Hi-Way Motor Co. v. International Harvester Co.

• Decision Date: 21 December 1976
• Docket Number: HI-WAY,No. 13,13
• Citation: 247 N.W.2d 813,398 Mich. 330
• Parties: MOTOR COMPANY and the Estate of William J. Pinkerton, Sr., Plaintiff-Appellants, v. INTERNATIONAL HARVESTER COMPANY, Defendant-Appellee. 398 Mich. 330, 247 N.W.2d 813
• Court: Michigan Supreme Court

Page 813

247 N.W.2d 813

398 Mich. 330 HI-WAY MOTOR COMPANY and the Estate of William J. Pinkerton, Sr., Plaintiff-Appellants, v. INTERNATIONAL HARVESTER COMPANY, Defendant-Appellee.

No. 13.

398 Mich. 330, 247 N.W.2d 813

Supreme Court of Michigan.

Dec. 21, 1976.

Gillard, Bauer & Mazrum by Roger C. Bauer, Alpena, for plaintiff-appellants.

John E. S. Scott, Dickinson, Wright, McKean, Cudlip & Moon, Detroit (Kathleen Lewis, Detroit, on the brief), for defendant-appellee.

LINDEMER, Justice.

This case involves an action for damages. Plaintiffs allege that they were fraudulently induced into entering a franchise agreement with defendant by the representations of defendant's agents that plaintiff Hi-Way Motor Company would be the exclusive heavy-duty truck dealership in the Alpena area.

Hi-Way Motor Company is incorporated in this state for the express purposes of selling automobiles and trucks and maintaining a service department. William J. Pinkerton, Sr., was president of that company and prior to holding such office was an attorney and a corporation executive for many years. Plaintiffs' bill of particulars describes Pinkerton as having 'extensive knowledge as a businessman and a lawyer' in the field of management.

Defendant International Harvester Company markets a variety of automotive products, machinery, and equipment through a nationwide system of dealerships. These products include a complete line of trucks. This truck line embraces so-called 'light trucks' and 'heavy-duty' trucks. The 'Fleetstar A' is one type of 'heavy-duty' truck. It is the granting of a franchise for this 'Fleetstar A' series to another dealership that provoked the instant controversy.

Prior to May, 1967, and for a period of approximately two months, Pinkerton negotiated with Alden Peterson, Harold Wahl and James Coey, employees of defendant, concerning the acquisition by plaintiff of an International Harvester truck franchise in the Alpena area. A franchise in Alpena was formerly held by Everett Smith, but Mr. Smith had terminated his franchise in April of 1967. Plaintiffs claim that during these negotiations Peterson, Wahl and Coey assured Pinkerton that no other heavy-duty truck line franchise would be granted in that area.

In the general geographic area around Alpena County there are three other dealers who were, prior to the time that plaintiff entered into its franchise agreement, authorized to sell certain International Harvester products. However, none of these dealers had franchises for 'heavy-duty' trucks. These dealers are located in Spruce, Hillman and Rogers City, Michigan.

On May 15, 1967, the franchise agreement was signed and Hi-Way Motor Company became an authorized International Harvester dealer. This agreement was supplemented by a series of additional written agreements authorizing the sale of different products, all incorporating the basic contract. As a result, plaintiff company was authorized to sell defendant's complete line of light-duty and heavy-duty trucks, including the aforementioned 'Fleetstar A' line.

Clause 32 of the agreement provides as follows:

'All understandings and agreements between the parties are contained in the agreement, which supersedes and terminates all previous agreements between the parties pertaining to the sale of the goods covered by this agreement. The rights of either party pertaining to goods sold by the Company to the Dealer under the previous sales and service agreements will be determined by the provisions of this agreement. There are no oral or collateral agreements or understandings affecting the agreement. When authorized by the Company's General Office, the Company's District Manager or Assistant District Manager may enter into written agreements with this Dealer, which are not inconsistent with any provision of the agreement, supplementing the agreement, but no representative of the Company, other than one of its corporate officers, is authorized in its behalf to modify, change or waive any of the provisions of the agreement or to change, add to (except by the filling in of blank lines and spaces) or erase any of the printed portion of the form upon which the agreement is prepared.' (Emphasis supplied.)

Plaintiff opened for business in May of 1967. In December of that same year, plaintiff was granted a franchise by Oldsmobile and operated both dealerships on the same property. In November of 1968, defendant replaced its district manager and Mr. Wahl, its assistant district manager. In light of these changes, plaintiff again sought assurances concerning the exclusivity of his heavy-duty truck franchise.

In January of 1970, defendant informed Pinkerton through Mr. Peterson that a 'Fleetstar A' franchise was to be awarded to a Mr. Thompson, a dealer in Spruce, Michigan. Pinkerton protested this decision, and a series of meetings resulted at which Pinkerton attempted to have defendant reconsider its decision. When Pinkerton did not get the satisfaction he sought, he notified the defendant that he was unilaterally terminating the franchise agreement. The parties agreed that October 31, 1970, was the termination date.

Plaintiff then instituted this action for damages claiming fraud and misrepresentation. The trial court, sitting without a jury, found for the plaintiffs in the amount of $71,211.68 and rendered judgment accordingly. The Court of Appeals reversed, reasoning that the evidence did not support a finding that all the elements of a cause of action for fraudulent misrepresentation existed. 59 Mich.App. 366, 229 N.W.2d 456 (1975). Plaintiffs' application for leave to appeal was granted July 23, 1975. We affirm the Court of Appeals.

The elements constituting actionable fraud or misrepresentation are well-settled in this jurisdiction. In Candler v. Heigho, 208 Mich. 115, 121, 175 N.W. 141, 143 (1919), we set forth those elements 'The general rule is that to constitute actionable fraud it must appear: (1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth, and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6) that he thereby suffered injury. Each of these facts must be proved with a reasonable degree of certainty, and all of them must be found to exist; the absence of any one of them is fatal to a recovery.'

See also, A&A Asphalt v. Pontiac Speedway, 363 Mich. 634, 639, 110 N.W.2d 601 (1961); Marshall v. Ullmann, 335 Mich. 66, 73, 55 N.W.2d 731 (1952); Waldbauer v. Hoosier Casualty Co., 285 Mich. 405, 408, 280 N.W. 807 (1938). The burden of proof rests with plaintiffs. Fraud will not be presumed but must be proven by clear, satisfactory and convincing evidence. Youngs v. Tuttle Hill Corp., 373 Mich. 145, 147, 128 N.W.2d 472 (1964).

The initial consideration, then, is whether defendant's agents made a material representation to plaintiff. In Boston Piano and Music Co. v. Pontiac Clothing Co., 199 Mich. 141, 165 N.W. 856 (1917), we affirmed the rule that an action for fraudulent misrepresentation must be predicated upon a statement relating to a past or an existing fact. Future promises are contractual and do not constitute fraud.

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