Hammond Ford, Inc. v. Ford Motor Company

Decision Date24 April 1962
Citation204 F. Supp. 772
PartiesHAMMOND FORD, INC., Plaintiff, v. FORD MOTOR COMPANY, Defendant.
CourtU.S. District Court — Southern District of New York

Taylor, Scoll, Ferencz & Simon, New York City, for plaintiff; Telford Taylor, Benjamin B. Ferencz, Kenneth Simon, New York City, of counsel.

Hughes, Hubbard, Blair & Reed, New York City, for defendant; L. Homer Surbeck, Jerome G. Shapiro, Robert M. Byrn, New York City, of counsel.

WEINFELD, District Judge.

At the conclusion of the extensive argument of this motion, the Court expressed a tentative view that the matter was not ripe for summary disposition under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. Since then, a careful reading of the voluminous affidavits and exhibits in support of and in opposition to the motion, as well as consideration of the authorities, has confirmed the Court's original impression.

The defendant seeks judgment of dismissal of plaintiff's suit which, in five separate causes of action, charges that defendant violated the Automobile Dealers Franchise Act1 and the Sherman and Clayton Acts.2 The motion for summary judgment is based on the defendant's first affirmative defense, which is two-pronged: (1) that an agreement of the parties dated April 14, 1959 whereby plaintiff resigned as a Ford dealer was a compromise and settlement which operated as a release and discharge of all five claims or causes of action now asserted by plaintiff, and (2) that an accord and satisfaction resulted when plaintiff accepted a payment made to it by the defendant under the April 14, 1959 agreement after the defendant requested, and plaintiff refused, to execute a general release of all claims.3

As to the first contention, that the agreement of April 1959 constituted a settlement and compromise of all claims and causes of action in favor of plaintiff, including those now asserted, the issue is one of fact — the intention of the parties — to be determined against the background facts and in proper perspective.4 The defendant alleges that such was their agreement; the plaintiff asserts to the contrary. While it may be true, as the defendant states, that the issue is not to be resolved by subjective intent,5 "in ascertaining what meaning to impute, the circumstances in which the words are used is always relevant and usually indispensable. The standard is what a normally constituted person would have understood them to mean, when used in their actual setting."6

Singularly, the letter agreement of April 14, 1959 is silent on the subject of settlement, compromise, release or discharge of any suits, claims or causes of action. It had its genesis in a notice of termination of plaintiff's franchise as a Ford dealer exercised by defendant under their then existing agreement referred to as the "1955 Ford Sales Agreement." Plaintiff sought to persuade defendant to withdraw the termination notice in various conferences with defendant's representatives and through correspondence. After extensive negotiations it was agreed that plaintiff would be permitted to "resign" its dealership. The form of the agreement was drafted by defendant and plaintiff was required to accept it as drawn.7 It provides that plaintiff "terminates" its Ford Sales Agreement of 1955; it requires the defendant to make payments to plaintiff in reimbursement for parts and accessories, tools, equipment and leasehold items. The defendant was obligated to reimburse plaintiff for such items under the 1955 agreement between them which was the subject of termination; however, the defendant agreed to reimburse plaintiff, not at the scheduled rates under their 1955 sales agreement, but at the more favorable rates which would be payable to a dealer terminated under the defendant's new 1957 sales agreement (in effect with dealers other than plaintiff); the defendant also agreed to make other payments without reference to either the 1955 or 1957 Ford Sales Agreement. In addition, defendant agreed to consider appointment of plaintiff as a Ford dealer in another location within the New York district of the Ford Division.

As already stated, the agreement of April 1959 (whether it be a "resignation" or a "termination," itself a subject of dispute between the parties) contains no reference to any settlement, compromise or release. The defendant, to establish its position that such was the purpose of the parties and, in any event, that the legal effect of the agreement was to settle and compromise all claims, relies upon the provision thereof wherein the defendant agreed to grant to plaintiff "the benefits of paragraphs 21(b), * * * 21(c), * * * 21(d), * * * and paragraph 22 * * * of the new form of Ford Sales 1957 Agreement * * *" covering parts and accessories, signs, tools and mechanical equipment and dealer premises. These paragraphs themselves are silent as to any release or settlement of claims. However, paragraph 23 of the 1957 sales agreement provides that a terminated dealer receiving the benefits provided for in paragraphs 21 and 22 shall execute and deliver a general release to Ford. In substance the defendant's position is that the plaintiff, by agreeing to accept the increased benefits provided for in paragraphs 21 and 22 of the 1957 form of sales agreement, by "necessary implication" signified its assent as a condition of the increased payments that it execute the release called for in paragraph 23, discharging the defendant from all liability, however claimed to arise. The defendant also urges "incorporation by reference" of the release provision of paragraph 23.

