Emich Motors Corporation v. General Motors Corp.

• Decision Date: 27 January 1956
• Docket Number: No. 11457.,11457.
• Citation: 229 F.2d 714
• Parties: EMICH MOTORS CORPORATION and U. S. Acceptance Corporation, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION and General Motors Acceptance Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

229 F.2d 714 (1956)

EMICH MOTORS CORPORATION and U. S. Acceptance Corporation, Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION and General Motors Acceptance Corporation, Defendants-Appellees.

No. 11457.

United States Court of Appeals Seventh Circuit.

January 27, 1956.

A. Bradley Eben, Edward Atlas, Chicago, Ill., for appellants.

Walter I. Deffenbaugh, Chicago, Ill., Henry M. Hogan, Detroit, Mich., Henry F. Herbermann, New York City, Ferris E. Hurd, Chicago, Ill., for appellees.

Before FINNEGAN, SWAIM and SCHNACKENBERG, Circuit Judges.

SWAIM, Circuit Judge.

This is an appeal from a summary judgment entered by the United States District Court for the Northern District of Illinois, Eastern Division, on March 21, 1955, dismissing the plaintiffs' complaint.

This action was commenced October 16, 1941, when plaintiffs, Emich Motors Corporation, hereinafter referred to as Emich Motors, and U. S. Acceptance Corporation, hereinafter referred to as U. S. Acceptance, filed a complaint for treble damages under the anti-trust laws, 15 U.S.C.A. § 15 et seq., against defendants, General Motors Corporation and General Motors Acceptance Corporation, hereinafter referred to as General Motors and as Acceptance Corporation, respectively.

An amended complaint was filed October 14, 1942. The trial lasted for four months — from October 20, 1947 to February 19, 1948 — and resulted in verdicts and judgments for plaintiffs in the sum of $1,236,000.00 and a supplemental judgment in the amount of $257,358.00 for plaintiffs' costs and expenses. On February 24, 1948, after the trial had been completed the plaintiffs filed an amendment to the amended complaint to make the pleadings comply with the evidence.

The plaintiffs' complaint was based on an alleged conspiracy between the defendants and others who were charged with having combined to restrain interstate trade and commerce in Chevrolets and other automobiles manufactured by General Motors. This conspiracy was alleged to have for its purpose the control of the financing of wholesale and retail purchases of such automobiles by compelling dealers to use the financing offered by General Motors' subsidiary, the Acceptance Corporation.

The defendants had been charged with and convicted of this conspiracy in a criminal case in which the judgment was affirmed by this court on May 1, 1941, United States v. General Motors Corporation, 7 Cir., 121 F.2d 376. The judgments of the trial court in the civil case were reversed by this court on March 3, 1950, 7 Cir., 181 F.2d 70. The Supreme Court granted certiorari limited to the use and effect of the criminal conviction as evidence in this case. The errors on which the judgments of the trial court had been reversed by this court consisted of improper rulings on the admission of evidence, erroneous instructions to the jury and the fact that the evidence on the issue of damages was so extremely speculative and conjectural as to furnish no sound basis for the amount allowed. All of these errors convinced this court that the defendants had been prejudiced, in that they were not given a fair opportunity to meet the evidence of the plaintiffs. This court therefore remanded the case for a new trial. The Supreme Court, 340 U.S. 558, 572, 71 S.Ct. 408, 95 L.Ed. 534, remanded the case to this court with directions to this court to modify its judgment to conform with the opinion of the Supreme Court as to the manner in which the judgment in the criminal case should be handled in the instant case by the trial judge. On May 1, 1951, this court issued its mandate pursuant to the opinion and mandate of the Supreme Court, but the mandate still called for a new trial in the District Court.

Thereafter, on October 17, 1951, this court in Hoskins Coal & Dock Corp. v. Truax Traer Coal Co., 7 Cir., 191 F.2d 912, held that personal actions to recover treble damages under the Clayton Act are governed by the Illinois Statute of Limitations, Illinois Revised Statutes 1947, c. 83, § 15, and must be brought within two years after the right of action accrues. The Supreme Court denied certiorari in the Hoskins case on March 3, 1952, 342 U.S. 947, 72 S.Ct. 555, 96 L.Ed. 704.

