that Myron S. Rossow was the independent distributor for Gulf during that time and that he formed the corporate respondent oil company in 1974 to purchase Gulf's interest. His past actions as an agent for Gulf are immaterial to the subsequent relationship between Heiman and the respondent.

This arrangement was shown for the purpose of raising an asserted fiduciary relationship which, it is argued, prevents termination of the franchise without a showing of good cause for the deprivation of vested rights.

Disregarding for the moment the question of the actual application of statutory law on the subject, some courts have found that a failure to show good cause for a franchise termination prevents summary eviction actions. See Shell Oil Co. v. Marinello (1972), 120 N.J.Super. 357, 294 A.2d 253, aff'd (1973), 63 N.J. 402, 307 A.2d 598, cert. denied 415 U.S. 920, 94 S.Ct. 1421, 39 L.Ed.2d 475; Mobil Oil Corp. v. Rubenfeld (1972), 72 Misc.2d 392, 339 N.Y.S.2d 623, aff'd (1974), 77 Misc.2d 962, 357 N.Y.S.2d 589. In Shell, legislation inapplicable because of its effective date was found to codify existing state common law and public policy on the matter.

These concepts, however, were considered and rejected by this court in the recent decision of Clark Oil & Refining Corp. v. Leistikow (1975), 69 Wis.2d 226, 230 N.W.2d 736. Collateral obligations arising because of franchising or dealership arrangements were there viewed as governed solely by legislation which under the facts of that case were either clearly not applicable or were pertinent only as to arrangements made after the effective date of the law.

Application of Chapter 135

Is such legislation, specifically ch. 135, Stats., effective here? If so, appropriate sections require the grantor of a dealership to give an explanatory notice 90 days prior to the date of a termination or a 'substantial change in competitive circumstances.' Sec. 135.04, Stats. Even if Rossow Oil Company were willing to continue to supply products to Heiman, the ouster from the established location certainly qualifies under the record here as such a change. The law further provides that the grantor must not make such adjustments without 'good cause.' Sec. 135.02(6), Stats. A violation of the chapter by the grantors allows the dealer and action for damages or injunctive relief. The significant requirement of 'good cause' is applicable, however, only to those dealerships entered into after April 5, 1974. Sec. 135.03, Stats.

Chapter 135 was disregarded by the trial court because it found it vague and did not believe it applied to small organizations such as Rossow. It is clear that these statutory provisions were enacted for the protection of the interests of the dealer, whose economic livelihood may be imperiled by the dealership grantor, whatever its size.

In review, the circuit court disregarded the trial court's construction and concentrated on the question of whether Heiman's dealership agreement with Rossow preceded the effective date of the statute. From the testimony on the record, the circuit court found that Heiman and the respondent entered into a month-to-month or periodic leasing agreement in January of 1974. Although the appellant offered testimony that the agreement also embraced distributorship matters, there was no contradiction that a periodic tenancy of month-to-month existed. The record shows that Gulf's specific lease with Heiman had earlier ceased and that Gulf had allowed holdover use in the nature of a periodic tenancy. See sec. 704.01(4), Stats. When Rossow obtained the station, he apparently mentioned that a contract would be provided in the future, but it is undisputed that use in the interval was agreed to continue on the same terms and circumstances as existed during the holdover after the Gulf lease. The fact that similar terms were involved hardly makes the January, 1974 agreement a renewal or extension of the prior tenancies, especially when a new lessor is involved.

Heiman cannot now dispute that a periodic tenancy was found from the testimony in the trial court. The appellant instead submits that each month after January was a separate and new lease, such that the monthly tenancy of May, 1974, when notice of termination was given, was a dealership agreement entered into after the effective date of ch. 135.

We recognize that there is a split among the authorities who have considered the question of whether a periodic tenancy is a series of individual and new tenancies rather than a continuing tenancy subject to termination at definite intervals. However, we hold that a periodic tenancy is one continuing tenancy subject to termination at various rental periods. This result comports with our property legislation, which acknowledges that periodic tenancy may arise in a number of ways. See Committee Comment--1969, 40E Wis.Stats.Anno. sec. 704.19. As stated in Wagner v. Kepler (1951), 411 Ill. 368, 104 N.E.2d 231, at 235--36:

'A tenancy from month to month partakes of the nature of a tenancy at will and once created exists for an indefinite period. . . . Being a tenancy of uncertain duration, it cannot be said to be a tenancy for a definite period of one month or a succession of tenancies for definite periods of one month each. Furthermore, since, in the absence of an agreement or contractual or statutory provisions to the contrary, a tenancy from month to month is only terminable by either party upon giving proper and timely notice . . . it follows that a tenancy from month to month is a single tenancy, continuous and uninterrupted until so terminated.' See also Drum v. Pure Oil Co. (Fla.App.1966), 184 So.2d 196; Janofsky v. Garland (1941), 42 Cal.App.2d 655, 109 P.2d 750; contra, Toms Point Apartments v. Goudzward (1972), 72 Misc.2d 629, 339 N.Y.S.2d 281, aff'd (1973), 79 Misc.2d 206, 360 N.Y.S.2d 366; Hour Publishing Co. v. Gorez (1968), 5 Conn.Cir. 419, 254 A.2d 919.

Just as other courts found this view especially meaningful when tort liability was sought to be imposed on the lessor for defects discovered during the landlord's 'possession' at each artificial interval between the alleged 'new' leases, it is submitted that the view is equally applicable here where Heiman asserts that each period was a 'new' agreement and thus governed by the intervention of ch. 135. The testimony on the record rather indicates that the parties were in the process of establishing new terms, including a higher, inflexible base rent, which alterations were frustrated by national rent and price controls imposed because of economic conditions. No new agreement was in fact reached after the effective date of the dealership legislation, the parties merely abiding by the continuing periodic tenancy until notice of termination was given.

Counterclaims

On this appeal, Heiman asserts that his counterclaim and request at trial was for dismissal of the eviction action and consolidation with another action pending in the county court. In fact, the 'counterclaim' returned with the answer refers only to unspecified damages in the event that possession of the property be awarded to the respondent. The request for dismissal and consolidation is addressed solely to an allegation in the answer concerning the pending action. Such a joinder seems a rather unusual remedy to be sought by a 'counterclaim.'

A proper method of obtaining a consolidation of the actions or a consolidation for trial would normally entail a motion by Heiman to one of the judges of the branches of the same county court where his cases were pending. The appellant could also have retained a fully detailed answer and counterclaim that demonstrated on its face and thus early informed the court that permissible counterclaims beyond the jurisdiction of the small claims process were involved, such that the matter required trial under the full procedure. A motion for consolidation could then have been made.

Instead, Heiman answered with a summary reference to another pending action. The pleadings in that action were not repeated nor otherwise incorporated as an attached exhibit. By way of counterclaim, appellant asserted undetailed damages, again without reference to whether the theory supporting such was the basis for the other pending action. On this appeal Heiman asserts some common nexus between the actions, but the appellate record is totally silent as to what was involved in the other case.

On appeal Heiman has asserted counterclaims...