Jappe v. Co-Op Supply Inc. ( 1979 )

No. 14510
I N THE S P Bk C W O THE STATE O MXfTANA
U F lE O F F
1979
WILLIAM B. JAPPE and MAWARET L JAPPE,
.
P l a i n t i f f s and Respondents,
-vs-
m P SUPPLY, IW., a Corporation,
Defendant and Appellant.
Appeal f r m : D i s t r i c t Court of the F i f t h Judicial D i s t r i c t ,
Honorable Frank E. B l a i r , Judge presiding.
Counsel of Record:
For Appellant:
Corette, S m i t h and Dean, Butte, mntana
R. D. Corette argued, Butte, Montana
Schulz, Davis and Warren, Dillon, Mntana
C a r l Davis argued, Dillon, Montana
For Respondents:
Poore, McKenzie, Roth, Robischon & Robinson, Butte,
Montana
Robert Poore argued David Wing argued, Butte, I%xkma
SuhLtted: M y 1, 1979
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Decided:
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Filed:
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Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Plaintiffs William and Margaret Jappe sought specific
performance of a 1976 contract providing for payment of
commissions and an option to purchase a self-service, gas-
convenience store. Co-op Supply, the defendant, has appealed
a judgment for the plaintiffs entered by the Beaverhead
County District Court.
This appeal raises the following issues: (1) whether
the plaintiffs refused to perform their management duties
called for by the 1976 contract, and if so, whether their
refusal excused defendant's nonperformance of the contract;
(2) whether the defendant terminated the 1976 contract by
discharging the plaintiffs from their employment positions;
and, (3) whether there was sufficient evidence to support
the District Court order for specific enforcement of the
1976 contract provisions for payment of commissions and
option to purchase.
The defendant, Co-op Supply, Inc. is the owner of
petroleum plants, gas stations and convenience stores in
Dillon, Montana. In 1966, William Jappe was employed as
general manager of defendant's main store in Dillon, Montana.
Two years later, Jappe's wife, Marge, was hired as Co-op
Supply's bookkeeper. The employment of the Jappes was by
oral agreement.
In 1972, the plaintiffs became interested in developing
their own service station-convenience store. William Jappe
developed plans for the store and negotiated a "hold" on property
located in northern Dillon. He presented these plans to
Co-op Supply, and Co-op Supply became interested in the
project. Thereafter the "hold" on the Dillon property became
a lease to Co-op Supply and William Jappe as joint lessees.
During the next four years, the parties operated under
the written agreement providing that William Jappe provide the
management and Co-op Supply provide the capital for the business,
which was called Mini Co-op (Mini I). The agreement also
stated that the Jappes should be compensated by receiving
monthly gasoline commissions and an option to purchase the
property should it be sold or otherwise disposed. The
business was so successful that expansion was planned.
Jappes and Co-op Supply decided to build a larger store
on company-owned ground. To facilitate the development of
the project, the Jappes purchased land and innovated special
features for the new store. The contract which governed the
rights and duties of the parties towards Mini I was rewritten
to pertain to the new site and to reimburse the Jappes for
their cost in purchasing the site. This contract was executed
on August 10, 1976. The new site is referred to as Mini 11.
Mini I1 began operating in the fall of 1976 and the
parties operated without problems under the 1976 contract
until the following summer. In June 1977, a dispute arose
between the Board of Directors and the Jappes concerning
the size of bonuses to be paid to employees.
The dispute came to a head at a Board meeting on July
5, 1977, when the Jappes, disgusted with the Board's rejection
of their recommendations concerning employee bonuses, made
statements to the effect that they felt like quitting. The
Board interpreted these comments as resignations. Whatever
the case, in the next few days the Jappes decided to seek rein-
statement of their employment positions.
At subsequent meetings unattended by the Jappes, the Board
decided that reinstatement would be permitted only if the
Jappes signed an agreement cancelling their prior written
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agreements with Co-op Supply. On August 9, 1977, the Jappes
refused to sign the cancellation agreement and the Board
agreed their "resignation" was thereafter effective. Jappes
left their keys at the office and departed. The following day,
Marge Jappe resumed her usual bookkeeping duties at Co-op
Supply's main store. She continued working until she received
a letter signed by Supply's president telling her that she
had been terminated. Approximately one week later, William
Jappe returned to Mini I1 to perform his management duties but
at the request of the directors he left the premises.
The Jappes were not paid any commissions on gasoline
sales after August 26, 1977 and by writing on September 26,
1977, advised Co-op Supply that they elected to exercise
their option. Thereafter, the Jappes instituted this suit
to enforce the commission and option provisions of the 1976
contract.
The first issue raised by Co-op Supply is whether the
trial court erred in concluding that the 1976 contract is
valid and enforceable, and governs the rights of the parties
concerning Mini 11. The 1976 contract stated that it "embraced
the operation and management" of Mini I1 and that the facility
"is . . . managed by Jappe." Co-op Supply argues that the
contract is not in effect because the Jappes abandoned any
good faith performance of their management duties.
