Opinion ID: 1526964
Heading Depth: 1
Heading Rank: 2

Heading: Chevron U.S.A. The Claim of Apparent Agency

Text: Plaintiffs do not contend that a master-servant relationship existed between Chevron U.S.A. and Walker's Chevron, and the facts of record would not support the contention if made. Rather, plaintiffs contend that Chevron U.S.A. is liable for the negligent acts of employees of Walker's Chevron because Chevron U.S.A. influenced the plaintiffs to believe that Weeks was its employee and, reasonably relying on that apparent relationship and the care and skill that the plaintiffs believed a mechanic employed by Chevron U.S.A. would possess, they entrusted the repair to Weeks, to their detriment. This theory of liability, most often referred to as apparent agency or agency by estoppel, [4] was before us in B.P. Oil Corp. v. Mabe, supra , and more recently in Mehlman v. Powell, 281 Md. 269, 378 A.2d 1121 (1977). As we pointed out in B.P. Oil Corp. v. Mabe, supra , the law applicable to the plaintiffs' claim against Chevron U.S.A. is that set forth in Restatement (Second) of Agency, § 267 (1958): One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such. In order to recover on this theory, in addition to showing that Weeks was negligent and that his negligence was a proximate cause of the ensuing damage, plaintiffs must show that: 1) they were misled by appearances by Chevron U.S.A. into believing that Weeks was an employee of Chevron U.S.A.; 2) this belief was objectively reasonable under all the circumstances; and, 3) they relied on the existence of that relationship in making their decision to entrust Weeks with the repairs. See B.P. Oil Corp. v. Mabe, supra, 279 Md. at 644-45, 370 A.2d 554. See also Drexel v. Union Prescription Centers, Inc., 582 F.2d 781, 791 (3rd Cir.1978). One commentator has described the first two requirements in these terms: The first [test] is objective: could a reasonable man believe that the company's manifestations of apparent authority indicate it is holding the operator out as its agent? The second is subjective: did the facts known by the plaintiff in a particular case reasonably justify his assumption that the operator was the company's agent? Comment, Service Stations Torts: Time for the Oil Companies to Assume Their Share of the Responsibility, 10 Cal.W.L.Rev. 382, 394-95 (1974). Comment a to § 267 of the Restatement (Second) of Agency discusses the third requirement: The mere fact that acts are done by one whom the injured party believes to be the defendant's servant is not sufficient to cause the apparent master to be liable. There must be such reliance upon the manifestation as exposes the plaintiff to the negligent conduct. We shall assume, without deciding, that summary judgment could not properly have been entered on the questions of whether the plaintiffs subjectively entertained the belief that Weeks was an employee of Chevron U.S.A., and whether Weeks was engaged by the plaintiffs to make the repairs as a result of that belief. We hold, however, that summary judgment was correctly entered in favor of Chevron U.S.A. on the ground that any belief so held by the plaintiffs was not objectively reasonable under all of the circumstances. Most of the alleged indicia of control relied on by these plaintiffs were identical to those relied on by the plaintiff in B.P. Oil Corp. v. Mabe, supra. The Lesches related by affidavit that: The station was known as Walker's Chevron, Inc. There was a large sign bearing the Chevron logo which was located on the parking lot of the station. The gasoline pumps had Chevron decals. The service vehicles had Chevron decals on each door. There was a Chevron emblem and slogan on the door to the service bay. There were other Chevron decals on the poles supporting the canopy over the full service island, as well as on the office desk. The gas station employees wore uniforms with Chevron emblems on them, and the gas station service tickets had the Chevron emblem on them. There was no indication at the service station that it was not associated with Chevron in any respect.    Also, Walker's Chevron identified itself as a Chevron service station in the local yellow pages. From this, the Lesches said it was evident to us that Walker's Chevron was associated with Chevron, a national oil company, and they thought that Chevron U.S.A. would stand behind any repair. In B.P. Oil Corp. v. Mabe, supra, 279 Md. at 640, 370 A.2d 554, we quoted the following passage from Coe v. Esau, 377 P.2d 815, 818 (Okla. 1963): It is indeed a matter of common knowledge and practice that distinctive colors and trademark signs are displayed at gasoline stations by independent dealers of petroleum product suppliers. These signs and emblems represent no more than notice to the motorist that a given company's products are being marketed at the station. We also quoted from Reynolds v. Skelly Oil Co., 227 Iowa 163, 171, 287 N.W. 823, 827 (1939), as follows: The argument of appellee that the Skelly Oil Company was estopped because of the signs displayed and that, because of such signs, there was a presumption that the station was owned by the Skelly Oil Company has no support in reason or authority. [One may a]s well argue, that because the word `Chevrolet' or `Buick' is displayed in front of a place of business, General Motors would be estopped to claim that it was not the owner of the business. It is a matter of common knowledge that these trademark