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October 2, 1963

John W. SKEELS, Plaintiff,
UNIVERSAL C.I.T. CREDIT CORPORATION, Defendant, v. Estelle A. SKEELS, Third-Party Defendant

The opinion of the court was delivered by: WILLSON

In this civil action a twelve day, hard fought jury trial was had. Plaintiff, John W. Skeels, was a franchised Chrysler automobile dealer. Defendant, Universal C.I.T. Credit Corporation, is in the financing business and, says defendant's counsel, the major source of its profit is gained by purchasing from automobile dealers retail time sales contracts relating to automobiles. The jury returned a verdict for the plaintiff in the sum of $ 55,000.00 for compensatory damages and $ 50,000.00 representing punitive damages. On the counterclaim the jury awarded defendant the full amount claimed, that is the sum of $ 48,674.90. By its verdict the jury found that the defendant pre-emptively seized plaintiff's automobiles and other assets which constituted an unlawful conversion of plaintiff's business by the defendant.

Plaintiff had been a recognized Chrysler automobile dealer in Ingomar, a suburb of Pittsburgh, for many years. The controverted issues in the case arose from the occurrences which took place between November 10 and November 29, 1960. Plaintiff had been doing his financing through defendant for some 19 months prior to November of 1960. Before that plaintiff had done its financing through a Pittsburgh bank. Even before that plaintiff did its financing with defendant, and defendant had actively sought the return of plaintiff's business. Plaintiff was selling a million dollar's worth of cars per year and that volume of business was valuable to defendant. When the parties resumed doing business defendant made a capital loan to plaintiff in the sum of $ 25,000.00 which was payable monthly, and which monthly payments were never in default. Defendant's counsel describes the method of doing business as follows:

 'In the contracts between Plaintiff and Defendant in which Defendant lends capital loan funds and in which it agrees to floor plan automobiles for Plaintiff, Defendant has secured the agreement of Plaintiff to submit to Defendant all retail time sales contracts. The obvious purpose of this is to permit Plaintiff to purchase as many of these contracts as are worthy of purchase. It is an admitted fact in this case that the main source of Defendant's revenue comes from the interest charges on these contracts which are negotiated between the Plaintiff and his retail customers. If Plaintiff and other automobile dealers are not doing business, no such retail contracts can be generated and none would be submitted to Defendant and the main source of its business would evaporate. Thus, Defendant has every motive for maintaining dealers in business and, in fact, its own witnesses, Van Dyke, Williams and Modrak, testified that their main activity is the promotion of new business from automobile dealers. Thus, Defendant has every motive for maintaining Plaintiff and other automobile dealers actively in business. Under these circumstances and known business facts, it would be against all reason to assume that Defendant had any motive for 'putting Plaintiff out of business'.'

 The theory of plaintiff's case was and is that in the Fall of 1960 plaintiff needed refinancing. Considering the volume of business he was doing he was short on work capital. In fact, defendant had recognized this and had suggested refinancing to plaintiff. In the dealings between the parties plaintiff only dealt with the local representative of the defendant. Defendant being a nationwide corporation, its headquarters were in New York and its local agents were not of and by themselves authorized to grant or extend loans; in fact, the local agents' authority was to a considerable extent limited. But on November 10, 1960, Modrak, defendant's local man approved an application for a new loan to plaintiff from the defendant and sent it on through channels to the New York office. What occurred thereafter with respect to the requested loan was the subject of sharp dispute in the trial testimony and other evidence. In the opinion of the Court, plaintiff's testimony on this phase of the case cannot be reconciled with defendant's evidence. The jury was bound to accept plaintiff's testimony and reject defendant's or vice-versa. As the verdict favored the plaintiff he is entitled to all the inferences which reasonably flow from the evidence. From November 10th to and including the time defendant moved in on plaintiff's business, one must keep in mind that according to plaintiff he was almost daily assured by defendant's representative not that the loan might be or would be approved, but that it had been actually approved and that the check would be forthcoming momentarily. If one keeps that fact in mind in examining the testimony and plaintiff's theory of the case, then it seems to this Court that the jury verdict must stand.

