Morton Bldgs. of Nebraska, Inc. v. Morton Bldgs., Inc.

Decision Date09 March 1976
Docket NumberNo. 75--1241,75--1241
Citation531 F.2d 910
Parties1976-1 Trade Cases 60,762 MORTON BUILDINGS OF NEBRASKA, INC., Appellant, v. MORTON BUILDINGS, INC., et al., Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Wallace Rudolph, Lincoln, Neb., made argument for appellant; John H. McArthur and A. James McArthur, Lincoln, Neb., on the brief.

Fredric H. Kauffman, Cline, Williams, Wright, Johnson & Oldfather, Lincoln, Neb., for appellees; David R. Buntain, Lincoln, Neb., on the brief.

Before GIBSON, Chief Judge, CLARK, Associate Justice, Retired, * and BRIGHT, Circuit Judge.

GIBSON, Chief Judge.

Appellant, Morton Buildings of Nebraska, Inc. (hereafter referred to as West), 1 instituted the present action claiming that Morton Buildings, Inc. (Morton), had tortiously interfered with West's business and had conspired with various individuals to violate § 1 and § 2 of the Sherman Act. 15 U.S.C. §§ 1, 2 (1970), as amended, (Supp. IV, 1974). The District Court, 2 in a nine day non-jury trial, concluded that West had failed to support these theories and entered judgment in favor of Morton.

Morton manufactures prefabricated wood-framed, metal-covered buildings which are primarily used for various farm and commercial purposes. Morton buildings are distributed through a multistate distribution system, consisting of Mortonowned sales offices as well as a number of independent dealers. In August, 1968, Morton established an independent dealership in Lincoln, Nebraska, and authorized West to sell and erect Morton buildings in that area. The dealership contract between Morton and West was oral and was terminable at will by either party.

Throughout the course of the dealership a number of conflicts developed between West and Morton. These problems purportedly arose due to West's failure to cooperate with Morton and his reluctance to conform to established Morton procedures. In late 1970 Morton offered its independent dealers the opportunity to adopt the 'Morton system', which was a multifaceted plan conceived by Morton to establish some uniformity in the operational aspects of the Morton distribution system. Pursuant to the Morton system salesmen were compensated on a salary rather than commission basis and independent dealers were required to maintain a specified inventory of Morton-approved equipment. In addition, the Morton system offered its dealers access to a centralized computer system which could prepare payroll checks, pay accounts payable, file tax returns, prepare monthly profit and loss statements, and analyze the profitability of salesmen.

At the urging of Morton, West permitted the Morton system to supplant West's previous operational system in January, 1971. In order to facilitate the transition Morton cosigned a $36,000 note for West to enable West to purchase the necessary equipment under the new system. The services available through the Morton computer system were instituted on March 1, 1971.

Further problems continued to materialize in the relationship between Morton and West. There are many charges and countercharges flowing to and from the parties, and what the actual situation was at that time is difficult of ascertainment. Although West did $700,000 worth of business in 1970, his net worth by his own figures at the end of that year was $20,000. Obviously, West's business was undercapitalized. He had been on a cash basis with Morton since the inception of the dealership and had to prepay the entire cost of any buildings ordered from Morton. In addition to West's financial difficulties, Morton attributed the dissatisfaction between the parties to the complaints of West's customers, dissention among West's employees, and West's abdication of managerial responsibilities. On the other hand, West contends that his problems were caused by Morton's implementation of a deliberate and conspiratorial plan to take over all of West's operations and to effectively destroy West as a future or potential competitor.

On April 22, 1971, Morton representatives traveled to Lincoln, Nebraska, to seek resolution of the various problems confronting the parties. The representatives communicated Morton's view of West's problems to West and Kenneth Bickel, who had assumed managerial responsibilities from West. West and Bickel were informed that if the situation had not improved in 30 days the dealership would be terminated. On April 23 West telephoned Arnold Reiff, a Morton supervisor, and stated, 'If I'm going to get the axe, let's get it over with.' Morton officials then met with West on April 27 and a termination agreement was negotiated. Morton presented facts which indicate that negotiations were conducted concerning various contractual terms and that all parties on a give-and-take basis manifested assent to the final provisions embodied in the agreement. These provisions were then set forth in a memorandum prepared by William Uphoff, general manager for Morton, and submitted to but never signed by West. It appears that West commenced performance of the agreement but later became disenchanted and rejected it. West contends that he did not enter into any agreement with Morton and that the termination was unilaterally imposed by Morton. Alternatively, West asserts that, even if an agreement is found, it is voidable at his option because his assent was induced by misrepresentation and duress.

