Costner v. Blount Nat. Bank of Maryville, Tennessee, 76-2515
| Decision Date | 29 June 1978 |
| Docket Number | No. 76-2515,76-2515 |
| Citation | 578 F.2d 1192 |
| Parties | 1978-1 Trade Cases 62,115 Paul Kermit COSTNER, Jr., Plaintiff-Appellee, v. The BLOUNT NATIONAL BANK OF MARYVILLE, TENNESSEE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Jackson C. Kramer, James A. Ridley, III, David E. Rodgers, Kramer, Johnson, Rayson, Greenwood & McVeigh, Knoxville, Tenn., for defendant-appellant.
Norman H. Williams, J. Edward Ingram, Fowler, Rowntree, Fowler & Robertson, Knoxville, Tenn., for plaintiff-appellee.
Before LIVELY and MERRITT, Circuit Judges, and RUBIN, District Judge. *
A jury found the defendant bank civilly liable for violating the anti-tying provisions of the Bank Holding Company Act, 12 U.S.C. § 1972 and the Sherman Act, 15 U.S.C. § 1. The Bank Holding Company Act in essence applies the general anti-tying principles of the Sherman Act to the context of commercial banking, by prohibiting a bank, when it makes a loan, from requiring in return some business or service to the bank other than the usual obligations directly related to ensuring timely repayment of the loan. A damage award of $60,000 was trebled by the District Court in accordance with both acts.
The tying arrangement was created when the plaintiff Costner, owner of 50% Of the stock in an automobile dealership, obtained a $420,000 personal loan from the defendant bank to buy the remaining stock in the company. Costner pledged all of the stock to secure repayment of the loan. The loan agreement imposed several conditions affecting the operation of the business, including a requirement that the corporation sell a substantial share of its retail commercial automobile installment paper to the bank, and that it employ a person designated by the bank to ensure compliance with the tying arrangement.
On appeal, the bank concedes that the agreement violated the Bank Holding Company Act. Its major contentions are that the illegal tying arrangement did not damage the plaintiff and did not sufficiently affect interstate commerce to constitute a violation of the Sherman Act. We affirm the decision below.
The uncontroverted evidence shows that the automobile dealership experienced financial difficulties, and approximately eighteen months after the loan agreement and tying arrangement were entered into, the bank demanded payment of the personal loan. Threatened with foreclosure of the stock he had pledged as collateral for the loan, the plaintiff assigned his stock to the bank under an agreement which allowed the bank to find a purchaser for the stock at a price to be determined by the bank in negotiations with the purchaser. The bank agreed, in exchange, to make certain payments and to cancel the plaintiff's obligation to pay off the principal balance of the loan plus another personal loan, for a total value of approximately $420,000. The bank vice president who had handled the plaintiff's loan then sold the automobile dealership to a group headed by his brother for a price which did not return to plaintiff any value above the value of the cancellation of the indebtedness.
The plaintiff's theory of causation and damage was that the tying arrangement increased the costs of doing business and that this fact, among others, led to the decline of the business. The decline of the business in turn put the bank in a position to call the loan and to force the plaintiff to sell the business to the vice president's brother for a price considerably below the fair market value of the business. The jury award of $60,000 indicates that the jury accepted the plaintiff's theory.
The bank agrees that the jury instructions given by the district court were correct, and the bank does not object to any of the evidentiary rulings of the district court. The bank argues rather that the plaintiff's theory of causation and the evidence introduced to support it were insufficient to permit a jury finding that the illegal tying arrangement caused damage to the plaintiff.
We have reviewed the record and the evidence presented to the jury and, like the District Court, we are unable to say that the evidence was insufficient to justify a finding of causation by the jury. There was evidence that general economic conditions and poor management caused a decline in plaintiff's business, but there was also evidence that the illegal tying arrangements contributed to the decline. In cases of this kind, it is for the jury, as the trier of facts, to determine the question of causation. We cannot say under the circumstances that the jury's verdict was unfair and should be set aside.
The bank's argument that the plaintiff has no standing to claim damages turns on a preliminary finding of fact, and the district court put that question of fact to the jury in its instructions:
However, plaintiff would not be entitled to damages solely upon a finding by the jury that the tying arrangement resulted in damages to the car dealership. . . . If plaintiff is to recover he must prove that as a result of the tying arrangement the sale of his stock in the corporation was for less than its fair market value at the time. The injury to the stockholder must be direct and not merely consequential or derivative through the corporation. Depreciation in the value of the stock that occurred before the sale of the stock because of injuries directly affecting the corporation rather than the shareholder cannot be recovered. The sale of the stock must result in further loss to the shareholder and not merely substitute the already depreciated value of the stock for money of equal value.
The District Court apparently gave this charge to the jury upon the submission of the bank, and we believe there is sufficient evidence to justify a finding that the plaintiff, as distinct from the automobile dealership, suffered direct damage as a result of the illegal tying arrangement. See Perkins v. Standard Oil Co., 395 U.S. 642, 89 S.Ct. 1871, 23 L.Ed.2d 599 (1969); Pogue v. International Industries, Inc., 524 F.2d 342 (6th Cir. 1975).
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