Case Title: Prather v. Colorado Oil & Gas Corp.

Citation: 218 Kan. 111, 542 P.2d 297

Docket Number: 47,745

State: kansas

Court: Kansas Supreme Court

Date: 1975-11-08T00:00:00Z

Document:
218 Kan. 111 (1975)
542 P.2d 297
ROBERT L. PRATHER, Appellant,
v.
COLORADO OIL & GAS CORP., Appellee.
No. 47,745

Supreme Court of Kansas.
Opinion filed November 8, 1975.
Russell E. Grant, of Saums and Grant, of Wichita, argued the cause, and was on the brief for the appellant.
Joseph W. Kennedy, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, argued the cause, and Ken M. Peterson, of the same firm, was with him on the brief for the appellee.
The opinion of the court was delivered by
SCHROEDER, J.:
This is an action for damages by Robert Prather (plaintiff-appellant) against the Colorado Oil and Gas Corporation, d/b/a Derby Refining Company (defendant-appellee) for terminating *112 a sublease to a Derby gas station in Wichita, Kansas. Appeal has been duly perfected by the plaintiff from the trial court's order sustaining the defendant's motion for summary judgment.
The defendant (hereinafter Derby) defends on two grounds: First, that no valid written sublease was in force; and second, that the plaintiff ratified the defendant's termination of the sublease.
The motion for summary judgment was submitted to the trial court on the files, the pleadings, the request for admissions and the reply thereto and the deposition testimony of the plaintiff, Mr. Prather. Derby relies primarily upon the admissions and the deposition testimony of Mr. Prather.
Reviewing the record, as we must on a motion for summary judgment, it discloses Robert Prather had operated various gas stations since 1959. From September 1970 until April 1973 he subleased a Derby gas station at 3001 South Broadway in Wichita. In April of 1973 Derby officials decided to close the South Broadway station because the property owner wished to retake possession of the property. Mr. Wille, Derby's field supervisor, discussed with Mr. Prather the leasing of Derby's station No. 9193 located at 1001 West 31st Street South. At that time Mr. Wille unsuccessfully tried to convince Mr. Prather to operate the station as a self-service station.
On April 8 or 9, 1973, Mr. Prather entered into a mutual cancellation of his sublease agreement on his South Broadway station and signed a one year sublease on the West 31st Street station, No. 9193, on the form lease submitted to him by Mr. Wille. Mr. Prather thought this sublease agreement was the same normal service station sublease as on the South Broadway station. The South Broadway sublease required Mr. Prather to deposit with Derby the sum of $500 as security for faithful performance. This $500 was not returned to Mr. Prather upon the cancellation of the South Broadway sublease, but was retained by Derby and applied to the deposit on the new sublease of the West 31st Street station, No. 9193. The West 31st Street station sublease, submitted as an exhibit to the trial court, required Mr. Prather to deposit the sum of $1,000 as security for faithful performance. This fact was never called to Mr. Prather's attention, and he was not aware of it.
At the time Mr. Prather signed the West 31st Street station sublease, Mr. Wille had informed Mr. Prather that Derby had changed its mind about running the station on a self-service basis  that *113 Derby was going ahead to operate it as a leasing operation. Mr. Prather thought Mr. Wille signed the sublease on the 31st Street station when he signed it.
The terms of the South Broadway service station sublease under which Mr. Prather had been operating required Derby to supply the products for sale. Mr. Prather's profit on gasoline was five and one-half cents on regular gasoline and six cents on premium gasoline. Derby received two cents per gallon as rental. Mr. Prather was required to carry workmen's compensation insurance and public liability insurance coverage in the amounts specified in the lease.
Upon Mr. Prather's taking possession of the West 31st Street station No. 9193, operations under the new sublease were carried on in the same manner as at the prior station. Mr. Prather provided the insurance which was approved by Derby officials. Derby supplied the products and the profits from these sales were computed and paid upon the same basis as under the prior sublease. From April 10, 1973, to June 27, 1973, Mr. Prather operated station No. 9193 as a sublessee of Derby's without major controversy. The only disagreement between the parties arose in May of 1973 after Derby installed some self-service pumps, but did not convert his station to a completely self-service station. Although this action is not directly involved in the present controversy, a provision in the lease reads:
