Biever Motor Car Co. v. Chrysler Corp.

• Decision Date: 16 May 1952
• Docket Number: Civ. A. No. 3194.
• Citation: 108 F. Supp. 948
• Court: U.S. District Court — District of Connecticut
• Parties: BIEVER MOTOR CAR CO. v. CHRYSLER CORP.

108 F. Supp. 948

BIEVER MOTOR CAR CO. v. CHRYSLER CORP.

Civ. A. No. 3194.

United States District Court D. Connecticut.

May 16, 1952.

Herbert L. Emanuelson, New Haven, Conn., for plaintiff.

Cummings & Lockwood, by William H. Timbers, Stamford, Conn., for defendant.

HINCKS, Chief Judge.

This is an action for breach of contract. The plaintiff, "Biever", was for many years a Chrysler dealer in New Haven. On August 29, 1944 Biever and Chrysler executed two written agreements: an "Agreement Between Chrysler Direct Dealer and Chrysler Corporation, Chrysler Division", and a "Chrysler Direct Dealer-Retail Memorandum of Sales Area." Both agreements were in the form of printed booklets. They superseded other agreements which had previously been in effect between the parties.

The "Memorandum of Sales Area", which was made to be subject to the terms and conditions of the other agreement between the parties, provided that Biever should have the non-exclusive right to purchase Chrysler and Plymouth automobiles for resale in an area consisting of New Haven, West Haven, Hamden, North Haven and East Haven, and that it should have the exclusive right to maintain a place of business for selling such cars in New Haven Township. As to termination, the agreement provided that it should terminate automatically upon the termination of the main agreement between the parties.

The other, main, agreement sets forth at considerable length some of the rights and obligations of the parties in relation to the agency provided for under the "Memorandum of Sales Area." A preface to the agreement, entitled "Purposes of the Agreement", set forth in general terms what are stated to be the objectives thereof and provided that "the terms of this agreement relate to the foregoing principles and policies * * *." Under the agreement the dealer was given the privilege of ordering cars from Chrysler, but all orders were made subject to Chrysler's approval and acceptance. The agreement contained no provision as to prices, except that it provided that the dealer should have the advantage of any price reductions made between the time of his order and the time of delivery. No provision was included as to the terms of purchase: instead, the agreement provided merely that Chrysler would keep the dealer informed of prices and would furnish it with terms of purchase. In return for these limited rights Biever obligated itself to furnish various reports to Chrysler, to confine its sales to its own sales area; to maintain an adequate parts inventory; to use only Chrysler-approved advertising matter, etc.

There is no provision in the agreement as to its term. Instead, the agreement embodies two sections concerning termination. These are as follows:

"7

"Reasons for Termination Other Than by Notice

"While it is the desire of Chrysler to establish lasting arrangements with Direct Dealer, it is recognized that certain conditions may arise in which it is impracticable for this agreement to continue in effect. In the interest of friendly relations between Direct Dealer and Chrysler, it is important that the circumstances be set forth so that they may be thoroughly understood by both parties to this agreement. Accordingly it is agreed that this agreement shall terminate immediately by its own force without notice from either party in the event of (1) an attempted assignment of this agreement by Direct Dealer without Chrysler's written consent; (2) an assignment by Direct Dealer for the benefit of creditors; (3) the admitted insolvency of Direct Dealer; (4) the institution of voluntary or involuntary proceedings by or against Direct Dealer in bankruptcy or under insolvency laws or for corporate reorganization, or for a receivership or for the dissolution of Direct Dealer; (5) the admitted insolvency of any member of Direct Dealer if a partnership; (6) the assumption of any other line of motor vehicles for sale by Direct Dealer, without the written consent of the General Sales Manager or an executive officer of Chrysler; or (7) the discontinuance of Direct Dealer's distribution and resale in his sales area of the products herein referred to. Termination under this paragraph shall not impose any liability upon Chrysler under the provisions of Paragraph 8. It is further agreed by Direct Dealer that he will immediately advise Chrysler in writing of the occurrence of any event specified in this paragraph.

"8

"Termination by Notice

"IT IS ALSO recognized that certain other conditions may arise under which either party may desire to terminate this agreement by giving reasonable notice to the other party. Accordingly it is agreed that this agreement may be terminated, at any time upon not less than ninety (90) or more than ninety-five (95) days' written notice by Chrysler or upon not less than fifteen (15) or more than twenty (20) days' written notice by Direct Dealer, but either of these periods may be reduced by mutual written consent of Direct Dealer and Chrysler. Termination under the provisions of this Paragraph 8 by Chrysler shall not be effective unless the notice bears the written approval of the General Sales Manager or an executive officer of Chrysler. Termination of this agreement shall operate as a cancellation of all unfilled orders for motor vehicles, parts and accessories. Upon termination under the provisions of this Paragraph 8 by Chrysler or by Direct Dealer, Chrysler agrees to buy, and Direct Dealer agrees to sell within thirty (30) days after the effective date of termination: (a) All new and unused then current model Chrysler and Plymouth motor vehicles which were purchased by Direct Dealer from Chrysler and/or Chrysler Motors of California and are then the property of and in the possession of Direct Dealer, at the net invoice price to Direct Dealer current at the date of termination, including transportation charges paid by Direct Dealer, except vehicles built on Direct Dealer's specific order to other than Chrysler standard specifications, which special vehicles, together with all special equipment pertaining thereto as previously specially specified by Direct Dealer, may or may not be purchased by Chrysler at its option.

"(b) All new, unused and undamaged Chrysler and Plymouth parts for the then current and three (3) preceding models, which were purchased by Direct Dealer from Chrysler and/or Chrysler Motors Parts Corporation and/or Chrysler Motors of California and/or by authorized Chrysler Corporation Parts Wholesaler, and are then the property of and in the possession of Direct Dealer, at the net invoice price to Direct Dealer then current at the date of termination, exclusive of transportation charges thereon, less any necessary costs incurred by Chrysler for refinishing or reconditioning parts to restore them to their original salable condition. Prior to such purchases by Chrysler, Direct Dealer shall deliver said parts for inspection F. O. B. Factory or any other point designated by Chrysler.

"(c) All signs of a type recommended by Chrysler belonging to Direct Dealer, showing the names `Chrysler' or `Plymouth', at a price to be agreed upon by Chrysler and Direct Dealer."

In February, 1948, pursuant to Section 8 of the agreement, Chrysler informed Biever that, effective ninety days from receipt of notice thereof, it was terminating all agreements in effect between them. This was accompanied by a letter in which the defendant assigned as the reason for its action the death of Mr. Biever, theretofore an executive in the plaintiff corporation. In due course the termination became effective and Chrysler ceased to supply new automobiles to Biever.

Biever claims that this termination was wrongful as to it. It asks $950,000 in damages for losses it claims to have suffered because Chrysler failed to deliver further automobiles to it. In its complaint it alleged that Chrysler attempted to terminate "in the absence of good faith, wrongfully, maliciously, and without cause." This allegation was denied by the defendant who, in addition, alleged as a special defense that the complaint failed to state a claim upon which relief can be granted.

During the course of pre-trial discovery it became clear that the decision of the case might hinge on a question as to the interpretation of the main agreement. The defendant...