On December 15, 1952, the defendants filed a motion to amend their answer by filing a sixth defense that: "The several rights of action, if any, set forth in said amended complaint are barred by the statute of limitations in that this action was not commenced within two years after they accrued." In support of this motion in the trial court the defendants pointed out that this court had held in the Hoskins Coal & Dock Corp. v. Truax Traer Coal Co. case that the two year statute of limitations was applicable in such cases; that when defendants prepared their answer to the amended complaint their attorneys knew of two unreported decisions of the United States District Court for the Northern District of Illinois, Eastern Division, which held that the two year statute of limitations did not apply to such actions for treble damages; and that at that time there was no decision of this court or of the Supreme Court holding otherwise.

Plaintiffs filed objections to defendants' motion to amend their answer. Plaintiffs' principal objection was their contention that the defendants had waived the right to plead the statute of limitations and were estopped from pleading it by reason of the fact that they had tried to do so after the filing of their answer to the amended complaint, and only after they had subjected plaintiffs and their attorneys to the necessity and burden of the prolonged trial and of defending appeals from the judgments in plaintiffs' favor, at an expense to plaintiffs in excess of $23,000.00, an assessment of costs against plaintiffs in the amount of $12,221.80, and the expenditure by plaintiffs' attorneys of several thousand hours of work. Plaintiffs further contended that defendants have waived the right to so amend their answer by reason of their delay of 19 months after the judgment of the District Court in the Hoskins Coal & Dock Corp. v. Truax Traer Coal Co. case and for 14 months after that judgment was affirmed by this court.

Over the plaintiffs' objections the trial court permitted the defendants to amend their answer by adding the defense of the two year statute of limitations.

On October 8, 1954, plaintiffs filed a motion to vacate the order permitting defendants to amend their answer and to strike said plea of the statute of limitations on the grounds that defendants, not having pleaded that defense prior to the first trial, thereby waived the defense for all time, and that it did not lie within the discretion of the District Court to grant leave to defendants to so amend their answer.

After the trial court filed its memorandum opinion holding that plaintiffs' principal claims were barred by the two year statute of limitations, the parties stipulated that plaintiffs' minor claims be dismissed without prejudice to their principal claims. The trial court then entered a summary judgment dismissing the complaint, and from that judgment this appeal is prosecuted.

In this court plaintiffs insist that defendants by their omission to plead the statute of limitations prior to the first trial waived and relinquished that plea for all time, and that it was, therefore, not within the discretion of the District Judge to permit the plea. On this contention plaintiffs direct our attention to Rule 12(h) of the Federal Rules of Civil Procedure, 28 U.S.C.A., which provides, "A party waives all defenses * * * which he does not present * * * in his answer * * *"; and to Rule 8 (c) which provides, "In pleading to a preceding pleading, a party shall set forth affirmatively * * * statute of limitations * * * and any other matter constituting an avoidance or affirmative defense."

On their contention that defendants' waiver of the defense of the statute of limitations was final, plaintiffs rely on several cases which do not support their argument. In Roe v. Sears, Roebuck & Co., 7 Cir., 132 F.2d 829, 832, this court said:

"When defendant moved for summary judgment it had filed an answer, the legal effect of which was a waiver of its defense of the statute of limitations. It could not, therefore, unless relieved from its default, revive the defense it had waived. We need not consider when a defendant may be excused from its failure to plead the statute of limitations, and be permitted to amend its answer, because the instant case presents no such question. The defendant herein sought no such relief." (Our emphasis.)

From the above language it seems clear that this court recognized that such a waiver was not final and that under some circumstances a defendant could be relieved in such a case. In Retzer v. Wood, 109 U.S. 185, at page 187, 3 S.Ct. 164, at page 166, 27 L.Ed. 900, also cited by plaintiffs, the Court said:

"It is well settled that * * * a defendant who desires to avail himself of a statute of limitation as a defense must raise the question either in the pleading, or on the trial, or before judgment." (Our emphasis.)

Other cases cited by plaintiffs involve attempts of defendants to raise affirmative defenses for the first time on appeal contrary to the general rule that a question cannot be raised on appeal which has not been raised in the trial court. Ashton v. Glaze, 9 Cir., 95 F.2d 427, 429; Oedekerk v. Muncie Gear Works, 7 Cir., 179 F.2d 821.

Plaintiffs also rely on Stewart v. United States, 7 Cir., 199 F.2d 517. That opinion was on a second appeal. In the first appeal, 7 Cir., 186 F.2d 627, 634, this court had said: "It follows from what we have held that plaintiffs are entitled to a judgment, and all that remains is the assessment of plaintiffs' damages." From this language we see that the remand there was not for a new trial but only for the assessment of damages. This court correctly held that it was then too late for the Government to inject into the case by an amended...