Mandril v. Kasishke (620 S.W.2d 238, 1981)

DODSON, Justice.

A. T. Mandril brought this action against Coraldale Kasishke for alleged breaches of two contracts between the parties. In his action, Mr. Mandril alleged that Mrs. Ka-sishke overcharged him for gasoline and diesel fuel purchased under the agreements. Mrs. Kasishke generally denied Mr. Mandril’s allegations and alleged several affirmative defenses such as voluntary payment, laches, estoppel, waiver, modification, breach of contract, setoff and voidness. The case was tried with a jury. Based on the jury’s answers to certain special issues, the trial court rendered a take-nothing judgment on Mr. Mandril’s cause of action against Mrs. Kasishke. Mr. Mandril appeals from the judgment. We reverse and render.

On 23 February 1970, a partnership consisting of Mr. Mandril and Roger Gruhlkey leased a service station from Mrs. Ka-sishke. The station was designed and used as a truck stop and was known as “Texaco Truck Town.” The lease agreement was for a term of five years beginning 1 March 1970 and ending 28 February 1975. The monthly rental for the premises was computed on a “cents-per-gallon-of-fuel-sold” basis with a minimum rental of $2,000 per month. In addition, the partnership agreed to purchase, and Mrs. Kasishke (or her nominee) agreed to supply, certain types of gasoline, kerosene and diesel fuel. The prices for these products were variable and, in one way or another, were tied to the “posted tank wagon price of” or the “amount of any increase posted by” the supplier of Mrs. Kasishke. The partnership also agreed (as a “covenant”) to purchase all petroleum products, automobile parts and accessories, and merchandise from Mrs. Kasishke or her nominee to the exclusion of any other supplier. Finally, the parties agreed that, after the first year of the lease, either party may terminate the agreement with 180-days notice if the partnership failed to purchase an average of 150,000 gallons of fuel per month for any consecutive 12-month period.

On 28 February 1975, the parties executed a second lease agreement for the truck stop. This agreement was for a term of one year beginning 1 March 1975 and ending on the last day of February 1976. Again, the monthly rental was computed on a “cents-per-gallon-of-fuel-sold” basis with a minimum rental of $3,000 per month. The parties maintained the same, exclusive purchase arrangement as before. The prices for fuels were Mrs. Kasishke’s prevailing price to her customers adjusted by any increases or decreases by Mrs. Ka-sishke’s supplier. There was no minimum fuel sales requirement.

In response to special issues one, two and three, the jury found that Mrs. Kasishke overcharged Mr. Mandril a total amount of $22,403.89 for the sale of gasoline and diesel fuel under the agreements; in issues four and five, that Mr. Mandril voluntarily paid the invoices for gasoline and diesel fuel delivered to him, although he was convinced at the time he was being overcharged, but that he did so without knowledge of all the material facts concerning the overcharges; and, in issue six, that through their course of dealings the parties did not modify or adjust the prices provided for in the 23 February 1970 agreement.

In issue seven, the jury found that Mr. Mandril or one of his agents, servants, or employees signed written invoices agreeing to pay the amounts charged for gasoline and diesel fuel delivered to him during the period in question; in issue eight, that by his conduct, Mr. Mandril did not waive any right he had to recover for the alleged overcharges; and, in issue nine, that Mr. Mandril failed to purchase from P-K Supply, Inc. (Mrs. Kasishke’s nominee) all of his oils, washing compounds, automobile and truck parts and accessories, and other merchandise that P-K Supply, Inc. could have sold and delivered or could have caused to be sold and delivered during the period in question.

In issues ten and eleven, the jury found that Mr. Mandril unreasonably delayed bringing this lawsuit and that the unreasonable delay hindered Mrs. Kasishke in the defense of this lawsuit. In issues twelve and thirteen, the jury also found that by his conduct, Mr. Mandril led Mrs. Kasishke reasonably to believe that he would not insist upon strict performance under the 23 February 1970 contract and that she relied upon his conduct by continuing to provide gasoline and diesel to him.

Mr. Mandril brings fifteen points of error. By his first four points, he maintains that the trial court erroneously failed to disregard the jury’s answers to special issues ten and eleven, i. e., the laches issues; that, as a matter of law, the defense of laches was never an issue in the case; and that the evidence is legally and factually insufficient to support the jury’s answers to the laches issues.

