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Gold Fuel Service Inc. v. Esso Standard Oil Co.

Decided: December 21, 1959.


Scherer, J.s.c.


[59 NJSuper Page 9] The amended complaint alleges that the predecessor of the plaintiff was, for many years prior to December 10, 1957, in the business of fuel oil distribution to industrial and other consumer-level users in this vicinity; that on December 10, 1957 the plaintiff corporation was formed, which absorbed all of the business, good will and assets of the predecessor partnership and continued the business of the partnership, and, in particular, the servicing of the accounts of the defendants Cooper Alloy Corporation and Stainless Engineering & Machine Works (hereinafter jointly referred to as "Cooper"); that this account constituted the major portion of the business and income of the plaintiff and its predecessor, to the extent that the loss of the account would cause plaintiff to suspend or cease operations; that plaintiff and its predecessor, for 24 years, sold fuel oil to Cooper at an average margin of profit of 3 cents per gallon (wherever figures are given, they refer to the rate per gallon), which fuel oil it purchased from independent suppliers at a rate permitting such profit; that said profit rate has been standard in the industry, and independent suppliers and major companies, including the defendant Esso Standard Oil Company (hereinafter referred to as "Esso"), have been selling fuel oil to wholesalers and distributors on such profit margin; that on or about December 13, 1958 Esso induced Cooper to terminate its relations with plaintiff by offering to sell fuel oil to Cooper at a rate below that at which Esso and other major companies and independent suppliers had been selling to distributors like plaintiff; that Esso sold to Cooper at 10.2 cents, a rate substantially below that at which plaintiff could purchase

fuel oil from any suppliers in the industry, whether major or independent; that such action on the part of Esso constituted unfair competition, a malicious interference with the business and profits of the plaintiff, and a violation of public policy. The complaint further charges that such sale is not fair and lawful competition and therefore violates 15 U.S.C.A. § 1; that it is but one of a series of similar sales to ultimate consumers at prices lower than those at which wholesalers or distributors can purchase fuel oil for resale, and thus is an attempt by Esso to monopolize a part of interstate commerce in fuel oil, in violation of 15 U.S.C.A. § 2; that Esso is engaged in interstate commerce; that the sale was without legal justification and therefore is not fair and lawful competition and constitutes a violation of 15 U.S.C.A. § 13 a; and that Esso is liable to plaintiff in the sum of $500,000 as compensatory and punitive damages.

There is a second count in the amended complaint which repeats the allegations of the first count and further alleges that Cooper knew that Esso was selling fuel oil to it at a price lower than that at which plaintiff could purchase it in the open market. An accounting of the profits on this count is sought from Esso, together with a restraint against Esso's selling at prices lower than those at which plaintiff can purchase and a restraint against the three defendants from dealing with each other.

By order dated September 30, 1959 the amended complaint was dismissed by the plaintiff, with prejudice, as against Cooper, leaving only Esso as a defendant. The latter now moves for summary judgment dismissing the amended complaint on the ground that there is no genuine issue as to any material fact and that it is entitled to a judgment as a matter of law. R.R. 4:58.

Affidavits have been filed by both sides as to the surrounding circumstances of this transaction, as a result of which Cooper terminated its relations with plaintiff and obtained its fuel oil requirements from Esso. The affidavits,

in my opinion, disclose clearly that there is no dispute as to any material fact and that this is an appropriate case for the entry of summary judgment (Frank Rizzo, Inc. v. Alatsas , 27 N.J. 400, 405 (1958)), even giving proper weight to the most favorable inference rule (Savarese v. Pyrene Manufacturing Co. , 9 N.J. 595 (1952); McDermott v. Botwick , 38 N.J. Super. 528 (App. Div. 1956)).

Briefly, the facts disclosed by the affidavits and exhibits are that Cooper, in 1958, became dissatisfied with the price plaintiff was charging it for fuel oil and so advised plaintiff. Plaintiff then reduced its price from 12.7 cents to 12.5 cents. In October 1958 Cooper requested Esso to make a survey of its plants to determine whether or not a saving could be made in the cost of No. 2 fuel oil. Cooper was using several hundred thousand gallons of this grade oil annually. Esso made a survey and reported to Cooper, in a letter of November 6, 1958, that it should continue to use No. 2 fuel oil. It also advised that, for this grade of fuel oil in tank transport quantities, Esso's price was 10.05 cents, plus .33 cents for freight, or a total cost of 10.38 cents. Cooper sought bids from other suppliers, including the plaintiff, and one bidder quoted a price of 10.2 cents delivered at its plant. Cooper so advised Esso and stated that it would like to do business with Esso if the above quoted price could be met. Esso agreed to meet the competitive price of 10.2 cents. This figure was arrived at by maintaining the basic price for the fuel oil of 10.05 cents, but reducing its haulage charge from .33 cents to .15 cents. On this basis, Cooper awarded the contract to Esso, to become effective December 1, 1958. Plaintiff requested that its contract be continued for two weeks beyond that date in order to permit it to adjust its commitments with its suppliers. This request was granted, and Esso's contract actually became effective December 16, 1958.

Plaintiff has instituted another suit in the United States District Court for the District of New Jersey, alleging the same facts as are above set forth, and the relief there sought is based upon 15 U.S.C.A. §§ 13, 13 a , 15 and 26, with

a prayer for treble damages. This suit is still pending and has not come to trial.

On the argument the plaintiff conceded that there had been no unfair competition. Plaintiff also admitted that it cannot have a cause of action in this court based solely upon a federal statute, but must bring any such statutory action in the federal court. But, plaintiff argues that the federal anti-trust statutes, and, in particular, the Clayton and Robinson-Patman Acts (15 U.S.C.A. § 1 et seq.), establish a standard of conduct for fair competition in business transactions in interstate commerce, and that any departure from this standard constitutes unfair competition and is actionable in the state, as well as the federal, courts. Plaintiff concedes that the acts of Esso complained of here would not give rise to a cause of action at common law. It argues that ...

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