Busam Motor Sales v. Ford Motor Co.

• Decision Date: 03 April 1952
• Docket Number: Civ. No. 1824.
• Parties: BUSAM MOTOR SALES, Inc. v. FORD MOTOR CO.
• Court: U.S. District Court — Southern District of Ohio

104 F. Supp. 639

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

Civ. No. 1824.

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

April 3, 1952.

Gorman, Silversteen & Davis, Cincinnati, Ohio (Robert N. Gorman, Larz R. Hammel, Cincinnati, Ohio, of counsel), for plaintiff.

Taft, Stettinius & Hollister, Cincinnati, Ohio (J. Mack Swigert, Robert Taft, Jr., Cincinnati, Ohio, Duane D. Freese, Dearborn, Mich., of counsel), for defendant.

NEVIN, Chief Judge.

At the conclusion of the opening statement of counsel for plaintiff and in the absence of the jury, counsel for defendant (Mr. Swigert) made the following motion, as appears of record: "On behalf of the defendant company, I wish at this time to move for the entry of judgment for the defendant on the basis of the pleadings and the opening statement." The right to make such a motion is not questioned. Best v. District of Columbia, 291 U.S. 411, 415, 54 S.Ct. 487, 78 L.Ed. 882; Lucas v. Hamilton Realty Corp., 70 App.D.C. 277, 105 F.2d 800.

Pursuant to the statement of the motion, it was argued at some length by counsel for the respective parties.

During the course of the argument, the following statements were made: "Mr. Swigert: (Of counsel for defendant) Now in the opening statement counsel for plaintiff admitted that the sales agreement in this case was in fact the sales agreement which is annexed to the answer which was filed by the defendant in this proceeding. So all of the terms of this sales agreement, a copy of which I have in my hand here, are admitted for the purposes of this motion to be the agreement of the parties. Judge Gorman: (Of counsel for plaintiff) I will say that it is conceded so there will be no argument but that is the contract."

This colloquy led the Court to inquire, as the record shows, whether the motion of defendant technically should perhaps be one for summary judgment based on the provisions of paragraphs (b) and (c) of Rule 12 and Rule 56 of the Federal Rules of Procedure, 28 U.S.C.A.

As the record further shows, defendant then added to its motion, as originally stated, a motion for summary judgment.

It is the present view of the Court that in the instant case the procedure to be followed is more or less immaterial. The Court is of the opinion that defendant's motion is well taken and should be sustained in either form. However, to save any question in the record and so that counsel and the higher court may fully understand the Court does here and now sustain defendant's motion "for the entry of judgment for the defendant on the basis of the pleadings and the opening statement" and counsel will prepare and submit an entry accordingly.

In arriving at its conclusion, the Court has considered all material facts properly plead and all material statements in the opening statement properly made in accordance with the issues raised by the pleadings, as true.

Because the record already shows the arguments of counsel and the authorities which they submit support their respective contentions, the Court deems it unnecessary to go into great detail either as to the facts stated or claimed by plaintiff in counsel's opening statement, or as set out in the pleadings or the law as applicable thereto. However, a brief review especially of the authorities relied upon by the respective parties may not be amiss.

In the course of his argument Judge Gorman stated as follows:

"I think there is the important legal question, or at least one of them, that can be decided at this time and disposed of. * * * There is one matter that the Court can consider in addition to the petition and opening statement. We purposely admitted that the contract attached to the answer was the contract in question in this case. So there can be no argument about what the particular contract is, and your Honor has that before you.

"Now what does the matter deal with? It deals with the question, first of all, with contracts terminable at will, and one of the questions involved is, must a contract terminable at will, such as this, be terminated in good faith? * * *.

"I think we should start with paragraph 11 of the contract because to my mind that is the fundamental matter before this Court. Paragraph 11 states `that this agreement has been signed by the dealer and sent to the company's office, at Dearborn, Michigan, for final approval and execution, and has subsequently been there signed and delivered on behalf of the company, and the parties hereto intend it to be executed as a Michigan agreement and construed in accordance with the laws of the state of Michigan.' * * *

"The question which this Court has to decide is, What is the law of Michigan? Not what the weight of authority is, not what the State of Ohio holds. It is not like the matter of Erie R. R. Co. v. Tompkins 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 where you apply the Ohio law. But the Court has to put itself in the position that he is a Michigan judge in trying to interpret this law according to the laws of Michigan. So that the scope of inquiry in this case is very narrow. It does not call for a review of all the automobile cases in the United States. It calls for a definite review of what Michigan courts have said was the Michigan law.

