B. P. OIL CORPORATION v. CLAUDE J. MABE
No. 43, September Term, 1976.
Court of Appeals of Maryland
Decided March 18, 1977.
Order affirmed; costs to be paid by appellants.
Argued and reargued by Wilbur D. Preston, Jr., with whom were B. Ford Davis and Whiteford, Taylor, Preston, Trimble & Johnston on the brief, for appellant.
Amicus curiae brief filed by Exxon Corporation, Lewis A. Noonberg, Edward S. Digges, Jr., David F. Tufaro, Piper & Marbury and Richard P. Delaney on the brief.
Argued and reargued by Gordon W. Priest, Jr., and Peter Parker, with whom were White, Page & Lentz on the brief, for appellee.
SMITH, J., delivered the opinion of the Court. LEVINE, J., dissents and filed a dissenting opinion at page 649 infra.
The issue presented in this case is whether appellee, Claude J. Mabe (Mabe), established that a service station operator, Lonnie Faison (Faison), was an agent of appellant, B. P. Oil Corporation (BP). The Court of Special Apрeals held in Mabe v. B. P. Oil Corp., 31 Md. App. 221, 356 A. 2d 304 (1976), that an agency by estoppel was established. Since we conclude that Mabe failed to establish either actual agency or agency by estoppel, the judgment of the Court of Special Appeals will be reversed.
The incident giving rise to this litigation occurred when Mabe, accompanied by his father and his brother, noted the need for gasoline and water for his automobile and pulled into a filling station operated by Faison. He stated that he asked the attendant there for water to put in the radiator of the car. Mabe said that when its contents were placed in the radiator “it went down in the radiator and came back up and went on the motor and then it exploded,” causing a fire which injured him. It seems to have been assumed by all parties that this was gasoline.
Mabe‘s suit against Faison and BP alleged that the service station in question was “owned and under the direction of the defendant BP Oil Corporation and operated by its agent Lonnie Faison, trading as Faison Service Station . . . .” He claimed that his injuries “stemmed directly from the negligent and tortious conduct of the defendants and their agents . . . .” A Baltimore City jury returned a verdict of $2,800 in favor of Mabe against BP.1 The trial judge (Dorf, J.) granted BP‘s motion for judgment n.o.v., finding “no agency of any kind,” and that “this case [was not] one of apparent authority or agency by estoppel.” The Court of Special Appeals reversed.
The service station in question was painted yellow and green, said to be the BP colors. There was a large BP sign on a pole hanging over the station; BP insignia appeared on the gasoline pumps; there was a tow truck present with a BP sign on it, and the attendant in question wore a uniform with yellow and green BP emblems on his jacket and cap.
The service station building was leased by the owner to Faison. He leased it to BP who in turn leased it back to Faison. Gasoline tanks, pumps and signs were owned by BP. Under the agreement between Faison and BP, Faison was
Under the agreement between BP and Faison he was to buy a minimum of 180,000 gallons of gasoline per year, which works out to 15,000 gallons per month. He testified, however, that he “was only buying 400 gallons of gasoline per week,” a reason given for the fact that he did not participate in any promotion of BP, saying that he could not “afford to on that.”
There is a suggestion by Mabe that the compensation of Faison was fixed and controlled by BP because under the lease arrangement he received a net of one and a half cents per gallon on gasoline sold. BP paid Faison two cents per gallon as its rental for the lease from Faison and he paid BP one-half cent per gallon as rent under the lease to him. This contention overlooks the fact that rent in some amount, not shown in the record, was due from Faison to the owner of the premises. Moreover, if he had no rent to pay to the owner, sale of the maximum of 230,000 gallons of gasoline provided in the contract would provide remuneration of only $3,450 per year. This makes it obvious that thе profit to be derived by Faison from the operation of the service station in question came not from this source, but from the difference between the buying price and selling price of the gasoline and other items sold by him after deduction of other expenses of operation.
Faison was paid no salary or commission by BP. Any employees were hired, fired, and paid by him. He was required to make no reports to BP relative to his sales and service operation. He paid his own sales and other taxes. BP had no control over the hours of station operation, the hours of operation being fixed by Faison. Faison paid cash on delivery for that which he bought. If he did not hаve the
An agreement was in existence between BP and Faison relative to the purchase of tires, batteries, and other equipment. He was not obliged to enter into such an agreement nor was any of this equipment a BP product. The record is unclear as to whether a BP representative periodically called on Faison to assist him by making suggestions calculated to increase sales. Faison said unequivocally that no such representative appeared. The BP sales supervisor who testified, but who at the time of this incident “was managеr of the clerical force, record keeping, reports” and who became sales supervisor subsequent to this incident, said such representatives did call on Faison.
