Sharp v. Interstate Motor Freight System

Decision Date25 June 1969
Docket NumberNo. 53371,53371
Citation442 S.W.2d 939
PartiesFrancis M. SHARP, II, Eaton Truck Line, Inc., by its Receiver, Fred A. Murdock, Third-Party Plaintiff-Appellant, v. INTERSTATE MOTOR FREIGHT SYSTEM, Respondent.
CourtMissouri Supreme Court

William M. Austin, Walter R. James, North Kansas City, Lane Bauer, Kansas City, for appellant.

William H. Sanders, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, J. M. Neath, Jr., Warner, Norcross & Judd, Grand Rapids, Mich., for respondent.

HOUSER, Commissioner.

This is an appeal by third-party plaintiff Eaton Truck Line, Inc., by its receiver Fred A. Murdock, from a judgment entered in a third-party proceeding. Interstate Motor Freight System, a Corporation, is third-party defendant.

Third-party plaintiff Eaton sought a declaratory judgment with reference to the rights, duties and liabilities of the parties arising out of a contract of sale of Eaton's rights to operate as a common carrier of property in interstate commerce by motor vehicle, and a contract of lease made thereunder; for a cease and desist order, and for judgment against Interstate 'for the amount of the benefits it is determined Interstate has derived from the conduct of the operations covered by the subject operating rights, without a lease of such operating rights from February 11, 1965 to date of judgment (alleged to be $7,100 per day from May 12, 1965 until it ceases its operations), for the amount of expenses the Receiver has incurred to date of judgment (alleged to be 'substantial') resulting from the aforesaid conduct of Interstate * * * .' Third-party defendant Interstate filed a counterclaim for breach of contract, praying for damages 'equal in amount to all sums paid by Strickland Transportation Co., Inc. to Receiver Murdock under the so-called agreement between them of April 6, 1965 (alleged to be $1,600 per month from and after May 5, 1965 'to the present time'), plus reasonable attorney fees and costs incurred' in the litigation.

The limited issue tried was the liability of the parties under the contract and lease. This issue was defined by a pretrial order as follows: 'The trial of this cause shall be limited to the issues of liability between the parties, together with the right of the parties to recover damages either on third-party plaintiff's petition or third-party defendant's counterclaim, together with all other issues relating to relief sought by the pleadings, but no evidence shall be received nor will any determination be made by the Court as to dollar amount of damages to be recovered by either party.'

The judgment from which third-party plaintiff Eaton appealed found that Eaton was not entitled to the declaratory relief it sought, or injunctive relief or damages. It declared the contracts of October 3 and 4, 1962 still operative; that Interstate is not precluded by the terms of the contracts from purchasing Eaton's rights and is not estopped therefrom by its conduct, and that Interstate has a continuing right to purchase and lease the Eaton certificates and operating rights, subject to approval by the Interstate Commerce Commission. Third-party defendant Interstate was adjudged to take nothing on its counterclaim against Eaton. It was further ordered that the judgment on the limited issue be deemed a final judgment for the purpose of appeal.

The effect of the court's finding was to deny each claim of third-party plaintiff Eaton, including its claim for damages in a sum far exceeding the amount which establishes jurisdiction in the Court. We therefore have jurisdiction of this appeal by reason of the amount in dispute, notwithstanding the issue tried was limited to the question of liability, on analogy to the cases of Conley v. Fuhrman, Mo.Sup., 355 S.W.2d 861; Bogus v. Birenbaum, Mo.Sup., 375 S.W.2d 156; Finley v. Smith, Mo.App., 170 S.W.2d 166, transferred, 352 Mo. 465, 178 S.W.2d 326; Crouch v. Tourtelot, Mo.Sup., 350 S.W.2d 799, and Superior Concrete Accessories v. Merle E. Kemper Co., Mo.Sup., 284 S.W.2d 482.

