Transit Bus Sales v. Kalamazoo Coaches

• Citation: 145 F.2d 804
• Decision Date: 06 December 1944
• Docket Number: 9745.,No. 9744,9744
• Parties: TRANSIT BUS SALES v. KALAMAZOO COACHES, Inc. KALAMAZOO COACHES, Inc., v. TRANSIT BUS SALES.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

145 F.2d 804 (1944)

TRANSIT BUS SALES v. KALAMAZOO COACHES, Inc. KALAMAZOO COACHES, Inc., v. TRANSIT BUS SALES.

Nos. 9744, 9745.

Circuit Court of Appeals, Sixth Circuit.

December 6, 1944.

COPYRIGHT MATERIAL OMITTED

Adolph J. Bieberstein, of Madison, Wis. (Bull, Biart & Bieberstein, of Madison, Wis., on the brief), for Transit Bus Sales.

Edward J. Ryan, of Kalamazoo, Mich. (Frank F. Ford, of Kalamazoo, Mich., and Alexander, McCaslin, Cholette & Buchanan, of Grand Rapids, Mich., on the brief), for Kalamazoo Coaches, Inc.

Before SIMONS, ALLEN, and McALLISTER, Circuit Judges.

SIMONS, Circuit Judge.

In a suit by a Wisconsin distributor upon a contract for exclusive territory for the sale of interurban buses of a Michigan manufacturer, the principal question in the appeal is the measure of damages to which the distributor was entitled by reason of its breach. In the cross appeal, the manufacturer assails the judgment on the ground that the distributor, being a foreign corporation, is unable to sue in a Michigan court because it was doing business in that state without a license in contravention of Michigan statutes.

By the contract of August 27, 1940, here involved, the appellant was given the exclusive privilege of selling the appellee's coaches in a number of states, including the Upper Peninsula of Michigan. The contract was drafted by the appellant in Wisconsin pursuant to a previous verbal agreement, signed by it in Wisconsin, and sent to the appellee in Michigan for approval and signature. The appellee returned it with a rider containing provisions which had been previously agreed upon, but which, through apparent inadvertence, had been omitted. Before sending the rider to the appellant, the appellee had initialed it, and it was agreed to by the appellant initialing it in Wisconsin. In this situation the appellant claims that the agreement was a Wisconsin contract controlled by the law of that state. The District Judge so held, and we agree. With regard to the validity and interpretation of a contract, the lex loci contractus controls, and in this respect there is no difference between Michigan and Wisconsin law. Millar v. Hilton, 189 Mich. 635, 155 N.W. 574; International Harvester Co. v. McAdam, 142 Wis. 114, 124 N.W. 1042, 26 L. R.A.,N.S., 774, 20 Ann.Cas. 614. The general rule is that a contract is made where the last act necessary to make it a binding obligation is performed. Williston on Contracts, § 97; Restatement, § 74. The final approval of the rider was the last act in consummating the agreement. The appellee's contention that the plaintiff is estopped to claim that the agreement was a Wisconsin contract, because the plaintiff drew it and sent it to the defendant with representation that it contained the entire agreement, must be rejected in the absence of clear proof that the defendant relied upon such representation. It could have withheld acceptance until the initialed rider was returned by the plaintiff. It chose, however, to return the contract, as amended, for completion in Wisconsin. There was no estoppel.

By the terms of the agreement between the parties the manufacturer granted the distributor the exclusive right and privilege to buy for resale and to sell its product in the territory assigned to it, and agreed that if any coaches were sold in such territory by it, itself, or by any of its other dealers, distributors, or representatives, the distributor would receive from the manufacturer 20% of the list price of such product even though the distributor was not instrumental in procuring the sales. The agreement was to continue for a period of three years beginning with the date of the receipt, by the distributor, of the first coach, and it is conceded that this occurred on September 23, 1940. The contract also contained provision for its termination upon certain notice, and on October 27, 1941, the manufacturer undertook such cancellation to become effective December 31, 1941. The trial court instructed the jury that such notice was not legally effective, and that the contract remained in full force and effect after that date. No question, however, is raised by the appeal as to the correctness of the instruction, and so we need not consider the infirmities of the notice. Prior to the notice, however, the manufacturer sold three buses in the distributor's territory, upon which the distributor's 20% commission amounted to $2,380. Subsequent to the notice the manufacturer sold 15 buses in the distributor's territory, upon which the commission, if the distributor was entitled to it, would be $12,398.

The court directed a verdict for the plaintiff for the full amount of the commissions on sales made in the distributor's territory prior to the abortive effort to cancel, but denied any recovery to the distributor for sales made thereafter, on the ground that the measure of the distributor's damage was the profit which it might have realized had it been permitted fully to perform the contract, and since there was no proof on the part of the distributor, of its cost of making sales, there was no basis upon which the jury could arrive at its loss of profits, the burden being upon it to establish, with reasonable certainty, the amount that it would have had to expend in making sales.

The usual rule...