Mabe‘s reasons for entering the station in question were set forth in the following testimony on direct examination:
“Q Why did you choose the BP station?
“A Because I always buy BP gasoline, always deal with BP.
“Q Had you dealt with BP before?
“A Yes, up on 29th Street and Greenmount Avenue. I [sic] was right around the corner from where I lived at.
“Q How often had you dealt with them?
“A I had been dealing with them for around about a year at that time.
“Q Was there anything in particular you attracted you to the BP station on Hilton Street?
“A Nothing except for the BP station, had BP signs, BP gas, BP pumps.”
Although his brother twice said that reasons for entering this station were “the happy motoring sign” which he said “is a slogan and it means that thеre‘s good service,” it was not actually established that such a sign, the sign of one of BP‘s competitors, was on the premises.
I
Actual Agency
We first address ourselves to whether actual agency was established since there would be no reason to consider the doctrine of apparent agency or agency by estoppel if there were sufficient evidence of actual agency to warrant consideration of the case by the jury.
As far back as DeFord v. State, use of Keyser, 30 Md. 179 (1869), this Court stated that the presence or absence of control is an essential element in determining whether a master-servant relationship exists. Our predecessors there said:
“If they were at his command and bound to obey his orders and direction, in regard to the work they were engaged in, and could be, at any time he thought proper, discharged by him, then they were his servants, and he is liable for the consequences of their negligence and malfeasance committed in the course of their employment. But if, on the other hand, they were at work or directing the work on the building, as independent contractors or the servants and employees of independent contractors, over whom he could rightfully exercise no such control and direction, he is not so liable.” Id. at 203-04.
“It is generally stated that there are four elements to be considered in determining the question whether the relationship of master and servant exists. These elements are: (1) the selection and engagement of the servant, (2) the payment of wages, (3) the power of dismissal, and (4) the power of control of the servant‘s conduct.” Id. at 577-78.
In Keitz v. National Paving Co., 214 Md. 479, 134 A. 2d 296 (1957), Judge Prescott referred for the Court to these four criteria and then аdded a fifth, “whether the work is a part of the regular business of the employer.” The power to control was the fourth item there listed. The opinion further stated:
“Standing alone, none of these indicia, excepting (4), seems controlling in the determination as to whether such relationship exists. The decisive test in determining whether the relation of master and servant exists is whether the employer has the right to control and direct the servant in the performance of his work and in the manner in which the work is to be done. It will be noted from the above, it is not the manner in which the alleged master actually exercised his authority to control and direct the action of the servant which controls, but it is his right to do so that is important. Sun Cab Co. v. Powell, 196 Md. 572, 578, 77 A. 2d 783; Charles Freeland v. Couplin, 211 Md. 160, 169, 170, 126 A. 2d 606.” Id. at 491. (Emphasis in original.)
Accord Clemons v. Bullock, 250 Md. 586, 600, 244 A. 2d 240 (1968); Anderson Nurs. Homes v. Walker, 232 Md. 442, 444-45, 194 A. 2d 85 (1963); Marine v. Service Trucking Co., 225 Md. 315, 319, 170 A. 2d 188 (1961); L. & S. Co. v. State Accident Fund, 221 Md. 51, 56, 155 A. 2d 653 (1959); Snider v. Gaultney, 218 Md. 332, 336-37, 146 A. 2d 869 (1958); and
Cases from other jurisdictions which have recognized control as a necessary element and have found insufficient evidence of control to warrant a conclusion of the existence of a master-servant relationship and thus of actual agency in factual situations analogous to the case at bar include: Smith v. Cities Service Oil Company, 346 F. 2d 349, 352 (7th Cir. 1965); Miller v. Sinclair Refining Company, 268 F. 2d 114, 118 (5th Cir. 1959); Greenberg v. Mobil Oil Corporation, 318 F. Supp. 1025, 1030 (N.D. Tex. 1970) (“With the written contracts in evidence which established on their face that Robinson was an independent contractor, the only way plaintiffs could discharge their burden of proof was by showing that the contracts were a sham and subterfuge created for the purpose of defrauding the public.“); Apple v. Standard Oil, Division of American Oil Company, 307 F. Supp. 107, 111-12 (N.D. Cal. 1969) (“Cases from other jurisdictions appear to hold uniformly that an oil company under comparable facts is not liable for the negligence of the lessee-operator, unless the company exercises ‘control’ over the lessee‘s operations, and support the conclusion that the facts upon which plaintiff relies in this case are insufficient to establish an agency, either actual or ostensible.“); Arkansas Fuel Oil Company v. Scaletta, 200 Ark. 645, 654, 140 S.W.2d 684 (1940); Drum v. Pure Oil Company, 184 So. 2d 196, 198 (Fla. App. 1966); Cawthon v. Phillips Petroleum Company, 124 So. 2d 517, 519-20 (Fla. App. 1960); Manis v. Gulf Oil Corporation, 124 Ga. App. 638, 185 S.E.2d 589 (1971); Reynolds v. Skelly Oil Co., 227 Iowa 163, 169, 170, 287 N. W. 823 (1939); Levine v. Standard Oil Co., 249 Miss. 651, 654, 163 So. 2d 750 (1964); Elkins v. Husky Oil, 153 Mont. 159, 165, 455 P. 2d 329 (1969); Shaver v. Bell, 74 N. M. 700, 705-06, 397 P. 2d 723 (1964) (“Plaintiff . . . could not assume from the appearance of the station, which has standard Cosden signs and colors, that the station was operated by
Coe and Westre are so close factually to the case at bar as to warrant quotation at some length. In Coe the court said:
“It is indeed a matter of common knowledge and practice that distinctive colors and trade mark 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.” (Citing cases.)