The parties agree that laches is an affirmative defense and that two of the essential elements of laches are: (1) an unreasonable delay by one having legal or equitable rights in asserting them; and (2) a good faith change of position by another to his detriment because of the delay. City of Fort Worth v. Johnson, 388 S.W.2d 400, 403 (Tex.1964). The burden of proving the essential elements of laches is on the party asserting it, and the failure to prove any one or more of the elements is fatal. Id. Furthermore, Mr. Mandril filed his action within the applicable statute of limitations period. In Barfield v. Howard M. Smith Co. of Amarillo, 426 S.W.2d 834, 840 (Tex.1968), the Court acknowledged and stated the following settled principle: “Generally in the absence of some element of estoppel or such extraordinary circumstances as would render inequitable the enforcement of petitioners’ right after a delay, laches will not bar a suit short of the period set forth in the limitation statute.” (Emphasis added).

In support of his position, Mr. Mandril, in essence, claims that the evidence is legally and factually insufficient to support a finding that Mrs. Kasishke made a good faith change of position to her detriment because of any delay by him in bringing this action. Conversely, Mrs. Kasishke contends that the record supports such a finding in that: (1) she was “lulled” into not exercising her right to terminate the agreement for his failure to purchase 150,000 gallons of fuel per month as a result of his continuing to order, receive and pay for fuels at the prices charged; (2) Mr. Mandril destroyed or materially hindered proof of a substantial counterclaim or setoff for lost profits; and (3) a material witness for Mrs. Ka-sishke died before the trial of this case.

The record shows that Mr. Mandril, more often than not, failed to meet the minimum purchase requirement of 150,000 gallons of fuel per month; that as early as 1973 he thought he was being overcharged; that he told Mrs. Kasishke that he was being overcharged; that she did not acknowledge any overcharges and told him he was being treated fairly; that she thought he was satisfied; and that she continually pushed him to increase his volume of fuel sales. As stated in Barfield, 426 S.W.2d at 840: “As a party to arm’s length business transactions, respondent had a duty to use ordinary care for the protection of its own interests . .. and [is] also charged with the legal effect of any instrument it signed.” It is undisputed that Mrs. Kasishke negotiated and voluntarily entered into both the 1970 and 1975 lease agreements and that she knew she had the right under the 28 February 1970 agreement to terminate the lease for non-compliance with the 150,000-gallon volume requirement. In this connection, Mrs. Kasishke testified that she did not terminate the lease because she continually thought Mr. Mandril would increase the fuel sales volume. Therefore, it being undisputed that Mrs. Kasishke did not terminate the lease in the expectation that Mr. Mandril would increase the fuel sales volume, there is no evidence to show that she made a good faith change of position to her detriment because of any delay by Mr. Mandril in bringing this action.

Mrs. Kasishke further contends that she made a good faith change of position to her detriment because Mr. Mandril destroyed or materially hindered proof of her substantial counterclaim or setoff for lost profits. In this connection she argues that the contracts required Mr. Mandril to purchase “the gasoline, fuels, oils, greases, solvents, chemicals, kerosene, washing compounds, automobile parts and accessories, and other merchandise from Lessor [Mrs. Kasishke] or its [sic] nominee, to the exclusion of similar merchandise marketed or distributed by any other person, firm or corporation”; that Mr. Mandril failed to comply with this provision by purchasing such merchandise from third parties; and that, before and after he filed this lawsuit, Mr. Mandril destroyed or disposed of his invoices on such third party purchases.

Additionally, she claims a “change of position” because a material witness died after the lawsuit was filed. The alleged material witness was the general manager of Kasishke Texaco, which sold gasoline and diesel fuel to Mr. Mandril under the lease. Mr. Mandril dealt with the general manager of Kasishke Texaco during the course of his operation of the truck stop.

The record shows that Mr. Mandril customarily threw away invoices and other records three years after the April 15 federal income tax filing date. Until approximately three weeks before trial, Mrs. Kasishke never inquired of Mr. Mandril concerning the alleged third party invoices. This action was filed on 26 June 1978 and was tried on 4 March 1980. The record shows that the alleged material witness died several months after the lawsuit was filed but several months before the action was tried.

There is no evidence that Mrs. Kasishke made efforts to obtain the testimony of the alleged material witness after the lawsuit was filed. If the alleged material witness’s testimony was important to her position, she is charged with the knowledge of its importance. Again, as stated in Barfield, 426 S.W.2d at 840: “As a party to arm’s length business transactions, respondent had a duty to use ordinary care for the protection of its own interests and is charged with knowledge of all facts which would have been discovered by a reasonably prudent person similarly situated.... ” Mrs. Kasishke’s second and third contentions represent a change of conditions rather than a good faith change of position to her detriment because of any delay of Mr. Mandril in asserting his right to recover for the alleged overcharge.

