Southern Intern. Sales Co., Inc. v. Potter & Brumfield Div. of AMF Inc., No. 72 Civ. 3989.

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Citation410 F. Supp. 1339
Docket NumberNo. 72 Civ. 3989.
PartiesSOUTHERN INTERNATIONAL SALES CO., INC., Plaintiff, v. POTTER & BRUMFIELD DIVISION OF AMF INCORPORATED and AMF Incorporated, Defendants.
Decision Date18 March 1976

410 F. Supp. 1339

SOUTHERN INTERNATIONAL SALES CO., INC., Plaintiff,
v.
POTTER & BRUMFIELD DIVISION OF AMF INCORPORATED and AMF Incorporated, Defendants.

No. 72 Civ. 3989.

United States District Court, S. D. New York.

March 18, 1976.


410 F. Supp. 1340

Tabak, Ezratty & Mellusi, New York City, for plaintiff; Ralph J. Mellusi, New York City, of counsel.

Rogers, Hoge & Hills, New York City, for defendants; W. Hubert Plummer, Frederick A. Nicoll, New York City, of counsel.

OPINION

EDWARD WEINFELD, District Judge.

This motion for summary judgment requires the court to pass upon the binding effect of a stipulation of the parties as to the law governing the interpretation of their contract.

Defendant Potter & Brumfield is an Indiana-based manufacturer of electrical products. Plaintiff Southern International is a Puerto Rican corporation. By agreement dated April 2, 1969, plaintiff became defendant's exclusive sales representative for Puerto Rico and adjacent United States islands. The agreement provided, among other things, that either party could terminate it "for any reason whatsoever" upon thirty days' notice, and that it "shall be interpreted in accordance with the laws of the State of Indiana." On December 21, 1971, Potter & Brumfield notified Southern International that the contract would be terminated as of February 20, 1972. Southern claims that it had performed "outstandingly" and that the termination was motivated by defendant's purpose to capitalize on the contacts Southern had developed by dealing directly with them.

In September 1972, Southern brought this diversity action, claiming that the termination violated the Puerto Rican Dealers' Contracts Act,1 which provides in pertinent part:

410 F. Supp. 1341
"Notwithstanding the existence in a dealer's contract of a clause reserving to the parties the unilateral right to terminate the existing relationship, no principal or grantor may directly or indirectly perform any act detrimental to the established relationship or refuse to renew said contract on its normal expiration, except for just cause."

Defendant does not dispute that its agreement with plaintiff was a "dealer's contract" as defined in the Act. Although it contends it did have "just cause" for the cancellation, its position on this motion for summary judgment is that the Dealers' Contracts Act does not apply because the parties agreed that Indiana law would govern their contract's interpretation, and Indiana would give effect to the clause allowing unilateral termination. Plaintiff argues that, upon all the circumstances surrounding the execution and performance of the contract, Puerto Rican law applies despite the provision that Indiana law governs its interpretation. The court agrees with plaintiff and denies the motion for summary judgment.

Since this is a diversity case, New York state choice of law principles apply on the issue of whether the law of Indiana or Puerto Rico governs.2 There are, as defendant notes, a number of New York cases that hold the parties' choice of law to control where their contract has a reasonable relation to the jurisdiction whose law they choose.3 It cannot seriously be challenged that the contract at issue bore a reasonable relation to Indiana. Defendant has its headquarters and facilities there, and it shipped, processed, and did the paperwork in Indiana on Southern's orders for merchandise. But this begins rather than ends inquiry. There is also authority from the New York Court of Appeals suggesting that the parties' intention and stipulation as to the law governing their contract is but one factor, albeit a weighty one, in deciding the ultimate question — namely, which jurisdiction has the most significant contacts with the matter at issue.4 Under this analysis the significance of the parties' choice of Indiana law would pale when viewed against the facts that almost all of the equipment sold by Southern on defendant's behalf was sold in Puerto Rico, for Puerto Rican accounts and for use in Puerto Rico; the solicitation of customers occurred in Puerto Rico; and plaintiff signed the contract there. More to the point, the application of Indiana law would frustrate the fundamental policy expressed in the Puerto Rican Dealers' Contracts Act. According to the Statement of Motives that accompanied the Act:

