Morris Oil Co. v. Rainbow Oilfield Trucking, Inc.

741 P.2d 840 (1987)

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Nature of the Case

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Facts

Dawn (D1) was engaged in the oilfield trucking business. Rainbow (D2) was a New Mexico corporation established to operate an oilfield trucking business in the Hobbs area. D1 and D2 entered into an agreement whereby D2 could use D1's certificate of public convenience and necessity in operating its trucking business. D1 reserved the right to full and complete control over the operations of D2 in New Mexico. D1 was to do all money collections and deduct a $1,000 per month clerical fee and a percentage of gross receipts and then remit the balance to D2. D2 was responsible for the payment of all operating expenses and all billings rendered were to be in D1's name. The agreement recited that D2 was not to be the agent of D1 and D2 was not empowered to create debts other than in the ordinary course of business and that D2 was to be an independent contractor and not an employee and D2 was to indemnify D1 against any debts and liabilities created. Morris (P) installed a bulk dispenser at the D2 terminal and periodically delivered diesel fuel for use in trucking operations. D2 eventually ceased operations and declared bankruptcy owing P $25,000. D1 held $73,000 in receipts and established an escrow to settle D2 claims. P was asked to forbear from collection of the debt. P's debt was never questioned and the debts incurred were made under D2 and not D1. Some claims were paid, but P's was not. P sued D1 in garnishment for $13,000 still held by D1 and sued Ds for the balance of the debt. The trial court found that D2 was acting as D1's agent and therefore held D1 liable for the remaining debt. D1 appealed.