Rockwell Engineering Co., Inc. v. Automatic Timing & Controls Co.
| Decision Date | 11 April 1977 |
| Docket Number | No. 76-2165,76-2165 |
| Citation | 559 F.2d 460 |
| Parties | 22 UCC Rep.Serv. 1141 ROCKWELL ENGINEERING CO., INC., Plaintiff-Appellant, v. AUTOMATIC TIMING & CONTROLS COMPANY, a Division of American Manufacturing Company, Inc., and Rockford Controls Company, Inc., Defendants-Appellees. . Heard |
| Court | U.S. Court of Appeals — Seventh Circuit |
Donald W. Ward, John F. Ittenbach, Indianapolis, Ind., for plaintiff-appellant.
Herbert C. Snyder, Jr., Indianapolis, Ind., for defendants-appellees.
Before CASTLE, Senior Circuit Judge, and CUMMINGS and PELL, Circuit Judges.
In this diversity action, plaintiff Rockwell Engineering Co. alleged in Count I that defendant Automatic Timing & Controls Co. 1 wrongfully terminated plaintiff as its representative, causing plaintiff $150,000 in damages. In Count II, plaintiff sued Rockford Controls Co. for wrongfully inducing Automatic to terminate its contractual relationship with plaintiff. Plaintiff also sought $150,000 in damages from Rockford.
After filing separate answers to the complaint, the defendants filed a joint motion for summary judgment on the ground that Automatic validly terminated the selling relationship it had with the plaintiff, so that Rockford could not be liable for inducing any breach of a contractual relationship. After considering the briefs of the parties in support of and in opposition to the summary judgment motion, the district court filed findings of fact and conclusions of law and entered summary judgment for defendants. We affirm.
The district court found that plaintiff, an Indiana corporation, was owned entirely by its president, Harvey P. Rockwell. Its principal place of business was in Indianapolis, Indiana, where it engaged in the business of manufacturing and selling electrical measuring and control devices. Plaintiff was the sales representative of defendant and other manufacturers of related products. The court also found that Automatic, a Pennsylvania corporation with its principal place of business in King of Prussia, Pennsylvania, was engaged in the business of manufacturing and selling electrical and electronic timing and control devices. Defendant Rockford was a manufacturers' representative for the sale of control devices made by various manufacturers, including Automatic. Rockford, an Illinois corporation, has its principal place of business in Glen Ellyn, Illinois.
In 1956, plaintiff became a representative for Automatic in parts of Indiana, Kentucky and Ohio, but was terminated as a representative in 1959 or 1960. However, until 1967, it acted as a distributor of Automatic products. As a distributor it only resold products it purchased from Automatic. When plaintiff was Automatic's representative, it had an exclusive territory and received commissions on all Automatic products sold in its territory, even products sold directly to customers by Automatic. During the representation period, plaintiff also purchased Automatic products for resale to its customers.
On September 5, 1967, plaintiff entered into a written agreement with Automatic by which it again became a representative for Automatic in a territory limited to central and southern Indiana. The agreement provided that it could be terminated by either party upon 30 days' written notice. In April 1972, Automatic terminated that written agreement by written notice and proposed a new agreement. However, contract negotiations collapsed and no agreement was reached. Nevertheless, plaintiff continued to act as a representative for Automatic in the same territory until May 15, 1975.
On April 17, 1975, Automatic gave plaintiff written notice of its termination as a representative. Thereafter, plaintiff continued to act as a distributor and to make sales of Automatic products until September 24, 1975, when plaintiff returned its entire stock of Automatic products for credit and totally severed its relationship with Automatic.
Defendant Rockford has been a representative for Automatic since 1964. In May 1975, Rockford represented Automatic in northern Illinois, northern Indiana and part of Iowa. Rockford represented other principals in southern Indiana. After plaintiff was terminated as a representative of Automatic in May 1975, Rockford's territory as an Automatic representative was enlarged to include the parts of central and southern Indiana formerly served by plaintiff.
In its conclusions of law, the district court held that in Indiana, a contract providing for continuing performance which has no termination date, or which provides that it will last indefinitely, is terminable at will by either party. Since the oral understanding between plaintiff and Automatic after April 1972 was indefinite as to time, the court held that Automatic did not breach such agreement by terminating the relationship in May 1975. The court also determined that because the relationship between plaintiff and Automatic had lasted for a reasonable time and because Automatic gave plaintiff reasonable prior written notice of termination, Automatic was not liable, regardless of whether or not it acted in bad faith. Because Automatic was held entitled to terminate its relationship with plaintiff, the court decided that Rockford could not be liable for inducing a breach of contract inasmuch as no illegal conduct by Rockford was alleged.
(1) This case is of course governed by Indiana law. Plaintiff admits that under Indiana law prior to February 1975, an agency contract of indefinite term was terminable at will by either party regardless of the bad faith of the terminating party (Br. 15). See e. g., Miller v. Ortman, 235 Ind. 641, 136 N.E.2d 17, 33 (1956); House of Crane v. H. Fendrich, Inc., 146 Ind.App. 478, 256 N.E.2d 578 (1970); Bell v. Speed Queen, 407 F.2d 1022, 1024-1025 (7th Cir. 1969); B & T Distributors, Inc. v. Meister Brau, Inc., 459 F.2d 29, 31 (7th Cir. 1972).
(2) To avoid such authorities, plaintiff relies exclusively on Montgomery Ward & Co. v. Tackett, Ind.App., 323 N.E.2d 242 (1975), which was called to the district court's attention and was cited in its third conclusion of law. 2 There the franchise agreement was for one year and from year to year thereafter. 3 It contained the following termination article:
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