* * *
“Whether relation of master and servant does in fact exist between lessor of gasoline station and its lessee so as to render the doctrine of respondeat superior applicable, depends on whether lessor has the right to control, or exercises the right to control, lessee in the details of the work to be performed in the operation and management of the station. [Citing cases.]
“The facts and circumstances adduced by plaintiff‘s evidence are insufficient to raise the necessary inference that Continental either had the right to control or exerсised the right to control the conduct of Esau in the operation of his station. Esau was free to, and did handle, tires and
automotive accessories of other suppliers; he procured his own personnel, determined the daily business hours and the methods of doing business. The petroleum products supplied by Continental were sold to Esau on a cash basis. So far as the record discloses, Esau was not in any way restricted in adopting his own merchandising policies.” Id. 377 P. 2d 818-19.
In Westre the court said:
“Suffice it to say that the deciding factor appears to be the extent of the control exercised by the oil company, and that the decided weight of opinion in the cases with leases and sales agreements similar to the ones presented here, holds that the service station operator occupies the position of an independent businessman rather than an employee.
“The lease in question here is a form printed by Sinclair Refining Company providing for a rental computed at 1.5 cents per gallon of gasoline delivered to said station for sale therefrom, with a minimum of $150 except for August through November, when the minimum is $125. It was further provided that if the amount of rental is computed on the volume of business, that lessee agrees to promote diligently the sale of gasoline and other products, and keep the station open for the same time as competing service stаtions were open. The lease also contained a provision that the rest rooms and toilet shall be kept clean and hygienic so as to comply with standards set by any laws or ordinances, and a further provision that, without lessor‘s prior written consent, no part of the station could be used for motor overhauling, body and fender repairing or refinishing, tire recapping, welding or for any activity which cannot be conducted safely in the presence of volatile petroleum products. There is also a clause wherein lessee agrees to indemnify lessor for any liability
for damages arising out of the operation of the station. “Similar types of clauses are found in many leases. None of these indicate the type of control sufficient to establish anything but a landlord-tenant relationship. Nor does the fact that the rental was lowered at one time indicate anything but a desire to retain a tenant. The sales agreement established nothing more than a seller-purchaser arrangement. No social security or taxes were withheld by Sinclair, nor unemployment taxes paid by Sinclair. In most of the cases where the courts have held the station operator to be an employee, these taxes and withholdings have been paid by the oil company. Other indications of the independent nature of DeBuhr‘s business included: payment of all expenses, and receipt of all income without any aсcounting to Sinclair; freedom of operation of the business, and employment of help; retail sales license in DeBuhr‘s name; DeBuhr‘s ownership of the hand tools and much of the equipment.
“The oil company did furnish some assistance to DeBuhr. One of these was that it agreed to accept at face value all purchases made on credit cards, provided that the products or services were authorized. Honoring credit cards was entirely the option of DeBuhr. Sinclair also made available service manuals, use of which was optional, and conducted service schools, attendance at which was optional. This is nothing more than most manufacturers furnish tо their independent dealers. Nor was any authority or control shown to have been exercised by Sinclair‘s representative, T. E. Boch. He may have sent in a few customers, but it is not unusual for wholesalers and distributors to aid their independent dealers in promoting sales.” Id. 82 S. D. 278-79.
