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Schultz v. Onan Corp.

May 28, 1982

NATHAN SCHULTZ AND DUANE SCHULTZ, INDIVIDUALLY AND TRADING AS J.C. SCHULTZ COMPANY, A PARTNERSHIP
v.
ONAN CORPORATION AND A.F. SHANE COMPANY ONAN CORPORATION, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA -- ERIE

Author: Hunter

Before: HUNTER, HIGGINBOTHAM, Circuit Judges and WEINER,*fn* District Judge

Opinion OF THE COURT

HUNTER, Circuit Judge:

FACTS

1. Onan Corporation ("Onan," "defendant"), a manufacturer of electrical equipment, and Joseph Schultz Co. ("Schultz," "plaintiffs"), a distributor, were parties to a distributorship agreement signed by Joseph Schultz on June 3, 1977, and by Onan on June 15, 1977. The 1977 agreement was the last in a series of similar agreements, the first of which had been signed in 1961. Article 10 of the 1977 agreement provided in pertinent part:

ARTICLE 10

Effective Date of Agreement and Termination

A. Effective Date. This Agreement shall become effective on the date of acceptance by Onan as evidenced by the signature of its authorized officer hereon and shall remain effective until the 31st of December in the year of the 3rd anniversary of this agreement, unless terminated by either party in accordance with this Article.

B. Termination. Termination shall be governed by the following. .. .

1. Either party may terminate this Agreement for any reason upon sixty (60) days written notice to the other.

2. Onan may terminate thie Agreement upon thirty (30) days written notice to Distributor in the event Distributor shall have failed to fulfill any one or more of Distributor's responsibilities set forth in Article 9 of this Agreement.

Appendix at 423A.*fn1 Thus, even if none of its termination provisions was invoked, by its own terms the 1977 agreement had a fixed duration and would terminate on December 31, 1980.*fn2

2. On March 24, 1978, Onan wrote to Schultz that "[i]n accordance with previous communications with you, please be advised that Onan is hereby giving notice that the distributorship relationship between Onan and J.C. Schultz Company is to be terminated sixty (60) days from the date of this letter." Appendix at 17Z.*fn3 Schultz filed suit seeking damages for alleged federal antitrust and state law violations, and the jury awarded Schultz $45,500 under the Minnesota doctrine of recoupment. That doctrine, which is discussed infra, allows a franchisee/distributor under certain circumstances to recover from ...


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