Becker v. Crown Central Petroleum Corp.

⁵⁹⁸ Orth, C. J., delivered the opinion of the Court. The General Assembly of Maryland at its session held in 1973 made known its concern about the distribution and sale through marketing arrangements of petroleum products in this State. It declared that the economy, the public interest, welfare and transportation were vitally affected thereby and found it necessary to define the relationships and responsibilities of the parties to certain agreements pertaining thereto. Code, Art. 23, § 167A.

It did so by enacting the “Maryland Gasoline Products Marketing Act” as a subheading under the “Corporations” Article. 1 Ch. 662, Acts 1973, codified as Art. 23, §§ 167A to 167-1. Section 3 of ch. 662 made the Act'apply “to dealer agreements and all renewals and extensions thereof entered into on or after July 1,1973.” As enacted in 1973 the Act defined certain terms, § 167C; 2 required certain information to be given by a distributor to a prospective dealer, § 167D; set out provisions to which marketing agreements are subject, § 167E; imposed liability ⁵⁹⁹ on a distributor for wrongful termination of the agreement, § 167F; specified defenses to actions based on termination of the agreement, § 167G; provided for notice of intent to terminate or cancel an agreement, § 167H; and designated remedies for violations of the Act, § 167-1. It is manifest that the Legislature adopted a comprehensive scheme covering three general areas: (1) it required certain information to be given by a distributor to a prospective dealer; (2) it delineated certain provisions to which marketing agreements [were] subject; and (3) it provided sanctions for violations. The first area enabled a prospective dealer to make an intelligent and considered decision on whether to enter into an agreement.

It included such data as the gallon volume history; the names and addresses of previous dealers at the location for the past five years and the reasons their marketing agreements were terminated; any legally binding disposition of the location; the training programs the distributor will furnish and the specific goods and services it will provide. Full disclosure was required of (a) all obligations required of the dealer, (b) all restrictions on sale, transfer and termination of the agreement, and (c) the total amount of any cash deposits required, interest charges to be paid thereon and conditions for the return of the deposit. Art. 23, § 167D (1) - (7). Section 167E delineated the “[p]rovisions to which marketing agreements [were] subject.” The section began: “Every marketing agreement between a distributor and a dealer shall be subject to the following provisions whether or not expressly set forth therein:” The provisions were set out in eight paragraphs.

One gave a dealer a grace period within which he may cancel an executed agreement, ¶ (2). Three specified what a dealer shall not be required to do: to keep open for any specified number of hours a day or days a week unless expressly set forth in the agreement, ¶ (1); to sell products at a price fixed by the distributor, ¶ (4); to use any promotion in the ⁶⁰⁰ operation of the business, ¶ (5). Paragraph (3) prohibited an agreement waiving the right of either the dealer or distributor to trial by jury or to interpose counterclaims or cross-claims. Paragraph (6) established certain rights and obligations in the event of any termination or cancellation of an agreement by mutual agreement or otherwise.

Paragraph (7) forbade a distributor from withholding unreasonably its consent to any assignment, transfer, or sale of a marketing agreement. Paragraph (8) read: “With respect to nonrenewal of a marketing agreement, either party must give the other party notice of his intent not to renew a marketing agreement at least 90 days prior to the expiration of the term of that marketing agreement.” The third area dealt with sanctions. They included civil liability for damages for violation of any provision of the Act and other remedies legal or equitable as may be available to the party injured by a violation, § 167-1. A distributor who has a written marketing agreement with a dealer shall be liable to the dealer as provided in § 167-1 for the distributor’s wrongful or illegal termination or cancellation of the marketing agreement during its terms, § 167F.

Defenses to an action predicated upon the termination or cancellation of an agreement are designated in § 167G, but they are available only when notice of intent to terminate or cancel is given as provided in § 167H, namely, written notice to the other party in person or by certified mail at least 60 days prior to the date which it intends to terminate or cancel the, marketing agreement, “provided, however, that where criminal misconduct, fraud, abandonment, bankruptcy or insolvency of the dealer, adulteration of product, or the giving of a dishonored nonsufficient fund check, is proven at the time of termination or cancellation, the 60-day notice shall not be required.” On 3 July 1973 Crown Central Petroleum Corporation and Earl Becker entered into a “Lease and Dealer Agreement.” It is clear that within the contemplation of the Act, Crown was a distributor, Becker was a dealer and the agreement was a ⁶⁰¹ marketing agreement. Under date of 29 March 1974 Crown sent Becker a “Notice of Cancellation” which was received by him on 3 April 1974 by certified mail. The Notice read: “You are hereby notified that pursuant to provisions thereof we are hereby cancelling the following agreements which have heretofore been entered into by you with us: BRANDED SERVICE STATION LEASE AND DEALER AGREEMENT DATED JULY 3,1973. THIS NOTICE SHALL BE EFFECTIVE JUNE 30,1971,.