In the case at bar the evidence adduced on behalf of Mabe simply does not show that BP controlled Faison‘s operations. Accordingly, actual agency was not established.
II
Apparent Agency or Agency by Estoppel
One thing upon which the parties here can agree is that the law applicable to such an agency is that stated 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.” (Emphasis added.)
Restatement of Agency § 267 (1933) is identical to the above. Two Maryland cases are cited in the annotations to it, Pennsylvania R.R. v. Hoover, 142 Md. 251, 120 A. 526 (1923), and Pugh v. Washington Ry. & Elec., 134 Md. 196, 106 A. 522 (1919). The plaintiff was permitted to recover in Hoover despite a contention that his injury took place at a station owned by the West Jersey and Seashore Railroad in Atlantic City. It was a part of the system of the Pennsylvania Railroad. He had bought a round trip ticket from Baltimore to Atlantic City from Pennsylvania R. R. The Court found
The textwriters indicate that reliance is necessary to establish agency by estoppel. See, e.g., 1 F. Mechem, Law of Agency § 245 (2d ed. 1914) which states in discussing the matter:
“Estoppel is always a matter personal to the individual asserting it and he must therefore show that he was misled by the appearances relied upon. It is not enough that he might have been, or that some one else was, so misled. It must also appear that he had reasonable cause to believe that the authority existed; mere belief without cause, or belief in the face of facts that should have put him on his guard is not enough.” Id. at 177-78.
The cases we have examined seem to be uniformly in agreement with the statements in the Restatement and Mechem to the effect that for there to be liability in a case
A number of courts around the country have stated the law in the above fashion and have failed, in circumstances analogous to the case at bar, to find liability upon a defendant such as BP in the instant case. See, e.g., Miller v. Sinclair Refining Company, 268 F. 2d 114, 118 (5th Cir. 1959); Apple v. Standard Oil, Division of American Oil Company, 307 F. Supp. 107 (N.D. Cal. 1969), where in
“Apple had no contact with the defendant. He had a credit card of another company, first issued 14 years earlier. The card itself shows that the sign of the issuing company was distinct from that of the defendant. Apple stopped at the station to purchase a fan belt. The only reason he selected that particular station was because it would honor his credit card. He had never been there before. There is no evidence that defendant supplied Selbe with fan belts. There is evidence that Selbe was not required to purchase accessories from the defendant.” Id. at 115;
Union Oil Company of California v. Crane, 288 Ala. 173, 258 So. 2d 882, 887 (1972); Drum v. Pure Oil Company, 184 So. 2d 196 (Fla. App. 1966); Cawthon v. Phillips Petroleum Company, 124 So. 2d 517, 520-21 (Fla. App. 1960); Manis v. Gulf Oil Corporation, 124 Ga. App. 638, 640, 185 S.E.2d 589 (1971); Crittendon v. State Oil Co., 78 Ill. App. 2d 112, 118-19, 222 N.E.2d 561 (1966); Reynolds v. Skelly Oil Co., 227 Iowa 163, 287 N. W. 823 (1939), where the court said:
“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. As 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.” Id. at 171;
Sherman v. Texas Co., 340 Mass. 606, 608, 165 N.E.2d 916 (1960) (the court referred to Reynolds and said, “We rule that the representation of the signs was confined to the
In the view we take of this case we need not discuss any factors of agency by estoppel other than that of reliance because Mabe has fallen far short of having established any such reliance when he entered Faison‘s service station. Any reasons advanced by others in his vehicle for entering the service station in question can have no bearing because, as Mechem, supra, states it, “Estoppel is always a matter personal to the individual asserting it and he must therefore show that he was misled by the appearances relied upon.” (Emphasis added.)
Mabe suggests that “[t]he rеductio ad absurdum of this position [(that there must be personal reliance)] would be to deny recovery to the child in Edwards v. Gulf Oil Corporation, 69 Ga. App. 140, 24 S.E.2d 843 (1943), because the parent had made the ultimate decision to enter the station there in question.” The parent did not make the decision in that case and Mabe obviously intends this statement purely for purposes of argument. In Edwards a mother was held to have made out a cause of action to recover for the death of her minor child. She alleged negligence on the part of a service station operator and an oil company “in that no warning device or protection was placed around some boiling tar which was used in front of the filling-statiоn of the corporation,” operated for it by an individual who “wore a uniform and cap with the name
In this instance Mabe is an adult who was in full control of the vehicle. He said he was attracted to Faison‘s station by “[n]othing except for the [fact that it was a] BP station, [and it] had BP signs, BP gas, BP pumps.” This, added to the statement of Mabe that his reason for choosing the station in question was that he “always buy[s] BP gasoline, always deal[s] with BP,” is but little different from a statement that one always buys a particular make of shoes, wears clothes with a certain label, drives an automobile produced by a certain manufacturer, eats a certain brand of breakfast cereal, or smokes a certain kind of cigarette. In short, the record lacks any evidence of reliance upon the part of Mabe. There has been comment in some of the cases and in the brief of Mabe relative to advertising which may have enticed prospective customers into places of business. The record in this instance is completely silent as to any advertising on the part of BP.