West seeks $750,000 damages for Morton's alleged tortious interference with West's business. Additionally, West contends that Morton violated various provisions of the antitrust laws and that the court should permit West to recover treble damages totaling $2,250,000. The District Court resolved the facts adversely to West and concluded that West was not entitled to prevail under either theory nor was West entitled to a judgment for $9,549.11 allegedly owed under Morton's contract theory of termination.

I. Tortious Interference Claim.

West's initial claim, in count one, is based on the theory that Morton tortiously interfered with West's business by conceiving and implementing an anticompetitive plan to take over all of West's operations. 3 In furtherance of this plan Morton allegedly interfered with West's internal affairs, overburdened West financially, misrepresented financial information and forced West to agree to a termination of the dealership, and then appropriated West's employees, assumed all West's contracts and took over all of West's customers and leads. Morton presented evidence tending to refute these contentions.

While the pleadings of tortious interference are sufficient, a resolution of the factual disputes is dispositive of this claim. Nebraska law, which concededly controls in this diversity segment of West's claim, clearly provides that a person may discontinue a terminable at will business relationship with another person even though intended or unintended harm results. Buhrman v. International Harvester Co., 181 Neb. 633, 634, 150 N.W.2d 220, 222--23 (1967); Barish v. Chrysler Corp., 141 Neb. 157, 163, 3 N.W.2d 91, 95 (1942). However, if a person terminates a dealership by using improper means which are accompanied by an anticompetitive intent or purpose, he may be liable in tort to the injured party. Frank H. Gibson, Inc. v. Omaha Coffee Co., 179 Neb. 169, 178, 137 N.W.2d 701, 708--09 (1965). The District Court's findings of fact generally reflect Morton's theory of the case and, upon applying applicable principles of law to these facts, the District Court concluded that Morton had not engaged in an anticompetitive campaign to destroy West as a competitor.

We have independently reviewed the record in its entirety and conclude that the District Court's factual findings are not clearly erroneous. Fed.R.Civ.P. 52(a). It is unnecessary to make a lengthy and detailed recitation of all the facts which tend to justify Morton's actions in this matter and give sufficient support to the District Court's factual findings. In general, the evidence indicates that there were numerous conflicts between Morton and West prior to the termination. West was experiencing dissention among personnel, management difficulties and a certain degree of financial instability. When Morton ordered West to remedy the existing problems, West voluntarily chose to discontinue the dealership. The parties negotiated and consented to a termination agreement. Contrary to West's allegations the evidence does not adequately prove an attempt by Morton 'to steal a business by taking unfair advantage of a business relationship.' Frank H. Gibson, Inc. v. Omaha Coffee Co., supra at 178, 137 N.W.2d at 708. Despite West's selective reference to facts in the record which allegedly undermine the District Court's findings, the factual findings made by the District Court are supported by the record. Morton did not utilize any unlawful means to effect a termination of the West dealership and did not entertain the requisite anticompetitive intent.

West contends that the termination agreement must be vitiated because West's consent was induced by misrepresentation and duress. At the termination meeting on April 27, 1971, Morton prepared a financial statement which represented that West had lost $45,000 in the first quarter of 1971. It was later ascertained that the true loss for the quarter was $10,000. While the record does not indicate whether this misstatement was intentional or inadvertent, it does indicate that West apparently had many contracts for buildings that remained on location, unerected, thus making it difficult to ascertain West's actual financial condition. West asserts that this misrepresentation of his financial condition renders the agreement voidable at his option.

Nebraska law requires an aggrieved party to show the materiality of a misrepresentation as a precondition to receiving a judicial declaration that the contract is not binding on him. Garbark v. Newman, 155 Neb. 188, 195, 51...

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