The opinion of the court was delivered by: LORD
JOSEPH S. LORD, III, Chief Judge.
This is an action to recover excise taxes.
On August 15, 1971, President Nixon announced that in order to stimulate the economy, he was requesting that Congress repeal the 7% excise tax then extant on new passenger cars retroactive to the date of the announcement. General Motors thereafter apprised the public that if such legislation was passed, a refund in the amount of the tax would be passed on to all persons who bought new General Motors vehicles after August 15, 1971.
Plaintiff ("Delaware Valley") is a non-franchised dealer engaged primarily in the sale of new and used Cadillacs (which are, of course, manufactured by General Motors) acquired from General Motors franchised dealers and car auctions. According to the general manager and vice president of Delaware Valley, Jerry Friedrich, General Motors franchised dealers will not openly sell to Delaware Valley. Sales, therefore, are consummated by passing title either to Sindell Leasing Co., a fictitious name of Delaware Valley, or to a member of its president's family. Mr. Marvin Yentis, president of Delaware Valley, and Mr. Friedrich both testified that these were nonetheless "new" cars when passed on to plaintiff's customers.
The "Consumer Purchase" Vehicles
Count I of plaintiff's complaint involves twenty-seven Cadillacs acquired by Delaware Valley before August 16, 1971 and sold to its customers after that date and before December 10, 1971.
After the President's announcement on August 15, there apparently was general confusion among dealers as to what action, if any, should be taken. Mr. Yentis testified that after making several inquiries and receiving no clarification, he acted on the advice of counsel and began to give credits to customers in the amount of the excise tax if the customer refused otherwise to purchase a vehicle.
Mr. Yentis asserted that this was necessary in order to maintain plaintiff's competitive position.
Plaintiff's procedure for making a refund was as follows. A price would first be agreed upon, along with a bargained discount and/or trade-in. Then the amount of the excise tax would be determined and a credit would be given against the net purchase price. The customer acknowledged receipt of the tax credit by signing an appropriate statement.
On December 10, 1971, the Revenue Act of 1971, P.L. 92-178, 85 Stat. 497 (hereinafter "Act"), was signed into law. Section 401 of the Act provided for the elimination of the federal excise tax on passenger cars and a refund of such tax on new passenger cars delivered after August 15, 1971. This refund was to be made by the manufacturer to the consumer or "ultimate purchaser" first, and only then could the manufacturer apply to the Internal Revenue Service for a refund.
Consequently, General Motors went about making refunds by referring to its new car delivery report cards. These cards named the party who purchased a new General Motors automobile from a General Motors franchised dealer. General Motors sent notification to these purchasers of their entitlement to a refund. In the case of plaintiff, since the first sale, the one by the General Motors franchised dealer to Sindell Leasing, or to a member of Marvin Yentis' family, or to some other purchaser, each of whom eventually passed the car on to Delaware Valley for resale, occurred before August 16 in each of the twenty-seven cases, General Motors did not recognize these as coming within the ambit of the 1971 Revenue Act.
After Delaware Valley brought these cars to the attention of General Motors in April of 1972, General Motors still refused to make refunds on the grounds that (1) Delaware Valley's customers were not "ultimate purchasers" of "new" cars under the Act; and (2) even were that not the case, Delaware Valley had failed to comply with the refund procedure later articulated in the Temporary Excise Tax Regulations, § 142.2-2(b) (4), issued on May 17, 1972. These regulations provide that a refund was to be made by separate check, and could not merely be in the form of a discount or credit against the purchase price.
Plaintiff argues that defendant has breached a duty to it and has violated the requirements and the spirit of the Act by failing to process plaintiff's claim for a refund. Furthermore, plaintiff claims that defendant cannot take it upon itself to make ultimate legal decisions as to who is and who is not entitled to a refund under the Act, and that it especially cannot make such decisions in a way which discriminates against non-franchised dealers.
We recognize that the Act may create some thorny questions regarding the discretion of the manufacturer. Since the manufacturer must first make a refund before it may submit a claim for reimbursement, it must at least preliminarily decide who is entitled to a refund under the Act. However, we believe that in this particular case, plaintiff's problems were of its own making, and we see no reason to pin the blame on General Motors.
We need not decide the difficult issue of whether these cars, allegedly new when sold to Delaware Valley's customers, qualified for excise tax reimbursements under the Act. First, Marvin Yentis and Jerry Friedrich testified at trial as to the "newness" of the cars in question. However, their testimony was in general terms and we find it difficult to believe that they had vivid recollections of the condition of each individual car's ...