Chrysler Corp. v. Quimby

• Court: Supreme Court of Delaware
• Writing for the Court: SOUTHERLAND; SOUTHERLAND
• Citation: Chrysler Corp. v. Quimby, 51 Del. 264, 144 A.2d 123, 1 Storey 264 (Del. 1958)
• Decision Date: 30 April 1958
• Parties: , 51 Del. 264 CHRYSLER CORPORATION, a corporation of the State of Delaware, Defendant Below, Appellant, v. Charles H. QUIMBY, Individually and as Assignee of Randall Motors, Inc., a corporation, Plaintiff Below, Appeliee.

Page 123

144 A.2d 123

1 Storey 264, 51 Del. 264

CHRYSLER CORPORATION, a corporation of the State of Delaware, Defendant Below, Appellant, v. Charles H. QUIMBY, Individually and as Assignee of Randall Motors, Inc., a corporation, Plaintiff Below, Appeliee.

Supreme Court of Delaware.

April 30, 1958.

Supplemental Opinion July 11, 1958.

Reargument Denied Sept. 22, 1958.

See 144 A.2d 885.

Aaron Finger and E. N. Carpenter, II (of Richards, Layton & Finger), Wilmington, for appellant.

James R. Morford and Ernest S. Wilson, Jr., Wilmington, for appellees.

SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.

SOUTHERLAND, Chief Justice.

This is a suit for damages for breach of contract founded on promissory estoppel. The plaintiff is Charles H. Quimby, individually and as assignee of Randall Motors, Inc. The defendant is Chrysler Corporation. The case was tried before a jury, which gave Quimby a verdict for $92,200.34. Defendant's motion for a directed verdict in its favor or for a new trial was denied. Chrysler appeals.

In the following statement of facts we shall assume, as we must, that the jury believed Quimby's account of the facts and accepted the inferences from all the testimony most favorable to him.

Upon this assumption, Quimby made the following case:

In 1944 Chrysler and Randall Motors, Inc., entered into a direct dealer agreement granting to Randall Motors the non-exclusive right to sell Chrysler and Plymouth motor vehicles and products within a prescribed area, including the city of Washington and nearby territory. This agreement is sometimes referred to as a 'franchise'. It was terminable by Chrysler on 90 days' notice.

The president and active executive of Randall Motors was Tom Randall. Quimby, a Washington lawyer, was a friend of Tom Randall for many years. Quimby was secretary and a director of Randall Motors. He often discussed with Tom Randall at lunch the affairs of Randall Motors. He owned 10 shares of the stock.

On January 13, 1951, Tom Randall died. Some days later Charles B. Neely, Chrysler's Regional Manager, asked Quimby for information respecting the stockholders of Randall Motors. Quimby supplied this information. The corporation had outstanding 700 shares of stock. Of these Tom Randall and his wife owned 250; 350 shares were owned by persons in New York; a Mrs. Wynne of Washington owned 90; and Quimby owned 10.

On January 26 Neely reported these facts by letter to J. A. O'Malley, General Sales Manager of Chrysler, at the home office in Detroit. At about this time Quimby had told Neely that he wanted to see Randall Motors continue with the business. Neely wrote to O'Malley that Quimby was making an effort to obtain the business for himself, but he (Neely) would not under any circumstances recommend that he succeed Tom Randall. Neely recommended that a 90-day notice of termination of the agreement be given. O'Malley approved, and the notice was given. It was effective May 13.

On receipt of the notice Quimby at once saw Neely and asked the reason for the termination. He gathered from Neely's reply that it was largely a matter of form; that it was for finding out what would be done with Randall Motors and then making arrangements with the people who would be connected with it.

Thereafter Quimby had several conversations with Neely in the course of which Neely mentioned Mr. O'Malley and Mr. Condon of the Chrysler Office in Detroit. Sometime later (probably early March) Quimby suggested to Neely that it would help straighten out the situation if he (Quimby) went to see Mr. Condon or Mr. O'Malley. Neely told him to go ahead.

Quimby immediately went to Detroit. On arrival he telephoned the Chrysler office. 'The only one [he] could contact was Condon'. He made an appointment with Condon. Condon was Sales Executive of the Chrysler Sales Division, and on the staff of the General Sales Manager. Quimby told Condon about the business of Randall Motors and his connection with it. Quimby said that he was anxious to keep it going and that since the New York people wanted to get out he would try to acquire their stock. Condon asked: 'How about Mrs. Randall?'. Quimby said he supposed she would stay in. Condon then told Quimby about some unfortunate experiences Chrysler had had with dealer agreements involving a widow with an interest in the dealer's business and said that Chrysler was not interested in getting into a similar situation again. Quimby asked whether if he got the stock Randall Motors could have the franchise. Condon replied that under no circumstance would Chrysler give the franchise while Mrs. Randall was still a stockholder. Condon also said that if Quimby wanted the franchise continued, he would have to get control of all the stock, and that Mrs. Randall would have to be paid off. Quimby said that he would try. Condon added that the thing for Quimby to do was to go back to Washington and see Neely and 'work through him and do whatever he tells you if you want to get the franchise back for Randall Motors. That is the quickest way to do it.' But Condon emphasized that Mrs. Randall would have to be paid off completely.

