Wood Motor Co. v. Nebel

• Decision Date: 27 July 1950
• Docket Number: No. 6526,6526
• Citation: 232 S.W.2d 772
• Parties: WOOD MOTOR CO., Inc., et al. v. NEBEL et al.
• Court: Texas Court of Appeals

Page 772

232 S.W.2d 772

WOOD MOTOR CO., Inc., et al. v. NEBEL et al.

No. 6526.

Court of Civil Appeals of Texas, Texarkana.

July 27, 1950.

Rehearing Denied Oct. 5, 1950.

Geo. Prendergast, Marshall, for appellants.

Gist & Wilson, Tyler, Joseph P. Wither spoon, Austin, for appellees.

WILLIAMS, Justice.

Appellant Wood Motor Company, Inc., styled 'direct dealer,' the defendant below, and appellees C. W. Nebel, Jr., and his father, d/b/a Nebel Motor Company, styled 'associate dealer,' in June, 1944, entered into a written contract, for the alleged breach of which, the basis of this suit, appellees were awarded judgment for $25,000 damages. The contract consists of two instruments styled 'De Soto and Plymouth Motor Vehicles Associate Dealer Agreement' and 'De Soto and Plymouth Vehicle Associate Dealer Terms of Purchase,' which we will refer to respectively as the main or sales agreement and the purchase agreement.

No cars were in production when the agreement was executed on account of the war in progress. The testimony given by litigants reflects that they expected rapid sales and good profits on the cars upon the resumption of automobile production at the war's end and the agreement was made with this end in view. Appellants' President testified that Chrysler Corporation informed him 'it was going to be necessary to have our dealer points covered to handle the number of expected cars.' Appellees with the same expectation proceeded to and did at his own expense secure and remodel a building suitable for the automobile business; install and equip a service department, office and bookkeeping department; display signs; stocked up with parts and accessories; and conducted a series of newspaper advertisements. A substantial if not all of above program had been completed prior to the production of new cars in January, 1946.

In January, 1946, appellant began to receive new cars, and during that year received a total of 190 Plymouths and 77 De Sotos. Of this number appellant delivered to appellees in January, 1946, one De Soto and one Plymouth and none thereafter. Appellant retained during above period for resale in the Marshall, Texas, area 75 Plymouths and 36 De Sotos. Appellant sold some buyers outside of the areas that had been assigned to its twelve associate dealers. Appellant between January, 1946, and December 30, 1949, date of trial, received 1,000 new De Sotos and Plymouth cars.

With only one Plymouth and one De Soto having been delivered to appellees, the appellant in July, 1946, mailed to the latter a notice of termination of the contract, which reads:

'Wood Motor Co.

'DeSoto-Plymouth

'July 5, 1946. Marshall, Texas.

'Nebel Motor Company,

'308 E. Tyler Street,

'Longview, Texas.

'Gentlemen:

'Re: Associate Dealer Agreement,

'No. 481.

'Pursuant with paragraph nine, Termination by Notice, of the above captioned agreement, you are hereby notified that this agreement will be terminated on October 5, 1946, unless it is your desire to make this termination effective at an earlier date by mutual written consent.

'Very truly yours,

'(Signed) S. W. Wood, Jr., Pres.

'C/c: Mr. Frank Garard, Regional Manager.

'Mr. C. E. Heard, District Manager.

'Registererd letter-return receipt requested.'

The president of appellant testified that in January, 1946, he had decided to terminate the contract because he had become dissatisfied in 1945, with the way appellees had maintained their service department and because appellees had displayed the DeSoto automobile contrary to a plan to keep all DeSotos under wraps until all dealers could exhibit the model at one time; that he reprimanded appellees about this breach when the Plymouth was delivered a few days later. He did not inform appellees of such intent (until above letter was written) as he 'hoped to obtain a mutual termination agreement from appellees.' We deem it unnecessary to detail appellees' version of above.

The jury found that prior to July 5, 1946, Wood Motor Company breached its contract with plaintiff by its failure to deliver to the latter its proportionate share of available new automobiles; and plaintiff had sustained $6,000 damages prior to July 5, 1946, as a result of such breach. In response to special issue No. 3, the jury answered that Wood Motor Company, under the facts of the case, waited an unreasonable length of time from and after January 19, 1946, to give plaintiff written notice terminating the contract. The jury found in response to special issue No. 4 that appellant did not have a just cause for terminating the contract as of July 5, 1946; and to No. 5, plaintiff had sustained.$19,000 damages since the termination of the contract on July 5, 1946. In response to an issue requested by defendant, the jury found that plaintiff did not breach the contract.

