Ford Motor Co. v. State

• Decision Date: 27 October 1943
• Docket Number: No. 8109.,8109.
• Citation: 175 S.W.2d 230
• Parties: FORD MOTOR CO. v. STATE.
• Court: Texas Supreme Court

175 S.W.2d 230

FORD MOTOR CO. v. STATE.

No. 8109.

Supreme Court of Texas.

October 27, 1943.

Rehearing Denied December 8, 1943.

COPYRIGHT MATERIAL OMITTED

Error from Court of Civil Appeals for Third Supreme Judicial District, Travis County.

Suit by the State against the Ford Motor Company to recover penalties for and enjoin violations of the state anti-trust laws. A judgment of dismissal was reversed and the cause remanded by the Court of Civil Appeals, 169 S.W.2d 504, and defendant brings error.

Judgment of Court of Civil Appeals affirmed, with direction.

Gabe P. Allen and Allen & Allen, all of Dallas, Clifford B. Longley, Wallace R. Middleton, and Bodman, Longley, Bogle, Middleton & Armstrong, all of Detroit, Mich., and Black, Graves, & Stayton and Charles L. Black, all of Austin, for petitioner.

Gerald C. Mann, Atty. Gen., and Grover Sellers, First Asst. Atty. Gen., and E. P. Price, Fred Chandler, Benjamin Woodall, and Pat Coon, Asst. Attys. Gen., for respondent.

CRITZ, Justice.

This is what we commonly call an antitrust suit. It was filed in the district court of Travis County, Texas, by the State of Texas, acting by and through its Attorney General, against Ford Motor Company, a Delaware corporation, to recover many thousands of dollars in penalties, and to permanently enjoin Ford Motor Company from violating our anti-trust laws, Articles 7426 to 7447, inclusive, R.S. We shall hereinafter refer to the State of Texas as the State, and to Ford Motor Company as Ford.

The State filed six petitions in the district court. The district court sustained special exceptions to each of the first five, which adjudged them respectively insufficient to charge any violation of our antitrust laws. When the State's sixth petition was presented, the trial court sustained certain special exceptions to it, which also adjudged it insufficient. The State refused to further amend, and the court entered a judgment finally dismissing this cause. The judgment of the district court was reversed by the Austin Court of Civil Appeals, and this cause was remanded for a trial upon its merits.

We shall not attempt to set out the numerous special exceptions to the State's petition which were sustained by the district court. The law questions involved will sufficiently appear in the course of this opinion. The State's petition in the district court is very long, and we shall not attempt a detailed statement of its allegations. Any attempt to do so would extend this opinion to an unreasonable length. We shall make such statements in the course of this opinion as are sufficient to show the substance of the allegations involved.

By its pleadings in the district court, and by its briefs and arguments in the Court of Civil Appeals and in this Court, the State contends that certain provisions, which we will later quote and discuss, contained in an alleged written contract between Ford and all of its authorized Texas dealers, constitute on their respective faces agreements in violation of our anti-trust laws. The State also contends that if such provisions do not on their faces violate our anti-trust laws, Ford has violated such laws in its method of operation under such contract.

A copy of the contract here involved is attached to the State's petition and made a part thereof. It is sufficient at this point to say that it is not in any sense an agency contract. When Ford sells its products thereunder to its Texas dealers, it completely parts with title thereto, and the dealers become absolute owners thereof. As we understand this record, counsel for both parties to this action agree that this is a correct construction of this contract.

Before proceeding further we deem it advisable to announce certain general rules of law which we conceive will largely govern the decision and result of this appeal.

1. The petition in a suit for penalties must state all the statutory requirements with the same degree of certainty that is required in a criminal case. The petition in a penalty suit is not sufficient unless the essential facts necessary to constitute a violation of law are averred. The general rule that all reasonable intendments will be indulged in to sustain a pleading in an ordinary civil case, does not apply to penalty suits. To the contrary, in penalty suits the plaintiff's pleadings are strictly construed, and will not be aided by inferences. 32 Tex.Jur., pp. 764, 765, and authorities there cited.

2. A contract which merely agrees to do a certain thing "in so far as it is lawful for the dealer to so agree * * *" on its face constitutes no agreement to do the thing mentioned, if it is unlawful so to do. Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 109 A.L.R. 1464.

3. It is a violation of our antitrust laws for one party to enter into a contract with another party, whereby it is agreed that goods or products sold by the one party to the other party for resale in this State shall be resold at fixed or agreed prices, or at prices to be fixed or determined by the original seller. W. T. Rawleigh Medical Co. v. Fitzpatrick et al., Tex. Civ.App., 184 S.W. 549; Segal v. McCall, 108 Tex. 55, 184 S.W. 188; W. T. Rawleigh Medical Co. v. Gunn, Tex.Civ.App., 186 S.W. 385.

