Snyder v. Eastern Auto Distributors, Inc.

• Decision Date: 02 February 1966
• Docket Number: No. 10051.,10051.
• Citation: 357 F.2d 552
• Parties: J. Wesley SNYDER, d/b/a Snyder's Auto Sales, Appellant, v. EASTERN AUTO DISTRIBUTORS, INC., a Corporation, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

357 F.2d 552 (1966)

J. Wesley SNYDER, d/b/a Snyder's Auto Sales, Appellant, v. EASTERN AUTO DISTRIBUTORS, INC., a Corporation, Appellee.

No. 10051.

United States Court of Appeals Fourth Circuit.

Argued December 7, 1965.

Decided February 2, 1966.

Leo H. Hill and Theodore A. Snyder, Jr., Greenville, S. C. (Carter & Hill, and Wofford & Snyder, Greenville, S. C., on brief), for appellant.

O. G. Calhoun, Greenville, S. C. (W. Francis Marion, Greenville, S. C. and P. A. Agelasto, Jr., Norfolk, Va., on brief), for appellee.

Before BRYAN and BELL, Circuit Judges, and MAXWELL, District Judge.

ALBERT V. BRYAN, Circuit Judge:

The question here is the amenability of the defendant Eastern Auto Distributors, Inc. to service of the process of the United States District Court for the western district of South Carolina in an action brought by J. Wesley Snyder, trading as Snyder's Auto Sales. The suit, resting on The Automobile Dealers Franchise Act, 15 U.S.C. §§ 1221-1225, was to recover damages for Eastern's allegedly unwarranted cancellation of its automobile dealership agreement with Snyder.

The District Court dismissed, on motion, for want of jurisdiction, finding that Eastern had withdrawn from the State before service. In the course of its opinion the Court, overruling Eastern's preliminary contention, held that the general venue statute, 28 U.S.C. § 1391(c), supplemented the special venue provision of the Franchise Act. In that holding we join. However, we cannot accede to the holding that Eastern's withdrawal after cancellation and before suit, even if true, immunized it from Snyder's suit. Hence we reverse, believing the service good.

The Franchise Act declares in section 1222:

"An automobile dealer may bring suit against any automobile manufacturer engaged in commerce, in any district court of the United States in the district in which said manufacturer resides, or is found, or has an agent, without respect to the amount in controversy, and shall recover the damages by him sustained and the cost of suit by reason of the failure of said automobile manufacturer from and after August 8, 1956 to act in good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, canceling, or not renewing the franchise with said dealer * * *." (Accent added.)

The general venue provision, 28 U.S.C. § 1391(c), is as follows:

"A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

The undisputed circumstances here were these. Eastern, a Virginia corporation, held the distributorship in South Carolina and nearby States for Renault and Peugeot automobiles, parts and accessories. In 1957 it granted Snyder a dealer franchise for the sale of Renaults, and in 1958 for Peugeots. His place of business was in Greenville, South Carolina and his dealership territory embraced the northwestern part of the State. Admittedly, Eastern was an "automobile manufacturer", Snyder an "automobile dealer", and their agreement a "franchise", and both were engaged in "commerce", within the definitions of the Act, 15 U.S.C. § 1221.

The agreement required Eastern to make available to Snyder periodically a certain number of cars for sale. It stipulated that Eastern would furnish him with advertising signs and displays and promotional materials from time to time. Title to each of the automobiles delivered to Snyder remained in Eastern until payment for it was made in accordance with the current price schedules of Eastern. Snyder was obliged to establish and maintain a show room, a repair shop and a place of business satisfactory to Eastern "in appearance, size, layout and equipment", with no change in location permitted without the prior approval of Eastern. Further, the dealer was required to maintain working capital, and a system of accounting for Eastern's business similar to the system used by its other dealers. Inspection of Snyder's books and records was to be allowed during business hours.

Eastern had assumed responsibility to the car producers for fulfillment of their warranties on each car. Snyder covenanted to undertake this obligation, to make the necessary adjustments with the owners and to replace parts as needed. Eastern was then to reimburse Snyder for any expense incurred in this aspect of the dealership.

Monthly, throughout the duration of the agreement, Eastern sent to Snyder's establishment in Greenville a district sales manager to receive car orders. The district manager would complete and sign them for Eastern at Snyder's plant and, when executed by Snyder, forward all the papers to Eastern's office in Virginia. James F. Sharkey, Jr. acted in this capacity for Eastern during the last 18 months of the agreement. At the same time he supervised Snyder's sales methods and offered suggestions of improved sales techniques and advertising methods. Additionally, a service representative of Eastern regularly called to see if Snyder was meeting his responsibilities in regard to the car warranties, and also gave expert help and advice to Snyder for servicing the Renaults and Peugeots.

On February 21, 1964 Eastern wrote Snyder that it would terminate the franchise agreement effective 30 days from receipt of the letter. The ground given for the cancellation was the "substandard performance by your company for many months in the sale of Renault and Peugeot vehicles as against potential". The notice further advised that "until a replacement dealer is appointed, or for a reasonable length of time until further notice", Eastern would continue to offer Snyder the regular dealer discounts on parts and would honor warranty claims "as in the past for work done on customers' vehicles". Eastern then also represented that it would repurchase at current dealer cost any new cars and parts in Snyder's inventory. Likewise, it promised to repurchase at fifty percent of cost his permanent Renault and Peugeot advertising signs found in acceptable condition.

After the termination, correspondence continued between Eastern and Snyder with regard to the dissolution. On May 18, 1964 Eastern wrote Snyder reminding him of Eastern's unanswered request that all Renault and Peugeot signs in his possession be shipped to Norfolk, Virginia, repeating that upon their receipt Eastern would make a final accounting with him. Simultaneously, Eastern asked Snyder to advise when its representative might come to Snyder's shop to inspect the vehicles and other materials which were to be returned. Assurance was renewed that on the return of the cars, parts and signs "a final accounting can be made with your dealership". A copy of this letter went to Sharkey.

In another letter to Snyder, dated June 2, 1964, Eastern noted that no reply had been received to its letter of May 18, and said again that it was ready to make final settlement. On June 8, 1964 Snyder replied that he would be glad to receive Eastern's representative at such time as it designated. Sharkey telephoned Snyder on June 19, 1964 from North Carolina and arranged to meet him that afternoon at Snyder's place in Greenville. When he arrived he was served with the summons and complaint in the present action, Greenville being situated in the western district of South Carolina.

Venue here, appellee Eastern insists, is dictated solely by The Automobile Dealers Franchise Act, 15 U.S.C. § 1222, supra, without reference to the general provision, 28 U.S.C. § 1391(c). The argument is that as the Act's designations are specific and special, they are therefore exclusive, citing Fourco Glass Co. v. Transmirra Glass Prods. Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957). On this postulate, Eastern argues that venue was improperly laid because the facts did not establish that Eastern, as the Act demands, "resided" or was "found"...