Accordingly, we conclude that Mrs. Ka-sishke failed to establish a good faith change of position to her detriment because of any delay by Mr. Mandril in bringing his action. Therefore, we sustain points one, two and three.

In points of error five, six, seven and eight, Mr. Mandril maintains that the court erroneously failed to disregard the jury’s answers to the estoppel issues, i. e., special issues twelve and thirteen, that, as a matter of law, the defense of estoppel was never an issue in the case; and that the evidence is legally and factually insufficient to support the jury’s answer to special issues twelve and thirteen. Under these points, Mr. Mandril, in essence, contends that the evidence is legally and factually insufficient to support findings on all of the essential elements of estoppel.

The essential elements of estoppel are: (1) a false representation or concealment of a material fact; (2) made with knowledge, actual or constructive, of the fact; (3) the party to whom it was made must be without knowledge or the means of knowing the real facts; (4) the false representation or concealment must have been made with the intention that it would be acted on; and (5) the party to whom it was made must have relied on and acted on it to his prejudice. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 932 (1952). The burden of proving each element of estoppel is upon the party asserting it and the failure to prove any one or more of the essential elements is fatal. Barfield v. Howard M. Smith Co. of Amarillo, 426 S.W.2d at 838.

In special issues twelve and thirteen, the jury found that Mr. Mandril led Mrs. Kasishke “reasonably to believe that he would not insist upon strict performance under the February 23, 1970 contract” and that Mrs. Kasishke “relied upon conduct of plaintiff [Mr. Mandril] ... by continuing to provide gasoline and diesel fuel to him.” No other issues on estoppel were requested or submitted to the jury.

Given these circumstances, Mrs. Kasishke maintains, as we understand her position, that the conduct of Mr. Mandril upon which she relies was his continuing to order and pay for gasoline and diesel fuel at the prices charged. Nevertheless, one of the elements of estoppel which she had the burden to prove was, as stated above, that she was without knowledge or the means of knowing the real facts. It is undisputed that Mrs. Kasishke knew or had the means of ascertaining the correct contract price of gasoline and diesel fuel. We have not been referred to evidence to the contrary. It suffices to state without further discussion that she failed to establish one of the essential elements of her defense of estoppel. Therefore, we sustain points five, six and seven.

As stated above, in response to special issue number seven, the jury found that Mr. Mandril, or one of his agents, servants, or employees signed written invoices agreeing to pay the amounts charged for gasoline and diesel fuel delivered to him during the period in question. In points of error ten and eleven, Mr. Mandril maintains that the trial court erroneously failed to disregard the jury’s answer to special issue seven, because the issue is immaterial and, as a matter of law, the signed invoices do not constitute contractual agreements to establish new prices for fuel or change or modify the contract prices for fuel stated in the lease agreements executed by the parties. In support of his position, he argues that the invoices do not constitute legal contracts.

Mrs. Kasishke, on the other hand, contends that the invoices constitute written modifications of the lease agreements which are binding on the parties. She claims that the sales of fuel are “goods” and that therefore Tex.Bus. & Com. Code Ann. chapter 2 (Vernon 1968) controls. In particular, Mrs. Kasishke relies upon § 2.209(a) of the code which says that an “agreement modifying a contract within this chapter [2] needs no consideration to be binding.” She also relies on Adams v. Can-Dee Oil Corp., 357 S.W.2d 808 (Tex.Civ.App.—Waco 1962 writ ref’d n.r.e.), to support her position that the signed, written invoices in this case modify the pricing terms in the agreements.

It is elementary that parties having the power to make a contract have the power to modify it. Moser Co. v. Await Industrial Properties, Inc., 584 S.W.2d 902, 906 (Tex.Civ.App.—Amarillo 1979, no writ). However, the new or modifying agreement must possess the essential elements of a contract. In particular, there must be a meeting of the minds of the parties, Southern Travelers’ Ass’n v. Wright, 34 S.W.2d 823, 826 (Tex. Comm’n App. 1931, holding app’d), and the terms of the original contract cannot be unilaterally remade by one of the parties. Kitten v. Vaughn, 397 S.W.2d 530, 533 (Tex.Civ.App.—Austin 1965, no writ).

In Adams, the plaintiff sued for commissions due under a written employment agreement which provided that he was to receive 2½⅞: per gallon of gasoline sales as compensation for managing the defendant’s service station. 357 S.W.2d at 808. However, certain “daily inventory balance sheets” signed by the plaintiff and furnished by him to the defendant showed his compensation rate to be from 1$ to 2