4. It is a violation of our antitrust laws for one party to enter into a contract with another party, whereby it is agreed that goods or products sold by the one party to the other party, for resale in this State, shall be resold only in a restricted territory in this State. Newby v. W. T. Rawleigh Co., Tex.Civ.App., 194 S. W. 1173; Whisenant v. Shores-Mueller Co., Tex.Civ.App., 194 S.W. 1175, writ dismissed; Fred Miller Brewing Co. v. Coonrod, Tex.Civ.App., 230 S.W. 1099, writ refused; W. T. Rawleigh Co. v. Lemon et al., Tex.Civ.App., 247 S.W. 683; W. T. Rawleigh Co. v. Marshall, Tex.Civ.App., 248 S.W. 153; J. R. Watkins Co. v. Myers, Tex.Civ.App., 255 S.W. 1002; McConnon & Co. v. Marshall et al., Tex.Civ.App., 280 S. W. 323; W. T. Rawleigh Co. v. Bradberry, Tex.Civ.App., 290 S.W. 870; Henderson Tire & Rubber Co., Inc., v. Roberts et al., Tex.Com.App., 12 S.W.2d 154.

5. Any intentional course of conduct by the parties to a contract which accomplishes the result of enabling the seller to dictate or control the resale price of goods or products sold by him for resale in Texas, or which enables the seller to cause the purchaser to confine his resales to a restricted territory in this State, or which otherwise accomplishes results prohibited by our anti-trust laws, violates the same. W. T. Rawleigh Co. v. Lemon et al., Tex.Civ.App., 247 S.W. 683; W. T. Rawleigh Co. v. Land et al., Tex.Civ.App., 261 S. W. 186; Id., 115 Tex. 319, 279 S.W. 810. See the opinion of the Supreme Court approving opinion of Court of Civil Appeals, 279 S.W. 810, 814. Burpee Can Sealer Co. v. Henry McDonnell Co., Tex.Civ.App., 75 S.W.2d 458, writ refused; Henderson Tire & Rubber Co., Inc., v. Roberts et al., Tex. Com.App., 12 S.W.2d 154.

This case involves some other principles of law, which we will announce in the course of our discussions.

The State contends that Section 5 of this contract violates our anti-trust laws. Such section reads as follows:

"Operation of Business.

"(5) Dealer agrees to maintain a place of business and only one place of business, unless repair shops or used automobile outlets and/or neighborhood service stations are separate from salesroom, located in a place and equipped in a manner acceptable to Company; to display conspicuously thereon approved Ford signs; to install and maintain therein the tools, machinery and equipment recommended by Company; to employ sufficient, competent salesmen to solicit adequately all potential purchasers of Company products in the community in which Dealer is located, and sufficient, competent service mechanics to render prompt, efficient service to owners of Company products and to render such service to any owners of Company products engaging such service, including the service to which a purchaser of such products from Dealer (or from another dealer who has paid Dealer the Service Commission mentioned in subparagraph (c) of paragraph 9 hereof) is entitled; to install and maintain an accounting system in accordance with Ford Dealers Accounting Procedure Manual as approved by Company; to furnish Company at regular intervals as designated by Company accurate financial statements reflecting the true financial condition of Dealer's business on standard forms provided by Company for that purpose; to allow representatives of Company, at all reasonable times and from time to time, to examine, all records, contracts and accounts covering sale or service of Company products by dealer and to examine Dealer's stock and place of business and to test Dealer's equipment and facilities to the end that Company may be assured that Dealer is carrying out all of the terms of this agreement and is properly equipped to render adequate service to owners or operators of Company products; to submit promptly to Company, Dealer's Ten-Day Reports accurately and fully prepared on forms provided by Company therefor and on the dates specified therein."

When we break the above contract provision up into its parts, we find that it obligates the authorized Ford dealer:

(1) To maintain a place of business.

(2) To maintain only one place of business, where approved Ford signs are displayed.

(3) To install in such place of business tools, machinery, and equipment recommended by Ford.

(4) To employ competent salesmen to solicit potential purchasers of Ford products, and to employ sufficient and competent mechanics to render efficient service to the owners of such products.

(5) To render efficient service to the purchasers of Ford products from a dealer other than the particular dealer who has paid to the contracting dealer a service commission, as provided by another provision of this contract.

(6) To install and maintain an accounting system approved by Ford.

...