Boatland, Inc. v. Brunswick Corp.

• Decision Date: 22 August 1977
• Docket Number: No. 76-1386,76-1386
• Citation: 558 F.2d 818
• Parties: BOATLAND, INC. and Robert L. Moore, Plaintiffs-Appellants, v. BRUNSWICK CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 818

558 F.2d 818

BOATLAND, INC. and Robert L. Moore, Plaintiffs-Appellants, v. BRUNSWICK CORPORATION, Defendant-Appellee.

No. 76-1386.

United States Court of Appeals Sixth Circuit.

Argued April 18, 1977.

Decided and Filed July 25, 1977.

Rehearing Denied Aug. 22, 1977.

Gareth S. Aden, Nashville, Tenn., Charles J. Williams, Madison, Tenn., for plaintiffs-appellants.

Frank Gorrell, James W. Berry, Jr., and James O. Bass, Jr., Nashville, Tenn., for defendant-appellee.

Before WEICK, EDWARDS and CELEBREZZE, Circuit Judges.

WEICK, Circuit Judge.

Boatland and Moore have appealed from an interlocutory order of the District Court, certified pursuant to 28 U.S.C. § 1292(b), granting partial summary judgment in favor of Brunswick. The sole issue in the appeal is whether or not the Wisconsin Fair Dealership Law, Wis.Stat.Ann. §§ 135.01 et seq., applies to Boatland's outboard motor dealership contract with Brunswick. The District Court held that the statute was inapplicable. We disagree and reverse.

Moore is the President of Boatland, Inc., a Tennessee Corporation. The corporation has its place of business in Nashville, Tennessee, and sells both inboard and outboard boats, outboard motors, and other boating accessories. In 1965 Moore became a Mercury Marine Outboard motor dealer. In 1971 his corporation, Boatland, took over his dealership, and ever since has been a Mercury dealer. Mercury Marine is a division of the Brunswick Corporation, a Delaware Corporation. Mercury has its principal offices and a factory in Fond du Lac, Wisconsin.

Brunswick and the plaintiffs have had an unbroken sequence of one-year marine engine dealership contracts since 1965. On September 1, 1974 Brunswick and Boatland renewed their annual dealership contract, termed "Direct Sales Contract," which made Boatland a Mercury dealer. The contract had been drawn by Brunswick and is nothing more than a printed form contract, the more pertinent provisions of which are set forth in the footnote. ¹

On August 11, 1975 Brunswick mailed to Boatland a letter notifying it that the Mercury outboard motor dealership contract would not be renewed for model year 1976.

On August 20, 1975 Boatland's legal counsel replied by letter and requested that Brunswick reconsider its decision terminating Boatland's Mercury dealership, or face legal action. Brunswick acknowledged receipt of the letter five days later but gave no satisfactory response.

On August 29, 1975 Boatland and Moore filed suit against Brunswick for injunction and other relief in the Federal District Court for the Middle District of Tennessee, Nashville Division, alleging among other things Brunswick's violation of the provisions of the Wisconsin Fair Dealership Law. Jurisdiction was based on diversity of citizenship. A temporary restraining order was entered by the District Court the same day, enjoining the violation of the dealership contract.

Subsequently the District Court heard and denied plaintiffs' application for a preliminary injunction.

Plaintiffs then filed a motion for summary judgment. They alleged that the Wisconsin Fair Dealership Law determined the rights and remedies of the parties and that it was not complied with by Brunswick. Brunswick countered on December 12, 1975 by filing a cross-motion for partial summary judgment alleging among other things that the Wisconsin statute was inapplicable to the contract in dispute.

The District Court handed down a memorandum opinion and entered a separate order on December 22, 1975 granting Brunswick's motion. The Court held that the Wisconsin Fair Dealership Law did not apply to the dealership contract.

I

In a diversity case the Federal Court is bound by state substantive law wherever applicable, Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and the conflict of laws of the forum in which the court sits. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), and Agricultural Serv. Ass'n v. Ferry-Morse Seed Co., 551 F.2d 1057, 1063 (6th Cir. 1977). Here the forum state is Tennessee, and clearly the conflict of laws of that state applies.

The District Court in Moody v. Kirkpatrick, 234 F.Supp. 537, 540 (M.D.Tenn.1964) stated:

Tennessee follows the general rule that the validity of a contract and the substantive rights of the parties to it are to be governed by the law which the parties intended. In the absence of a manifestation of contrary intention, the parties are presumed to have contracted pursuant to the laws of the state in which the contract was entered into. Deaton v. Vise, 186 Tenn. 364, 210 S.W.2d 665 (1948).

