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BOULEVARD AIRPORT, INC. v. CONSOLIDATED VULTEE AIR

August 11, 1949

BOULEVARD AIRPORT, Inc.
v.
CONSOLIDATED VULTEE AIRCRAFT CORPORATION



The opinion of the court was delivered by: BARD

This case comes before me on the defendant's motion to dismiss this action on the grounds that (1) the Court does not have jurisdiction of the defendant; (2) the summons was not lawfully and sufficiently served on the defendant; (3) that the complaint does not set forth a valid cause of action; (4) that the complaint does not set forth the written agreement upon which the cause of action arises, and sets forth an invalid and unenforceable agreement; and (5) the complaint is vague, indefinite, prolix and self contradictory, because it is based on an agreement and also an alleged deceit, fraud and conspiracy.

The plaintiff's complaint and the affidavits filed by both sides allege the following facts. On or about November 7, 1945, the plaintiff, Boulevard Airport, Inc., a Pennsylvania corporation, entered into a written agreement with the defendant, Consolidated Vultee Aircraft Corporation, a Delaware corporation having its offices in Wayne, Michigan, and authorized to do business within the Commonwealth of Pennsylvania *fn1" . This agreement was executed in Wayne, Michigan *fn2" , and appointed plaintiff the sole distributor and gave it an exclusive franchise to sell the defendant's 'stinson aircraft throughout southeastern and central Pennsylvania and the lower part of New Jersey. Under the terms of this agreement, the plaintiff was required to maintain places of business, salesrooms and service stations which were satisfactory to the defendant, and to provide such working capital as the defendant deemed necessary. The plaintiff agreed to solicit, obtain and appoint dealers to sell the defendant's Stinson aircraft and products in the above mentioned territory,,subject to approval by the defendant. The plaintiff agreed and was required to carry stock of the defendant's Stinson aircraft and products, to arrange for financing, to give instructions and to make every effort to satisfy owners and purchasers of this aircraft sold. After it had been in operation for a year, the agreement was terminable without cause by distributor upon thirty days notice and by the seller upon ninety days notice; it was also terminable for cause in accordance with specified terms. The agreement was to be governed and construed by the laws of Michigan.

 On or about July 8, 1947, at a meeting in Detroit, Michigan, the plaintiff, through its general manager, and the defendant, through its vice president in charge of sales, orally rescinded the 'termination without cause' clause of the agreement. On August 20, 1947 a certificate of withdrawal from doing business within Pennsylvania, which had been applied for in 1946, was granted the defendant by the Department of State of Pennsylvania *fn3" . On January 13, 1948, the plaintiff was notified by the defendant that, effective ninety days from date, the plaintiff distributorship and franchise was terminated and cancelled.

 During the period from July 8, 1947, to January 13, 1948 the defendant's authorized agents urged and insisted that the plaintiff enlarge and extend its activity in behalf of the defendant. The defendant's authorized agents made repeated representations and assurances of a permanent and profitable distributor relationship. Relying on these proddings and representations and on the agreement of rescission, the plaintiff expended much time and money in expanding it physical facilities, employing new sales and service personnel, signing up new dealers and outlets for the defendant's products and expended $ 31,400 in promoting this distributing and franchise agreement. In return the plaintiff reasonably expected to earn commissions of upwards of $ 50,000 during 1948 and much larger profits in the following years. As a result of the termination of this agreement and in accordance with its terms, the defendant appropriated all dealers which the plaintiff had obtained and trained.

 The plaintiff alleges that it has performed all its duties under the agreement faithfully and satisfactorily; that the agreement was terminated and cancelled on January 13, 1948 without just cause, excuse, or any legal justification; that the defendant has refused upon demand to reimburse the plaintiff for his investment in the enterprise, and has deprived the plaintiff of the profits which it reasonable expected to earn; that this cancellation was a breach of the written agreement as amended by the oral rescission of the termination without cause clause; and that the cancellation of this termination clause and the representations of intention to effectuate a permanent and profitable relationship were not made in good faith, but were made with the secret, fraudulent intent to oust the plaintiff from its distributorship and franchise as soon as the defendant could profitably reap the benefit of the plaintiff's expenditures, efforts and labors.

