Thurman A. Hobbs and Donna A. Hobbs v. Lotsip, Inc.

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April 13, 2005


[NO. CV02-8716]




Robert J. Gladwin, Judge

Thurman Hobbs and Donna Hobbs appeal from a $32,345.59 judgment entered against them in an action brought by appellee Lotsip, Inc., for fuel it delivered to two gas station and convenience stores operated by appellants. Because the trial judge's decision is not clearly erroneous, we affirm.

Appellants entered into an agreement to purchase two stores from Michael Stacks and Jamie Stacks; the Dennard Country Store, in Dennard, and the Sircle S Supercenter, in Damascus. They took possession of the stores on June 1, 2002, and closing was set for June 10, 2002. On May 29, 2002, appellants entered into a written agreement to purchase gasoline from appellee, which had formerly done business with the Stackses. This agreement, which was signed by appellants and John S. Gresham, appellee's president and sole shareholder, provided, in part, that all invoices were to be paid within ten days. Appellants also signed a personal guaranty agreement in favor of appellee that was dated June 1, 2002. Appellee delivered fuel to appellants' stores on June 1, 2002; June 4, 2002;

and June 8, 2002, and appellants paid for the gas delivered on June 1. Someone named "Shawna (last name illegible)" signed the bill of lading for one of the June 4 deliveries, and "William Mesaros" signed for the other delivery. Mr. Gresham stated at trial that he did not know who Shawna was but assumed that William Mesaros was the husband of Pat Mesaros, who managed one of the stores. A bill of lading for one delivery on June 8 indicated that no one was present at the store when the gas was delivered. There was no bill of lading for the June 8 delivery of fuel to the other store. Mr. Gresham claimed that, after giving certain credits to appellants, the outstanding balance owed to appellee was $32,345.59.

Mr. Hobbs became aware during a conversation with Mr. Gresham on June 3, 2002, that the Stackses had an outstanding debt of $85,000 to appellee and that appellee had liens on the stores. On June 10, 2002, Mr. Hobbs notified the Stackses that he would be closing the stores, which he did on June 14, 2002. The Stackses obtained an order on June 14, 2002, awarding them possession of the stores and restraining appellants from coming onto the property or removing or expending any of the stores' proceeds.

Appellee filed this action against appellants in the Pulaski County Circuit Court for $32,345.59 on August 16, 2002. In response, appellants pled accord and satisfaction, insufficiency of process and service of process, failure of consideration, waiver, laches, estoppel, election of remedies, and breach of contract. They also stated:

[Appellants] affirmatively state that [appellee] supplied certain quantities of gasoline and fuel to [appellants] which [appellants] did not order or authorize. [Appellants] also state that [appellee] agreed to remove this gasoline and fuel from [appellants'] former storage tanks and credit [appellants'] account for any recovered fuel. To the best of [appellants'] knowledge, [appellee] has failed to honor this agreement.

At trial, Mr. Hobbs testified that, after he learned of the Stackses' outstanding debt to appellee on June 3, he did not authorize any more purchases of gas from appellee. He said that appellee had delivered gasoline on June 4 and June 8 without his authorization, which he claimed was necessary, according to an oral agreement that he said he had with Mr. Gresham:

I did not authorize any additional fuel purchases of gas from Mr. Gresham after June 3, 2002. When we talked on May 29, 2002 there was one thing that we all agreed on and that was that I would keep up with the gas account. I would keep up with the financing of that account and I would be the one to authorize all loads of gas. We talked later just to acknowledge that he had already delivered the loads of gas. At that point, I felt that I couldn't do anything because the gas was already there.


I did not authorize the load of fuel that was delivered on June 4. Mr. Gresham stated that he would received [sic] faxed readings from my manager at each store concerning how and when gas was to be delivered. I am not aware of any of that process. I did not enter into any kind of agreement with Mr. Gresham to have my managers fax daily readings. I asked the managers to let me know what was going on. I knew that Mr. Gresham was going to talk to them and find out how much gas. I figured that Mr. Gresham was going to call me and tell me and make recommendations. That did not occur until after it was delivered.


