Chevrolet Motor Co. v. Gladding

• Decision Date: 27 June 1930
• Docket Number: No. 2934.,2934.
• Citation: 42 F.2d 440
• Parties: CHEVROLET MOTOR CO. v. GLADDING.
• Court: U.S. Court of Appeals — Fourth Circuit

42 F.2d 440 (1930)

CHEVROLET MOTOR CO. v. GLADDING.

No. 2934.

Circuit Court of Appeals, Fourth Circuit.

June 27, 1930.

William H. Hudgins, of Baltimore, Md., for appellant.

Robert R. Carman, of Baltimore, Md. (Gerald W. Hill and G. C. A. Anderson, both of Baltimore, Md., on the brief), for appellee.

Before PARKER and NORTHCOTT, Circuit Judges, and HAYES, District Judge.

HAYES, District Judge.

This is an action for damages for breach of contract. Chevrolet Motor Company (appellant) entered into the contract with Ray V. Gladding (appellee) on August 2, 1926. The contract was in writing and consisted of a "Memorandum," "Appendix," and an "Order" covering a period of twelve months. The pertinent provisions of these instruments are printed in the margin.¹

The contract contained three provisions for its termination at the option of appellant. It could be canceled without notice if appellee became insolvent, upon 10 days' notice if he did not exclusively represent seller, and upon 60 days' notice if any question arose which threatened the mutually satisfactory business relationship.

On September 27, 1926, the appellant notified appellee of the cancellation of the contract, effective ten days later because dealer was not exclusively representing the seller. No other reason was assigned. The parties had mutually agreed upon 134 cars to be furnished under the contract during the year which were to be delivered in stated quantities and models during each month of the year; 36 of these had been shipped before the cancellation of the contract.

The appellant contends that the contract is unenforceable for want of consideration and mutuality, and relies on the principles announced in the following cases: In re Charles Wacker Co. (D. C.) 244 F. 483; Standard Motor Co. v. Shockey, 139 Md. 136, 114 A. 869; Interstate Iron & Steel Co. v. Northwestern Bridge Co. (C. C. A.) 278 F. 50; Oakland Motor Car Co. v. Indiana Auto Co. (C. C. A.) 201 F. 499; Velie Motor Car Co. v. Kopmeier (C. C. A.) 194 F. 324.

We think this contract has features distinguishing it from each of the authorities cited, and that its construction should be determined by the following cases: Ellis v. Dodge Brothers (C. C. A.) 246 F. 764; Moon Motor Car Co. v. Moon Motor Car Co., Inc., (C. C. A.) 29 F.(2d) 3; Buick Motor Co. v. Thompson, 138 Ga. 282, 75 S. E. 354.

The parties intended to make a contract for the sale of automobiles and parts. The seller required dealer to establish a place of business and equip it with parts in order to conduct a service station satisfactory to seller. It agreed to sell him cars and parts at standard dealer's discount, and they mutually agreed on the number of cars for the year at 134, specifically describing them. Dealer testified he intended to perform the contract accordingly, and the manager of seller testified he expected performance. Seller had required dealer to carry a stock of parts which at the time of the contract amounted to about $1,800. The seller took back $626 of the parts, and refused to take the remainder. The contract provided that the seller, in event the contract was terminated, would take at cost unused automobiles and such of the parts as he could accept. So long as the contract was in force, the dealer was permitted to use the name "Chevrolet," and advertising in the territory was paid by both in order to promote sales. The provisions of the contract and the acts of the parties themselves are consistent only with a construction of a mutual contract imposing reciprocal obligations and equally binding. The clause agreeing not to cancel the contract except upon 60 days' notice shows that the dealer should have that time as seller's dealer to dispose of his cars and parts with all the selling advantages of an accredited dealer. The contract exacted an investment by the dealer, and protected him agains the hazards of the termination of the contract without a notice of 60 days except for the other causes not material here.

It is contended that the seller could cancel the order for any month without incurring liability, but this privilege does not carry a right to act arbitrarily. The contract properly construed confers no discretionary right on seller to refuse to sell the cars and parts. If the seller did not regard the contract as binding it to performance, why did it make the provisions for the cancellation?

