Standard Oil Company of California v. Perkins

• Citation: 347 F.2d 379
• Decision Date: 03 September 1965
• Docket Number: No. 18928,19352.,18928
• Parties: STANDARD OIL COMPANY OF CALIFORNIA, Appellant, v. Clyde A. PERKINS, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

347 F.2d 379 (1965)

STANDARD OIL COMPANY OF CALIFORNIA, Appellant, v. Clyde A. PERKINS, Appellee.

Nos. 18928, 19352.

United States Court of Appeals Ninth Circuit.

June 14, 1965.

Rehearing Denied September 3, 1965.

COPYRIGHT MATERIAL OMITTED

Francis R. Kirkham, Richard J. MacLaury, Thomas E. Haven, Pillsbury, Madison & Sutro, San Francisco, Cal., Wayne Hilliard, James H. Clarke, Koerner, Young, McColloch & Dezendorf, Portland, Or., for appellant.

Roger Tilbury, Portland, Or., for appellee.

Before POPE, KOELSCH and DUNIWAY, Circuit Judges.

KOELSCH, Circuit Judge.

In 1953, Standard Oil Company of California entered into a consignment contract with Clyde A. Perkins, Lee G. Powell and the Harris Oil and Distributing Companies.¹ The contract permitted the consignees to sell Standard's petroleum products on a "non-exclusive basis" in designated areas of Washington and Oregon. Those areas were "outlined and indicated on the print marked Exhibit B, attached" to the contract and "made a part" thereof. Exhibit B consists of two maps, both of which clearly include the Yakima, Washington area as part of the territory in which consignees could distribute Standard products.

In 1956 a new contract was executed which "terminated and superseded" the 1953 contract. After operating under the 1956 agreement for two years, Perkins terminated his relations with his co-consignees and Standard. In 1959 he then commenced an action in the Superior Court of the State of Washington against Standard, seeking damages for breach of contract. The action was predicated on Standard's refusal to provide Perkins with products for distribution in the Yakima area.

Alleging diversity of citizenship between the parties, Standard sought and obtained removal of the action to Federal District Court.² Standard then moved to dismiss the action, on the ground that Powell (a Washington resident) and the Harris Companies were indispensable parties. Perkins then amended his complaint to join Powell and the Harris Companies as defendants, after they refused to join with him as parties plaintiff.

Standard then moved to dismiss the action on the ground that diversity jurisdiction was lost, since Perkins and Powell were both citizens of Washington. The district court thereupon realigned Powell and the Harris Companies as parties plaintiff to preserve diversity jurisdiction, and denied the motion to dismiss, 29 F.R.D. 16. The cause was then tried to a jury, which rendered a substantial verdict in favor of Perkins.

Standard moved for judgment notwithstanding the verdict and for a new trial; after these motions were denied and judgment was entered Standard appealed. Thereafter Standard filed a motion in the district court for relief from judgment pursuant to Rule 60(b).³ At the request of the district court, we remanded the case to permit that court to consider the latter motion. Thereafter, a hearing was held in the district court and the motion for relief was denied. Standard then filed an appeal from the latter ruling. This court ordered both appeals consolidated, for the purpose of briefing, argument and determination.⁴

I.

We reject Standard's threshold contention that diversity jurisdiction was lacking. In substance, it is Standard's view that Powell is an indispensable party; that his interests are "adverse" to Perkins, requiring his alignment as a defendant; and that proper alignment would destroy diversity among the parties. These same arguments were presented to the district court, which realigned the parties upon an examination of their "real and true interests." Perkins v. Standard Oil Co. of California, 29 F.R.D. 16 (D.C.Or.1961).

Nothing before us demonstrates that Powell was asserting an interest in the claim; nor do we find that Powell's position was "adverse" to that of Perkins in the sense that required him to be made a party defendant. To say that Powell did not agree with Perkins that an action should have been brought, is not to say that he occupied the position of a defendant having an immediate stake in the suit. We believe the district court's realignment finds support in these cases. See Poole v. West Point Butter and Cheese Ass'n, 30 F. 513 (C.C.Neb. 1887) Appeal Dismissed, 140 U.S. 694, 11 S.Ct. 1026, 35 L.Ed. 600; Cf. Federal Mining and Smelting Co. v. Bunker Hill & Sullivan M. & C. Co., 187 F. 474 (D.C. Ida.1909); Henley v. Protective Life Ins. Co., 95 F.Supp. 988 (D.C.Miss.1951).

