Hoover v. Sun Oil Co.

Supreme Court of Delaware · 1965 · Corporations

212 A.2d 214 (1965)

Updated August 1, 2026

Corporationsindependent contractorfranchiseagencyfranchise relationshipservice stationright to controlday-to-day operations

Facts

Plaintiffs were injured in a fire that started while their car was being filled with gasoline at a service station operated by James F. Barone, and they alleged the fire was caused by the negligence of Barone's employee. Sun owned the station and most of its equipment, leased the premises to Barone, and entered a dealer's agreement under which Barone bought Sun petroleum products, used Sun equipment and advertising materials, and sold Sun products under the Sunoco label. Sun's sales representative made weekly visits, took orders, inspected restrooms, relayed complaints, and gave advice and suggestions, and Barone attended a Sun training school. But Barone made no written reports to Sun, bore the risk of profit or loss, set his own hours, and independently determined the identity, pay, and working conditions of his employees, with his name posted as proprietor.

Issue

Whether the relationship between Sun and Barone was one of principal and agent so that Sun could be liable for the alleged negligence of Barone's employee, or whether Barone was an independent contractor as a matter of law.

Rule

The test is whether the oil company retained the right to control the details of the day-to-day operation of the service station. Control or influence over results alone is insufficient to create an agency relationship or impose liability for the operator's or employees' torts.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Prairie Star Petroleum owns a branded service station in Tulsa and leases it to Lena Ortiz. Prairie Star requires Lena to sell its gasoline under its brand name, lends her pumps and signage, and sends a field representative every week to inspect restroom cleanliness, relay customer complaints, and suggest ways to increase sales. Lena sets the station's hours, hires and pays attendants without approval, files no reports to Prairie Star, and keeps all profits or losses.

If a station attendant negligently damages a customer's car during fueling, is Prairie Star most likely vicariously liable?

Explanation. The governing question is whether the company retained the right to control the details of daily operation. Ownership, branding, inspections, complaints, and sales advice indicate close business cooperation and concern with results, but do not alone establish agency where the operator independently sets hours, controls employees, bears profit-and-loss risk, and need not follow advice.