We reserve all claims against you by reason of any breach by you of the above agreements or any of them or by reason of any indemnity agreement contained therein.” On 5 June 1974 Becker instituted an action in the Circuit Court for Baltimore County against Crown for a declaratory judgment and interlocutory injunctive relief. On 1 July the parties filed a stipulation. They agreed in paragraph 1 thereof: “1. Plaintiff, Earl Becker, shall temporarily remain at the service station located at 5217 Baltimore National Pike, Baltimore, Maryland 21229 under the terms of the Branded Service Station Lease and Dealer Agreement dated July 3, 1973 between the Plaintiff and Defendant until August 31, 1974 or until this case has been heard and decided on the merits, whichever shall first occur.” This rendered moot the request for injunctive relief.

Paragraphs 4 and 5 of the stipulation read: “4. The 90-day notice of non-renewal called for under the provisions of Article 23, Sections 167E (8) of the Maryland Code was not afforded the Plaintiff. ⁶⁰² 5. Trial on the merits of this litigation will be limited to the following factual and legal issues: (a) Whether or not the Plaintiff received legally sufficient notice of termination for cause in accordance with Article 23, Sections 167G and 167H, (b) Whether, in fact, such cause for termination existed, (c) Assuming no such cause existed under the Maryland Gasoline Products Marketing Act, whether such statute, if construed to in any way regulate or interfere with Defendant’s right to cancel or terminate Plaintiff’s use of Defendant’s federally registered trademark, is unconstitutional under the Supremacy Clause of the United States Constitution, in that the Lanham Act, 15 USC, Sec. 1051 et seq. may have entirely preempted the field of regulation and control of such trademarks.” On 26 August when the case came to trial by the court without a jury, another issue was presented for determination which we designate as issue (d): “Whether any notice was required to terminate the agreement.” The trial was concluded the same day, and the decision held sub curia. A declaration of the court was issued on 8 November and filed on 12 November. 3 The court determined “that the Branded Service Station Lease and Dealer Agreement dated July 3, 1973 between Crown Central Petroleum Corporation, Defendant, and Earl Becker, the Plaintiff, covering a drive-in gasoline service station, located at 5217 Baltimore National Pike, automatically terminated at the end of its term on June 30, 1974 and, therefore, the Defendant in this case is entitled to immediate possession of ⁶⁰³ the premises.” On 2 December Becker directed the Clerk of the court to “file an appeal to the Court of Special Appeals in this matter.” On 6 December the court issued an order staying its direction that Crown had the immediate right to occupy the service station pending a decision on appeal. 4 It further ordered that during the period of the stay Crown continue to deal with Becker as if the lease between them was in full force and effect.

The stay was conditioned upon Becker abiding by the terms and conditions of the lease and posting a supersedeas bond in the amount of $10,000. An approved bond was filed on 17 December. On 17 December Becker noted another appeal “to the Court of Special Appeals in this matter.” This latter appeal was filed too late to apply to the judgment of 8 November. Maryland Rule 1012.

If it was intended to be with respect to the order of 6 December, see Rule 1017-1021, the propriety of that order, even if subject to appeal, was not briefed. Rules 1031, § c 2, 3, 4 and 1046, § f. Therefore, we do not consider it. The declaration of 8 November included a memorandum opinion.

In the opinion the court observed that there were “certain determinations that must be made before an answer can be given as to the rights of the parties in this case.” It designated them: “First, the affect of Article 23, Sections 167E, 167G and 167H of the Annotated Code of Maryland. Second, whether or not these provisions of the Annotated Code of Maryland above referred to are unconstitutional as under the combined effect of the Supremacy Clause of the United States Constitution, Article 4 Clause 2, and the Lanham Act 15 U.S.C. Section 1051 et seq. Third, whether or not cause existed giving the Defendant the right to cancel the lease agreement from the Plaintiff. Fourth, whether or not there was any necessity for any type of notice to be given by the Defendant to ⁶⁰⁴ the Plaintiff in order to terminate the aforesaid lease agreement.” The court found as a fact that there was no intent on the part of Crown to terminate the agreement for cause, and that, in any event, sufficient cause to terminate for cause did not exist.

It determined that “there is no conflict” between the Maryland Gasoline Products Marketing Act and the Lanham Act. It held, however, that a marketing agreement without a renewal clause was not subject to the 90-day notice of intent not to renew required by Art. 23, § 167E (8). It concluded that as there was no renewal provision within the term's of the marketing agreement here, “it was not even necessary that any notice be sent to [Becker] that the lease would cease at the end of the term of the marketing agreement.” It was therefore that the court determined that the marketing agreement automatically terminated at the end of its stated term on 30 June 1974 and that Crown was entitled to immediate possession of the premises. Becker poses only one question on appeal.

