Crawford v. General Contract Corporation

• Decision Date: 02 June 1959
• Docket Number: Civ. A. No. 762.
• Parties: H. T. CRAWFORD, individually, H. T. Crawford, d/b/a Crawford Motor Company; H. T. Crawford and W. I. Meeks, a partnership, formerly doing business under the partnership firm name of Crawford Chevrolet Company, H. T. Crawford, Wayne Caldwell and Dwain Crawford, a partnership doing business under the partnership firm name of Dwain Crawford Buick Company, and H. T. Crawford, Waldo Pool, Joe Shirley, and Milton Crawford, a partnership, formerly doing business under the firm name of Crawford Auto Sales, Plaintiffs, v. GENERAL CONTRACT CORPORATION and Securities Investment Company of St. Louis, Defendants.
• Court: U.S. District Court — Western District of Arkansas

174 F. Supp. 283

H. T. CRAWFORD, individually, H. T. Crawford, d/b/a Crawford Motor Company; H. T. Crawford and W. I. Meeks, a partnership, formerly doing business under the partnership firm name of Crawford Chevrolet Company, H. T. Crawford, Wayne Caldwell and Dwain Crawford, a partnership doing business under the partnership firm name of Dwain Crawford Buick Company, and H. T. Crawford, Waldo Pool, Joe Shirley, and Milton Crawford, a partnership, formerly doing business under the firm name of Crawford Auto Sales, Plaintiffs, v. GENERAL CONTRACT CORPORATION and Securities Investment Company of St. Louis, Defendants.

Civ. A. No. 762.

United States District Court W. D. Arkansas, Hot Springs Division.

June 2, 1959.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Shaver, Tackett & Jones, Texarkana, Ark., Lookadoo, Gooch & Lookadoo, Arkadelphia, Ark., Van Johnson, Texarkana, Ark., for plaintiffs.

Cockrill, Laser & McGehee, Little Rock, Ark., for respondents.

JOHN E. MILLER, Chief Judge.

Statement

On July 11, 1957, the plaintiffs herein filed their complaint in the Texarkana Division against the defendants, General Contract Corporation and Securities Investment Company of St. Louis, hereinafter referred to collectively as General. The complaint is extremely prolix but in essence it alleged that the plaintiffs, who will be identified more particularly in the findings of fact, were engaged in four business operations in various parts of Arkansas and using various forms of business enterprise, all of which businesses were engaged in the sale of automobiles at retail. After setting forth the jurisdictional facts, the complaint alleged that for over two years prior to January 7, 1956, Glenn Bellinger, manager of the defendants in Hot Springs, Arkansas, actively solicited the businesses to finance their new and used cars through an arrangement with the defendants, and in the course of such solicitation represented to the plaintiffs that General would stand by them in their financing operations "through thick and thin." The complaint alleged that relying upon such representations and assurances, the plaintiffs curtailed their financing operations with other companies and gave their financing business to General until the 7th day of January 1956, when General refused to accept any further financing. The complaint also alleged with particularity representations by Bellinger as defendants' manager that the defendants would finance up to $80,000 on a new business to be opened by three of the plaintiffs in the City of Hot Springs, Arkansas; that a contract was thereafter signed on January 6, 1956, with General, but that on January 7, as set out above, defendants refused to deal further with the plaintiffs.

In various particulars the plaintiffs then alleged that the sudden termination of credit and financing caused rumors among financial institutions, which resulted in the plaintiffs' inability to obtain adequate financing elsewhere; that by reason of the loss of their commercial credit some of the plaintiffs were obliged to and did sell at a loss various properties in an attempt to finance their own automobiles, and that each of the plaintiffs was damaged in specified sums as a result thereof.

The plaintiffs also alleged an agreement between the plaintiffs and General to the effect that when a purchaser of an automobile from one of the plaintiffs became delinquent on his note (which was guaranteed by the plaintiffs), the defendants would promptly notify the particular plaintiff involved and that upon receipt of such notice, the plaintiff would contact the delinquent purchaser and usually succeed in an arrangement for payment which would avoid costly repossessions. The plaintiffs alleged that following the termination of their financing with General, that General would consistently delay in repossessing automobiles so that when repossessed such automobiles were damaged and of little value; that the plaintiffs having obliged themselves to purchase such repossessions from General for the amount due thereon, thereby were forced to take automobiles of comparatively little value.