II.

We need pause only briefly to deal with Standard's contention that the jury erred in determining that the Yakima area was included as part of the marketing territory allotted to Perkins and his co-consignees. The rule is long settled that it is "an undue invasion of the jury's historic function for an appellate court to weigh conflicting evidence, judge the credibility of witnesses and arrive at a conclusion opposite from the one reached by the jury." Cf. Lavender v. Kurn, 327 U.S. 645, 652-653, 66 S.Ct. 740, 744, 90 L.Ed. 916 (1946). And here, the map appended to and made a part of the contract was convincing physical evidence from which the jury could rationally conclude that the Yakima area was indeed a territory allotted to the consignees. The jury was neither required to nor apparently did it believe Standard's assertion that the Yakima area had been included as part of the consignees' territory by mistake.

III.

Two procedural issues are raised, the proper resolution of which, Standard contends, operate to bar this action. Neither, in our estimation, has compelling merit.

In the first, Standard argues that Perkins' failure to comply with a contractual provision requiring him to give Standard notice of any claim of breach precludes his action. The contract provides "In the event of any breach by Standard of any provision of this agreement, consignee shall give Standard written notice of any such breach and Standard shall have five days within which to comply with the provisions breached. If said breach is not corrected within said five-day period, consignee may, at its option, terminate this agreement by giving Standard 25 days' notice thereof in writing."

Nowhere in the agreement is notice made an express condition precedent to suit. And a court will not imply that a covenant is a condition unless it clearly appears the parties so intended it, particularly when the limitation period provided by the contract is very short. It bears emphasis that we here deal with a so-called "adhesion" contract prepared by Standard.⁵ Provisions in such contracts should be construed in accord with the understanding attached to them by laymen unversed in the law. We think that had Standard intended this particular provision to operate as a condition precedent to suit, it could have manifested such intention by language leaving far less to implication than did this.

Moreover, as Professor Merrill has stated in his text:

"The vast majority of decided cases accord to the pleadings filed in litigation an equivalence to the formal service of notification upon the opposite party. This is true not only of demands for the performance of duty owed where law and contract are silent, but also of that numerous class of cases in which statute or contract prescribed notification by the plaintiff to the defendant if he is to maintain suit. The common sense reasoning of the judges in these cases that the separate notification is a vain thing upon which the law ought not to insist and that the contracts prescribing notification in general terms are not commands of limitation but of information * * *" 2 Merrill on Notice § 763 at pp. 189-190 (1952).

In short, to accord the contractual provision the effect contended for by Standard would be neither warranted by the express language of the contract nor by sound considerations of policy.

So it is likewise with the contention that the 1956 agreement which "terminated and superseded" the agreement sued on would thus divest plaintiff's cause of action. Parties may of course contractually extinguish prior vested rights. Whether they have done so, however, is a question of intent. See Grider v. Turnbow, 162 Or. 622, 94 P.2d 285, 290-291 (1939).

We are of the view that when rights are created not by the contract itself, but vest as an incident of its breach, it takes language more explicit than a general expression of intent to terminate and supersede the terms of the earlier contract to divest them. See 5A Corbin, Contracts § 1236 at pp. 534, 538-40 (1964). Reduced to its simplest terms, the contrary rule contended for would make a provision to "terminate and supersede" an implied release. And an implied release premised on general and equivocal language should not and will not be lightly inferred. We are not inclined to sanction what could become "traps for the unwary," particularly when, as here, an adhesion contract is involved. See generally, 45 Am.Jur., Release § 26 (1943).

IV.

The crucial question in the case involves the interworking of the so-called "going business" rule of damages with the effect of the parol evidence rule. Standard points out that unless plaintiff operated a going business there can be no valid evidence of damage because his loss is too speculative and not reasonably certain. See Buck v. Mueller, 221 Or. 271, 351 P.2d 61, 66-67 (1960); Putnam v. Lower, 236 F.2d 561, 571-572 (9th Cir. 1956). Standard acknowledges that there is an exception to this rule, where the plaintiff has been given an exclusive agency within a territory and the defendant has breached the agreement by permitting another to sell products within the same territory.⁶ In that event, damages are reasonably ascertainable by simply measuring the profits made by the person supplanting the plaintiff. If, however, the agency is non-exclusive, Standard contends the going business rule applies in full vigor and all evidence of damage is excluded because of its speculative nature. Although Perkins would dispute a rigid application...