Shell Oil Co. v. Parker

• Decision Date: 18 May 1972
• Docket Number: No. 350,350
• Citation: 265 Md. 631,291 A.2d 64
• Parties: SHELL OIL COMPANY v. Milton PARKER et al.
• Court: Maryland Court of Appeals

Page 631

265 Md. 631

291 A.2d 64

SHELL OIL COMPANY v. Milton PARKER et al.

No. 350.

Court of Appeals of Maryland.

May 18, 1972.

William H. Hicks, Baltimore (Robert R. Price, Jr., Centreville, on the brief), for appellant.

Richard A. Brown, Glen Burnie, and Edward C. Mackie, Baltimore (John S. Mahle, Jr., Baltimore, on the brief), for appellees.

Argued before HAMMOND, C. J., and BARNES, FINAN, ^* SINGLEY and SMITH, JJ.

BARNES, Judge.

The appellant, Shell Oil Company, defendant below (Shell), challenges a judgment entered upon a jury's verdict for $1.00 nominal damages and for $75,000.00 punitive damages in the Circuit Court for Queen Anne's County (Turner, J.), contending that the appellees, Milton and Frank Parker, plaintiffs below, (1) failed to give timely written notice of their claim within the terms of the written contract between Shell and the Parkers; (2) the action was barred by the three year Statute of Limitations; (3) the jury should not have been allowed to consider punitive damages in the absence of actual or compensatory damages; and (4) the jury should not have been allowed to consider punitive damages in the absence of legally sufficient evidence of actual malice on the part of Shell. We have concluded that the third contention of Shell is correct and we will reverse the judgment in regard to punitive damages and affirm the $1.00 award of nominal damages, without finding it necessary to consider the legal sufficiency of the evidence in regard to actual malice.

The basic facts are not in dispute and covered a period of several years. The Parkers (who are brothers) in 1947 or 1948 had purchased land on Maryland Route 3 (then Route 301) approximately four miles south of Glen Burnie, Anne Arundel County, known as 4300 Belle Grove Road, where they erected a machine shop. A salesman representing Shell induced them to expand their business to include a service station for the sale of Shell products. The Parkers agreed and installed gasoline tanks and pumps.

A Dealer Sales Contract (the Contract) was executed on July 27, 1954 by Shell and the Parkers and is the only written evidence of the relationship between the parties. The primary period of duration in the Contract was for five years, i. e., from October 15, 1954, through October 14, 1959, with a provision for automatic renewal from year to year thereafter. There was a provision for termination by the Parkers at the end of the primary period or at the end of any subsequent contract year by giving 30 days' notice of termination at the end of any term. Shell had a similar right of termination at the end of the first or any subsequent contract year. Shell exercised this right in 1968 and there is nothing in the record to indicate that the Contract was not terminated in accordance with its provisions. The Contract also contained the usual type of provisions that Shell would sell its products which the Parkers as 'Dealer' would order during the Contract with certain stated minimum and maximum numbers of gallons of the respective Shell products during each contract year. The Contract in Paragraph 6 provided:

'6. CLAIMS. Shell shall have no liability to Dealer for any defect in quality or shortage in quantity of products delivered hereunder, unless Dealer gives Shell notice of Dealer's claim within five (5) days after delivery of the products in question, and Shell is given reasonable opportunity to inspect such products. Shell shall have no liability to Dealer for any other claim, and Dealer shall have no liability to Shell for any claim (except for indebtedness or relating to equipment), arising directly or indirectly out of or in connection with this Contract or any sales or deliveries of petroleum products by Shell to Dealer hereunder or otherwise, unless the claimant gives the other party notice of the claim within ninety (90) days after the date of the sale, delivery or other transaction or occurrence giving rise to the claim. Every notice of claim shall set forth fully the facts on which the claim is based.'

For several years, the relationship was satisfactory to both Shell and the Parkers. About 1960 or 1961, the highway was dualized and Route 301 was changed to Route 3. Shell about that time installed additional pumps on the premises of the Parkers, who, at a considerable expense to them, built additional driveways so that traffic on both sides of the highway could enter the Parkers' station.

Not long after the new driveways were installed, a gasoline station selling Shell products was opened on the southbound section of Route 3 approximately two blocks north of the Parker station. The Parkers were forced within seven or eight months to close down their southbound operation because of lack of business.