There were two (2) loads, one to each store, apparently delivered on June 4, 2002. I did not order or authorize that delivery. I did not sign anything to receive those two (2) loads. I did not authorize William Mesaros or Shawna someone to sign for these two loads of gas on my behalf. I was not contacted about these two (2) loads before they were delivered.


At some point, I learned that Mr. Gresham had delivered additional fuel to the stores. This additional fuel had not been authorized. I learned that the unauthorized fuel had been delivered on June 8, 2002. I talked with Mr. Gresham about the unauthorized fuel that had been delivered on June 8 and June 4. Mr. Gresham told me not to worry that he would take care of that. He told me that he would get a load from each place.

On the other hand, Mr. Gresham testified that appellants' employees had authorized each delivery of fuel. He stated: "I did tell Mr. Hobbs that I would fax him on a daily or every other day basis the price of gasoline and ask him to respond accordingly whether he wanted to purchase gasoline." He said:

I would know that the Hobbs needed gasoline because they had a manager at each store. They would fax us their fuel readings and then I would call the managers and determine what allocation of fuel they needed for each location.


On the four (4) deliveries of fuel that was [sic] sent over to the Hobbs, I personally had a conversation with an employee of the Hobbs at the convenient [sic] store. I received direction from an employee of the Hobbs to deliver the fuel.

Mr. Gresham also discussed appellants' claim that he had agreed to remove the fuel from the stores' premises:

I made a request and talked to the Hobbs about payment. They told me they were in dispute with the seller and that the assets of the stores and their bank accounts had been frozen because of a restraining order. They were unable to pay at that time.

The Hobbs did make a request of me to recover or remove fuel from the tanks at the stores. They asked us to go to the stores and remove the fuel. That is not something that normally occurs in the fuel distribution business. There are hazards in removing fuel. Water is accumulated in the tanks if they are old tanks. Over time, condensation builds up and water builds in the tanks. Debris settles down and once you start pumping out of those tank [sic] there is some risk of contaminates. So, preferably, you never have to pump fuel out to resell to anyone. When you do it, it's hard to sell that product because people have a danger. They know the dangers of the fuel so other retailers don't want that fuel at a market price. They would rather just get it from the terminal where there is some kind of assurance.


They also asked that I remove some fuel from the Dennard store which presented another situation, another set of problems. Those are above ground tanks not designed to be pumped out because of gravitational flows. You have to go in and re-pipe that tank and have piper [sic] fitter's licences [sic]. Piper fitters come in and install accouterments that would allow you to pump it out. So that was not practical.

Mr. Gresham continued on cross-examination:

I told Mr. Hobbs that I would attempt to remove any fuel if we could. It was not possible. It was not possible at Dennard because I would've had to have a pipe fitter come in and fit the above ground tanks. That would have taken weeks to get someone up there. The Sircle S location I couldn't get a truck in there to do it. I couldn't get rid of the fuel if I had tried to sell the fuel somewhere because no one wants fuel that has been in the ground. When I discussed this with Mr. Hobbs, Mr. Hobbs did not offer to pay for some of these expenses associated with the removal of the fuel.

At the conclusion of the trial, the circuit judge stated:

Well, it's an unfortunate situation for Mr. Hobbs, but the contract is pretty clear. I think the obligation is pretty clear. Mr. Hobbs obviously got in something over his head and it wasn't the right type of business arrangement. I am very sorry for that, but that has no place in the contract dispute.

At that point, appellants' attorney asked: "Your Honor are you finding that the deliveries particularly on the 8th were authorized by Mr. Hobbs because there is no document signed that he ordered or anyone received on his behalf?" The trial judge replied:

Yeah. I think it is pretty clear even with his own testimony on the 10th he told the employees that they were going to have to start doing something extreme to relieve the situation which you know obviously is authorized and then sold gas out of those tanks. I think it is pretty obvious what occurred and it is obvious that it is a tragedy for them, but it is also for the gentlemen that delivered the products so I am going to grant the judgment.