There is substantial evidence to support the trial court's
conclusion that at all times the Jappes stood ready and willing
to perform their management duties. Co-op Supply would have
this Court find that the Jappes' expressions of disappointment
at the July 5, 1977 meeting was a refusal to perform their
duties under the 1976 contract. The trial court found that
the Jappes' "resignation" related only to their employment
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positions with Co-op Supply. The evidence shows that the
Jappes wished to continue working at Mini I1 and William Jappe
did resume such work until he was requested to leave. Thus,
the evidence supports rather than preponderates against the
trial court's finding that the Jappes were willing to continue
managing Mini 11.
Co-op Supply also argues that the 1976 contract was only
in effect as long as the Jappes remained as employees and
therefore that the contract ceased to be effective on August
9, 1977 when the Board accepted the Jappes' resignations.
But, the trial court found that Co-op Supply's 1976 contract
with the Jappes was not contingent upon their continued
employment at the main store. The Jappes were employed by oral
agreement to work at the main store while their duties at
Mini I1 were governed by the 1976 contract which stated that
Jappes' management of Mini I1 shall be "in addition to their
other and normal duties as employees of Co-op Supply, Inc."
Additional language in the 1976 contract suggests that
it was a property agreement, not an employment contract.
Paragraph two of the contract provides that the Jappes shall
be compensated not for their duties but for "their contribution
to CO-OP SUPPLY, INC. in the matter of acquiring, promoting,
developing, and establishing said Mini Co-op.. . ." This
language along with the testimony of William Jappe that he
understood the contract to be a form of partnership agreement
is ample evidence that the contract was not dependent on the
Jappes employment at Supply's main store and did not cease
to be effectlve when Co-op Supply terminated the Jappes employ-
ment.
The next issue is whether the trial court was correct
in granting the Jappes specific performance of the option
to purchase Mini 11. The 1976 contract stated in paragraph
six that Co-op Supply agreed that if for any reason it should
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ever "sell or otherwise dispose" of Mini 11, that Jappes
would have the exclusive option to purchase the facility.
Co-op Supply contends that since it never sold the facility,
and has continued to operate Mini 11, that the option cannot
be exercised.
The District Court held that Co-op Supply had wrongfully
ousted the Jappes from their position as managers of Mini
11, and that this wrongful oust was a "disposal" of the
premises which triggered the operation of the Jappes' option
rights. The court concluded that the contractual wording
"sell or otherwise dispose" is ambiguous and therefore
looked to the surrounding circumstances as permitted by
section 28-3-402, MCA. We cannot hold as a matter of law
that the language was clear by its very tenor; therefore, it
was proper for the trial court to consider the surrounding
circumstances.
The circumstances surrounding the execution of the
contract support the trial court's conclusion that the
Jappes intended Mini I1 to be a joint venture with Co-op
Supply. The "sell or otherwise dispose" clause was inserted
at William Jappe's insistence to protect his property interest
in Mini 11, in the event that Co-op Supply should release
him from his position as Mini I1 manager. On the other
hand, construction offered by Co-op Supply towards the
language "sell or otherwise dispose" is not clear. Although
the 1976 contract was signed by Co-op Supply's president,
Peter Rebish, it was not read or discussed by the Board
members prior to July 5, 1977. Based on this evidence, we
cannot say that the evidence clearly preponderates against
the construction of the language reached by the District
Court.
The final issue is whether the Jappes are entitled to
any unpaid gasoline commissions under the 1976 contract. Co-op
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Supply h a s f a i l e d t o pay t h e J a p p e s any commissions s i n c e
August 26, 1977. The t r i a l c o u r t o r d e r e d Co-op Supply
t o pay commissions f o r t h e p e r i o d between August 26, 1977
and t h e d a t e when t h e J a p p e s o b t a i n e d p o s s e s s i o n o f Mini
I1 from Co-op Supply.
The c o n t r a c t p r o v i d e s t h a t t h e J a p p e s s h a l l " d u r i n g
t h e t e r m o f t h e a g r e e m e n t " b e compensated by r e c e i v i n g
g a s o l i n e commissions. The c o n t r a c t d o e s n o t s e t o u t d e f i n i t e
d a t e s f o r t h e t e r m o f t h e agreement b u t i t p r o v i d e s t h a t
t h e " a g r e e m e n t s h a l l r e m a i n i n f u l l f o r c e and e f f e c t u n t i l
t e r m i n a t e d by w r i t t e n agreement o f t h e p a r t i e s . . ." It
i s u n d i s p u t e d t h a t t h e c o n t r a c t h a s n o t been t e r m i n a t e d by
w r i t t e n agreement. A s a l r e a d y d i s c u s s e d , t h e r e i s ample
evidence t o support t h e t r i a l c o u r t ' s finding t h a t t h e
c o n t r a c t was n o t t e r m i n a t e d by Co-op S u p p l y ' s f i r i n g o f
t h e J a p p e s o r by any a c t i o n on t h e p a r t o f t h e J a p p e s .
