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MILOS v. FORD MOTOR CO.

April 4, 1962

Zigmund A. MILOS, individually and trading as Milos Ford Sales, Plaintiff,
v.
FORD MOTOR COMPANY and A. W. Kennedy Motor Company, Defendants



The opinion of the court was delivered by: SORG

This action was brought under the anti-trust laws, 15 U.S.C.A. §§ 1-7, 15 and under the Automobile Dealers' Franchise Act, 15 U.S.C.A. § 1221 et seq., claiming damages as a result of the termination of plaintiff's franchise agreement as an automobile dealer with defendant Ford Motor Company. The action under the anti-trust laws was dismissed as to both defendants at the close of plaintiff's case. The action under the Automobile Dealers' Franchise Act against defendant Ford was submitted to a jury which returned a special verdict in favor of plaintiff and found that he had sustained a loss of profits from August 11, 1958 to the date of trial in the amount of $ 75,600 and from the date of trial to September 30, 1962, in the amount of $ 19,400. The Court reserved decision on Ford's motion for a directed verdict made at the close of all the evidence and Ford now moves for judgment in accordance with its motion for a directed verdict or, in the alternative, for a new trial.

The Automobile Dealers' Franchise Act provides, in pertinent part, as follows:

 1. ' § 1222. Authorization of suits against manufacturers; amount of recovery; defenses

 2. ' § 1221. * * *

 '(e) The term 'good faith' shall mean the duty of each party to any franchise, and all officers, employees, or agents thereof to act in a fair and equitable manner toward each other so as to guarantee the one party freedom from coercion, intimidation, or threats of coercion or intimidation from the other party: Provided, That recommendation, endorsement, exposition, persuasion, urging or argument shall not be deemed to constitute a lack of good faith.'

 Defendant's motion for judgment is based on the following grounds:

 '1. Upon the facts and the law, the plaintiff has shown no right to relief.

 2. There is no evidence on which the jury could find a violation of the Automobile Dealer Franchise Act of 1955, 70 Stat. 1125 (1956).

 3. Under the evidence, the defendant Ford Motor Company as a matter of law acted in good faith in complying with the provisions of the franchise and in terminating the franchise of the plaintiff.

 4. Under the evidence, as a matter of law, the plaintiff as a dealer did not act in good faith.'

 5. Paragraph 5 of defendant's motion asserts that the Act is unconstitutional in that it deprives defendant of due process under the Fifth Amendment to the Constitution of the United States; that it is an unlawful delegation of legislative powers in contravention of Article I, Section 1 of the Constitution; that it is not an exercise of one of the enumerated powers vested in Congress by the Constitution, and specifically that it exceeds the power of Congress over interstate commerce under Article I, Section 8, clause 3 of the Constitution, and as such is an invasion by Congress of the powers reserved to the states under the Tenth Amendment. Paragraph 6 asserts that permitting the jury to make an award under the evidence in this case deprives defendant of due process under the Fifth Amendment. Paragraph 7 states that if the Act is construed to permit the jury to find liability in this case, the Act is unconstitutional as being vague, indefinite and uncertain and in failing to set forth a standard of prohibited conduct.

 6. 'There is no evidence of damage in this case resulting from a violation of the Automobile Dealer Franchise Act of 1956'.

 THE FRANCHISE AGREEMENT

 Plaintiff first became a Ford dealer under a franchise agreement with Ford dated November 30, 1955. In 1957, Ford offered new franchise agreements, to all dealers, to be, at the dealer's option, either indefinite in duration, or for a 1 or 5 year term, but subject, in any event, to the termination provisions of the agreement. Ford and Milos entered into the new agreement on April 1, 1957, to expire by Milos' election, on September 30, 1962. The transmitted letter from Ford accompanying the new agreement stated, in part, as follows:

 'The new agreement is intended to be prospective in effect; it does not deal with the past. It is not intended, however, that the execution and delivery of the agreement should constitute evidence of a decision by either party to continue the relationship with the other for any period of time except in accordance with the provisions of the agreement. In other words, each party may exercise at any time in the future any right granted to it or him under the new agreement and shall not be deemed to ...


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