On June 25, 1973, Derby officials informed Mr. Prather they wanted to convert his station to a completely self-service station. They offered him a position as manager at a salary of $550 to $600 per month, which was less than Mr. Prather was making as a sublessee. Mr. Prather testified the Derby officials at first said he could decide whether to convert to a completely self-service station. But on June 26, 1973, the Derby officials made a unilateral decision to convert to a self-service station. They approached Mr. Prather at his home and informed him for the first time the sublease he signed in the field was not signed in Derby's office. They told Mr. Prather, *114 a high school graduate, he did not have a lease. Mr. Prather's narrative deposition testimony on this point was as follows:
Thus, on June 27, 1973, when Mr. Prather went to work Derby officials retook possession of his station, audited the pumps, and hired his employee to run the station. Mr. Prather signed the final audit document, relinquished his keys to the Derby officials, supplied $75 of his cash for making change, supplied the combination to the safe, agreed to sell his small amount of equipment and left the station. Mr. Prather admits no physical force or threats were used, but he justifies his leaving as avoiding a fight. He testified:
Ninety days later Derby officials sent Mr. Prather a check for $626.11 which he cashed. This represented a $500 security deposit on the station, commissions from sales and the value of Mr. Prather's equipment left at the station less credit card charge-backs.
In his reply to Derby's request for admissions Mr. Prather stated:
Based upon the foregoing admission of Mr. Prather, Derby attempts to sustain the judgment of the trial court. Derby contends Mr. Prather, with full knowledge of the facts, voluntarily accepted the return of the security deposit held by Derby under the sublease, and voluntarily accepted payment for goods sold to Derby as part of the transaction alleged to constitute a wrongful termination on the sublease, and therefore, by such conduct waived any claim he might have had against Derby.
Mr. Prather's petition sought damages in the sum of $14,000 for loss of income, the sum of $200,000 for loss of future earnings, profits and goodwill and the sum of $1,000,000 for punitive damages. The petition alleges that Derby by and through its officers, agents and employees, did wilfully, maliciously, and with force and duress, terminate his possession of Derby station No. 9193 by false and fraudulent acts in failing to execute the written lease agreement, which Derby presented to him upon his entering into possession of said premises, and by further representing to him that he did not have a lease agreement with Derby, and by the use of force and duress in taking over possession of said service station premises, with intent and purpose to convert said premises to its own use and purposes. The trial court later permitted Mr. Prather to amend his petition to include an allegation that the acts and conduct of Derby were oppressive.
Derby's brief says for the purposes of this appeal we must assume what Mr. Prather says is true, that he did have a one year sublease on station No. 9193, that Derby "took over" the station on June 27, 1973, and that this was done without his consent. Thereupon Derby argues that after assuming all this there is no basis whatsoever for a charge of fraud against Derby simply because no facts alleged in Mr. Prather's petition, nor any testimony given at his deposition, remotely tend to substantiate the charge. Derby argues the only representation complained of is that Derby's employees told Mr. Prather that Derby had not signed the sublease, which was true.
As we read Derby's brief, this maneuver on their part to recognize *116 that Mr. Prather had a valid sublease on station No. 9193, attempts to hurdle the issue of fraud. An issue of fact to be determined in the trial court was whether Mr. Prather had a sublease on station No. 9193. If from the evidence it is established that Mr. Prather had a sublease, the conclusion is inescapable that the representation by Derby's officials to Mr. Prather that he had no lease was false. And, if it was false, Mr. Prather was induced to act upon such false premise in relinquishing possession of the station as he did, and in accepting and cashing the $626.11 check from Derby.