Because there is no evidence of any kind of reliance on the part of Mabe and no evidence of actual agency, Judge Dorf propеrly granted the motion for judgment n.o.v.
Judgment of the Court of Special Appeals reversed and case remanded to that court for the passage of an order affirming the judgment of the Superior Court of Baltimore City; appellee to pay the costs.
Levine, J., dissenting:
I agree with the Court of Special Appeals, sitting en banc with but one judge dissenting, that the trial judge erred in granting the motion for judgment n.o.v. Viewed in the light most favorable to Mabe, the evidence was sufficient for the jury to conclude that BP represented to Mabe that Faison
While I agree with the majority that Faison was not BP‘s actual agent, I believe that he was BP‘s apparent agent, since, under the circumstances, apparent authority was created:
“... [A]pparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.” Id. at § 27.
What Mabe observed were the indications by signs and advertising that the station was a BP station; nothing attracted him “except for the BP station, . . . BP signs, BP gas, BP pumps.” The attendant “had a BP uniform” which was “[g]reen with the yellow BP,” “had a BP hat and just a regular BP service man. BP service man.” Although these manifestations may have been directed to the community at large, they were “words” or “conduct” within the contemplation of § 27. See Restatement, supra, § 8, Comment b.
Moreover, in my view, a jury could find that BP‘s manifestations, reasonably interpreted, caused Mabe to believe that BP consented to have Faison service his car. According to the majority‘s position, it is common knowledge that a substantial portion of gas stations are independently owned and that the signs mean merely that a customer may purchase BP products. The short answer is that many stations are company owned, and BP, as a principal, is responsible for the information which came to Mabe‘s attention. Id. at § 27, Comment a. In this instance, although Mabe saw all these indicia of BP control, he saw no sign — and there was none — which stated that Faison was
I believe also that the evidence was sufficient to permit a jury to conclude that Faison‘s apparent authority caused Mabe justifiably to rely оn Faison‘s skill. Although, in my view, the majority erroneously excludes the testimony of Mabe‘s father and brother on the issue of Mabe‘s reliance, I conclude that in any event, Mabe‘s testimony alone presented a jury question.2 Mabe testified that in addition to the BP station, there were two other stations within sight
The majority, on the other hand, emphasizes that Mabe presented no evidence to show that BP‘s media advertising encouraged reliance on the skill of BP‘s agents, and therefore concludes that it was unreasonable for Mabe to rely on Faison‘s skill. Rather, in the majority‘s view, reliance only on Faison‘s products was justified.
The logic of the majority‘s opinion completely escapes me. BP‘s media advertising is irrelevant to the determination of reliance because Mabe has presented a compelling case of justification for his reliance, superior to any which he might have presented had he relied solely on advertising. Mabe relied not on impersonal media commercials, but rather on his substantial and continuous personal experience with BP over a period of more than a year. In short, Mabe‘s patronage of a BP station, although not Faison‘s BP, more effectively established Mabe‘s trust in BP‘s skill and products than any advertising could have hoped to accomplish. The same decisive fact, prior patronage inducing reliance on a person‘s skill, was present in Standard Oil Co. v. Gentry, 1 So. 2d 29, where the oil company was held liable. Cf. Gizzi v. Texaco, Inc., 437 F. 2d at 310 (Texaco held liable where plaintiff relied on advertising).
Since Mabe justifiably relied on Faison‘s skill as a result of Faison‘s apparent authority, I believe that BP should be liable to Mabe as if Faison were BP‘s agent. See Restatement, supra, § 267; Wood v. Holiday Inns, Inc., 508 F. 2d at 175-77; Gizzi v. Texaco, Inc., 437 F. 2d at 310; Standard Oil Co. v. Gentry, 1 So. 2d at 31; Beck v. Arthur Murray, Inc., 54 Cal. Rptr. at 330; Johnston v. American Oil Company, 215 N.W.2d at 721; Chevron Oil Company v. Sutton, 515 P. 2d at 1286-87. See also Sheraton Corp. of Am. v. Kingsford Packing Co., Inc., 319 N.E.2d at 858-59.
I therefore dissent.