JAPPE v CO-OP SUPPLY INC
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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, -vsm P SUPPLY, IW., a Corporation, Defendant and Appellant. 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. Appeal f r m : 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 M y 1, 1979 a SuhLtted: Decided: Filed: 'F ;' -- 5.'. , . - - 6 - - -1 M9 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, gasconvenience 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. on August 10, 1976. This contract was executed 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. Board interpreted these comments as resignations. The Whatever the case, in the next few days the Jappes decided to seek reinstatement 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 -3- 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. left their keys at the office and departed. Jappes 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 -4- 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 employment. 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 -5- 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. -6- Co-op 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 W e Concur: Chief J u s t i c e , " affirmed. 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. 126 Mont. S e e Garden C i t y F l o r a l v . Hunt ( 1 9 5 3 ) , 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
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