Quimby asked Condon whether the fact that he was a lawyer and wanted to get the controlling interest in the stock would prevent the granting of the contract. Condon replied: 'Not at all. You go on back and talk to Mr. Neely.'

Condon took him to lunch in the executives' lunch room where he was introduced to various officers around the table as 'Mr. Quimby from Randall Motors Company our dealership in Washington'. He thought O'Malley was present.

Quimby went to the factory that afternoon on Condon's invitation, and also the next day. He then returned to Washington. He at once went to see Neely at Neely's office. Neely asked him what he (Quimby) had been told. Quimby repeated Condon's statement that he (Quimby) should work through Neely and do whatever Neely told him. Neely said all right, and added that the first thing Quimby must do was to get control of all the outstanding stock; and also said that he must insist on Mrs. Randall being paid off in full. Quimby clearly understood that if he did those two things, Randall Motors would get a renewal of the franchise.

Quimby's statement that he was promised the franchise is corroborated by the testimony of another applicant for it. Mr. D. C. Barnhard went to see Neely around the first of April to apply for the contract. Neely told Barnhard he could make no commitment or even take an application, because 'they' had given first refusal to an officer of the Randall Motors Company.

Quimby proceeded to acquire all of the stock of Randall Motors. Sometime around April 10 the New York stockholders sold their 350 shares to Randall Motors for $56,000, or $160 a share. Mrs. Wynne's stock--90 shares--was bought by the corporation for $200 a share. Mrs. Randall gave Quimby a power of attorney to vote her shares, and an option to May 15 to buy her shares at a price to be agreed upon.

About the middle of April Quimby reported to Neely that he either owned or controlled every share of stock of Randall Motors. Neely said that that was fine and he would get in touch with the factory and Quimby would hear from him.

We interrupt our summary of Quimby's case to note that his statement to Neely was inaccurate. He had only an option from Mrs. Randall, and had not obligated himself to buy the stock. The point is of importance, as we develop later.

A few days later Quimby saw Neely again. Neely then told him for the first time that he (Quimby) was a lawyer and not an automobile man; that they wanted an experienced automobile man; that Quimby would have to get someone who would meet with Chrysler's approval as an active manager, and would have to sell that person 51% of the stock.

Quimby was surprised and disappointed. He felt that Neely had broken his promise, but thought that he must meet Chrysler's requirements. Quimby then suggested Walper, Neely's assistant, and asked Neely if he (Neely) would be affected if Walper were to leave him. Neely said no, he thought it would be fine.

Quimby talked to Walper, who was interested. Quimby and Walper talked to Neely, who said he would have to know that Walper himself would own 51% of the stock. He did not say that Walper was unsatisfactory. Walper had preliminary negotiations with a bank for a capital loan on his securities to raise the money required.

Some days later Neely told Quimby that Walper would not be approved at the factory that Chrysler, from a list of three men, would select one, to whom Quimby must sell 51% of the stock; and that he (Neely) would let Quimby know later whom they had selected. Quimby agreed to this. Neely never told him the name of the person.

Barnhard again saw Neely to inquire how Quimby was progressing with fulfilling the things he had to do. Neely indicated that progress was satisfactory and said that Quimby would have to have an experienced automotive man with him. He also said that he had approved three men, and indicated that Quimby would select one of the three.

On May 9 Quimby bought Mrs. Randall's 250 shares at $240 a share, relying, as he said, on the various assurances Neely had given him. He spent $38,000 of his own funds and borrowed $22,000 from Randall Motors. On the same day he wrote Neely of the purchase and added that he was the sole stockholder. He referred to an arrangement with Walper whereby the latter would acquire a majority of the stock and become an officer of Randall Motors, stated his business experience and formally requested the grant of the franchise.

Some days before this letter Neely had learned from Mrs. Randall that she had decided to accept $240 a share for her stock. On May 7 he wrote O'Malley advising the latter of this fact. He added:

'With Kitty Randall paid off--our moral obligation to Tom Randall is concluded and we are now in position to seek and accept the best possible candidate for our...