 Upon motion of counsel for the plaintiff, this Court issued an order on September 20, 1948, which authorized the Sheriff of Dauphin County, Pennsylvania, to serve the copy of the summons and two copies of the plaintiff's complaint upon the Secretary of the Commonwealth of Pennsylvania as agent for the defendant. Service was so made on September 21, 1948.

 The plaintiff's complaint sounds in contract for breach thereof and in tort for fraud and deceit. Such inconsistency, or self contradiction as the defendant contends, is not ground for dismissal of the complaint. Federal Rules of Civil Procedure, Rule 8(c)(2), 28 U.S.C.A.; Israel v. Alexander, D.C., 50 F.Supp. 1007; Townsend v. Walker Kidde & Co., Inc., D.C., 7 F.R.D. 166.

 The plaintiff's complaint does set forth a good cause of action. In the field of tort law one who fraudulently misrepresents to another that he intends to do or not do a certain thing in the future for the purpose of inducing the other to act in reliance thereon in a business transaction is liable to the other for the harm caused to him by his justifiable reliance upon the misrepresentation. Restatement of Trots, §§ 525, 526, 530, 531, 871 comment e; Fidelity-Philadelphia Trust Co. et al. v. Simpson, 293 Pa. 577, 583, 143 A. 202; Standard Interlock Elevator Co. v. Wilson, 218 Pa. 280, 285, 67 A. 463; Berry et al. v. Chrysler Corp., 6 Cir., 150 F.2d 1002, 1004.

 It is my opinion that the complaint also sets forth a good cause of action for breach of contract. American Type Founders, Inc. v. Lanston Monotype Machine Co., D.C., 45 F.Supp. 531, affirmed 3 Cir., 137 F.2d 728; Bassick Mfg. Co. v. Riley et al., D.C., 9 F.2d 138; cf. Rossmassler et al. v. Spielberger et al., 270 Pa. 30, 41, 112 A. 876.

 Nor is the plaintiff's complaint vague and indefinite in respect to the damages claimed, as is contended by the defendant. The question of lost profits is always speculative to a certain degree and is quite often hard to prove. It is not necessary, however, that the plaintiff allege evidentiary facts to support his allegations of loss. Paragraph 23 of the complaint is sufficient when it says: 'In reliance on said assurances and in performance of said demands, the plaintiff expended and invested upwards of $ 31,400 in promoting the distributor and franchise contract entered into with the defendant. The plaintiff * * * reasonably expected to earn an overriding commission of upwards of $ 50,000 during the year ending 1948 and much larger profits in the years to follow.' These allegations are sufficient to inform the defendant of the plaintiff's claims. The defendant's remedy to obtain more specific information, if necessary, is by a bill of particulars, not by a motion to dismiss.

 Furthermore, the complaint does not have to set forth the written agreement. It is sufficient if the substance of the agreement or its legal effect is alleged. Graffius v. Weather-Seal, Inc., D.C., 7 F.R.D. 125; Maryland Casualty Co. v. Kelly, D.C., 3 F.R.D. 28.

 The defendant bases his contention that this Court does not have jurisdiction over him on the ground that service upon the Secretary of the Commonwealth as agent for the defendant was insufficient because the defendant had already been issued its certificate of withdrawal from doing business within this state, and that by the issuance of this certificate this agency had been revoked.

 The statute establishing the procedure by which a foreign corporation withdraws from doing business within the Commonwealth of Pennsylvania *fn4" provides that 'Process against the corporation in an action upon any liability or obligation incurred within this Commonwealth, before the issuance of such certificate, may be served thereafter upon the Secretary of the Commonwealth.' (Emphasis added.)

 The defendant contends that no liability was incurred before its certificate of withdrawal was issued, and that even if liability was so incurred, it was not incurred within Pennsylvania. Plaintiff contends, that even if a valid certificate of withdrawal was issued, process was ...


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