Wood Motor Co. v. Nebel

Decision Date04 April 1951
Docket NumberNo. A-2915,A-2915
Citation150 Tex. 86,238 S.W.2d 181
PartiesWOOD MOTOR CO., Inc., et al. v. NEBEL et al.
CourtTexas Supreme Court

George Prendergast, Marshall, and Graves, Dougherty & Greenhill, Austin, for petitioners.

Bascom Gist, Tyler, and Joseph P. Witherspoon, Jr., Austin, for respondents.

HICKMAN, Chief Justice.

This is a suit by C. W. Nebel and son, C. W. Nebel, Jr., doing business as Nebel Motor Company, styled 'Associate Dealer,' against Wood Motor Company, styled 'Direct Dealer,' for damages for the alleged breach of a contract entered into between the parties of date June 30, 1944. The trial court rendered judgment in favor of respondents against petitioner for $25,000, and the case was affirmed by the Court of Civil Appeals. 232 S.W.2d 772.

The contract consisted of two instruments, both prepared by Chrysler Corporation, one being labeled 'De Soto and Plymouth Motor Vehicles Associate Dealer Agreement,' and the other 'Terms of Purchase.' The war was in progress when the contract was made and on that account no cars were then in production. It was expected that when peace was restored rapid sales at good profits would follow, and the contract was made in the light of that expectation. Prior to the resumption of production and the receipt of new cars by petitioner in January, 1946, the respondents expended large sums of money in remodeling a building in Longview, equipping a service department, an office and book-keeping department, purchasing display signs, and running advertisements in newspapers, all for the purpose of being prepared to engage in the business of selling and servicing De Soto and Plymouth cars when production was resumed. During the year 1946 petitioner received from the factory 77 De Soto and 190 Plymouth cars, of which number it retained 36 De Soto and 75 Plymouth cars for sale in the Marshall area, and delivered to respondents but one car of each make. The remainder were distributed among other 'Associate Dealers.' For some reason petitioner became dissatisfied in January, 1946, with its arrangement with respondents and undertook to procure a termination of the contract by mutual consent, failing in which it mailed this notice to respondents on July 5, 1946:

'Re: Associate Dealer Agreement, No. 481.

'Pursuant with paragraph nine, Termination by Notice, of the above captioned agreement, you are hereby notified that this agreement will be terminated on October 5, 1946, unless it is your desire to make this termination effective at an earlier date by mutual written consent.'

Upon the trial of the case in the district court the jury found in answer to special issues: (1) that petitioner breached its contract with respondents prior to July 5, 1946, by its failure to deliver to respondents their proportionate share of available new automobiles; (2) by reason of which respondents sustained damages in the sum of $6,000 prior to July 5, 1946; (3) that petitioner waited an unreasonable length of time from and after January 19, 1946, to give respondents written notice of the termination of the contract; (4) that petitioner had no just cause for terminating the contract as of July 5, 1946; (5) that since the termination of the contract respondents had sustained damages in the sum of.$19,000; and (6) in answer to a special issue requested by petitioner it found that respondents did not breach the contract prior to January 19, 1946. Upon the verdict, judgment was rendered in favor of respondents for $25,000. It should be observed here that the case was submitted to the jury on the theory that July 5th and not October 5th was the date of the termination, if any, of the contract, and no question with respect thereto is presented here.

We consider first the item of $6,000 damages which, according to the finding of the jury, accrued prior to July 5, 1946, the date of the notice of termination.

Section 4 of the Terms of Purchase Agreement provides:

'Acceptance of Orders

'Direct Dealer shall have the right to accept, in whole or in part, any or all orders received, and shall not be liable for any loss or damage resulting from its failure to ship or deliver goods ordered.'

Section 4 of the Associate Dealer Agreement provides in part: 'Orders for Motor Vehicles. In order to facilitate the orderly scheduling of production and shipments from week to week, Associate Dealer agrees to submit weekly his orders for new motor vehicles * * *. A dealer is expected to accept any motor vehicle ordered by him. * * *.'

Section 22 of the Associate Dealer Agreement provides: 'Force Majeure. Neither Direct Dealer nor Associate Dealer will be liable for failure to perform its part of this agreement when the failure is due to fire, flood, strikes or other industrial disturbances, inevitable accident, war, riot, insurrection or other causes beyond the control of the parties.'

Since respondents never actually placed any orders with petitioner, the argument is pressed here that no damages are recoverable for petitioner's failure to deliver cars. Obviously, the point reaches the entire judgment, and while petitioner does not claim in its argument that no contractual relations ever existed between the parties, the effect of sustaining the point would be to hold that none ever existed. It is elementary that if a contract is susceptible of two constructions, one of which would render it valid and the other void, the former will be adopted. We have concluded that Section 4 of the Terms of Purchase Agreement, when considered in the light of the contract as a whole, is reasonably susceptible of the construction that the nonliability provision thereof does not extend to cars for which orders were accepted by the petitioner, but is applicable only to cars, orders for which were not accepted by it. The provision deals with acceptance of orders, and the nonliability clause is a part of the sentence dealing with the right to accept orders. The 'right to accept' imposes the duty to perform when that right is exercised, subject to the provisions of the Force Majeure section.

While there is no evidence that respondents ever filed or that petitioner ever accepted any orders, there is evidence which in our opinion raised the issue of the equivalent of orders and acceptances. The jury has found that petitioner breached its contract with respondents by its failure to deliver to respondents their proportionate share of new automobiles. Mr. Wood of Wood Motor Company testified, in effect, that his company was advised by the factory not to take orders for cars because of the uncertainty of deliveries; that there was no sense in taking orders when cars were not available; that Chrysler Corporation advised him against taking orders, and he in turn made the same recommendation to his dealers. He further testified: 'I expected a fair and equitable distribution of my part of the automobiles, and I, in turn, expected to make a fair and equitable distribution.' He further testified that but for the fact that in January, 1946, petitioner decided not to send respondents any more cars, respondents would have received about the same number of cars as those sent to the Associate Dealer in Kilgore. That is, to our minds, some evidence that petitioner, in effect, treated the transaction as amounting to an acceptance by it of the obligation to deliver to respondents their proportionate share of cars without the necessity of written orders. The other Associate Dealers, twelve in number, did not in orders, but petitioner delivered to them their proportionate shares, respectively, based upon a formula adopted for the purpose of determining the proper ratio. We are unable to hold, as a matter of law, that the strictness of the written contract in...

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