Appellant asserts here as was urged in support of its motion for an instructed verdict and for judgment non obstante veredicto that by reason of Secs. 4 and 9, later herein set out, that it is not liable for its failure to deliver any automobiles; nor for damages for failure to comply with the contract after same had been terminated under Sec. 9 and it was not necessary to show just cause for termination. The trial court rejected this asserted unilateral construction of the contract.

Under terms of the agreement exclusive of Secs. 8, 9, 10 and 22, appellees agreed to provide and maintain an adequate plant for the sale and service of the cars and parts they buy from appellant; to submit weekly wheir orders for cars and to make reports of new and second hand cars on hand when required. The contract designates the City of Longview, Gregg County, Texas, as the area assigned to appellees for the sale of DeSoto and Plymouth products. The agreement provides for the protection of the parties in the event of price increases or decreases. Appellant agreed to furnish from time to time the prices of vehicles, parts and accessories, together with schedule of discounts and terms of purchase. Secs. 11 to 21, both inclusive, deal with appellees' duty to maintain parts and services to meet the requirements in the area; to advertise the products in manner approved by direct dealer, the maintenance of certain required bookkeeping system, the method of collections and other provisions not necessary to detail. The purchase agreement deals with the modes of shipment; method of payment; right to divert a shipment upon failure of appellees to pay a sight-draft; claims for shortages; untiform warranty of products; discounts; transportation charges and delivery of parts.

Among the 'purposes of this agreement' as stated in the contract are: 'to set forth in a clear and understandable way the terms under which the parties agree to do business together and thus to facilitate associate dealer's purchase and resale of DeSoto and Plymouth products'; 'the mutual effort being directed to provide the public with improved designs * * * in the confidence that in so doing the most stable and profitable business for both will be built and maintained'; 'associate dealer invests his capital * * * applies his efforts' with the sales and services and assumes responsibility to develop the sales and servicing of the products 'in the area allotted to him * * *' and to this end the expenditures for a proper plant equipment in Longview hereinabove detailed were required of appellees; 'essentially the arrangements seek to make it easier for associate dealer to buy motor vehicles and parts from direct dealer and easier for the public to buy * * * from associate dealer'; and 'in order to promote this result, direct dealer endeavors to provide associate dealer with products of a quality that will render good service * * * and to cooperate with associate in effectively merchandising its products to the public * * *'

It is observed from above brief summary of a twenty-four page printed contract with its thirty-eight sections, largely in general terms, all prepared by Chrysler, and by appellant tendered to appellees for execution, that many definite promises and duties were exacted from appellees on one hand with only a few reciprocating promises made by appellant and these to some extent modified by various conditions and saving clauses. But irrespective of this characteristic of its provisions the conclusion is inescapable that the parties intended by its terms to mutually develop and maintain the area assigned to appellees into a mutually profitable venture in the sale of these cars, parts and accessories, and to accomplish this end the direct dealer impliedly, if not expressly, agreed to sell to appellees the required products, from whom appellees expressly agreed to buy. Litigants knew of all the terms and provisions of the contract at the time it was signed and executed.

In 10 Tex.Jur. (Contracts), Sec. 95, applicable here, it is stated: 'Though a contract on its face and by its express terms may appear to be obligatory on one party only, if it is manifest that it was the intention of the parties, and the consideration upon which one party assumed an express obligation, that there should be a corresponding and correlative obligation on the other party, such a corresponding and correlative obligation will be implied, and the contract held to be mutual * * * as where the act to be done by the party expressly binding himself can only be done upon a corresponding act being done or allowed by the other party.' See also 17 C.J.S., Constracts, § 100b. For the application of this principle in construction of contracts of substantially similar characteristics, see Ellis v. Dodge Bros., 5 Cir., 246 F. 764; Mills-Morris Co. v. Champion Spark Plug Co., 6 Cir., 7 F.2d 38; Kane v. Chrysler Corp., D.C., 80 F.Supp. 360; Bowen v Virginia Lee Candies, Inc., Tex.Civ.App., 44 S.W.2d 502; Clement v. Producers' Rfg. Co., Tex.Com.App., 277 S.W. 634; Big Four Ice & Cold Storage Co. v. Williams, Tex.Civ.App., 9 S.W.2d 177. As stated in Kane v. Chrysler, su...