Shell Oil Co. of California v. Wright

• Decision Date: 11 March 1932
• Docket Number: 23377.
• Citation: Shell Oil Co. of California v. Wright, 167 Wash. 197, 9 P.2d 106 (Wash. 1932)
• Parties: SHELL OIL CO. OF CALIFORNIA v. WRIGHT et ux.
• Court: Washington Supreme Court

9 P.2d 106

167 Wash. 197

SHELL OIL CO. OF CALIFORNIA v. WRIGHT et ux.

No. 23377.

Supreme Court of Washington, En Banc.

March 11, 1932

Appeal from Superior Court, Pierce County; E. D. Hodge, Judge.

Action by the Shell Oil Company of California against Elmer Wright and wife, doing business under the firm name of Elmer Wright Service Station, in which defendants filed a counterclaim. Judgment for plaintiff, and defendants appeal.

Affirmed.

BEALS and PARKER, JJ., and TOLMAN, C.J., dissenting.

Bartlett Rummell and Joseph A. Mallery, both of Tacoma, for appellants.

Rickabaugh & McElroy, of Tacoma, and Hyland, Elvidge & Alvord, of Seattle, for respondent.

HOLCOMB J.

On May 24, 1928, respondent leased the service station of appellants in Tacoma, Wash., for five years. The lease provided 'The rental for said premises shall be adjusted to a sum equivalent to two cents for each and every gallon of Shell gasoline purchased during the month for each and every month during the term of this lease. The lease will be credited each and every month with said rental on a merchandise statement issued for the following month's business; that is, rental for the month of August will be credited on September's statement.'

At the same time respondents subleased the same premises to appellants for the purpose of using the same as a service station for handling exclusively Shell gasoline, motor oils etc., and by the terms of the sublease appellants agreed to buy, and respondents agreed to sell, gasoline to appellants which stipulation in the sublease reads: '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 said sublessee not greater than the tank wagon price for commercial gasoline effective date of sale at Tacoma, Washington, said tank wagon price being no cents per gallon less than the sublessor's tank wagon price for commercial gasoline as determined and posted at sublessor's depot at Tacoma, Wash., including Wash. State Motor Vehicle Fuel Tax.'

Supplementary to the lease and sublease, by an offer made by letter on March 22, 1929, which was accepted and acted upon by appellants, respondent agreed to allow appellants an additional one cent per gallon for the term of the lease and sublease. The additional one cent per gallon allowed appellants came about by reason of respondent having extended credit to appellants in the sum of $1,000 for the purchase of gasoline from respondent, and appellants obligated themselves to repay that amount by the payment of one cent per gallon of gasoline purchased by them from respondent. Appellants paid the extra one cent per gallon on such gasoline, which was applied as payment on the terms of the contract so long as the lease and sublease remained in effect. In accordance with the provisions of the lease and sublease, which so permitted, appellants gave notice of cancellation thereof to respondent in May, 1930, which was acquiesced in by respondent, and it was stipulated at the trial that the contracts were canceled as of May 26, 1930.

Although the contracts provided that the rent should be paid by credit memorandum issued at the end of each month for the purchases during that month, about March 1, 1929, appellants requested respondent to give them the credit for the rent at the time of each delivery. Thereupon, by mutual agreement, from March 1, 1929, for the balance of the period during which the contracts were in force, the rent at the rate of 2 cents per gallon was deducted at the time of each delivery, from the tank wagon to appellants. For instance, as shown by exhibits introduced by respondent, the posted tank wagon prices issued from time to time showed the allowances therefrom, and the invoices delivered to appellants showed the deductions granted them. For example, in the month of April, 1929, the tank wagon price posted at the office of respondent was 18 1/2 cents. The invoices delivered to appellants billed the gasoline to them at 18 1/2 cents gross, less 2 cents for rent, and the 1 cent additional allowance, or a net of 15 1/2 cents per gallon. At a certain period in May the posted tank wagon price issued by respondent showed 18 1/2 cents less the 3-cent deductions, or a net of 15 1/2 cents. For a certain time in June the posted tank wagon price and the billing to appellants showed 19 1/2 cents as the price per gallon, which, with the 3-cent deductions, left 16 1/2 cents per gallon net. In July, 1929, the tank wagon price as posted in Tacoma was 20 1/2 cents. Appellants were billed at 20 1/2 cents gross, less 4 cents allowance, or a net of 16 1/2 cents, which allowances included the 2 cents for rent, 1 cent additional allowance as required by the letter of March 22, 1929, and an additional 1 cent to assist appellants in meeting competition. The same system was used continuously as shown by these exhibits; the posted tank wagon price at Tacoma being shown as it changed from time to time throughout the period from February 28, 1929, to May 26, 1930, when the contract was terminated as heretofore stated.

The complaint of respondent against appellants is to recover a balance of $351.19. Appellants admitted that on the original amount of credit extended there still remained $351.19 balance for merchandise received, but affirmatively alleged that they had at no time refused to buy from respondent as much gasoline and oil products as the market would absorb and that respondent, in violation of its contract, refused to fill the orders of appellants, and still did, at the time of pleading, refuse to deliver the orders to appellants, notwithstanding appellants had tendered cash payments for delivery of respondent's products in accordance with the terms of the contract. They further allege that they were ready and willing to purchase from respondent all the products of respondent which the public would buy at their place of business, and that their standing order for the products of respondent it had failed to fill and still refuses to deliver. They allege a counterclaim against respondents for $1,070.80, being 2 cents per gallon on the admitted purchase by appellant of 53,540 gallons of gasoline from respondent during the existence of the contracts. The trial court, after receiving all the evidence, some of which on behalf of respondent was undisputed, found that appellants had become indebted to respondent in the sum of $351.19 over and above all legal set-offs and counterclaims on account of merchandise purchased of respondent at the special instance and request of appellants. The leasing, subleasing, and subsequent modification of the contracts were found by the court to have been entered into and the cancellation of the contracts on May 26, 1930. The court also found that, after the contracts had been partially executed and on March 1, 1929, the modification was made to the contracts to the effect that, instead of a credit memorandum being delivered to appellants at the end of each month, a sum equivalent to 2 cents for each and every gallon of Shell gasoline should be deducted at the time of the delivery of the gasoline, due appellants as rental. It is further found by the court that respondent furnished invoices to appellants with the delivery of each load of gasoline during the period of the contract until its termination on May 26, 1930, in all of which statements the deduction of 2 cents for the rental on the premises was shown on each and every invoice, or that the invoices showed that the 2 cents was an adjustment on the lease contract between the parties. The court further found that appellants at all times accepted the deduction of 2 cents for rental as...