Perfection Oil Company, a Corporation v. Leo Saam and Continental Oil Company, a Corporation

264 F.2d 835
CourtCourt of Appeals for the Eighth Circuit
DecidedApril 28, 1959
Docket16091_1
StatusPublished
Cited by4 cases

This text of 264 F.2d 835 (Perfection Oil Company, a Corporation v. Leo Saam and Continental Oil Company, a Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Perfection Oil Company, a Corporation v. Leo Saam and Continental Oil Company, a Corporation, 264 F.2d 835 (8th Cir. 1959).

Opinion

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by plaintiff, Perfection Oil Company, from final order sustaining defendants’ motion for summary judgment and dismissing its complaint for injunctive relief against defendants, Saam and Continental Oil Company which will hereinafter be called Continental. Jurisdiction is established upon the basis of diversity of citizenship and an amount in controversy in excess of $3,000.

Plaintiff in its complaint alleged that it purchased defendant Saam’s bulk oil plant at Scales Mound, Illinois, for $8,-910.89, and that in connection therewith plaintiff, on June 30, 1952, entered into a written contract for a five-year period with Saam, leasing the bulk plant to him and employing Saam as its distributor at Scales Mound. The contract provides that Saam is to handle plaintiff’s products exclusively, upon terms specified in the contract. Both plaintiff and Saam carried out the provisions of the contract until its expiration in 1957. Thereafter, Saam continued in plaintiff’s employment for a time without any definite extension of the contract. In February 1958 Saam advised plaintiff that he was leaving its employment on May 1, 1958, that he intended to erect a bulk oil plant in Scales Mound, and that he had accepted employment with Continental to distribute its products in Scales Mound. Plaintiff prayed that Saam be enjoined from proceeding with the building of the bulk plant and from handling the products of Continental, upon the ground that such conduct was in violation of a restrictive provision of Saam’s employment contract with the plaintiff, which provision is hereinafter set out in full. *837 Plaintiff also sought to restrain Continental from entering into any arrangement with Saam for the distribution of its products at Scales Mound. Since the rights of the plaintiff against Continental are dependent upon the interpretation of Saam’s contractual obligations to the plaintiff, the case against Continental requires no consideration unless plaintiff’s claims with reference to Saam are established.

This controversy turns upon the interpretation of what the parties and the trial court describe as the restrictive paragraph of the contract which reads:

“It is further agreed by the party of the second part [Saam] that the sale of first party’s petroleum products in the trading area hereinbefore referred to, is a valuable asset to the party of the first part and in order to promote the sales of petroleum products in said trading area the party of the first part will make expenditures through advertising and otherwise, and in consideration of the covenants and agreements herein contained the party of the second part agrees that in the event of the termination of this contract for any reason, with or without cause, that in such event, the party of the second part covenants and agrees not to engage in the sale of gasoline, fuel oils or petroleum products, directly or indirectly, either on his own account, or as an employee for any other person, firm or corporation, in the town of Scales Mound, Jo Daviess County, Illinois, or within a radius of ten (10) miles from said town of Scales Mound, Illinois, for a period of five (5) years following the termination of this contract.” (Emphasis ours.)

The trial court upheld defendants’ position that the paragraph just quoted was operative only if the contract was terminated prior to the expiration of the five-year term therein provided, and that the restrictive paragraph had no effect if the term ended by efflux of time.

It is established beyond dispute that the lease and employment contract remained in effect for the entire five-year contract period, and that it expired by lapse of time pursuant to its terms. Thus, the ultimate issue in this case is the meaning of the word “termination” as used in the restrictive paragraph.

Plaintiff raises no objection in its brief to the propriety of disposing of this case by summary judgment procedure. The trial court in its unreported memorandum opinion adequately supports its conclusion that the issues in this case can be disposed of by summary judgment, the court stating :

“The claim of the plaintiff for this relief is based upon the provisions of the restrictive paragraph of the agreement heretofore set out. The motion of the defendants for summary judgment is based upon the provisions of the same paragraph. Neither the plaintiff nor the defendant Leo Saam made or makes any claim for reformation. Neither the plaintiff nor the defendant Leo Saam made claim that it or he has any further evidence to offer bearing upon the interpretation of that paragraph. All of the parties stand upon the provisions of the restrictive paragraph viewed in the light of the other provisions of the agreement containing it and the other documents referred to. * * * ”

The court in interpreting the word “termination” as used in the restrictive paragraph of the contract states:

“Where the agreement of the parties is in writing their intent has to be found in their expression in the writing. The writing is the exclusive repository of their common intention. In the absence of reformation the parties are bound by the language employed to state the agreement.
“It is assumed that the parties to an agreement ascribe to the terms used by them therein the meaning *838 ascribed to those terms under the law applicable to their agreement.
“In the present case it seems clear that the applicable law and hence the governing law is that of the State of Illinois.
“The provisions of the restrictive paragraph are applicable ‘in the event of the termination of this contract for any reason, with or without cause.’
“Under the Illinois law a distinction is made between the meaning ascribed to the word ‘termination’ and to the word ‘expiration.’ Under that law the word ‘terminate’ does not encompass within its scope the ending of an agreement by the expiration of its fixed term.”

Support is found in the Illinois decisions for the statement made by the trial court in the last paragraph of the foregoing quotation. Stuart v. Hamilton, 66 Ill. 253; Weill v. Centralia Service & Oil Co., 320 Ill.App. 397, 51 N.E.2d 345.

Stuart v. Hamilton, supra, interprets an Illinois statute which authorized collection of double rental from a tenant holding over after the expiration of his lease. Plaintiff sought double rental from a tenant who held over after his lease had been forfeited prior to the expiration of the term. The court denied relief, holding that double rental applied only to situations where tenants held over after the expiration of the lease. In the Weill case, supra, the court held that the lease was terminated because of the failure to pay rent. The court in its opinion states (at page 347 of 51 N.E.2d):

“The word ‘terminate,’ employed in connection with a lease, connotes a conclusion and severance of the relationship of landlord and tenant prior to the expiration of the term of the lease by the efilux of time. Stuart v. Hamilton, 66 Ill. 253, 255.”

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Bluebook (online)
264 F.2d 835, Counsel Stack Legal Research, https://law.counselstack.com/opinion/perfection-oil-company-a-corporation-v-leo-saam-and-continental-oil-ca8-1959.