The defendant's contention of "necessary implication" and "incorporation by reference" contains its own refutation — at least insofar as its motion for summary judgment is concerned. The parties were not governed by the 1957 sales agreement but by that entered into in February 1955. Under the latter agreement, the only one then in effect between them, Ford, upon the termination of plaintiff's franchise, was obligated to reimburse plaintiff for parts and accessories, signs, tools and equipment and certain lease items. Ford's 1957 sales agreement contained a substantially similar provision but, as already noted, the payments thereunder were more liberal than those provided for under the 1955 sales agreement. Paragraphs 21 and 22 of the 1957 agreement were used as a yardstick to reimburse plaintiff for parts and accessories and the like. However, this was not the sole measure of reimbursement. The defendant also agreed to reimburse plaintiff for items which were not payable to a terminated dealer under either the 1955 or 1957 agreement. The parties were cancelling their 1955 agreement and, in part, one purpose of the defendant was to give the franchise to another dealer under what it believed would be a more advantageous arrangement to it. The fact that defendant was prepared to increase the payments to plaintiff to terminate its agency, whether it be the result of resignation or termination, would not automatically bring into play other provisions of the 1957 form of sales agreement or substitute all the provisions of the newer form for the one which was then in effect between them unless such was their intention.

Apart from its position that the release provision of paragraph 23 became effective, the defendant also contends that the parties contemplated the discharge of the very claims upon which this suit is based. Again, to support its position, it must go beyond the four corners of the agreement since, just as there is no mention of a release therein, there is also an absence of any reference to the compromise of any claim, cause of action or lawsuit. Nonetheless, the defendant urges that "plaintiff in effect threatened suit" and "potential claims for antitrust treble damage claims were also evident";8 but this argument rests upon a fragmentation of various sentences contained in correspondence or data submitted by plaintiff to defendant's Dealer Policy Board in which plaintiff, in pressing for the withdrawal of the termination notice, asserted that defendant, by specified activities, had prevented plaintiff from turning in a more creditable performance under its franchise. Defendant culls from these sentences isolated words and phrases such as "intimidation and coercion," "fair or equitable," "threats," "pressures" and "termination," and relates these to words in the Automobile Dealers Franchise Act to support its claim that in effect plaintiff threatened suit. But these must be read in proper context; they contain no threat to sue nor the assertion of any claim either under the Dealers Act or any antitrust law. Plaintiff's counterposition that at no time did it mention, threaten or assert any claim or lawsuit, is not successfully controverted on the papers submitted on this motion.

As this Court stated upon the argument:

"It is difficult to understand why, in a transaction of this kind, engaged in by experienced men, there should not have been a very simple reference that on payment of the amount agreed upon herein the Hammond Company should execute a general release."

Perhaps this is what the parties did intend, but the agreement on its face or in words does not show with sufficient clarity that such was their purpose,9 and clearly this issue should not be disposed of under the summary judgment rule.

The defense of accord and satisfaction rests upon no stronger ground than the plea of settlement and compromise for purposes of a motion for summary judgment. Essentially it, too, revolves about the defendant's contention that the April 1959 agreement entitled it to a release.

The defendant made two payments as required under that agreement without any request or demand for a release, but shortly before the third payment, $18,000, was due a...

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    • United States
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    ...circumstances. New York Trust Co. v. Island Oil & Transport Corp., 34 F.2d 655, 656 (2d Cir. 1929); Hammond Ford, Inc. v. Ford Motor Co., 204 F.Supp. 772, 773 (S.D. N.Y.1962); 4 Williston, Contracts, § 611 at 553 (3d ed. Plaintiff insists, however, that Item 10, as amended, imposed no posit......
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    ...(2 Cir. 1953); J. F. White Engineering Corp. v. United States, 311 F.2d 410, 412-413 (10 Cir. 1962); Hammond Ford, Inc. v. Ford Motor Company, 204 F.Supp. 772, 775-777 (S.D.N.Y.1962); Champlin v. Jackson, 313 Mass. 487, 48 N.E.2d 46 (1943); Hudson v. Yonkers Fruit Co., 258 N.Y. 168, 179 N.E......
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    ...dismiss where an issue of fact existed as to whether gifts of stock were bona fide under Section 16(b)); Hammond Ford, Inc. v. Ford Motor Co., 204 F. Supp. 772, 776-77 (S.D.N.Y. 1962) ("[W]hether the defendant in good faith was asserting its claim to a general release [of all claims] so tha......
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