Bateman v. Ford Motor Company

• Decision Date: 28 March 1962
• Docket Number: No. 13901.,13901.
• Citation: 302 F.2d 63
• Parties: Howard BATEMAN and Marguerite B. Jones, Partners, Trading as Ernest Jones Company, Appellants, v. FORD MOTOR COMPANY.
• Court: U.S. Court of Appeals — Third Circuit

302 F.2d 63 (1962)

Howard BATEMAN and Marguerite B. Jones, Partners, Trading as Ernest Jones Company, Appellants, v. FORD MOTOR COMPANY.

No. 13901.

United States Court of Appeals Third Circuit.

Argued February 23, 1962.

Decided March 28, 1962.

Rehearing Denied April 17, 1962.

Israel Packel, Philadelphia, Pa. (H. James Sautter, Daniel Lowenthal, Philadelphia, Pa., Fox, Rothschild, O'Brien & Frankel, Philadelphia, Pa., of counsel, on the brief), for appellants.

Harold E. Kohn, Philadelphia, Pa. (Aaron M. Fine, Dilworth, Paxson, Kalish, Kohn & Dilks, Philadelphia, Pa., on the brief), for appellee.

Before GOODRICH, KALODNER and GANEY, Circuit Judges.

GOODRICH, Circuit Judge.

Plaintiff brought, in the District Court for the Eastern District of Pennsylvania, a suit for an injunction and damages under the "Dealer's Day in Court Act," 15 U.S.C.A. §§ 1221-1225. He asked for a preliminary injunction. This was denied on the ground that the statutory right to damages is exclusive, and the plaintiff appeals.

The statute under which the action is brought, 15 U.S.C.A. § 1222, provides as follows:

"An automobile dealer may bring suit against any automobile manufacturer engaged in commerce, in any district court of the United States in the district in which said manufacturer resides, or is found, or has an agent, without respect to the amount in controversy, and shall recover the damages by him sustained and the cost of suit by reason of the failure of said automobile manufacturer from and after August 8, 1956 to act in good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, canceling, or not renewing the franchise with said dealer: Provided, That in any such suit the manufacturer shall not be barred from asserting in defense of any such action the failure of the dealer to act in good faith."¹

The purpose of the statute was stated in the report of the House Committee prior to enactment. The report says:

"The bill as amended proceeds from the conclusion that in the automobile industry concentration of economic power has increased to the degree that traditional contractual concepts are no longer adequate to protect the automobile dealers under their franchises." H.Rep. No. 2850, 84th Cong., 2d Sess. (1956), 1956-3 U.S.Code Cong. & Admin.News, pp. 4596, 4597.

The first point which the defendant makes is that the question is moot, since the termination of the franchise by the defendant has already taken place. We cannot take this argument seriously. The question was raised in the court below and the appeal from the denial of the injunction was brought before the termination date. In other words, the question was in litigation in this Court and, of course, we retain jurisdiction until the question is settled. Porter v. Lee, 328 U.S. 246, 66 S.Ct. 1096, 90 L.Ed. 1199 (1946).

The plaintiff gives two grounds for his appeal. The first is that this statute is, according to the legislative description thereof, a supplement to the antitrust laws. That is what the title to the law says.² Since there is a provision for injunctive relief in the Clayton Act,³ the argument runs, that provision should carry over to this Dealer's Day in Court Act. We are not impressed with this argument. While the statute under consideration is called a supplement to the antitrust laws, we think the subject matter is so different that there is little similarity between them. It would be highly artificial to carry over the injunctive provision of the older act to this new statute. This is exactly what the Supreme Court held in Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 78 S.Ct. 352, 2 L.Ed. 2d 340 (1958). There the Court said that, while section 1 of the Robinson-Patman Act did amend the Clayton Act, section 3 did not (15 U.S.C.A. §§ 13, 13a). Therefore, a private action for treble damages and injunctive relief based on the prohibitions of section 3 could not be brought under sections 4 and 16 of the Clayton Act, respectively. A somewhat similar holding with regard to the act here in issue is Schnabel v. Volkswagen of America, Inc., 185 F.Supp. 122 (N.D. Iowa 1960). These cases, we think, show that the appellant has no right to an injunction based on section 16 of the Clayton Act.⁴

The appellant's second ground, however, has more body to it. It is to the effect that the court should exercise its equitable powers to make more effective the relief provided in the statute. Here, cases like Carnation and Paine Lumber Co. v. Neal, 244 U.S. 459, 37 S.Ct. 718, 61 L.Ed. 1256 (1917), which deal with whether a private person is invested by a specific statutory provision with a right to maintain a bill for injunctive relief, are not applicable. This second argument is addressed to the general equitable powers of the court.

It may be conceded that the legislative history gives no indication that the subject of supplemental equitable relief was considered. That fact, to our minds, does not advance the ball in either direction.⁵ We know that the judicial power of the United States applies to all cases "in Law and Equity." Article III, section 2 of the Constitution so says. From the very beginning of equity one of the bases of action by the chancellor was to make effective the rights which the law gave a party. The purpose of the statute here in question, as its title says, was to balance the power "now heavily weighted in favor of automobile manufacturers." To make the remedy provided by the statute effective in accomplishing what is meant to be accomplished, we think that the dealer needs equity help in keeping his business going while his legal claim is being tested. A judgment for damages acquired years after his franchise has been taken away and his business obliterated is small consolation to one who, as here, has had a Ford franchise since 1933.

This general equitable power of the court to give injunctive relief to make more effective a remedy provided by law is long established and well known. Pomeroy states the rule as follows:

"Wherever a right exists or is created, by contract, by the ownership of property or otherwise, cognizable by law, a violation of that right will be prohibited, unless there are other considerations of policy or expediency which forbid a resort to this prohibitive remedy. The restraining power of equity extends, therefore, through the whole range of rights and duties which are recognized by the law, and would be applied to every case of intended violation, were it not for certain reasons of expediency and policy which control and limit its exercise." 4 Pomeroy, Equity Jurisprudence § 1338 (5th ed. 1941). (Emphasis original.)

That here the right at law was conferred by an act of Congress does not require departure from the general rule stated above. The statute may be viewed as writing into every dealer franchise agreement a term that the manufacturer will not terminate the relationship in bad faith.⁶ In any event, the bare fact that Congress by statute has provided a right at law without express provision for injunctive relief does not preclude the exercise of the general powers of a court of equity.

The suggestion was made in argument that the statute could not have been meant to compel a motor company to carry a dealer's franchise indefinitely. That is agreed. A franchise is not a marriage for life. And if a termination turns out to be made, in the statutory language, "in good faith," the dealer is certainly entitled no longer to protection. Further, within the terms of the contract and the statute, the manufacturer may terminate the contract if he acts in good faith. No protection should extend longer than the termination made in good faith. It is hardly a new idea for a court to enjoin a defendant from doing in bad faith what he would be legally privileged to do if he acted in good faith. For example, the...