Basically it is whether the trial court erred in holding that the agreement automatically terminated at the end of its term. The question encompasses whether the agreement was without the scope of the notice requirement of the Maryland Gasoline Products Marketing Act. Crown accepts this question, but urges that it raises another issue in the event the agreement be found subject to the statutory notice requirement, namely, was the notice here given sufficient under § 167E (8). It then presents two other questions.

It asks (a) whether § 167E (8) can be enforced in the light of the Lanham Act and (b) whether the notice here given was sufficient to permit a “for cause” termination of the agreement under § 167G (3) and (4) and § 167H. The Maryland Gasoline Products Marketing Act and the Lanham Act The “Lanham Act” is codified as Chapter 22, headed “Trade Marks”, of Title 15 of the United States Code, §§ ⁶⁰⁵ 1051-1127. The Congress of the United States expressly and clearly set out the intent of the Chapter in § 1127: “The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce; to protect registered marks used in such commerce from interference by State, or territorial legislation; to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce by the use of reproductions, copies, counterfeits, or colorable imitations of registered marks; and to provide rights and remedies stipulated by treaties and conventions respecting trademarks, trade names, and unfair competition entered into between the United States and foreign nations.” The Maryland Gasoline Products Marketing Act, according to its title was fundamentally related to the sale and distribution of gasoline products, providing for the regulation of marketing agreements between gasoline distributors and gasoline dealers, giving dealers a course of action against distributors under certain circumstances and affording distributors certain defenses. The General Assembly found it necessary, as we have pointed out, to define the relationship and responsibilities of distributors and dealers as to agreements between them because the distribution and sale of petroleum products through such agreements were of public interest and vitally affected the welfare, transportation and economy of the State.

Although a marketing agreement within the meaning of the Act included one under which the dealer was granted “the right to use a trademark, trade name, service mark, or other identifying symbol or name owned by the distributor”, Code, Art. 23, § 167C (3), the legislation focused primarily on the right of a dealer to occupy premises owned, leased or controlled by the distributor, for the purpose of engaging in ⁶⁰⁶ the retail sale of gasoline products supplied by the distributor. In Florida Lime and Avocado Growers, Inc., 373 U. S. 132, 142 , the Supreme Court of the United States said: “[F]ederal regulation of a field of commerce should not be deemed preemptive of state regulatory powers in the absence of persuasive reasons — either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained.” In Pennsylvania v. Nelson, 350 U. S. 497, 501-505 , the Court stated that three of the most widely accepted tests for supersession were (1) the scheme of federal regulation was so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it; (2) the federal statutes touch a field in which federal interest is so dominant that the federal system must be assumed to preclude enforcement of state laws on the same subject; (3) enforcement of state legislation presents a serious danger of conflict with the administration of the federal program. See Melville v. State, 10 Md. App. 118, 122-123 . Applying these tests we do not deem the Lanham Act to be preemptive of Maryland’s power to regulate marketing agreements between distributors and dealers of gasoline products.

We do not see in the federal statute that Congress has unmistakably ordained that it has preempted such state power. The federal scheme of regulation as to trademarks was not so pervasive as to make reasonable the inference that Congress left no room for the states to supplement it to the extent Maryland did in the Gasoline Products Marketing Act, nor will the enforcement of the Maryland Act present a serious danger of conflict with the administration of the federal program. The mere presence of federal legislation in a particular area does not, in and of itself, create a preemption of all state legislation in that area. States are permitted to act in the interstices of the federal regulatory matrix, even where extensive federal regulatory schemes ⁶⁰⁷ have been enacted, if there is no express Congressional language of preemption, and may require more stringent standards than those designed by Congress, and may otherwise adopt laws affecting the subject of a federal statute, so long as the federal purpose is not undermined.

Mariniello v. Shell Oil Company, 511 F. 2d 853 (3rd Cir. 1975), citing Kewanee Oil Co. v. Bicron Corp., 416 U. S. 470 (1974); Goldstein v. California, 412 U. S. 546 (1973); Rice v. Sante Fe Elevator Corp., 331 U. S. 218 (1947). The Construction of Code, Art. 23, § 167E (8) The agreement consisted of a printed form obviously prepared by Crown, it contained blanks to be filled in to make it applicable to a particular dealer. Paragraph 3 of the form read: “TERM: This agreement shall be for an initial probationary term of__commencing on -and an additional probationary term of-thereafter, subject to the right of either Crown or Dealer to cancel this Agreement at any time by giving--days written notice during the initial probationary term or by giving--days written notice during the additional probationary term. Unless so terminated, this Agreement shall continue for an additional term of___ Each of the respective terms of this Agreement are subject to earlier termination under the provisions of Paragraphs 21, 22 and 23.” This paragraph was changed in the agreement executed by Becker and Crown to read as follows: “TERM: This agreement shall be for a term of One (1) Year commencing on July 1, 1973.