On October 3, 1962 Eaton and Interstate entered into a written contract, subject to approval by ICC, for the sale by Eaton and purchase by Interstate of all of Eaton's rights to operate as a common carrier of property in interstate commerce by motor vehicle, including rights evidenced by two certificates of convenience and necessity issued by ICC, for $105,000. Interstate agreed to apply for authority for the transaction, which was to be consummated within the period prescribed by ICC, 'but if the Interstate Commerce Commission, by final order, denies authority to transfer the involved rights, then Purchaser shall have the right to assign this contract to any person or corporation which is not a carrier as defined by the Interstate Commerce Act, provided that said assignment is made within thirty (30) days of the effective date of said final order and Seller receives written notice thereof within said period. Otherwise, neither party shall have any further rights or obligations hereunder.' The contract further provided that 'Pending final approval of this transaction, the parties will seek authority for Buyer to temporarily lease and operate,' and provided for payments of $1,600 per month by buyer to seller until an application 'for permanent authority to purchase said Certificate is disposed of; provided that if and when rental payments reach a total of One Hundred Five Thousand Dollars ($105,000.00), no further rental payments shall be required. * * *'

On October 4, 1962 Eaton and Interstate entered into an ancillary written lease of Eaton's operating rights to Interstate, by which the parties agreed to promptly file application with ICC for authority for transferee temporarily to conduct operations under transferor's rights; agreed that in the event such temporary authority was granted transferee should conduct operations as authorized by transferor's certificates 'until final determination of the application for permament authority,' and that transferee pay $1,600 per month during the period of such temporary authority. Such payments were agreed to be credited upon the purchase price 'in the event of approval of such transfer.' No further rental payments were to be required if and when rental payments reached a total of $105,000.

Interstate applied for and was granted temporary authority and on October 17, 1962 began operating thereunder between St. Louis and Kansas City.

Interstate's application for authority to sell and transfer was heard by an ICC hearing examiner who in March, 1964 filed a recommended report denying approval of the purchase by Interstate. The latter filed exceptions. At that juncture Eaton went into receivership. On November 16, 1964 ICC made an order adopting the hearing examiner's recommendations. Interstate filed a petition for further hearing. On February 10, 1965, by an order effective February 11, 1965, ICC denied Interstate's petition for further hearing, adopted the hearing examiner's recommended report and order, and set an effective date for the termination of operations by Interstate ninety days thereafter, on May 12, 1965. On February 13 or 15 Interstate's general counsel and secretary informed Eaton's receiver that ICC had denied Interstate's application that Interstate was not going to follow the procedure for judicial review, but that Interstate would be willing to join in such a procedure if Eaton or the receiver wanted a review; that there was a possibility that Interstate might want to exercise its right to assign the Eaton rights, in which event Interstate would want to work out some kind of an inter-line agreement. On February 18 Interstate's vice-president informed the receiver that Interstate was not going to assign the contract to a noncarrier and that the receiver should seek another buyer, arrange 'to get the rights in operation' and have his attorney call Interstate's general counsel and arrange for 'an orderly turnover' of the operation. Eaton's counsel communicated with Interstate's general counsel and confirmed the fact that Interstate was not going to seek judicial review or assign its rights. On February 22 Interstate's general counsel and secretary told an attorney for Eaton and its principal stockholders that the management and directors had decided not to appeal or seek to enjoin enforcement of the ICC order and not to assign the operating rights under the contract, but suggested that Interstate would be pleased if the receiver appealed the ICC order; that Interstate would cooperate in any reasonable way in furthering such an appeal. Counsel for Eaton 'told him very bluntly we (Eaton and the receiver) were not in any financial position to do this.' Interstate's representative said that Interstate would operate until May 12 but not thereafter. Eaton's counsel informed Interstate's representative that Eaton and the receiver would find a new purchaser or in some way try to save the operating rights from lapsing and being extinguished. Eaton and the receiver began looking for a new purchaser. Interstate revoked its powers of attorney with the freight tariff bureaus as they related to Eaton's rights; issued instructions to the bureaus that its tariff provisions were to be cancelled effective May 12, 1965, and cancelled the lease on its Missouri terminal premises at Windsor effective May 12, 1965. On March 10 Interstate's general counsel and secretary advised a creditor of Eaton that Interstate would terminate operations on May 12, 1965; that it did not intend to assign, but that Interstate hoped the receiver and the attorneys for the principal stockholders of Eaton would appeal, although they had 'heard nothing further from them.' Interstate paid its lease money for the month of May for the first twelve days only. Interstate did not at any time exercise its contractual right to make an assignment. On April 7, 1965, in reliance on the assurances and conduct of Interstate's...

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