Court Opinion

ID: 9569548
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:14:49.262063+00
Date Added: 2024-06-11T12:03:27.017905
License: Public Domain

Herd, J.:
This is an appeal by Continental Oil Company (Conoco) from a judgment in favor of Ideal Truck Lines, Incorporated, holding Ideal did not owe Conoco $22,782.04 in federal excise taxes paid for Ideal by Conoco.
The facts are for the most part uncontroverted. Conoco is a major oil corporation operating out of Ponca City, Oklahoma. Ideal is a common carrier truck line operating out of Norton, Kansas. Ideal had been a direct retail sale consumer of diesel fuel from Conoco for a number of years. The time frame involved in this appeal is 1974 to 1978. In June 1974 the parties executed the following document:
*154"Ideal Truck Lines. Inc. June 19, 1974
P.O. Box 330
Norton, Kansas 67654 3520 West 75th Street
Prairie Village, Kansas
66208
We are pleased to quote you as follows, subject to the conditions on the reverse side of this form and your acceptance within_days after the above date.
Quantity 187,000 gal.
Conoco Product CONOCO #2 Diesel Fuel
Type of Delivery and/or Package Size Transport
Price 26.350/Gal.
F.O.B. Norton, Kansas
The volumes set out below are the maximum monthly quantities and are subject to change at any time in accordance with Continental’s product allocation program. Any product not taken during the month specified will be deleted from the total allocation and will not be delivered at a later date.
July 1974 38,500 gal. October 1974 39,500 gal.
August 1974 39,500 gal. November 1974 34,500 gal.
September 1974 36,500 gal. December 1974 32,500 gal.
Delivery Period: From July 1, 1974 to December 31, 1974
Price Escalation: Price will escalate with CONOCO’s normal consumer basing value price for CONOCO No. 2 Diesel Fuel which is 25.61<i/gal. on June 19, 1974.
Taxes: Unless otherwise stated herein, all prices are exclusive of taxes and such prices will be increased to the extent of any applicable tax or governmental charge now or hereafter imposed.
Shipment: Per above schedule
Terms of Payment: NET, 30 days.
If this offer is acceptable to you, please sign and return duplicate copy.
Accepted June 21, 1974
Continental Oil Company
Ideal Truck Lines, Inc., Buyer (Conoco)
By /s/ T. S. Bergin
Division Product Pricing
By /s/ Lester W. Long Assistant”
Conoco delivered diesel fuel to Ideal pursuant to the foregoing document, billing Ideal for the fuel plus federal tax on an invoice with a two line description: “Conoco No. 2 Diesel Fuel . . . Fed Tax . . . .”
Commencing January 1, 1974, and continuing through 1975, 1976, 1977 and 1978 Ideal sent letters authorizing Conoco to collect four cents per gallon excise tax on all diesel fuel it sold Ideal. The letters were written in the following form:
*155“January 1, 1974
Continental Oil Company
Drawer 471
Ponca City, Oklahoma
Gentlemen:
Please consider this letter your authorization to charge us the federal excise tax of 4 cents per gallon on all diesel and other special motor fuels purchased for highway use. This fuel will be delivered into storage facilities properly marked “tax paid fuel — for highway use” at the following location(s):
912 North State
Norton, Kansas 67654
In the event diesel or other special motor fuels are also purchased for non-highway use, separate storage facilities properly marked for non-highway use will be maintained for this fuel. If special fuel(s) delivered into storage facilities for non-highway use is subsequently used over the highway, we will report and pay the applicable federal excise tax directly to the Internal Revenue Service.
Yours very truly,
/s/ Fred L. Gilhousen
Ideal Truck Lines, Inc.
Norton, Kansas.”
Conoco complied with Ideal’s request for the year 1974 and until July 15, 1975. Thereafter until June 1978 Conoco failed to bill and collect the excise taxes from Ideal. Its statement rendered July 15, 1975, had a one line description: “Conoco No. 2 Diesel Fuel . . . $2,301.17.” This invoice was totaled out at $2,301.17.
Ideal paid Conoco the amount it was billed for. The excise taxes on diesel fuel sold to Ideal from July 15, 1975, to May 18, 1978, were neither collected nor paid by Conoco. Ideal assumed the taxes were included in the billing. Conoco sent Ideal price quotations from time to time on a printed quotation form which stated on the last line: “Prices in cents per gallon excluding Federal, State, and Local taxes.”