Accord: Agricultural Serv. Ass'n, Inc. v. Ferry-Morse Seed Co., supra and the cases cited therein; Moody v. Bass, 357 F.2d 730, 732 (6th Cir. 1966); American Training Serv. v. Commerce Union Bank, 415 F.Supp. 1101, 1104 n. 3 (M.D.Tenn.1976); Hamilton Nat'l Bank of Chattanooga v. Hutcheson, 357 F.Supp. 114, 116-17 (E.D.Tenn.1973), aff'd without published opinion, sub nom. Hamilton Nat'l Bank of Chattanooga v. Meadow, 492 F.2d 1243 (6th Cir. 1974); and Sloan v. Jones, 192 Tenn. 400, 407, 241 S.W.2d 506 (1951).

The District Court in Koehler v. Cummings, 380 F.Supp. 1294, 1303 (M.D.Tenn.1974), added:

Indeed, Moak v. Continental Casualty Co., 4 Tenn.App. 287, 292 (1927) states, "The lex loci contractus becomes as much a part of the contract as if specifically incorporated therein, and, in the absence of evidence of contrary intention, the parties must be held to have contemplated the application of that law to the terms of their agreement."

In the present case the most significant contacts between the parties occurred in Wisconsin, rather than in Tennessee. The contract was entered into at Fond du Lac, Wisconsin, the situs of Brunswick's Mercury Marine Division's principal offices. All shipments of the goods under the contract were made from Wisconsin. Title to the shipped goods passed from Brunswick to Boatland in Wisconsin since all shipments were made f.o.b.

The state of Tennessee is nowhere mentioned in the form part of the contract, and the only contacts which the parties had with Tennessee were the location of Boatland's place of business, where the outboard motors were resold and serviced by Boatland, and where Boatland promoted the Mercury product. The evidence clearly indicates that the parties intended Wisconsin law to apply to the contract.

The Wisconsin law as applied to the contract includes the substantive laws of that state in determining the parties' rights and obligations. American Training Serv. v. Commerce Union Bank, supra; Ohio Cas. Ins. Co. v. Travelers Indem. Co., 493 S.W.2d 465, 467 (1973); and Deaton v. Vise, supra. Since the Wisconsin Fair Dealership Law is part of the substantive law of Wisconsin it applies on its face to this contract. Brunswick, however, argues that the Interpretation Clause of the contract, which states in part that the contract shall "be interpreted and construed according to the laws of the State of Wisconsin", means only that Wisconsin law was to give "meaning and effect" to the terms of the contract, rather than to be "governed" by the laws of Wisconsin. This is a strained and narrow construction of the language, which we think is unwarranted. There was no evidence that the parties intended to limit Wisconsin law to the mere interpretation of the terms of the contract. They intended, rather, that the substantive law of Wisconsin should determine their rights and obligations.

Furthermore, if the language of the contract is at all ambiguous, it should be construed against the draftsman, Brunswick, and should be read in a more reasonable light. Southwest Forest Indus., Inc. v. Sharfstein, 482 F.2d 915, 919 (7th Cir. 1972); Bouton v. Litton Indus., Inc., 423 F.2d 643, 646 (3rd Cir. 1970); and Tele-Controls, Inc. v. Ford Indus., Inc., 388 F.2d 48, 51 (7th Cir. 1967). See also Lauritzen v. Larsen, 345 U.S. 571, 588-89, 73 S.Ct. 921, 97 L.Ed. 1254 (1953); Foreman v. George Foreman Assoc., Ltd.,517 F.2d 354, 356 (9th Cir. 1975); and U. S. Ore Corp. v. Commercial Transp. Corp., 369 F.Supp. 792 (E.D.La.1974).

Tennessee conflict of laws presumes that the parties contracted pursuant to the laws of Wisconsin, and Brunswick has failed to rebut this presumption.

II

The Wisconsin Fair Dealership Law, Wis.Stat.Ann. §§ 135.01 et seq. provides in part at § 135.04:

(A) grantor shall provide a dealer at least 90 days' prior written notice of termination, cancellation, nonrenewal or substantial change in competitive circumstances. The notice shall state all the reasons for termination, cancellation, nonrenewal or substantial change in competitive circumstances and shall provide that the dealer has 60 days in which to rectify any claimed deficiency. If the deficiency is rectified within 60 days the notice shall be void.

This law became effective on April 5, 1974, five months before the contract in question was executed. It is clear from the uncontroverted evidence that Brunswick did not comply with this statute when it terminated the dealership agreement.

Brunswick contends that this statute is not applicable to the contract for two reasons: one, that the Wisconsin State Legislature never intended that this statute have extraterritorial effect and apply to dealers like Boatland doing business outside of the state; and two, that the parties provided their own method for termination of the contract in derogation of the Wisconsin Fair Dealership Law.

There is no evidence that the Wisconsin legislature intended to restrict the territorial application of the statute, or to prevent anyone particularly a Wisconsin resident, from making Wisconsin law applicable to his contract.

Since Brunswick, a Wisconsin resident, contracted to have Wisconsin substantive law applied to the contract, it cannot be heard now to complain about the extraterritorial application of the Wisconsin law. The contract was simply a Wisconsin contract. Se...