Shasta Douglas Oil Co. v. Work

• Decision Date: 04 February 1963
• Citation: 28 Cal.Rptr. 190,212 Cal.App.2d 618
• Court: California Court of Appeals Court of Appeals
• Parties: SHASTA DOUGLAS OIL COMPANY, a Corporation, Plaintiff and Appellant, v. William J. WORK and Frances Work, Defendants and Respondents. Civ. 10457.

Page 190

28 Cal.Rptr. 190

212 Cal.App.2d 618

SHASTA DOUGLAS OIL COMPANY, a Corporation, Plaintiff and Appellant, v. William J. WORK and Frances Work, Defendants and Respondents.

Civ. 10457.

District Court of Appeal, Third District, California.

Feb. 4, 1963.

Rehearing Denied Feb. 27, 1963.

Hearing Denied April 3, 1963.

Pickering & Marler, Redding, and Brobeck, Phleger & Harrison, San Francisco, for appellant Shasta Douglas Oil Co.

Leep & Saunders, Redding, and Benjamin Dreyfus, San Francisco, for respondents Work.

VAN DYKE, Justice pro tem.

This is an appeal from a portion of a judgment. Shasta Douglas Oil Company is hereafter referred to as 'appellant.' The two respondents are hereafter referred to as 'work.'

Appellant sued Work for possession of land and for money due and money misappropriated, totaling over $16,000. Its claims were upheld. Work cross-complained and claimed that by appellant's violation of California's Antitrust Law he had suffered damages. The jury awarded him the sum of $33,375. The court trebled the award under the provisions of the statute and offsetting appellant's claims, gave Work a net judgment for $83,987.94. Appellant appeals from this portion of the judgment.

On November 30, 1956, Work began operating a gasoline service station upon a parcel of real property in Redding owned by E. B. Hinkle & Son, Inc., a gasoline wholesaler, under an oral arrangement which contemplated that Work would eventually purchase the property. On April 1, 1957, this arrangement was reduced to a written contract whereby Hinkle agreed to sell and Work agreed to buy the property for $85,000, with no down payment, on minimum monthly installment payments, including principal and interest, of $450 per month.

Thereafter, for some 16 months Work bought gasoline from Hinkle and resold it at the station. By August of 1958 Work owed Hinkle some $12,000 on open account for gasoline. At that time Hinkle sold its business, including the property being purchased by Work, and assigned its contract with Work to appellant.

Hinkle had sold gasoline to Work, and Work had in turn resold to consumers. When appellant purchased the property and took an assignment of the Hinkle-Work contract, a change was made in the handling of gasoline through the service station. Appellant and Work entered into a written consignment agreement which provided that appellant would deliver gasoline to Work, which he would 'accept * * * on consignment, and * * * hold and sell * * * in accordance with the terms' of the contract. The contract provided that title to all gasoline delivered should remain in appellant until sold by Work; that he should sell the consigned gasoline at retail prices specified by appellant; that title to the proceeds of the sales remained in appellant; and that such proceeds were to be remitted by Work to appellant. Appellant agreed to pay Work a commission on the sale price computed by an agreed formula. The agreement further provided that it might be cancelled by either party at any time upon written notice of the other. Appellant and Work went along under the Hinkle-Work sales agreement, and under the consignment agreement, until August 1960. The sales agreement contained a provision that if Work became in default and remained so for 30 days, the contract automatically became a lease of the property from Hinkle to Work. All payments made by Work prior to default were to be treated as rental; and the contract would be forfeited and terminated, all monies paid by Work being retained by Hinkle.

In August 1960 appellant served notice on Work of the termination of the sales agreement for default. At that time Work was still indebted for $7,401.64 on the open book account arising out of gasoline purchased from Hinkle. He had also failed to pay over to appellant, and, as appellant charged, had misappropriated $7,495.82 of proceeds of gasoline consigned to him. In the 46 months he had been in possession of the premises he had paid $6,118 on the principal of $85,000 purchase price of the land. Following the notice of termination of the Hinkle-Work contract, and on September 1, 1960, appellant filed suit against Work to recover possession of the premises, obtained a writ of possession, and on the same day the sheriff installed appellant in possession under the writ. In order to recover the $7,401.64 due on the open account and the $7,495.82 proceeds of gasoline sold under consignment, appellant filed action against Work for said sums. By his answers to the several causes of action Work admitted the execution of the two contracts we have referred to, but otherwise merely interposed a general denial. No defense of illegality was interposed, nor was any attempt made to invoke the court's equity powers to relieve Work of his default or to preserve any equity in the property. Instead, Work filed a cross-complaint alleging in substance the following: That by the agreements of sale and consignment aforesaid appellant had unlawfully maintained a maximum schedule of prices for the sale of petroleum products to Work and had unlawfully maintained a minimum schedule of prices for the resale of petroleum products by Work to the general public; that appellant by said agreements had unlawfully required Work to purchase all of his petroleum products from appellant at the schedule prices set by appellant; that appellant in addition to being in the wholesale gasoline distribution business sold gasoline at retail; that by reason of the foregoing the acts, agreements and arrangements made by appellant were against public policy and were illegal and void as being in violation of section 16600 et seq. of the Business and Professions Code. Work alleged damage as follows: (a) Loss of equity in the real property $45,000; (b) loss of past profits $15,000; (c) loss of future profits $100,000.

The jury returned the following verdict: First cause of action, open book account, found for the plaintiff, Shasta Douglas Oil Company, and assessed damages at $7,401.64. Third cause of action, consignment agreement, found for the plaintiff, Shasta Douglas Oil Company, and assessed damages at $7,495.82. Complaint in action No. 25858, payments on property, found for the plaintiff, Shasta Douglas Oil Company, and assessed damages at $413.20. Cross-complaint, found for the cross-complainants Work and assessed damages as follows: $33,375 for loss of equity in the real property, $0.00 past profits, $0.00 future profits.

In order to discuss the issues raised on the appeal, it is necessary to consider the contractual relations between the parties. By the contract of sale of the real property Hinkle agreed to sell gasoline to Work to be sold by Work at his service station at the price it was generally sold to other dealers in the area. As to the price at which Work would resell to the public, the contract contained nothing, and Work was free to set his price for sale to the public at any figure that suited him. But when Hinkle assigned the land sales agreement to appellant, Work and appellant changed the relationship through the execution of the consignment agreement. Under that agreement Work did not buy gasoline from appellant. On the contrary, appellant consigned gasoline to Work, retaining title, and Work sold the gasoline to the public as the agent or factor of appellant. He agreed to account for all sales to appellant, and it was his breach of this duty that formed the basis of one of the counts in the complaint filed by appellant. The consignment agreement, therefore, constituted a modification of the land sales agreement and signally changed the relationships between appellant and Work with respect to the movement of gasoline through Work's station. As to the contractual relationships between Hinkle and Work before Hinkle assigned to appellant, it is not claimed, and could not be, that this contract in any sense violated the Cartwright Act. It fixed no price for resale and bound Hinkle to sell to Work at a price for Hinkle's products generally prevailing in the area. The change brought about by the consignment agreement likewise violated no provision of the Cartwright Act, for it is lawful for a consignor selling through a consignee to fix the price at which he authorizes the consignee to sell the goods of the consignor. (United States v. Standard Oil Co., D.C., 78 F.Supp. 850, 854; Gonzalez v. Derrington, Cal.App., 10 Cal.Rptr. 700, pp. 710-717; United States v. General...