Each of the respective terms of this Agreement are subject to earlier termination under the provisions of Paragraphs 21, 22 and 23.” ⁶⁰⁸ Everything else that appeared in Paragraph 3 of the printed form had been x’ed out and the deletions initialed by the parties. Thus, under the express terms of the agreement, it ran at the longest for one year from 1 July 1973, with no provision for renewal or for continuance for any additional term. It was subject to earlier termination as expressly provided in the specified Paragraphs. Unless earlier terminated by means spelled out by it, it terminated 30 June 1974, and there was no way a party by unilateral action could extend it.

Therefore, Becker’s question is to be decided by determining what rights and obligations, if any, with respect to renewal were impressed on this agreement by the provisions of the Act as were in effect when the agreement was executed. The cardinal rule in statutory construction is to effectuate the real and actual intention of the Legislature. Wilson v. State, 21 Md. App. 557, 567 . This may be determined from the language of the statute, for it is generally true that the Legislature intended to mean what it plainly expresses, Slagle v. State, 243 Md. 435 .

When the exact reach or breadth of a statute lies in doubt, it is construed as a whole, considering all parts together in the light of its legislative history. See Karns v. Liquid Carbonic Corporation, 275 Md. 1 . That is, statutes are to be construed reasonably with reference to the purpose sought to be accomplished and in accordance with declared legislative policy. State v. Wagner, 15 Md. App. 413, 421 , and cases therein cited.

Fortunately, we are here afforded access to the legislative history of ch. 662, Acts 1973. Senate Bill No. 820, the “Franchise Practices Act”, and No. 821, the “Gasoline Dealers Day in Court Act”, were introduced in the Senate on 6 March 1972, read for the first time and referred to the Committee on Judicial Proceedings. They were referred to the Legislative Council of Maryland for study. See Legislative Council Working Agenda for 1972 in which SB 820, designated as Item No. 139, referred to the Council by the Senate Judicial Proceedings Committee, and SB 821, designated as Item No. 215, referred by the House ⁶⁰⁹ Committee on Economic Matters were both referred by the Council to the House Committee on Economic Matters. 5 Under date of 25 October 1972 the Chairman of the House Economic Affairs Committee made a report to the Legislative Council: “The House Economic Affairs Committee has voted favorably on a Gasoline Dealers Franchise Bill after many extensive hearings and drafts of proposed bills this summer.

The Gasoline Dealers bill is a result of the weaknesses the Committee found in Item 139 (S.B. 820 — Franchises) and Item 215 (S.B. 821 — Gasoline Dealers Day in Court Act). The bill does not address itself to the problem of non-renewal of leases, but does correct many abuses. Full disclosure of all relevant information pertaining to the operation of a service station is required of the franchisor to the franchisee, before a lease is signed. Dealer rights as to hours open for business, the price at which he sells products, participation in company advertising promotions, and re-sale of his company inventory to the company upon termination of the marketing agreement are specified.” The minutes of the Fourth Meeting of the Council held on 25 October 1972 reflect that the report and recommendations were adopted by the Council.

See page 373, Report of proposed bills made by the Legislative Council of Maryland to the General Assembly of Maryland of 1973. The bill recommended by the Council was in substance Senate Bill 220, ultimately enacted as the Maryland Gasoline Products Marketing Act, ch. 662, Acts 1973. It is apparent that SB 820 and SB 821 were strongly opposed by distributors with emphasis on the question of ⁶¹⁰ renewal of agreements. 6 The bill which received the favorable vote of the House Economic Affairs Committee acting as a committee of the Legislative Council, and which the Council recommended, is set out in pages 141-146 of the Council’s Report to the 1973 General Assembly. It is preceded by an explanation which is substantially the same as the Committee report.

It states specifically that the bill “does not address itself to the problem of non-renewal of leases”, adding “but it does correct many abuses”, listing them as contained in the Committee report. Nonrenewal of an agreement is not one of the abuses specified. In the light of this legislative history and in view of the content of the bill itself, we find it clear that the Legislature intended that the Act not deal with renewal of agreements except in the very limited sense of notice of nonrenewal. The only reference in § 1 of ch. 662, codified as Art. 23, §§ 167A to 167-1, to renewal of a marketing agreement was in § 167E (8), and then in negative terms, requiring in language we have set out supra, 90 days notice prior to the expiration of the terms of that marketing agreement by either party of intent not to renew.

The only other place in the chapter