Clause 11 relates to automobiles ordered in excess of allotment. Such orders when accepted by seller "shall be deemed to be subject to all the conditions to which orders for motor vehicles under said allotment are subject. And if seller shall accept from any other Dealer orders in excess of the monthly allotment of such other Dealer, such acceptance by Seller shall not render Seller liable to Dealer for any loss or damage because of the failure of Seller to ship any orders or order to Dealer." If the seller did not intend to be bound to ship the cars ordered on the allotment and did not think it was bound to do so, it is difficult to apprehend why it expressly absolved itself from liability for failure to ship accepted orders in excess of the allotment. This clause confirms our construction of the contract holding that it is not lacking in mutuality or consideration.

Appellant contends that, if the contract is enforceable, the damages should have been limited to such as accrued within 60 days, for, it contends, the seller had the right to cancel the contract on 60 days' notice when any question arose which threatened the mutually satisfactory business relationship; that such a question had arisen. These questions were properly presented by request for instructions and exception to the court's refusal to give them. No such defense was pleaded or proven. Nor was the contract canceled under this provision. It was canceled on 10 days' notice for the alleged failure of dealer to exclusively represent seller. Dealer insisted that he was not interested in the sale of other cars; seller contended he was, and offered evidence to show that he furnished finances and negotiated a contract for his sons for the sale of other cars. For this reason seller denied a breach of the contract. That was the issue raised; it was the issue to which the evidence was directed, it was the issue to be tried. While there was persuasive evidence on this issue in favor of appellant's contentions, the evidence was conflicting, it was a jury question, and the jury found in favor of appellee. We find no error in the charge of the court nor in its refusal to give the requested instructions.

When a party to a contract elects to cancel it under one or more alternative provisions conferring such a privilege, he should assign his cause and abide by it. He cannot assign one cause and cancel it, then, after being sued for wrongful cancellation, come into court and say he may have erred in respect of the cause assigned, but another cause does exist, and he is not liable. This court in Luckenbach Co. v. Grace, 267 F. 676, 679, said: "But the further and equally conclusive answer is found in the settled rule of law that one who breaches his contract for reasons specified at the time will not be permitted afterwards, when sued for damages, to set up other and different defenses." Wall Grocer Co. v. Jobbers' Overall Co., 264 F. 71 (C. C. A. 4th Circuit); McCreary v. Strongman (C. C. A.) 6 F.(2d) 441; Robb v. Crawford, 56 App. D. C. 394, 16 F.(2d) 339; Ohio Railway Co. v. McCarthy, 96 U. S. 258, 24 L. Ed. 693.

While the contract might have been terminated for various reasons before its performance was completed, the appellant eliminated these questions when it elected to cancel for the reason assigned, which the jury finds groundless. The court under appropriate instructions submitted the correct principles applicable to the damages recoverable.

Error is assigned to the ruling of the court sustaining objection to a question asked by appellant as to the trade meaning of the word "Exclusive." It does not appear what the witness would have said. This constitutes no reversible error. Maryland Casualty Co. v. Simmons (C. C. A.) 2 F.(2d) 29.

The court admitted over appellant's objection a letter written by Gladding's banker to Mr. Hatch, appellant's manager. The letter was dated July 28, 1926, and the contract was not finally consummated until August 2. Mr. Hatch had stated voluntarily that he read a letter about that time (July 28, 1926) from Mr. Gladding's bank to the effect that Mr. Gladding had loaned his boys $2,000. Without deciding that the letter was competent, we are unable to see anything in it which prejudiced the appellant. It is true the banker expressed the opinion that the loan would not impair the financial ability of Mr. Gladding, nevertheless appellant has not contended that Mr. Gladding was not financially able to perform his contract. Since it could not affect the result, its admission does not constitute reversible error. Appellate courts as a rule do not grant new trials except where it is apparent the trial court has committed error which is capable, at least, of affecting the result.

The judgment below is affirmed.

PARKER, Circuit Judge (dissenting).

The contract sued on is not one for the unconditional sale and delivery of a definite number of automobiles. It is one granting to the local dealer a "concession" to deal in automobiles, automobile parts, etc., manufactured by defendant, and providing for an allotment of cars annually, the delivery of which, however, is to be dependent upon a number of contingencies. It provides, among other things, that any cancellation or termination of the contract shall operate as a cancellation of all orders for automobiles, parts, etc., which shall not have been shipped prior to receipt of notice of cancellation. The contract specifies no definite time during which it is to continue and be binding upon the parties; and there is nothing in it to prevent cancellation by...