Shell, in 1961 or 1962, opened another service station approximately four miles south of the Parker station. In 1962 or 1963, Shell erected a sign, approximately 15 feet wide and 25 feet high 'from the ground up' which read:

'LAST SHELL BEFORE

INTERSTATE (695) (83) (95)

DEL. TURNPIKE (95)

N. J. TURNPIKE (nTPj)

FILL UP HERE . . . FREE INFO.'

This message to the public was false. The station of the Parkers was, in fact, the last Shell station before the highways mentioned on the sign. James H. Crouse, who was the second lessee from Shell of the station having the sign, informed Lowry, Shell's District Manager, that the sign was misleading. Lowry replied that he would not 'call that (the Parker station) a Shell station.'

The Parkers, from time to time, complained of the sign to salesmen of Shell and once to Shell's engineer; but nothing was done about it. Milton Parker testified that the income from the station generally declined after the sign was erected, credit card sales fell off immediately and those sales remained low until the Contract was terminated.

Mr. Crouse also testified that at a breakfast meeting with James E. Gerlock, also a District Manager for Shell, some months before the termination of the Parker contract, Gerlock told Crouse that he was going 'to kick Parker out.' When Crouse observed that the 'Parkers are honest (and) hard working * * * and they deserve to live,' Gerlock replied that the Parkers 'don't represent the Shell image as we would like to have it presented' and further stated that Frank Parker was a 'nut.' Gerlock also stated that he would 'get the (Shell) sign off the (Parkers') wall if it's the last thing I do.'

Over a 15-year period, Milton Parker had never missed a meeting of Shell dealers; but during the last few years prior to termination of the Contract, the Parkers were not notified of meetings and Shell salesmen stopped calling at the Parker station. The Parkers were not able to reach the Shell supervisory personnel by telephone and their telephone calls were not returned. Shell printed a portion of the building on the Parkers' station but left the painting job unfinished, claiming that Shell had run out of money to finish the work.

Shell terminated the Contract in October 1968. On November 20, 1968, the Parkers filed their declaration in this case in the Circuit Court for Anne Arundel County, claiming that Shell had erected the false sign 'for the specific purpose of diverting business from the 'independently owned' service station' of the Parkers 'to the 'company owned' service station' of Shell and that this action was part of an intentional and malicious plan to divert such business as alleged and in carrying out that plan, Shell had employed 'illegal, deceitful, and fraudulent means.' The Parkers claimed compensatory damages of $10,000.00 and punitive damages of $200,000.00. Shell pleaded the general issue plea, i. e. that it did not commit the wrongs alleged, and a special plea of the three year Statute of Limitations. On February 5, 1971, the action was removed to the Circuit Court for Queen Anne's County for trial. The trial was held on June 24 and 25, 1971, the only testimony at the trial being that offered by the Parkers and their witnesses, Shell offering no evidence even though Gerlock and other employees were present in court. The jury found a verdict in favor of the Parkers for 'the nominal one dollar and for the punitive $75,000.00.' Judgment was duly entered on the verdict. The trial court later declined to grant Shell's motion for judgment n. o. v. or, in the alternative, for a new trial and this timely appeal to this Court by Shell followed.

So far as the judgment for 'the nominal one dollar' is concerned, we are of the opinion that there was sufficient evidence to submit to the jury on the violations of the technical rights of the Parkers by Shell. These rights were continuing in nature and were not barred by the three year Statute of Limitations for the continuing violation during the three year period prior to the filling of the action. See Consolidated Public Utilities Co. of Westminster v. Baile, 152 Md. 371, 136 A. 825 (1927).

Nor were the violations barred by any failure of the Parkers to give notice under Paragraph 6 of the Contract inasmuch as the claim sued upon by the Parkers was a tort not arising out of or in connection with the Contract within the meaning of Paragraph 6 of the Contract which deals with shortage, defects in quality, or late deliveries of the Shell products mentioned in the Contract. Paragraph 6 does not purport to require the 90-day notice for independent torts of Shell and, indeed, such an attempted exoneration of Shell from its own malicious and illegal conduct may well be against public policy and void. See 17 Am.Jur.2d Contracts § 188, at 556-57. See also United States Telegraph Co. v. Gildersleve, 29 Md. 232 (1868).

Then, too, violations of the technical rights of the Parkers continued and the filing of the declaration was obviously sufficient written notice to Shell of such violations during the preceding 90-day period. We shall accordingly affirm the judgment for the nominal $1.00.

Appellants further claim that the jury...