Yoes v. Continental Oil Co.

• Decision Date: 04 January 1934
• Parties: YOES et al. v. CONTINENTAL OIL CO. et al.
• Court: U.S. District Court — Western District of Arkansas

5 F. Supp. 575

YOES et al. v. CONTINENTAL OIL CO. et al.

District Court, W. D. Arkansas, Fort Smith Division.

January 4, 1934.

G. L. Grant and G. T. Sullins, all of Fort Smith, Ark., for plaintiffs.

Warner & Warner, of Fort Smith, Ark., for defendants.

RAGON, District Judge.

The complaint of the plaintiffs joins the Continental Oil Company, N. H. Meads, and Fred Couch as defendants in this action. They allege that Meads was the agent and at all times employed by the defendant oil company in the management and distribution of its products from its office at Fayetteville, Ark., and, as such, directed and supervised the sale and delivery of the oil products under the instructions of the defendant oil company; they allege that the defendant Fred Couch was at all times in the employ of the defendant oil company, under the direct supervision of Meads, and was engaged in the distribution of the products of the defendant, and in so doing drove the truck of the defendant oil company, equipped with a large tank for the hauling of oil products of said company, which at the time of the alleged injury was being used by Couch for the purpose of delivering such products in Washington county, as directed by Meads.

The complaint further alleges that at the time of the accident the defendant Couch was in the course of his employment by the oil company and under the direction of Meads, and was driving the truck in a negligent manner, and in attempting to pass around the car in which the plaintiffs were driving he struck the front part of plaintiff's car, causing it to leave the road and run into a ditch, injuring the plaintiffs as specified in the complaint. The complaint alleges that, while driving in this negligent and careless manner, the defendant Couch was an employee of the oil company and operating said truck under the direction and supervision of Meads, and was acting in the line of duty, having delivered oil products of said oil company, and was returning therefrom.

A petition for removal from the Washington circuit court was filed by the Continental Oil Company, which petition was granted, and the case was removed to the Fort Smith Division of the Western District of Arkansas. The plaintiffs thereupon filed a motion in this court to remand the cause to the Washington circuit court.

The question to be determined is whether or not there was a fraudulent joinder of the defendants Meads and Couch with the Continental Oil Company upon the part of the plaintiffs. Therefore it is necessary to determine whether there was a joint liability of the defendants as stated in the complaint.

The Supreme Court of Arkansas, in an opinion delivered by Mr. Justice Smith in the case of Magnolia Petroleum Co. v. Johnson, 149 Ark. 553, 233 S. W. 680, 681, has passed upon facts similar to the facts involved in this case. In the Johnson Case the Magnolia Petroleum Company made a contract with one J. N. Smith, who was in the transfer business at Searcy, for the distribution and delivery of its oil products from its place of business in Searcy. The company supplied the containers for the oil and gasoline, while Smith, in consideration of the commissions paid, used the teams, wagons, and drivers employed by him in his transfer business. The company was not consulted in the employment or discharge of these men, whose wages were fixed and paid by Smith. One of these drivers, in delivering gasoline to the plaintiff, Johnson, through careless and negligent handling of the gasoline, caused the barn of Johnson to be set afire and burned.

One section of the contract between Smith and the company contained the following recitals: "It is expressly understood and agreed that the above rates of commission apply on sales made by agents, and the commissions to apply on sales made by salesmen, managers and others, and the commissions to apply on transfers between agencies, on home office contracts and on railroad contracts, are allowed as full compensation to agent for service to be rendered in connection with the proper handling of the company's business in territory assigned to the agency. The duties of the agent in return for said compensation, includes the proper care of stock placed in his charge, storage tanks, warehouse and other equipment, soliciting and carrying on business under the direction of the division manager, and other authorized representatives, and the making of deliveries, the collecting of accounts, the making of reports required, unloading cars, and such other services as may be required for the proper conduct of the business."

Another section of the contract provides that "* * * The company shall furnish, free of charge, all forms, stationery and postage for the proper conduct of the business, and that all other items of expense shall be assumed by the agent, Smith."

In construing this contract the court held: "The majority of the court are of the opinion that the facts stated made a case for the jury, and that the contract between the company and Smith created the relation of principal and agent, and that the company had reserved the right to control and direct the manner of making deliveries of oil, and that, while no directions were given in the particular instance as to the manner of delivering the oil to appellee, which caused the fire that destroyed the barn, the company had reserved the right of direction; and, in the discharge of all duties, whether performed by Smith himself or by men employed by him, in selling and delivering the oil, the work done was that of the company."

The test of joint liability as laid down in this case was stated as follows: "The test is, not whether the company...