State v. Willys-Overland

• Decision Date: 16 April 1919
• Docket Number: (No. 6197.)
• Citation: 211 S.W. 609
• Parties: STATE v. WILLYS-OVERLAND, Inc.
• Court: Texas Court of Appeals

211 S.W. 609

STATE v. WILLYS-OVERLAND, Inc.

(No. 6197.)

Court of Civil Appeals of Texas. San Antonio.

April 16, 1919.

On Motion for Rehearing, May 15, 1919.

Appeal from District Court, Travis County; George C. Calhoun, Judge.

Suit by the State of Texas against the Willys-Overland, Incorporated. From judgment for defendant, plaintiff appeals. Judgment reversed, and rendered for plaintiff.

C. M. Cureton and W. A. Keeling, both of Austin, for appellant.

Thos. H. Ball, of Houston, for appellee.

MOURSUND, J.

This is a suit filed March 1, 1916, by he state against Willys-Overland, Incorporated, a corporation organized under the laws of Ohio, and having its principal place of business at Toledo, Ohio. It was alleged in the amended petition, on which trial was had, that defendant had no permit to engage in business in Texas, but that since July 1, 1915, it has been selling automobiles and automobile accessories and supplies to dealers and distributors throughout said state, through its agents and representative, which sales were made at the respective places of business of its said dealers and distributors; that such automobiles, accessories, and supplies, so sold, have been shipped by defendant from Toledo to the dealers and distributors in Texas, and there distributed among, mixed and mingled with the other goods of such dealers and distributors, and have become a part of their respective stocks, and have been sold by them throughout the state. Plaintiff further alleged:

"That under the defendant's system of business in the state of Texas it sells its automobiles and automobile accessories and supplies to dealers and distributors for resale, and said dealers and distributors are given, by the defendant, by virtue of a contract made and entered into between the defendant and said dealers and distributors, a certain fixed territory in which to resell said automobiles and automobile accessories and supplies, the defendant agreeing with its said dealers and distributors not to sell to any other person in said territory and said dealers and distributors agreeing with the defendant not to sell any other automobiles and automobile accessories and supplies in said territory than those purchased from the defendant, and further agreeing not to sell the automobiles and automobile accessories and supplies purchased from the defendant to any person or persons outside of said designated and fixed territory."

In paragraph 4 it is charged that on or a out July 1, 1915, for the purpose "of creating and tending to create and carry out restrictions in the state of Texas in the sale of automobiles, and automobile accessories and supplies," and for the "purpose of preventing and lessening competition in the sale of said articles and commodities in said state," the defendant made and entered into a combination and agreement with the Overland Automobile Company of Dallas, Tex., one of its dealers and distributors, to the effect that on and after the date of such contract it would sell its automobiles, accessories, and supplies to said Overland Automobile Company for resale in a certain designated and fixed territory, defendant agreeing not to sell said commodities to any other person in said territory, and said company agreeing not to sell said commodities outside of said territory, and further agreeing not to sell any other automobiles and automobile accessories and supplies than those purchased from the defendant; that such combination and agreement was continuously observed and carried out until the date of the filing of the amended petition, and that each of the parties performed the things therein agreed to be performed by it, and refrained from doing the things therein stipulated as not to be done by it.

In paragraph 6 it is charged that on July 1, 1916, for the same purposes as are enumerated in paragraph 4, the defendant entered into a combination and agreement with the Overland-Houston Company of Houston, one of its dealers and distributors, whereby it agreed that on and after the date of said contract it would sell its automobiles and automobile accessories and supplies to said Overland-Houston Company for resale in a certain described territory, composed of Harris county and other counties, and elsewhere in Texas, the said company agreeing not to sell any other automobiles, accessories, and supplies in said territory or elsewhere than those purchased from defendant; that, although on the face of the contract said company is authorized to sell the said commodities purchased from defendant elsewhere than in the described territory, it was the intention of said parties to limit the right of said company, to sell such commodities, to said described territory; that for the purpose of effectuating the intent of the parties the following provision was incorporated in the contract, to wit:

