Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Buono Sales Inc. v. Chrysler Motors Corp.

decided: July 14, 1966.

BUONO SALES, INC., A CORPORATION OF THE STATE OF NEW JERSEY, APPELLANT,
v.
CHRYSLER MOTORS CORPORATION, A CORPORATION OF THE STATE OF DELAWARE AND CHRYSLER CORPORATION, A CORPORATION OF THE STATE OF DELAWARE



Staley, Chief Judge, and McLaughlin, Kalodner, Hastie, Forman, Ganey, Smith and Freedman, Circuit Judges. Forman, Circuit Judge (dissenting).

Author: Mclaughlin

McLAUGHLIN, Circuit Judge.

This is one of nine suits by New Jersey DeSoto passenger automobile direct dealers for Chrysler Motors Corporation, a corporation of the State of Delaware with its principal place of business in Michigan, against said Chrysler Motors Corporation and Chrysler Corporation, also a corporation of the State of Delaware with its principal place of business in Michigan. The said nine plaintiffs are all New Jersey corporations with their principal offices in said state. It was agreed in the case that the separate entities of the defendant corporations be disregarded and that the acts of both be deemed the acts of Chrysler Corporation. This resulted in the dropping of the second, third and fifth causes of action. The parties also stipulated in the district court and on this appeal that, because all nine cases are similar in law and fact, the determination in the present appeal will apply to the other eight appeals. The district judge, sitting without a jury, decided in favor of the defendants and plaintiff appeals.

Plaintiff has been selling Chrysler products since approximately 1935. Since 1953 it has had a direct dealer agreement with Chrysler with respect to DeSoto and Plymouth passenger automobiles. On or about November 18, 1960 Chrysler discontinued its production of DeSoto passenger automobiles. In its notification to plaintiff of that course it made no pretension that it was acting in accordance with the agreement. A reading of the contract readily reveals the reason for this. It is completely a self-serving Chrysler product. It was drawn by Chrysler and on several occasions revised by that concern. It is what was the admittedly uniform Chrysler, DeSoto-Plymouth agency contract used by Chrysler with its over sixteen hundred such dealers. It takes elaborate precaution to protect Chrysler in the event of any contemplated exigency. It is very clear from the contract itself that the thought that sometime in the future Chrysler might abandon the manufacture of DeSoto passenger automobiles was plainly not within Chrysler's thinking when it entered into its dealer agreements with Buono and the others. Had it been intended that the contract include Chrysler's right to close out its DeSoto business if and when it chose to do so, nothing could have been easier than to say so. It is beyond belief that Chrysler endeavored to provide for that contingency by subterfuge. Chrysler was unquestionably the dominating party to the agreement with the dealers taking whatever arrangement Chrysler chose to give them. Deceiving its dealers from the beginning as to what would have been an all important element of the agreement, hardly fits that situation or indeed into the basic picture of an outstanding American industry. As appears from the record this matter arises wholly from a radical corporate determination, for whatever the reason, to cut its production losses on DeSoto immediately. The inevitable collateral consequences of that move, the damage claims of its dealers, etc., if then bothered about at all, undoubtedly were regarded as the lesser evil which could be handled later.

The defense has done all that could be accomplished in meticulously dredging out of the contract every stray bit of language that can possibly lend some support to the hastily assumed, unwarranted position of the defendant. Taken as a whole, which is the way the contract admittedly must be construed, or even isolating fragments of it as is attempted, there is not one word in the document to suggest that the manufacturer reserved the right to stop making DeSoto automobiles for any reason or no reason. The intention of the parties is set out succinctly in the first introductory paragraph which reads:

"The purpose of the relationship established by this agreement is to provide a means for the sale and service of De Soto and Plymouth passenger cars and De Soto and Plymouth car parts and accessories in a manner that will best serve the interests of the retail customer and be of benefit to DIRECT DEALER and DE SOTO-PLYMOUTH."

The same purpose is stated in Paragraph 5 which makes the agreement "* * * the entire agreement between the parties relating to the purchase by DIRECT DEALER of new De Soto and Plymouth passenger cars and De Soto and Plymouth passenger car parts and accessories from DE SOTO-PLYMOUTH for resale, and it cancels and supersedes all earlier agreements, written or oral, between DE SOTO-PLYMOUTH or Chrysler Corporation and DIRECT DEALER relating to the purchase by DIRECT DEALER of De Soto and Plymouth passenger cars and De Soto and Plymouth passenger car parts and accessories." (Emphasis supplied).

