Busam Motor Sales v. Ford Motor Co.

• Decision Date: 31 August 1949
• Docket Number: Civ. No. 1824.
• Citation: 85 F. Supp. 790
• Parties: BUSAM MOTOR SALES, Inc. v. FORD MOTOR CO.
• Court: U.S. District Court — Southern District of Ohio

85 F. Supp. 790

BUSAM MOTOR SALES, Inc. v. FORD MOTOR CO.

Civ. No. 1824.

United States District Court S. D. Ohio, W. D.

August 31, 1949.

Robert N. Gorman, Cincinnati, Ohio, Larz R. Hammel, Cincinnati, Ohio, for plaintiff.

Taft, Stettinius & Hollister, Cincinnati, Ohio, for defendant.

DRUFFEL, District Judge.

Plaintiff commenced its action against defendant alleging among other things that on March 4, 1946, plaintiff company was a designated and authorized distributor of motor vehicles, parts, and accessories for defendant company and that by terms of the agreement between the parties defendant agreed to sell, and plaintiff agreed to purchase for resale for use Ford passenger automobiles, commercial automobiles, trucks, and parts and accessories therefor, and parts and accessories for Mercury and Lincoln automobiles, It was expressly agreed that plaintiff was to act as a dealer and not as an agent, and plaintiff agreed to maintain his business in a manner acceptable to the defendant; that by terms of the agreement it could be terminated at any time at the will of either party by written notice; the agreement further provided that it was to be construed in accordance with the laws of the State of Michigan.

Plaintiff claimed that by registered letter dated July 2, 1947, defendant notified plaintiff of its intention to terminate the sales agreement effective sixty days after receipt of the notice, which would be September 5, 1947. Plaintiff further claimed that said purported termination was not in good faith on the part of the defendant company and was a fraud on the rights of the plaintiff and further that under the laws of the State of Michigan the option to terminate an agreement of this nature may be exercised only in good faith.

Plaintiff further claimed that at the time of receipt of the notice of cancellation it had received 359 orders for delivery of Ford automobiles from various customers and that between July 7, 1947, and September 5, 1947, defendant company supplied 43 cars to the plaintiff for delivery on the orders obtained, leaving unfilled on September 5, 1947, orders for 316 Ford motor vehicles. Plaintiff further claimed that the refusal of the defendant to deliver sufficient automobiles to plaintiff company to fill said 316 orders was done to deprive plaintiff company of a profit on said orders, and that the purported termination of agreement was not made in good faith but solely to deprive plaintiff of the profits it would have received upon the filling of the said 316 orders in the sum of $105,768.00, and by reason thereof, plaintiff company had been damaged to that extent. Plaintiff further claimed $4800.00 damages by way of expenses incurred in the preparation of plans, estimates, surveys, and specifications for a new building which it did not require in view of the cancellation of said agreement.

Defendant answered generally admitting the agreement authorizing plaintiff company as a dealer in its motor vehicles etc., and claimed that said agreement did not obligate the defendant company to accept any orders from the plaintiff, but instead expressly provided that the defendant company agreed to give careful consideration to all orders received from the dealer but expressly reserves the right to follow or depart from such orders, and that defendant company shall in no way be liable for failure to ship, or for delay, and further answered that under the laws of the State of Michigan such an agreement can be terminated at any time and for any reason at the will of either party and that damages for termination may not be recovered. Defendant admitted further that it notified plaintiff of its intention to terminate the sales agreement and denies that the termination was not made in good faith, and denies that it was made to deprive plaintiff of profits, and denies that it was in any way a fraud on the rights of the plaintiff, and for further answer the defendant states that it filled all orders received from the plaintiff, and that the plaintiff had never ordered from the defendant any of the 316 Ford motor vehicles referred to in the complaint.

At the conclusion of the trial a verdict of $87,000.00 damages was returned by the jury in favor of plaintiff company.

This matter is now before the court on a motion for a new trial and judgment for defendant notwithstanding the verdict.

In the determination of these motions the first issue to be considered must be the issue of the lack of good faith and fraud on the part of the defendant company as alleged by the plaintiff company.

Before proceeding to a consideration of the evidence offered by the plaintiff in support of its allegations of lack of good faith and fraud, certain provisions of the contract must also be considered, to wit: "dealer agrees to maintain a place of business * * * located in a place and equipped in a manner acceptable to company * * * to install and maintain therein the tools, machinery, and equipment recommended by the company * * * to employ sufficient, competent salesmen to solicit adequately all potential purchasers of the company products in the community in which dealer is located, and sufficient, competent service mechanics to render prompt, efficient service to owners of company products * * * etc."

To support plaintiff's claim that the contract was cancelled in bad faith and in fraud of plaintiff's rights Joseph E. Busam, president of plaintiff company testified that since 1912 that plaintiff company and its predecessors owned solely at one time by Joseph G. Busam, his father, and later as a partnership consisting of Joseph G. Busam and Joseph E. Busam, had been the authorized distributors of Ford automobiles; that shortly before the death of Joseph G. Busam, which occurred January 23, 1946, Joseph E. Busam was released from the Army in order to take over the business in view of the pending death of his father from a malignancy; that the entire partnership was taken over by him and that he had made an application to defendant company for a franchise; that he thereupon organized a corporation, plaintiff herein, which was granted a franchise by defendant company; that the company had recently moved from an old location at 6300 Vine Street, Elmwood Place, to 7315 Vine Street into a new building; that by reason of wartime restrictions on the use of building materials, they were unable to immediately provide space for new cars, showrooms, etc.; that new cars were not then in production but meanwhile the defendant company orally and in writing urged plaintiff to secure as many orders as possible for Ford products; that from time to time district supervisors of defendant company would call and discuss the affairs of plaintiff company making suggestions which they thought would help the agency in its service, including the suggested dismissal from service of two employees of the company which latter suggestion the witness explained he not only rejected, but resented. It was testified too, among other things that plaintiff company had considered plans for remodeling and planned to take care of the anticipated increase in business when new automobiles were available, but because of the continued restrictions on the use of building materials for other than essential uses, no action was taken to remodel the present building or to expand its facilities; that defendant company notwithstanding continued its pressure for expansion to an extent plaintiff company considered unreasonable and unfair. Mr. Busam further testified as time went by he was subjected to regular visits by two district supervisors; that he was later invited to the office of the District Manager, Mr. Lester, where he was subjected to continual criticism for his lack of effort, etc., and that later along it was suggested that the company felt that he might be more successful if he accepted a new location with a smaller dealership. This he ultimately rejected and some months later when he took his mother who was ill to California, and was there a couple of months that Mr. Lester acting on an alleged complaint of lack of management because of his absence from the business, personally made an inspection of the plant, that when he returned to Cincinnati, he visited Mr. Lester, who suggested among other things that his lack of willingness to comply with their requests to increase his facilities notwithstanding the continued building restrictions, meant that perhaps they may have to cancel his franchise; that later along one of the district supervisors visited him on several occasions and suggested that perhaps if he were willing to surrender his franchise that they would offer him delivery of fifty and ultimately seventy-five cars. This he refused; that in view of the increased pressure on him and what appeared to him to be unreasonable requests, he appealed by telephone directly to a top official of the Ford Motor Company at Dearborn, Michigan, whom he personally knew, requesting this official's assistance to overcome the activities of the local Ford supervisors; that eventually he received a notice of the termination of his contract, and in compliance with the terms...