"That the dealer [the Overland-Houston Company] shall be entitled for all current models of Overland and Willys-Knight automobiles purchased hereunder and sold by him in the district hereinbefore designated, to the discount applying to this contract as provided in said Schedule A, provided that for any current models of such automobiles sold by the dealer, and within sixty days next after actual delivery thereof to the purchaser, shall be taken from said district into and used for a period of one hundred twenty days in some district other than the one herein designated, the dealer shall in such case only be entitled to and receive fifty per cent. of the discount applying to this contract as provided in said Schedule A, the remaining fifty per cent. of such discount to be paid to the distributor in a district into which same shall have been taken and so used, as compensation to such distributor or dealer for advertising Overland and Willys-Knight automobiles, keeping on hand sufficient stock of repair parts, giving proper service to the owners thereof in such district, etc., and likewise the dealer herein shall be entitled to and receive fifty per cent. of the discount on all current models of said automobiles which are sold outside of said district, and within sixty days after actual delivery thereof to the purchaser, come into said district and be used therein for a period of one hundred twenty days thereafter; provided the dealer within sixty days after such automobiles not sold in said district have come into the same, notifies the distributor of such fact in writing; and provided further, that the distributor shall be the sole judge and arbiter of the rights of the dealer to any such discount, and may pay, credit or charge the same to the dealer or his account in such manner as it shall deem to be just and equitable to all parties concerned."

It was then alleged that by virtue of said provision said company, if it should make a sale outside of the described territory, would receive only half the discount it would receive if the sale was made within such territory; that the purpose of such provision was to restrict said company, in its right to resell the commodities purchased from defendant, to the territory described in the contract, and the parties so understood said provision and have so interpreted and carried out the same; that they understood and intended by said provision to prohibit said company from selling the commodities purchased from defendant to any person residing outside of the described territory, and also to prohibit defendant from selling its said commodities to any other person or persons in such territory, thereby giving said company the exclusive right to sell said commodities in said territory; that such agreement and combination became effective on or about July 1, 1916, and has been continuously observed, respected, maintained and carried out until the date of the filing of the amended petition, and in pursuance thereof the defendant has refused to sell its said commodities to any other person in said territory and said company has refused to sell said commodities purchased from defendant to persons other than those residing in said territory, and has also refused to sell in said territory or elsewhere any other automobiles or accessories and supplies than those purchased by it from defendant.

Plaintiff alleged further that by observance and maintenance of each of such pleaded agreements and combinations defendant was and is guilty of violating the provisions of articles 7796 and 7798 of the Revised Civil Statutes of 1911.

The petition closed with a comprehensive prayer for relief by injunction, but no prayer for the recovery of penalties. The defendant answered by general demurrer and general denial. The trial resulted in a judgment denying plaintiff any relief.

To substantiate the averments contained in paragraph 4 of the amended petition, there was introduced in evidence a contract with the Woodward Carriage Company, admitted to be exactly like the contract with the Overland Automobile Company of Dallas complained of in paragraph 4 of the amended petition. This contract purports to be that of the Willys-Overland Company, and the witness Graham, president and general manager of the Overland-Houston Company, testified that new contracts are made every six months. While the witness testified that the defendant corporation, Willys-Overland, Incorporated, which is a sales company for Willys-Overland Company did not come into existence until the year 1916. He probably meant that it did not make contracts until 1916, for he also testified that it had had a permit to do business in the state since about the first of the year 1916, and the contract between the Overland-Houston Company and Goldthwaite (Exhibit B), in which the defendant corporation is continually referred to and not the Willys-Overland Company, is dated January 3, 1916. He testified that such contract was not made until in March, 1916, after the filing of this suit, and if that be true, it was probably dated back to correspond with the date...