signs are displayed throughout the country by independent dealers. This common knowledge line of reasoning has been followed by many courts throughout the country. See, e.g., Watkins v. Mobil Oil Corp., 291 S.C. 62, 352 S.E.2d 284, 287 (1986) (sale of Mobil products, presence of Mobil signs and emblems on uniforms, and station trading as North Main Mobil was not sufficient evidence to establish apparent agency); Wood v. Shell Oil Co., 495 So.2d 1034, 1039 (Ala. 1986) (presence of oil company's distinctive logo displayed on signs, literature, products, and uniforms is not sufficient evidence, in itself, to establish apparent agency because it is common knowledge among the general public that such a logo is often displayed by independent dealers and that the only representation made by such displays is that the oil company's gasoline is sold at the service station); Stephens v. Yahama Motor Co., Ltd., 627 P.2d 439, 442 (Okl. 1981) (display of two Conoco signs at service station not sufficient to establish apparent agency because it is common knowledge that such signs are displayed by independent dealers); Apple v. Standard Oil, Division of American Oil Company, 307 F. Supp. 107, 115 (N.D.Cal. 1969) (mere fact that service station sold Amoco gasoline and displayed Amoco signs did not constitute a holding out sufficient to give rise to a finding of apparent agency). In Mehlman v. Powell, supra, 281 Md. at 274, 378 A.2d 1121, Judge Eldridge made this cogent observation for the Court: [I]n B.P. Oil Corp. v. Mabe, supra , it was necessary to distinguish between the products offered for sale and the automotive services provided by the attendant. The mere fact that BP products are advertised for sale does not, in itself, justify the inference that BP is as well directly providing automotive services. (emphasis in original). A similar distinction was drawn by the District Court of Appeal of Florida in Cawthon v. Phillips Petroleum Company, 124 So.2d 517, 521 (Fla.App. 1960). See also Sydenham v. Santiago, 392 So.2d 357 (Fla.App. 1981); Ortega v. General Motors Corp., 392 So.2d 40 (Fla.App. 1980). Compare Orlando Executive Park, Inc. v. Robbins, 433 So.2d 491, 493-94 (Fla. 1983) (distinguishing oil company cases from other apparent agency situations). The Lesches, however, point to additional factors that they believe militate in favor of a finding of apparent agency. First, they note that Chevron U.S.A. allowed them to charge their purchases of products and repairs on a VISA credit card. [5] We do not view that fact as an indication that Chevron U.S.A. controlled the details of the operation of Walker's Chevron. It is common knowledge that major oil companies accept credit card purchases, not only of their products, but of virtually anything sold by a service station, which, at least of fairly recent date, may even include grocery as well as automotive items. Moreover, it is common knowledge that many gasoline service stations accept several different major oil company credit cards. Whatever reasonable conclusions one might legitimately draw from the widespread use of credit cards in today's society, we are not convinced that there may be numbered among them the conviction that the party furnishing the credit card slip and cooperating with the credit card company and issuing bank enjoys the control of an employer over those whose bill is paid by the charge. Additionally, the Lesches claim that Chevron U.S.A., although expressing concern in its internal communications about the use by independent dealers of the word Chevron in corporate names, failed to require Walker's Chevron, Inc. to change its name. We believe Chevron U.S.A.'s principal concern was with the mandate of federal law [6] that it continually monitor the use of, and protect, its hallmark, at the risk of losing it. We do not believe that the inclusion of the word Chevron in the corporate name of Walker's Chevron to be a significant factor in favor of the plaintiffs' claim of a reasonable belief that Chevron U.S.A. was the master of the employees of this station. The station had been known as Walker's Chevron long before the decision to incorporate had been made. The plaintiffs next advance an argument that, given slightly altered circumstances, might have proven persuasive. The argument deals with a campaign designed to encourage Chevron customers to utilize the service facilities of their dealers in addition to purchasing Chevron products. It is in the area of advertising that some courts have found that major oil companies, already perilously close to broad liability by reason of what appears to be rather than what really is, have occasionally gone over the precipice. See, e.g., Gizzi v. Texaco Inc., 437 F.2d 308 (3rd Cir.1971) (national advertising slogan You can trust your car to the man who wears the star in addition to usual indicia of branded station); Chevron Oil Company v. Sutton, 85 N.M. 679, 515 P.2d 1283 (1973) (Chevron advertised in telephone directory that its repairmen were skillful). The advertising program involved in the case before us was Chevron U.S.A.'s We Care program. Initiated in 1976, it provided to station owners, at a modest cost, a package of materials for display and distribution. Known as a point-of-sale program, it was apparently not accompanied by any national or local media advertising. Central to the We Care program was a dealer-customer pledge, framed for posting in the station, which read as follows: