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McNutt Oil & Refining Co. v. D'Ascoli

Supreme Court of Arizona

April 5, 1955

McNUTT OIL & REFINING COMPANY, a Texas Corporation, Appellant,
Frank D'ASCOLI, Rose C. D'Ascoli, Ralph A. D'Ascoli, and Jean M. D'Ascoli, Appellees.

Rehearing Denied May 3, 1955.

Page 967

[79 Ariz. 29] Merchant & Parkman, Lee H. Brown, Tucson, for appellant.

Robert D. Stauffer, Harry L. Buchanan, tucson, for appellees.

PHELPS, Justice.

This cause of action arose out of a contract of sale and purchase entered into between Bruno Gajewski and his wife and Frank D'Ascoli and Ralph D'Ascoli and their wives on or about the 25th day of August, 1949. The subject of the transaction was a service station located in Tucson, Arizona. At the time of the sale the Gajewskis were handling 'Dixie' gas sold and distributed by the defendant McNutt Oil Company. In said agreement the [79 Ariz. 30] D'Ascolis agreed to pay to the Gajewskis the sum of $18,000 at the time and in the manner in said contract provided, and the Gajewskis agreed to sell and convey said property both real and personal to the D'Ascolis for said sum of $18,000 and covenanted and agreed in addition thereto that the said Gajewskis would not enter into competition with the D'Ascolis within a radius

Page 968

of three miles of said services station. The purchasers fully performed their part of the agreement making the payments at the time and in the manner provided therein. In the spring or summer of 1950 the D'Ascolis were not satisfied with their relations with the defendant and began to negotiate with the General Petroleum Company to handle their products in that station. The parties herein will be hereinafter referred to as plaintiffs and defendant.

The negotiations finally resulted in the plaintiffs leasing the station to General Petroleum for $150 per month rental who in turn leased it back to them at a figure not shown by the evidence. When plaintiffs purchased the service station they assumed a certain mortgage indebtedness secured by the equipment purchased in which defendant was in some way interested as a guarantor and for which plaintiffs were paying 6% interest. Under the arrangements with General Petroleum plaintiffs were to be refinanced at 4 1/2% interest and were to begin handling General Petroleum products on July 1, 1950. Plaintiffs paid the mortgage indebtedness to the Bank of Douglas on May 23, 1950, but because of defendant's failure to have the lien against the Gajewskis' equipment released until September 28, 1950, plaintiff were unable to close their negotiations with General Petroleum and procure its products until October, 1950. As a result thereof the plaintiffs were required to refund to General Petroleum rental of $150 per month for the months of July, August and September, 1950. The General Petroleum Company handled 'Mobile' gas which sells on the market for a few cents per gallon more than 'Dixie' gas furnished by the McNutt Oil Company.

In September of 1950 the Gajewskis opened up a service station handling Dixie gas approximately two blocks from the station which plaintiffs had purchased from them in July, 1949.

The plaintiffs instituted action against the Gajewskis for breach of covenant on the contract of sale and recovered a judgment against them in the sum of $500 which, under the instructions of the court upon the law of the case, was limited to loss of profits up to January 3, 1951, the date of the filing of their complaint against the Gajewskis. That judgment was paid in full and satisfied of record and the plaintiffs brought this action against the defendant and allege that the defendant wilfully, knowingly and wrongfully caused the Gajewskis to breach their agreement with the plaintiffs by inducing the Gajewskis to lease and operate a competitive gasoline service station within three miles of plaintiffs'[79 Ariz. 31] service station, to wit, within two blocks thereof.

The Oil Company answered setting up four separate defenses to the complaint:

1. That prior to the commencement of said cause of action plaintiffs had recovered judgment against the Gajewskis for the breach of the covenant here in question and which judgment had been fully satisfied by the Gajewskis;

2. That said judgment against the Gajewskis was a final adjudication of all the rights and claims of the plaintiffs growing out of the alleged breach of covenant and that the payment thereof constituted full satisfaction of all of plaintiffs' claims arising therefrom;

3. That by reason of the recovery and satisfaction of said judgment plaintiffs were estopped from asserting any claims against this defendant by reason of their election of the remedy against the Gajewskis;

4. That defendant was released from any claim against it by plaintiffs' acceptance of the damages recovered against and paid by the Gajewskis.

Plaintiffs sought damages in the sum of $6,000 as and for actual damages based upon the loss of the good will of the business purchased from the Gajewkis and $6,000 as and for punitive damages because of defendant's alleged wilful and wrongful inducement of the breach by the Gajewskis of the restrictive covenant in their contract with plaintiffs. The cause was tried to a jury and a verdict was returned in the sum of $1,000 actual ...

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