In June 1978, Conoco discovered it had failed to collect and pay Ideal’s excise tax for the three-year period amounting to $22,782.04. Upon this discovery, Conoco immediately made payment for the amount owed to the Internal Revenue Service and sent Ideal a statement on June 19, 1978, for reimbursement.
Ideal refused to reimburse Conoco for the taxes and this suit followed. The trial court found for Ideal on the theory there was no contract between the parties and since the mistake was unilateral uncoupled with fraud or undue influence a court of equity could not grant relief. This appeal followed.
For its first issue Conoco maintains that the invoices and letters *156constitute an agreement for the sale of diesel fuel and obligate Ideal to pay Conoco for the fuel plus four cents per gallon excise tax. Ideal denies a contract existed. Let us first examine the applicable statutes. K.S.A. 84-2-101 et seq. governs sales transactions such as this. K.S.A. 84-2-204 provides:
“(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
“(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
“(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.”
The trial court’s finding there was no contract is not supported by the evidence. Here the parties executed a written document dated June 19, 1974, providing for the sale of diesel fuel to Ideal. The agreement established the pricp and the maximum quantity of diesel fuel allocated to Ideal. It also quoted a current price and provided “[p]rice will escalate with CONOCO’s normal consumer basing value price for CONOCO No. 2 Diesel fuel which is 25.6l0/gal. on June 19, 1974.” It also provides a delivery period, place of delivery, terms and shipment schedule and states that unless otherwise stated all prices are exclusive of taxes. We hold the instrument is a valid contract between the parties. Thereafter the parties continued a course of dealing similar to that contracted for in 1974. Conoco would quote Ideal a price on No. 1 and No. 2 diesel fuel and Ideal would order what it needed at the quoted price for delivery in Norton. Conoco would then bill Ideal for the fuel and, as a separate item on the statement, for the excise taxes as authorized by its letters. We hold there was a valid contract entered into obligating Conoco to collect and pay the excise taxes on the fuel sold to Ideal. In consideration for Conoco’s obligation Ideal agreed to reimburse Conoco for the taxes.
The course of dealing continued on those terms until July 15, 1975, when Conoco mistakenly failed to bill Ideal for the taxes. Ideal paid the statements as submitted, never calling to Conoco’s attention the omission of the taxes. Ideal maintains it was unaware of the omission and misled by Conoco’s mistake. Let us review the history of the transactions between the parties. The original contract stated, “unless otherwise stated herein, all prices are exclusive of taxes . . . .” The statements rendered there*157under by Conoco contained a separate line item for taxes. The price quotations from Conoco to Ideal stated they excluded taxes. The price of fuel recited in the pertinent billing statements from Conoco coincided with the price quotations previously made from which Ideal ordered its fuel. And finally, the billing statements did not contain a separate line item for taxes. The foregoing evidence is uncontroverted. It is also sufficient to place a reasonably prudent person on notice the taxes were not included in the billing statements. In spite of this, Ideal argues it is not responsible for its taxes since it assumed they were included in the billings. Ideal cannot hide behind its failure to read the statements. It is a cardinal rule of evidence a person is presumed to have seen what he could have seen had he looked. See Horton v. Atchison T. & S. F. Rly. Co., 161 Kan. 403, Syl. ¶ 8, 168 P.2d 928 (1946). We hold Ideal knew or should have known its excise taxes were not being collected by Conoco. Ideal stood by permitting the oversight to continue. That was a mistake. The taxes are Ideal’s obligation. Conoco’s duty arose from the request by Ideal.
These facts do not support the trial court’s finding of a unilateral mistake on the part of Conoco. Instead the evidence clearly points to a mutual mistake of the parties in the performance of their obligations under the contract. Kansas law allows equitable relief upon a showing of mutual mistake. Campbell v. Fowler, 214 Kan. 491, 497, 520 P.2d 1285 (1974); Snider v. Marple, 168 Kan. 459, 465, 213 P.2d 984 (1950); Green v. Insurance Co., 112 Kan. 50, 53, 209 Pac. 670 (1922).