The judge entered judgment on December 12, 2002 in the amount of $32,345.59 for appellee, plus $500 in attorney's fees, and this appeal followed.1

Appellants argue on appeal that the trial court's decision is clearly erroneous because they did not authorize the deliveries of the fuel on June 4 and June 8 and because appellee agreed to recover the fuel from their gas tanks. In reviewing a bench trial, we will not set aside the findings of fact by a circuit judge unless they are clearly erroneous. Nationsbanc Mortgage Corp. v. Hopkins, 82 Ark. App. 91, 114 S.W.3d 757 (2003). We give due deference to the superior position of the trial judge to determine the credibility of the witnesses and the weight to be accorded their testimony. Id. It is within the province of the trier of fact to resolve conflicting testimony. Id.

The trial judge obviously did not believe Mr. Hobbs's assertion that Mr. Gresham agreed not to deliver any gas to the stores unless he (Mr. Hobbs) personally authorized it. The testimony of an interested party is taken as disputed as a matter of law. Pettus v. McDonald, 343 Ark. 507, 36 S.W.3d 745 (2001). The parties' written contract and appellants' personal guaranty did not mention such an agreement. In fact, it cannot be said that the contract was ambiguous. In regard to the construction of the terms of an agreement, the initial determination of the existence of an ambiguity rests with the court. Fryer v. Boyett, 64 Ark. App. 7, 978 S.W.2d 304 (1998). When a contract is unambiguous, its construction is a question of law for the court. Id. A contract is unambiguous and its construction and legal effect are questions of law when its terms are not susceptible to more than one equally reasonable construction. Id. When contracting parties express their intention in a written instrument in clear and unambiguous language, it is the court's duty to construe the writing in accordance with the plain meaning of the language employed. Id.

Even if the contract had been ambiguous, the parties did not act as if such an obligation existed - there is no dispute that appellants kept the stores open for business, which included the sale of gasoline delivered by appellee, for six days after appellee's last deliveries. Mr. Hobbs admitted that gas was being sold to customers at both stores until June 14. If a term of a contract is indefinite, the court will look to the conduct of the parties to determine their intent. Joshua v. McBride, 19 Ark. App. 31, 716 S.W.3d 215 (1986); Welch v. Cooper, 11 Ark. App. 263, 670 S.W.2d 454 (1984). Although appellants argue that they did not give actual or apparent authority to their employees to accept delivery of the gas, this was a question of fact for the trial court to decide. When the evidence as to the nature and extent of an agent's authority is in conflict, it is a question of fact for the fact-finder. Foundation Telecom., Inc. v. Moe Studio, Inc., 341 Ark. 231, 16 S.W.3d 531 (2000).

As for Mr. Hobbs's claim that Mr. Gresham agreed to remove the gas from the tanks, Mr. Hobbs admitted that a court order had been entered on June 14, 2002, directing him not to dispose of the inventory. Additionally, the trial judge clearly believed Mr. Gresham's statement that he agreed to do this only if he could and that it was not possible to do so for a number of reasons, which he explained in detail. When the testimony is in conflict on the issue of whether the parties made an agreement, a fact question arises that is to be determined by the trier of fact. Country Corner Food & Drug, Inc. v. Reiss, 22 Ark. App. 222, 737 S.W.2d 672 (1987).

In any event, even if Mr. Gresham had, without reservation, agreed to remove the gas just as Mr. Hobbs testified, that agreement would not have been enforceable, because the original contract did not impose this obligation and the Hobbses gave no additional consideration for such a promise. A contract is not enforceable if it does not impose mutual obligations on both of the parties. Superior Fed. Bank v. Mackey, 84 Ark. App. 1, 129 S.W.3d 324 (2003). Additional consideration is required when parties to a contract enter into an additional contract. Capel v. Allstate Ins. Co., 78 Ark. App. 27, 77 S.W.3d 533 (2002). In exchange for Mr. Gresham's purported additional agreement to remove the gas, Mr. Hobbs offered nothing. Therefore, any such agreement would have been unenforceable for lack of consideration.


Griffen and Baker, JJ., agree.

1 On June 16, 2004, we dismissed this appeal because the only notice of appeal contained in the record bore an untimely file mark. Appellants petitioned for rehearing on the ground that, although the circuit clerk had failed to include it within the record on appeal, a timely notice of appeal had been filed by facsimile and attached a copy of that document. On June 30, 2004, we granted the petition and deemed the record supplemented.