The last subparagraph of Paragraph 5 categorically notes that " this agreement does not have an expiration date." (Emphasis supplied). Chrysler is therefore given the right to amend the agreement as it "deems advisable", "provided that DeSoto-Plymouth makes the same amendment in DeSoto-Plymouth Direct Dealer Agreements generally. The amendment will be set out in a notice signed by the President or Vice-President of Chrysler Motors Corporation. Thirty-five (35) days after delivery of the Notice to the Direct Dealer this agreement will be deemed to be amended in the manner and to the extent set forth in the notice." No attempt was ever made to amend the notice by following the procedure called for by Paragraph 5 or otherwise.

Paragraph 5 also makes it an agreement term that "DeSoto-Plymouth may terminate it individually only as provided for in Paragraph 21." (Emphasis supplied). The latter, regarding this, reads:

"DE SOTO-PLYMOUTH may terminate this agreement on not less than ninety (90) days' written notice on (1) the failure of DIRECT DEALER to perform fully any of DIRECT DEALER'S undertakings and obligations in Paragraphs 7 through 10 and Paragraph 14 of this agreement, or (2) the death of any person listed in Paragraph 2 of this agreement, other than the death of DIRECT DEALER if he is an individual, or the failure of any such person so listed to continue his active and substantial participation in the management of DIRECT DEALER'S organization, or (3) a misrepresentation of or change in any of the ownership interests listed in Paragraph 3 of this agreement resulting in a transfer of majority control or interest in the capital stock or partnership interest of DIRECT DEALER, unless DE SOTO-PLYMOUTH has given written approval to such change, or (4), a disagreement, dispute or controversy between or among principals, partners, managers, officers or stockholders of DIRECT DEALER that, in the opinion of DE SOTO-PLYMOUTH, may affect adversely the operation, management or business of DIRECT DEALER, or (5) the conviction of DIRECT DEALER, or a partner, principal stockholder, officer or manager of DIRECT DEALER of any crime that, in DE SOTO-PLYMOUTH'S opinion, may affect adversely the operation or business of DIRECT DEALER or the name, good will, or reputation of DE SOTO-PLYMOUTH, De Soto or Plymouth products or DIRECT DEALER."

None of the listed situations, because of which DeSoto-Plymouth could terminate its contract with the nine plaintiff dealers, ever occurred and there is no claim to the contrary. Despite makeweight quibbling on behalf of the appellee again there is an utter absence of any mysterious or ambiguous wordage respecting Chrysler's right to end the agreement. Actions or conduct, slight or grievous, on the part of the dealer to which Chrysler took exception gave the latter the right to terminate. Confessedly none of the dealers was or could be so charged.

Continuing the futile search to find a valid pretext for Chrysler we are told that Paragraph 10 takes care of this. The part of a sentence relied on is "* * nor will anything in this agreement obligate DE SOTO-PLYMOUTH to deliver to DIRECT DEALER any particular number of new De Soto or Plymouth passenger cars." This it is contended "insulates appellee from liability for discontinuance of DeSoto production whether appellee's action is characterized either as contract modification or contract termination, depending upon the dealer affected." And in the same paragraph it is further urged that the phrase "De Soto-Plymouth will not be liable for delay or non delivery of products ordered * * *" exonerated the manufacturer from liability to the dealers "even in the absence of the rights of discontinuance and amendment" and "* * * regardless of the existence of good faith or other contractual rights." The proposition is put forth as supported by F. H. McClintock Co. v. Truxell Sales & Service, 297 Mich. 284, 297 N.W. 493 (1941). That decision, for whatever it may be worth, has no application to the admitted facts before us.

The dispositive answer to the above assertion that Paragraph 10 gives DeSoto-Plymouth the right to permanently stop DeSoto production is found right in Paragraph 10 and in the identical sentence from which the above quotations were taken out of context. Paragraph 10 is captioned "Orders". It provides the method by which the dealer orders the cars and for the strong control granted Chrysler over its deliveries. The paragraph reads:

"DE SOTO-PLYMOUTH agrees to ship De Soto and Plymouth passenger cars and De Soto and Plymouth passenger car parts and accessories to DIRECT DEALER only on DIRECT DEALER'S order.

