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KINGSTON DODGE, INC. v. CHRYSLER CORP.

April 19, 1978

KINGSTON DODGE, INC., Plaintiff
v.
CHRYSLER CORPORATION, Defendant, and PHILADELPHIA REGION DODGE ADVERTISING ASSOCIATION, INC., Intervening Defendant


Herman


The opinion of the court was delivered by: HERMAN

Kingston Dodge, Inc., Plaintiff, an automobile dealer in the Boro of Kingston, Luzerne County, Pennsylvania, executed in 1966 a Direct Dealer Agreement with Defendant, Chrysler Corporation, to buy Dodge automobiles from the Defendant and to sell them in its Sales Locality and to promote there the sale of Chrysler Products. This agreement provides in pertinent part:

 
"DODGE, in promoting sale of its products by DIRECT DEALER and other Dodge dealers, will seek to advertise in the most effective manner to develop public interest and confidence in its dealers and products.
 
DIRECT DEALER, in advertising in support of DIRECT DEALER'S selling and servicing Dodge products, agrees to advertise only in a manner that will develop customer confidence in DIRECT DEALER and Dodge products, and will not use any advertising tending to mislead to deceive the public. DIRECT DEALER agrees to discontinue any advertising that DODGE may reasonably find to be injurious to DODGE'S business or likely to deceive the public."

 Contemporaneously with the execution of the Direct Dealer Agreement with Chrysler, Plaintiff also entered into an agreement with the Philadelphia Region Dodge Advertising Association, Inc., hereinafter referred to as "DAA". This agreement, hereinafter referred to as the "Membership Agreement", provided that Kingston Dodge would pay to DAA for all new passenger cars and trucks purchased from Chrysler an amount not less than $15 per car or truck *fn1" for the purposes of advertising Dodge products, and that for the convenience of the parties DAA could authorize Chrysler to collect the said amount from Kingston and forward the amount collected periodically to DAA.

 Paragraph 5 of the Membership Agreement provides in part that:

 
"In consideration of all other members similarly agreeing Direct Dealer agrees not to withdraw from membership in DAA except with the consent of a majority of its members or in case of dissolution of DAA. . . ."

 Paragraph 6 further provides that:

 
"Direct Dealer agrees to be bound by the by-laws of DAA and by any amendments thereto not inconsistent with the provisions of this membership agreement."

 In the By-Laws under the paragraph entitled "Eligibility of Members" there is a clause which provides "said applicant for membership is bound by the . . . by-laws of the corporation [i.e., DAA], and by which he agrees, in consideration of all other members signing similar agreements, not to withdraw from the corporation for a period of twelve months following written notice to the Board of Directors of his intent to withdraw." The paragraph following, entitled "Termination of Membership" provides for termination only in the event the dealer terminates his relation of Direct Dealer with Chrysler.

 The By-Laws provided for the expenditure of the money collected from its members for the purchase of various types of advertising and promotional activities "to promote the sale of Dodge Motor cars and/or trucks by authorized Dodge dealers in the Philadelphia Dodge Sales Region". *fn2"

 Plaintiff's complaint against Chrysler alleges that some time prior to 1976 disagreement developed between Kingston and DAA "regarding the manner and method utilized by DAA in its advertising program and specifically, Plaintiff charged DAA with unfair and inequitable distribution of over abundant funds in Plaintiff's account and alleged failure of any benefits derived by Plaintiff's association with DAA and that said charges were therefore in violation of the implied consideration for membership in the DAA organization.

 Chrysler denied knowledge or information sufficient to form a belief as to the truth of these averments but DAA, who was allowed to intervene denied all of the allegations in paragraph 8 of the complaint except that it acknowledges that a disagreement did in fact develop. Then at great length DAA explained the advertising program that had been followed alleging that the said program was beneficial to Plaintiff and fair to him and to his sales in the area and averred that over $10,000 of the "over abundant funds" were returned to Plaintiff in 1976 and 1977 and further that Plaintiff took an active part in DAA's April, 1977 program in which over $130,000 was expended, much inuring to Plaintiff's benefit.

 On February 19, 1976 Plaintiff by letter to Defendant with a copy to DAA Wilkes-Barre Representative, notified Chrysler that it intended to withdraw from its agreement with DAA and requested Chrysler to discontinue charging Plaintiff the $25 per car for advertising, which sum it then forwarded to DAA. On July 16, 1976 Plaintiff again notified Chrysler with a copy of the letter to the representative of DAA that it intended to ...


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