The plaintiffs attached a copy of two agreements signed by the plaintiffs and defendants, which on their face constituted the full contracts between the parties, but the plaintiffs alleged that such contracts are a ruse to avoid the laws of the State of Arkansas governing usury, and that they are illegal and void on that ground. Following this allegation the plaintiffs pray that all of their contracts executed by the plaintiffs' customers and upon which the plaintiffs are guarantors by reason of separate contracts be declared illegal and void. The plaintiffs also alleged that as an additional scheme to avoid the usury laws, the defendants established a dealer's reserve and a dealer's special reserve in favor of the various plaintiffs, which reserves were credited from payments made by the purchasers of automobiles and which when considered as a part of the payment rendered the notes usurious.

Finally, the plaintiffs alleged that the action of General in abruptly cutting off credit and in uttering and publishing degrading words with respect to the credit and business standards of the plaintiff H. T. Crawford was willful, wanton, and malicious conduct, which damaged the plaintiff H. T. Crawford, and injured his credit and business standing, for which he prays damages in the sum of $50,000 and punitive damages in the sum of $50,000. Each of the plaintiffs prayed damages for the damage to his business, for punitive damages, and certain plaintiffs also prayed damages for losses incurred in an attempt to finance their own businesses and for the amounts paid to the defendants as guarantors under their written contract for the usurious paper.

Prior to the filing of answers by the defendants, the cause was transferred by Honorable Harry J. Lemley to the Western Division of the Eastern District of Arkansas, and subsequently by the Honorable Axel J. Beck to the Hot Springs Division of the Western District of Arkansas.

Various interlocutory matters which are not relevant here came before the court, and on December 23, 1958, the defendants filed their separate answers to the complaint, and at the same time filed a joint motion to dismiss the allegations of the complaint relating to the claim of usury on the ground that the plaintiffs, being a party to the allegedly usurious contracts, could not take advantage of any claim of usury. On January 9, 1959, the court advised the parties that a ruling on this motion to dismiss would be reserved until the case had been fully developed at trial.

On April 1, 1959, a pretrial conference was held at which all of the parties were represented, and the court at that time advised the parties that in the interest of economy of time and money, the case should be tried upon all the issues of the complaint except those relating to the allegations of usury, and that if upon consideration of the defendants' motion to dismiss those allegations, the motion were denied, a second hearing could be held to determine whether the contracts were usurious and the amount of damages to which the plaintiffs would be entitled thereunder.

Accordingly, the case proceeded to trial to the court without a jury on April 29 and 30, 1959, and was tried upon all issues except those raised by the plaintiffs' allegations of usury. By agreement of the parties leave was given to submit in written form by stipulation the testimony of Olin Hendrix and A. C. Stone, which testimony has been received in the form of affidavits, together with the stipulation of the defendants for the admissibility of such testimony subject to objections of relevancy and materiality.

Immediately prior to the beginning of the trial, the plaintiff Crawford Chevrolet Company was given leave to file an amendment to the complaint, in which it was alleged that this plaintiff prior to December 9, 1955, had been as originally alleged a partnership, but that on that date and thereafter the partnership was terminated in favor of the Crawford Chevrolet Company, Inc., an Arkansas corporation, which acquired the assets of the original partnership. Leave was also given to the defendants to file an answer to said amendment, which answer was duly filed, admitting the facts set forth in the amendment and pleading the statute of limitations as a bar to any action by the corporation.

Following the trial, the case was submitted subject to the receipt of the written testimony of Olin Hendrix and A. C. Stone. That testimony has now been received and considered along with all of the ore tenus testimony in the case, the exhibits, and the pleadings and briefs of the parties, and the court now makes and files its formal Findings of Fact and Conclusions of Law.

Findings of Fact

1.

The plaintiffs, H. T. Crawford, W. I. Meeks, Wayne Caldwell, Dwain Crawford, Waldo Pool, Joe Shirley, and Milton Crawford, are citizens of the State of Arkansas, and in various combinations more fully set forth below were partners doing business under the names Crawford Chevrolet Company at Glenwood, Arkansas; Crawford Motor Company at Benton, Arkansas; Dwain Crawford Buick Company at Magnolia, Arkansas; and Crawford Auto Sales at Hot Springs, Arkansas. The plaintiff Crawford Chevrolet Company, Inc., is an Arkansas corporation and was doing business in the town of Glenwood, Arkansas, as successor to the Crawford Chevrolet Company. The defendant General Contract Corporation is a Missouri corporation authorized to do business within the State of Arkansas, and the defendant Securities Investment Company, is a corporation organized under the laws of Delaware and authorized to do business in the State of Arkansas.

The amount in controversy exceeds the sum of $3,000, exclusive of interest and costs.

2.

The central figure in the development of the business enterprises of the plaintiffs and in this litigation is the...