When Mr. Prather cashed the $626.11 check he was still laboring under the belief he had no lease. He said in his answer to request for admissions, "I had not been told otherwise at that time."
Derby argues that at the very time when the Derby employee was "taking over" station No. 9193 by auditing the pumps, Mr. Prather was selling Derby cash, mops, brooms and other items which he knew would be used in the continued operation of the station. It is contended the act of Mr. Prather in selling such items to Derby was part and parcel of, and cannot be separated from, Derby's act of "taking over" the station. It is argued that when Mr. Prather accepted payment for those items, some 90 days later, with full knowledge of the facts, he thereby ratified the entire transaction and waived any claim he might have had against Derby. (Citing, Jones v. Jones, 161 Kan. 284, 292, 167 P.2d 634.)
For the reasons hereafter assigned we think Derby's position is untenable.
Once a valid sublease on the West 31st Street station, No. 9193 is found to exist between Derby and Mr. Prather, Derby is bound by its provisions, and cannot interfere with the sublease and defeat Mr. Prather's rights. (See, 49 Am.Jur.2d, Landlord and Tenant, § 47, p. 89 and § 280, p. 293.) The lease of a gasoline service station is generally governed by the principles of law and equity applicable to all leases. (Annots., 83 A.L.R. 1416 [1933] and 126 A.L.R. 1375 [1940].)
Thus, when Derby as lessor "took over" the possession of the station in question Mr. Prather had a cause of action for breach of the sublease.
The next question is whether Mr. Prather has waived, or ratified the breach, or is estopped to seek redress in damages from Derby.
On the record here presented great importance cannot be attached to Mr. Prather's alleged acquiescence in the take-over. *117 Actual ouster or physical dispossession is no longer necessary. (49 Am.Jur.2d, Landlord and Tenant, § 301, p. 316.) Forceful ejectment is not required to perfect legal rights. Thus in Woods v. Kirby, 238 Ark. 382, 382 S.W.2d 4 (1964) a farm tenant was held not to have waived his claim for damages for wrongful eviction by voluntarily surrendering possession of the land instead of waiting to be ousted by the sheriff.
Derby contends Mr. Prather's acceptance of the $626.11 check with full knowledge of past events is a conclusive bar to his damage suit. Theories of ratification, waiver and estoppel are said to support the appellee. As a general legal principle Mr. Prather's actions fall short on all of these theories.
Ratification has been defined as the acceptance of the result of an act with an intent to ratify, and with full knowledge of all the material circumstances. (Frazier v. Railway Co., 97 Kan. 285, 288, 154 Pac. 1022; and Porterfield v. Farmers Exchange Bank, 327 Mo. 640, 37 S.W.2d 936 [1931].) Here the appellant's deposition testimony does not establish the critical intent required to ratify. Mr. Prather was falsely told he had no contract, and believing the representation to be true he responded as if he had no valid sublease.
For the same reason Mr. Prather's actions fall short of waiver, which has been defined as the intentional relinquishment of a known right. (Schneider v. Washington National Ins. Co., 200 Kan. 380, 398, 437 P.2d 798; Jones v. Jones, 215 Kan. 102, 116, 523 P.2d 743, cert. denied, 419 U.S. 1032, 42 L. Ed. 2d 307, 95 S. Ct. 515; and Flott v. Wenger Mixer Manufacturing Co., 189 Kan. 80, 90, 367 P.2d 44.) The intent to waive known rights is essential.
Equitable estoppel is nonconsensual in nature. Estoppel is recognized to defeat the inequitable intent of the party estopped. (Flott v. Wenger Mixer Manufacturing Co., supra.) As a general rule, only the innocent may invoke estoppel. (Jefferson Life & Cas. Co. v. Johnson, 238 Miss. 878, 120 So. 2d 160 [1960]; and 28 Am.Jur.2d, Estoppel and Waiver, § 79, p. 719.) This court has indicated one must act in good faith to invoke estoppel. (Board of County Commissioners v. Brown, 183 Kan. 19, 325 P.2d 382.)