"DIRECT DEALER agrees to submit to DE SOTO-PLYMOUTH current orders for De Soto and Plymouth passenger cars and De Soto and Plymouth passenger car parts and accessories, and estimates of DIRECT DEALER'S future passenger car requirements at such times and for such periods as DE SOTO-PLYMOUTH reasonably may request for the mutual benefit of dealers and DE SOTO-PLYMOUTH. DIRECT DEALER will submit such orders and estimates on forms DE SOTO-PLYMOUTH provides. All orders are subject to acceptance by DE SOTO-PLYMOUTH, which may be in whole or in part. DE SOTO-PLYMOUTH will use its best efforts to fill accepted orders for De Soto and Plymouth passenger cars and De Soto and Plymouth passenger car parts and accessories; however, DE SOTO-PLYMOUTH will not be liable for delay or nondelivery of products ordered nor will anything in this agreement obligate DE SOTO-PLYMOUTH to deliver to DIRECT DEALER any particular number of new De Soto or Plymouth passenger cars."

It is an understatement to say that Paragraph 10 simply outlines the running order and delivery part of the DeSoto-Plymouth dealer relationship. It is pretty much under the domination of the manufacturer with respect to the number of cars it allots a dealer but Paragraph 10 cannot be tricked up into presenting any right to Chrysler to end its making of DeSoto passenger cars. It contains the rules for a functioning business and though strongly hedged around nevertheless DeSoto-Plymouth pledges as part of the continuing association with its dealer that it "* * * will use its best efforts to fill accepted orders for De Soto and Plymouth passenger cars and DeSoto and Plymouth accessories ; * *." (Emphasis supplied.) Appellee is expressly and properly reluctant to resort to this argument which possesses no merit whatsoever.

Paragraph 28 of the agreement is mentioned as another ground for Chrysler ending the DeSoto passenger car. That is titled "Inability to Perform". It reads:

"In addition to any other exemption from liability specifically provided for in this agreement, neither DIRECT DEALER nor DE SOTO-PLYMOUTH will be liable for failure to perform its part of this agreement when the failure is due to fire, flood, strikes or other labor disputes, accident, war, riot, insurrection, acts of government, governmental regulation or other circumstances beyond the control of the parties."

This time the clause "* * * other circumstances beyond the control of the parties" is removed from the paragraph and is construed to mean that if Chrysler for business circumstances as it claims or any other circumstances thoroughly foreign to the title, text and purport of 28 decides to finish with its manufacture of DeSotos it may do so. The catch-all language relied upon is limited to the kind of events specifically named. It will not serve as a convenient umbrella to cover the entirely unrelated good or bad business conditions and practice alleged. This contract by its terms is to be under Michigan law. The latter follows the general rule mentioned. Hamilton v. Stephens, 240 Mich. 228, 215 N.W. 321 (1927); Quisle v. Brezner, 212 Mich. 254, 180 N.W. 467 (1920); Park Building Co. v. George P. Yost Fur Co., 208 Mich. 349, 175 N.W. 431 (1919).

Finally there is Paragraph 20 upon which the district court principally depended in deciding in favor of the defendant. The title of 20 and its text reads:

"20. CHANGE OF MODELS, PARTS AND ACCESSORIES DECLARED OBSOLETE OR DISCONTINUED

"DE SOTO-PLYMOUTH at any time may discontinue any models, lines or body styles and may revise, change or modify their construction or classification. All orders will refer to models, lines and body styles in production at the time DE SOTO-PLYMOUTH receives the orders unless DIRECT DEALER specifies otherwise. DE SOTO-PLYMOUTH at any time may declare obsolete or discontinue any or all parts, accessories and other merchandise. DE SOTO-PLYMOUTH may act under this Paragraph 20 without notice and, except as set forth in Paragraph 13 of this agreement, without any obligation to DIRECT DEALER by reason of DIRECT DEALER'S previous purchases."

The defense view is that the words in the text "models", "lines", "body styles" individually or together mean the DeSoto passenger automobile. This is especially emphasized with respect to the word "lines". The title of 20, its opening sentence and every word of the balance of the paragraph are the strongest possible refutation of this far fetched assumption. In the district court it was finally accepted that "model" meant year of make and that "body style" referred to a particular kind of automobile as a two-door or a four-door, hardtop or convertible. The defense seemingly on ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.