"Now we have said and we say all along that in the case of J. R. Watkins Co. v. Rich, 254 Mich. 82 235 N.W. 845, that contracts in Michigan terminable at will can only be terminated in good faith."

While calling attention to other Michigan cases cited in the Rich case, which incidentally was decided in 1931, plaintiff in the final analysis relies on the decision in that case. In the Rich case, it is held, as stated on page 82 of 254 Mich., on page 845 of 235 N.W., that "Provision in contract for termination at option of party is valid, but where relationship is commercial and does not involve fancy, taste, sensibility, judgment, or other personal features, option may be exercised only in good faith. * * * Where dealer in merchandise arbitrarily and illegally terminated and breeched contract to sell goods to salesman on credit, sureties thereon were discharged from liability."

It is too fundamental to need the citation of authority that every decision must be considered in the light of the facts upon which it is based. As a reading of the Rich case will show, the facts there presented are so dissimilar from the facts presented by the pleadings and opening statement in the instant case as to make it not a controlling or binding authority here or in any given case based on the contract here involved.

This is the view not only of this Court, but it is the view as well of other courts including the Court of Appeals of the Second Circuit. In the case of Bushwick-Decatur Motors v. Ford Motor Company, 116 F.2d 675, the court ruled on the very language of the contract here under consideration. There the court say, 116 F.2d on page 676: "It is not disputed that four and a half years after the inception of this dealership, notice of termination was duly given by the Company. Plaintiff contends, however, that such termination was malicious, in bad faith, and contrary to the custom of the trade, and therefore wrongful; in its complaint and affidavits it makes a showing of substantial loss. Defendant stands firmly on its unqualified power to terminate, irrespective of its reasons for doing so, though its affidavits do challenge the charges of malice and bad faith. Exactly the same termination clause in the same form of contract has been construed to give Ford an unqualified power to terminate the relationship in Buggs v. Ford Motor Co., supra 7 Cir., 113 F.2d 618."

The court then cites a number of authorities and then comes on to say,

"Other cases are cited and discussed in the Buggs case and in the opinion below. * * *

"With this weight of precedent, in the light of the clear intent of the parties, we feel constrained to hold that defendant had ended its obligations under the contract. But plaintiff contends that the law of Michigan is otherwise and cites therefor J. R. Watkins Co. v. Rich, 254 Mich. 82, 235 N.W. 845, 846, holding that a power of termination, extended to `either of the parties' `at any time by giving the other party notice thereof,' of a contract with a definite and stated duration did not authorize termination in the absence of `good faith.' We do not find that this contention has been considered in the cited cases, though at least in the Buggs case the contract contained the provision before us here that the law of Michigan should govern its construction."

The court then goes on to state the facts in the Rich case and say, "Here the agreement was without stated duration except for the provision making it terminable at any time `at the will of either party.' The difference in language alone might not be a sufficient basis for distinguishing the case; but that difference, coupled with the rather clear indication of fraud and its inconsistency otherwise with Michigan precedents, leads us to view it as not a binding authority upon us here."

In response to this, plaintiff in its brief in the Court of Appeals where the present case was taken in connection with a previous trial, on page 14 say, "First of all, Judge Clark in ruling on a motion for summary judgment in the Bushwick case incorrectly interpreted Michigan law." However, with Judge Clark, and concurring in his conclusion, were two other Circuit Court judges, Judge Chase and Judge Learned Hand. And prior to that decision, the same conclusion had been reached by the District Court, as shown by its decision reported in 30 F.Supp. at page 917. In that case, incidentally, the judgment was granted on a motion for summary judgment.

In a later Michigan case, F. H. McClintock Co. v. Truxell Sales & Service, Inc., 297 Mich. 284, 297 N.W. 493, decided in 1941, ten years after the Rich case, the Michigan Supreme Court said of a contract somewhat similar to the one here under consideration that "Under agreement relative...