 It is uncontroverted that as is usual plaintiff executed and delivered to defendant all the necessary security instruments and that the parties were bound by the terms and provisions of the Uniform Commercial Code of Pennsylvania, 12A Purdon's Pa.Stat.Ann. § 1-101 et seq.

 Early in the morning of November 29, 1960, defendant sent to plaintiff's business place, six or more men and removed all of the new and used cars from plaintiff's establishment and parked them on the nearby streets. Plaintiff's establishment was situated in the Borough of Ingomar, a suburb of Pittsburgh. Defendant's activities that morning caused a traffic tieup, with the police coming to the scene, and in general the public was aware that the defendant finance company had closed down plaintiff's business. Plaintiff's theory of his case was that the defendant, without cause, effectively destroyed his valuable automobile dealership. Defendant, on the other hand, contended that it did only what the security instruments permitted it to do.

 Very early in the course of the trial a representative of the defendant in Pittsburgh, a Mr. Craig, testified concerning a report he made to the New York office. The report related to a conference which took place on November 29th, a few hours after defendant had seized all of plaintiff's automobiles. The report to New York was to the effect, 'We wanted him to voluntarily give up the franchises so as to make more evident the fact that he quit rather than inferring that we put him out of business.' In the report the word 'quit' was underscored. (See Plaintiff's Exhibit D 1 and the Transcript at p. 384.) The Court considers that the nub of the law suit was embraced within the language used by Mr. Craig. That was the point that was left to the jury. As the trial judge, I consider that the jury fully understood the issues in the case. It is not contradicted that on the morning of November 29th, a Tuesday, defendant sent in a half-dozen men, more or less, and removed every single automobile out of plaintiff's place of business. Defendant's representatives on that morning said, 'We are taking over', 'You are out of business', and other similar language. Defendant took over that morning without giving plaintiff any inkling whatsoever of its intentions. In the meantime plaintiff was expecting the proceeds of the loan and although he was in default on several cars he was given no chance whatsoever to arrange other financing. Defendant points out that the paper was on demand and that the money was due forthwith for cars sold. This was conceded by plaintiff, but his counsel points out that the written agreements between the parties, under the Commercial Code, may be explained or supplemented by a course of dealing or usage or by a course of performance. The Code says 'A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.' 12A P.S. § 1-205 (1962 Supp.).

 The jury remained out overnight before returning its verdict. It awarded plaintiff $ 55,000.00 in compensatory damages and $ 50,000.00 in punitive damages. On defendant's counterclaim it found for the defendant in the sum of $ 48,674.90. At the trial and now, defendant asserts that under all the evidence defendant cannot be held liable to plaintiff. Defendant's counsel, in his brief, says with reference to plaintiff's theory of the case:

 'His theory apparently was that John Modrak had authority to make a capital loan to him and that Modrak and defendant breached this contract on November 25, 1960.'

 And defendant further says:

 'After Modrak had recommended making a loan in the amount of $ 25,000 to the division office and the division office had recommended the making of the loan to the New York office, Mr. Joseph Campbell, a vice president of Defendant in New York, reviewed the recommendations and declined to approve them. His action was relaid to Mr. Modrak and was further relaid by Mr. Modrak to Plaintiff.'

 The foregoing quotation from defendant's brief simply indicates to the Court that defendant's counsel will not face the issue which plaintiff presented and which was left to the jury. Mr. Doyle for the defendant seems to infer that the only basis for plaintiff's case was breach of contract. I do not agree. Ordinarily it seems repetitious to quote a portion of the charge to the jury, but in this case the charge sets forth the matter under discussion as to what evidence the jury was required to accept in order to find for the plaintiff or for the defendant. The Court's charge commencing at p. 1676 says:

 'Now, it seems to me that the case, in spite of everything else, the plaintiff's theory of the case has to be based largely on his own testimony that he didn't give up the business, didn't quit ...

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