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Prairie States Petroleum v. Universal Oil Sales

OPINION FILED SEPTEMBER 15, 1980.

PRAIRIE STATES PETROLEUM COMPANY, PLAINTIFF-APPELLEE,

v.

UNIVERSAL OIL SALES CORPORATION, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH M. WOSIK, Judge, presiding.

MR. JUSTICE MCGLOON DELIVERED THE OPINION OF THE COURT:

Universal Oil Sales Corporation and its Indiana-appointed receiver Toy Arnett were held in contempt of court for violating an order entered by the court. They were fined $5,000 per day and $2,500 per day respectively. Universal Oil Sales and Arnett appeal.

On appeal, both parties contend that (1) the trial court lacked subject matter jurisdiction to enter the order on which the contempt charge is based; (2) Universal cannot be held in contempt because it was unable to comply with the trial court's order; (3) Universal was denied procedural due process because the court did not hold an evidentiary hearing; and (4) the fines should be stayed if the contempt convictions are affirmed. Additionally, Arnett contends that his contempt conviction cannot stand because (1) plaintiff failed to obtain leave to sue from the Indiana court and (2) the trial court lacked personal jurisdiction.

We reverse.

Prairie States Petroleum Company (Prairie States) is an Illinois corporation which distributes petroleum products to gasoline service stations in the Chicago metropolitan area. Universal Oil Sales Corporation is an Indiana corporation which sells petroleum products from refineries to distributors. On July 5, 1979, Prairie States filed a complaint in the circuit court of Cook County seeking an injunction restraining Universal from selling gasoline to other distributors and requesting damages.

On July 24, 1979, Basil Elias, president and principal stockholder of Prairie States, and Richard Parker, president of Universal, met in the chambers of the trial judge. No one else was present. During this meeting Elias and Parker entered into an agreement which, in part, formed the basis for the agreed order subsequently entered by the trial court. The pertinent provision of the order is as follows:

"That UNIVERSAL OIL SALES CORPORATION will supply to PRAIRIE STATES PETROLEUM CO., INC., gasoline at a maximum price of 2 1/2 cents per gallon over the weighted average price of the gasoline supplied to UNIVERSAL OIL SALES CORPORATION on the following amounts for the respective months so long as the Department of Energy shall honor said gasoline allocations to UNIVERSAL OIL SALES CORPORATION."

At some point, the "2" was obliterated, thereby making the maximum price of gasoline only one-half cent per gallon over the weighted average price.

Richard Parker was slain on November 20, 1979. Mrs. Parker was charged with the slaying and incarcerated in Indiana. On December 7, 1979, Mrs. Parker and the estate of Mr. Parker petitioned the Indiana court to place nine oil companies, including Universal, in receivership. Upon its finding that an emergency existed, the Indiana court appointed Toy Arnett, an Indiana resident, receiver of the companies without notice to creditors.

On December 18, 1979, Prairie States filed a motion for rule to show cause why Universal should not be held in contempt for violating the agreed order of July 24, 1979. Prairie States alleged that Universal had refused to supply it with gasoline during November and December 1979. Universal moved to strike the motion on the ground that, as indicated in plaintiff's pleadings in an action brought in Federal court, Koch Refining Company refused to supply gasoline to Universal and that Universal was therefore unable to supply Prairie States. On January 22, 1980, Prairie States filed a supplemental motion for rule to show cause to which Universal responded, in its motion and memorandum to strike and dismiss, that the court lacked subject matter jurisdiction. On January 25, 1980, the trial court denied the motion to strike and dismiss and entered a rule to show cause.

The Indiana court approved and confirmed the appointment of Toy Arnett as receiver of all nine companies on January 25, 1980, after notice to creditors and a hearing. The court also found that the creditors present had no objections to the issuance of a temporary restraining order pursuant to Arnett's petition for relief from the Illinois court's order and ordered that same would be issued separately.

On January 29, 1980, the Indiana court entered a temporary restraining order prohibiting Arnett from supplying any customer of Universal with any product for less than the prevailing market price and specifically prohibiting the sale of gasoline to Prairie States at one-half cent over cost. This order was based on the following findings:

"1. That the Receiver has discovered a Court Order entered in the Circuit Court of Cook County, Illinois in Cause Number 79-4383 entitled Prairie States Petroleum Company vs. Marathon Oil Corporation, a corporation, and Universal Oil Sales Corporation, which provides in part that Universal Oil Sales Corporation is to supply Prairie States Petroleum Company gasoline at a maximum price of one-half cent per gallon over the weighted average price for the gasoline supplied to Universal Oil Sales Corporation in specified monthly allocations.

2. That at the time the Illinois State Court Order was entered, the prevailing margin in the industry was between five ...


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