The elements of equitable estoppel are well defined in Place v. Place, 207 Kan. 734, 739, 486 P.2d 1354. Here we do not have a similar fact situation and Derby does not contend in its brief the doctrine of equitable estoppel is applicable to this case. In the posture which this case comes before the court Derby is not an innocent party.
*118 Even if Derby qualified as an innocent party, the mere cashing of a check for liquidated sums of money due or for money previously earned, whose value is not disputed, is not an estoppel in every case. (Harrison v. Henderson, 67 Kan. 194, 72 Pac. 875.)
Mr. Prather's statement that the check was not intended to constitute a release and that it was not accepted as a release must be accepted as true for purposes of this appeal. (Manning v. Woods, Inc., 182 Kan. 640, 324 P.2d 136.) Issuable facts are joined by the pleadings and the appellant is entitled to a determination of the same by a trial of the facts. (Manning v. Woods, Inc., supra. See also, Asher v. Greenleaf, 68 Kan. 29, 32, 74 Pac. 633; Barnes v. Mid-Continent Casualty Co., 192 Kan. 401, 388 P.2d 642; Kohn v. Babb, 204 Kan. 245, 252, 461 P.2d 775; and Amino Brothers Co. Inc. v. Twin Caney Watershed District, 206 Kan. 68, 476 P.2d 228.)
In support of its argument Derby relies on Moore v. Farm & Ranch Life Ins. Co., 211 Kan. 10, 505 P.2d 666. There the Moores sought to recover from Farm and Ranch Insurance Company damages for misrepresentation in the sale of life insurance policies. After the Moores had discovered all of the facts, including the fraud, which may have entitled them to recovery, they made payments under the contract, testified they regarded the insurance as binding and in force, and demanded and received insurance dividends due under the policy. Taken as a whole this court held the Moores had waived their right to recover. The court used the following language:
The Moore case is easily distinguished from the facts here because the Moores knew of the fraud practiced upon them when they accepted further benefits under the insurance contracts. Here Mr. Prather did not know of the fraud  the fact that he did have a valid contract  when he was told by Derby officials that he had no contract.
*119 A case directly in point is Wolf v. Brungardt, 215 Kan. 272, 524 P.2d 726, where the court said:
A similar case on delay in discovering the fraud is Dreiling v. Home State Life Ins. Co., 213 Kan. 137, 515 P.2d 757.
It has been held that fraud vitiates whatever it touches including final judgments and final orders as well as contracts. (Stegman v. Professional & Business Men's Life Ins. Co., 173 Kan. 744, 252 P.2d 1074.)
Reviewing the record in this case as we must, there is substantial evidence from which it may be found Mr. Prather had a valid sublease with Derby. Mr. Prather's sublease had not been signed by any Derby official. Yet Mr. Prather gave valuable consideration for the sublease on the West 31st Street station, No. 9193, when he mutually agreed to terminate his South Broadway sublease. The security deposit of $500 was not then returned to Mr. Prather, but was carried as a security deposit under the new lease. Mr. Prather was given possession of the new premises at the West 31st Street station, No. 9193, and supplied products by Derby under the same terms and conditions as he had operated under the previous lease. For two and one-half months the terms of the lease, apparently satisfactory to Derby and with which Derby reasonably complied, were the basis upon which the station was operated by Mr. Prather. When the Derby officials told Mr. Prather he had no lease because no official had signed it, Derby fraudulently induced a false impression in the mind of Mr. Prather as to the legal nature of their transaction, both at the time the Derby officials took over the station and at the time Mr. Prather cashed the check for $626.11, 90 days later.
Under these circumstances the trial court erroneously sustained Derby's motion for summary judgment.
In announcing its decision the trial court did not state the legal principles controlling the decision. It was incumbent upon the trial judge to comply with K.S.A. 60-2702 (Rule No. 116, Rules *120 of the Supreme Court, 214 Kan. xxxvii) which has been held to apply to summary judgments in Cherry v. Vanlahi, Inc., 216 Kan. 195, 531 P.2d 66 and Scott v. Day and Zimmerman, Inc., 216 Kan. 458, 532 P.2d 1111.
Compliance with the rule may have alleviated some of our problems on appeal.
The judgment of the lower court is reversed.
MILLER, J., not participating.