T h e r e f o r e , t h e t r i a l c o u r t was c o r r e c t i n f i n d i n g t h a t t h e
c o n t r a c t i s i n f u l l f o r c e and e f f e c t and t h a t t h e J a p p e s
a r e e n t i t l e d t o commissions.
The judgment o f t h e D i s t r i c t Cour affirmed.
W e Concur:
Chief J u s t i c e
,
"
Mr. J u s t i c e J o h n Conway H a r r i s o n d i s s e n t i n g :
I dissent. F i r s t , I f i n d t h e f i n d i n g s o f f a c t and
c o n c l u s i o n s o f law and o p i n i o n r e a c h e d by t h e t r i a l c o u r t
b o t h d i f f i c u l t t o u n d e r s t a n d and c o n t r a r y t o t h e e v i d e n c e a s
I view it.
The e v i d e n c e , a s I see i t , c l e a r l y showed t h a t t h e
Jappes q u i t t h e i r p o s i t i o n s due t o t h e i r disagreements w i t h
t h e Board. Mr. J a p p e q u i t on a d i s a g r e e m e n t o v e r p o l i c y o f
pay t o c e r t a i n employees. Such p o l i c y m a k i n g d e c i s i o n s a r e a
m a j o r f u n c t i o n o f t h e Board, and i t i s e v i d e n t t h a t M r .
J a p p e was a t t e m p t i n g t o g o beyond h i s power a s a p a i d employee
o f Co-op S u p p l y . H i s d u t i e s were t o recommend c e r t a i n
o p e r a t i o n s o f Co-op, b u t n o t t o set policy. TOO, the f a c t
t h a t h e w a s d r i n k i n g a n d was a b u s i v e t o h i s e m p l o y e r s was
r e a s o n enough t o f i r e him. The J a p p e s , b o t h by t h e i r o r a l
s t a t e m e n t s , a c t s and c o n d u c t , c l e a r l y abandoned a n y good
f a i t h p e r f o r m a n c e o f t h e i r a g r e e m e n t s w i t h Co-op S u p p l y . They
d i d n o t p e r f o r m t h e i r m a n a g e r i a l d u t i e s w i t h t h e l o y a l t y and
f a i t h f u l n e s s expected. S e e Garden C i t y F l o r a l v . Hunt ( 1 9 5 3 ) ,
126 Mont. 537, 255 P.2d 352; 53 Am.Jur.2d M a s t e r and S e r v a n t
SS101-103.
A s I view t h e evidence, M r . J a p p e ' s employment was
t h a t o f g e n e r a l manager o f a l l o f t h e Co-op f a c i l i t i e s ,
which i n c l u d e d t h e s e r v i c e s t a t i o n , t h e Mini f a c i l i t y , t h e
b u l k and o i l b u s i n e s s , t h e p r o p o s e d b u s i n e s s and Key-Trol
S t a t i o n , a n d a l l b r a n c h f a c i l i t i e s o f Co-op S u p p l y i n illo on.
The D i s t r i c t C o u r t n o t e d i n i t s memorandum t h a t " [ w l h e n w e
s a y p l a i n t i f f s w e r e f i r e d on August 9 , [19771, w e r e f e r t o
t h e i r employment a t t h e S e r v i c e S t a t i o n a c r o s s t h e s t r e e t
from t h e County C o u r t h o u s e a t which t h e y w e r e employed u n d e r
a n o r a l , month t o month, c o n t r a c t . "
Thereafter, t h e D i s t r i c t Court attempted t o t r e a t t h e
r e s i g n a t i o n and s u b s e q u e n t d i s c h a r g e a s b e i n g s o l e l y r e l a t e d
t o t h e p o s i t i o n s o f manager and bookkeeper o f Co-op S u p p l y
a n d h a v i n g n o t h i n g t o do w i t h t h e p r e s e n t s u i t on t h e Mini
contract. The D i s t r i c t C o u r t t h e n t r e a t s t h e r e s i g n a t i o n
and d i s c h a r g e a s " p a r t o f t h e series o f e v e n t s which became
t h e t r i g g e r i n g mechanisms f o r t h e w r o n g f u l a c t i o n s o f Co-op
S u p p l y i n e n d e a v o r i n g t o f o r c e and p r e s s u r e t h e J a p p e s i n t o
r e l i n q u i s h i n g a l l p r o p e r t y r i g h t s " u n d e r t h e Mini c o n t r a c t .
I d o n o t u n d e r s t a n d how t h e c o u r t a r r i v e d a t t h i s d e c i s i o n
which a l l o w s J a p p e , a f t e r r e s i g n a t i o n and d i s c h a r g e from
managing Co-op S u p p l y ' s o t h e r b u s i n e s s , t o remain a s manager
o f t h e Mini f a c i l i t y . I c a n f i n d no r e a s o n t o a l l o w t h e
J a p p e s t o c o n t i n u e u n d e r t h e Mini c o n t r a c t when t h e y had
v i o l a t e d t h e i r f i d u c i a r y d u t i e s and o b l i g a t i o n s t o Co-op
Supply
I would r e v e r s e and d i s m i s s t h e c a u s e .
i