The issue here is whether restitution may be granted an aggrieved party where there is a mutual mistake in performance of a contract. The equitable principle of Nemo debet locupletari aliena jactura — no one should be unjustly enriched at the expense of another — is applicable. Restitution is based on justice, morals, equity and good conscience rather than contract or statute. 66 Am. Jur. 2d, Restitution & Implied Contracts § 4, p. 946. Restatement of Restitution § 1 (1937), makes this observation: “A person who has been unjustly enriched at the expense of another is required to make restitution to the other.” At common law the term “restitution” was used to describe the return or restoration of a specific thing or circumstance. It is now expanded to mean a general duty to do justice.
*158Kansas recognizes the general rule that restitution is a theory of recovery by an injured party. See Holloway v. Water Co., 100 Kan. 414, 167 Pac. 265 (1917); Osincup v. Henthom, 89 Kan. 58, 130 Pac. 652 (1913); Lowe v. Wells, 78 Kan. 105, 96 Pac. 74 (1908).
Further, once jurisdiction of the subject matter has been established, the court will take into consideration all matters before it to fully adjust the rights and equities of the parties. Place v. Place, 207 Kan. 734, 486 P.2d 1354 (1971); Koerner v. Custom Components, Inc., 4 Kan. App. 2d 113, 603 P.2d 628 (1979); Schaefer & Associates v. Schirmer, 3 Kan. App. 2d 114, 590 P.2d 1087 (1979).
The general rule in equity regarding mistakes is summarized in 5 Williston on Contracts § 1574 (rev. ed. 1937), as follows:
“One who by error in computation, or by mistake of any fact, pays a real or supposed creditor more than his due, or pays a debt previously discharged, may recover the over-payment; and generally speaking, money paid over under a mutual mistake of an essential fact, or under an unilateral mistake as to such a fact where the defendant has parted with nothing and the plaintiff has not received an expected return, may be recovered . . . .”
The case at bar involved the satisfaction by Conoco of a duty imposed on Ideal by statute. Under the law, a party who has discharged the obligation of another or who has performed beneficial services at another’s request is afforded a remedy to the extent of the benefit to the other party. Restatement of Restitution § 1 (1937) states:
“A person confers a benefit upon another if he gives to the other possession of or some other interest in money, land, chattels, or choses in action, performs services beneficial to or at the request of the other, satisfies a debt or a duty of the other, or in any way adds to the other’s security or advantage. He confers a benefit not only where he adds to the property of another, but also where he saves the other from expense or loss. The word ‘benefit,’ therefore, denotes any form of advantage.” Comment b, p. 12.
Kansas has no case law squarely in point but other jurisdictions have dealt with the issue. In Gulf Oil Corporation v. Lone Star Producing Co., 322 F.2d 28 (5th Cir. 1963), Gulf contracted to purchase crude oil from Lone Star at a price of $3.15 per barrel less a cost in excess of five cents per barrel for pipeline tariffs to one of Gulf’s stations. For thirty-one months Gulf paid Lone Star $3.15 per barrel, but failed to deduct the pipeline tariff amounting to fifteen cents per barrel. Upon discovering the error Gulf *159requested reimbursement from Lone Star of the overpayment of $44,522.33. The court held Gulf entitled to recover stating, “The fact that the payor was negligent, or was carelessly ignorant of the facts as to which he was mistaken does not necessarily bar recovery, but may be considered in determining the equities between the parties . . . .” p. 31.
In Bradshaw v. Kinnaird, 319 S.W.2d 475 (Ky. App. 1958), both parties participated in the mistake. There plaintiff purchased a farm containing a 9.2 acre tobacco base. Both parties believed the government-allotted base for plaintiff’s farm to be 14.3 acres. In rejecting rescission, the court held restitution to plaintiff must be granted to provide him with an adequate remedy: “To leave plaintiff without remedy would not only be unjust to him but would also result in a windfall to defendants.” p. 477.
In International Harvester Cr. Corp. v. East Coast Truck, 387 F. Supp. 820, 827 (S.D. Fla. 1974), the court used its equity powers to dissolve a contract between the parties stating: “It has often been said that a court of equity is a court of conscience which should not be shackled by rigid rules of procedure.”
Conoco paid taxes for Ideal, conferring a $22,782.04 benefit which Ideal refused to reimburse. Ideal was thereby unjustly enriched. Conoco is entitled to restitution in the amount of the benefit conferred.
The judgment of the trial court is reversed and judgment entered for the appellant, with prepayment interest at the legal rate from June 1978.