"The Commonwealth of Puerto Rico can not remain indifferent to the growing number of cases in which domestic and foreign enterprises, without just cause, eliminate their dealers, or without fully
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18 practice notes
  • Barnes Group, Inc. v. C & C Products, Inc., No. 82-1636
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • August 31, 1983
    ...Bros. Co. v. Cardi Corp., 471 F.2d 1304, 1307 n. 3 (1st Cir.1973); Southern Int'l Sales Co. v. Potter & Brumfield Div. of AMF, Inc., 410 F.Supp. 1339, 1342 & n. 8 (S.D.N.Y.1976); Kronovet v. Lipchin, 288 Md. 30, 43-46 & n. 16, 415 A.2d 1096, 1104-1106 & n. 16 (Ct.App.1980). See generally No......
  • Breatie and Osborn Llp v. Patriot Scientific Corp., No. 05 Civ. 6425(PKL).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 9, 2006
    ...involved in the absence of an effective choice by the parties." (quoting S. Int'l Sales Co. v. Potter & Brumfield Div. of AMF Inc., 410 F.Supp. 1339, 1341-42 (S.D.N.Y.1976) (internal quotation marks omitted))); see also Restatement (Second) Conflict of Laws § 187 cmt. g (1971) In contract c......
  • Estee Lauder Companies Inc. v. Batra, No. 06 Civ.2035(RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 4, 2006
    ...LEXIS 13386, 84 Civ. 2396, 1985 WL 3945, at *3-*4 (S.D.N.Y. Nov.27, 1985); Southern Int'l Sales Co. v. Potter & Brumfield Division, 410 F.Supp. 1339, 1342-43 (S.D.N.Y.1976) (Weinfeld, Generally, "[u]nder New York law ... a contract's designation of the law that is to govern disputes arising......
  • Keystone Leasing v. Peoples Protective Life Ins., No. 76 C 1648.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • April 28, 1981
    ...v. Beatrice Foods Co., 461 F.Supp. 152 (S.D.N. Y.1978); Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F.Supp. 1339 (S.D.N.Y.1976); Fricke v. Isbrandtsen Co., 151 F.Supp. 465 The facts in the instant case indicate that Tennessee is the site of the most sign......
  • Request a trial to view additional results
18 cases
  • Barnes Group, Inc. v. C & C Products, Inc., No. 82-1636
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • August 31, 1983
    ...Bros. Co. v. Cardi Corp., 471 F.2d 1304, 1307 n. 3 (1st Cir.1973); Southern Int'l Sales Co. v. Potter & Brumfield Div. of AMF, Inc., 410 F.Supp. 1339, 1342 & n. 8 (S.D.N.Y.1976); Kronovet v. Lipchin, 288 Md. 30, 43-46 & n. 16, 415 A.2d 1096, 1104-1106 & n. 16 (Ct.App.1980). See generally No......
  • Breatie and Osborn Llp v. Patriot Scientific Corp., No. 05 Civ. 6425(PKL).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 9, 2006
    ...involved in the absence of an effective choice by the parties." (quoting S. Int'l Sales Co. v. Potter & Brumfield Div. of AMF Inc., 410 F.Supp. 1339, 1341-42 (S.D.N.Y.1976) (internal quotation marks omitted))); see also Restatement (Second) Conflict of Laws § 187 cmt. g (1971) In contract c......
  • Estee Lauder Companies Inc. v. Batra, No. 06 Civ.2035(RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 4, 2006
    ...LEXIS 13386, 84 Civ. 2396, 1985 WL 3945, at *3-*4 (S.D.N.Y. Nov.27, 1985); Southern Int'l Sales Co. v. Potter & Brumfield Division, 410 F.Supp. 1339, 1342-43 (S.D.N.Y.1976) (Weinfeld, Generally, "[u]nder New York law ... a contract's designation of the law that is to govern disputes arising......
  • Keystone Leasing v. Peoples Protective Life Ins., No. 76 C 1648.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • April 28, 1981
    ...v. Beatrice Foods Co., 461 F.Supp. 152 (S.D.N. Y.1978); Southern International Sales Co. v. Potter & Brumfield Division of AMF Inc., 410 F.Supp. 1339 (S.D.N.Y.1976); Fricke v. Isbrandtsen Co., 151 F.Supp. 465 The facts in the instant case indicate that Tennessee is the site of the most sign......
  • Request a trial to view additional results

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