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BUONO SALES v. CHRYSLER MOTORS CORP.

March 25, 1965

BUONO SALES, INC., a corporation of the State of New Jersey, Plaintiff,
v.
CHRYSLER MOTORS CORPORATION, a corporation of the State of Delaware, and Chrysler Corporation, a corporation of the State of Delaware, Defendants



The opinion of the court was delivered by: AUGELLI

This action was tried to the Court, sitting without a jury, on the issues of liability under the first and fourth counts of the complaint, which allege, respectively, breach of contract, and tortious interference with business and prospective economic advantage. Counts two, three and five have been abandoned; and it has been stipulated that if the Court should make a finding of no liability on count one of the complaint, the remaining count six, based on the Automobile Dealers' Day in Court Act, 15 U.S.C.A. § 1221 et seq., would also be abandoned.

Plaintiff Buono Sales, Inc., is an automobile dealer located in Hawthorne, New Jersey. Defendant Chrysler Corporation is in the business of manufacturing automobiles. Defendant Chrysler Motors Corporation is a wholly owned subsidiary of Chrysler Corporation, and is engaged in the business of selling to dealers automobiles manufactured by the parent corporation. It has been stipulated that for the purposes of this action, 'the separate corporate entities of the two defendants are to be disregarded and that any acts of the defendant Chrysler Corporation shall be deemed to be the acts of the defendant Chrysler Motors Corporation.' In view of this stipulation, and unless otherwise stated, the defendants, and either of them, will hereinafter be referred to as 'Chrysler'.

 Jurisdiction is based on diversity of citizenship and allegation of the requisite amount in controversy, 28 U.S.C.A. § 1332. In addition, count six is brought under 15 U.S.C.A. 1222.

 From 1935 to 1959, plaintiff was a dealer for the DeSoto and Plymouth automobiles manufactured and sold by Chrysler. In 1959, plaintiff also became a dealer for the Valiant automobile, which was newly introduced by Chrysler in that year. On November 18, 1960, Chrysler discontinued production of the DeSoto. Thereafter, plaintiff continued as a Plymouth and Valiant dealer, and at the present time still operates as such.

 The discontinuance of the DeSoto automobile on November 18, 1960, was announced by Chrysler on that date to all of its more than 1600 DeSoto dealers, including plaintiff. In the previous five year period, DeSoto sales had suffered an extremely serious decline due to the shift in public demand from the middle-priced car field, which included DeSoto, to the lower-priced and foreign car field. This loss was compounded by recurring rumors in the trade that production of the DeSoto would soon be discontinued. New car registrations of DeSotos in the United States dropped from 118,062 in 1955 to 23,063 in 1960. Plaintiff's own car sales of the DeSoto automobile, which in 1955 and 1956 had accounted for over 50% Of its total new car sales, accounted for only 12 out of a total of 89 new cars sold by it in 1960. Under these circumstances, Chrysler would appear to have had sound bona fide business reasons for withdrawing the DeSoto from the market.

 On November 18, 1960, plaintiff's business relationship with Chrysler was covered by a 'DeSoto-Plymouth Direct Dealer Agreement' ('Agreement'), which had been in effect since June 10, 1957, and is still in force except as affected by the discontinuance of the DeSoto automobile. The Agreement provides that it is to be interpreted and construed according to the laws of the State of Michigan. It is plaintiff's contention in count one of its complaint that Chrysler's discontinuance of the DeSoto automobile constituted a breach of this Agreement. Chrysler, on the other hand, in addition to other reasons advanced to justify its action, takes the position that the Agreement, by its very terms, gave it the right to discontinue the DeSoto, without notice, and without any obligation to plaintiff. The problem thus boils down to one of interpretation and construction of the Agreement in question.

 It is hornbook law that the primary inquiry in cases involving the interpretation and construction of contracts is the ascertainment of the intention of the parties, and that such intention is to be gathered from the language used in the instrument. Thomas v. Jewell, 300 Mich. 556, 2 N.W.2d 501, 139 A.L.R. 1335 (1942); Sheldon-Seatz, Inc. v. Coles, 319 Mich. 401, 29 N.W.2d 832 (1947); Moulton v. Lobdell-Emery Mfg. Co., 322 Mich. 307, 33 N.W.2d 804 (1948). If the language employed is clear and unambiguous, the contract must be enforced as written, without reference to extrinsic facts. Harrington v. Inter-State Business Men's Accident Ass'n, 210 Mich. 327, 178 N.W. 19 (1920); Indemnity Insurance Co. of North America v. Geist, 270 Mich. 510, 259 N.W. 143 (1935). But if the terms of a written contract are uncertain, ambiguous, and susceptible of more than one interpretation, parol evidence may be introduced to resolve the issue. Weber v. Cole, 323 Mich. 485, 35 N.W.2d 396 (1949). See also Wigmore, Evidence, Vol. 9, Sec. 2556 (3rd Ed. 1940).

 The Agreement in this case contains no express provision imposing any obligation on Chrysler to produce or continue the production of DeSoto automobiles. Indeed, it may be implied from paragraph 10 of the Agreement, *fn1" that Chrysler would not be obligated to deliver any automobiles to plaintiff. The Agreement does provide, in paragraph 21, for a termination by either party upon the happening of certain events, but admittedly none of these events have taken place.

 From a reading and consideration of the Agreement as a whole, it is apparent that a resolution of the issue under count one of the complaint revolves around the meaning to be ascribed to certain words used in paragraph 20 of the Agreement. That paragraph, in pertinent part, provides that:

 '(Chrysler) at any time may discontinue any models, lines or body styles and may revise, change or modify their construction or classification. * * * (Chrysler) at any time may declare obsolete or discontinue any or all parts, accessories and other merchandise. (Chrysler) may act under this Paragraph 20 without notice and * * * without any obligation to (plaintiff) by reason of (plaintiff's) previous purchases.'

 Prior to the trial of this action, both sides moved for summary judgment under count one of the complaint, each contending that the Agreement was clear and unambiguous, that no further proofs were required, and that summary judgment should be awarded as a matter of law. The main target on the cross-motions for summary judgment was paragraph 20 of the Agreement, with particular reference to the meaning of the words 'models', 'lines', and 'body styles'.

 At the trial of the action, plaintiff rested its case on count one of the complaint after putting in evidence the Agreement, a telegram by Chrysler dated November 18, 1960 advising plaintiff of the discontinuance of the 1961 DeSoto, and Chrysler's letter of the same date stating reasons for the discontinuance. In addition to the foregoing, plaintiff relied on the briefs submitted in connection with its summary judgment motion. Chrysler, on its claimed right to discontinue production of the DeSoto automobile under paragraph 20 of the Agreement, introduced evidence bearing on the meaning intended by the language used in that paragraph.

 There was testimony, from which the Court finds, that as used in the automobile industry, and as understood by the parties to the Agreement, the word 'model' means and refers to automobiles identified by a particular year; that the word 'line,' though susceptible of more than one meaning, is generally used in the industry to designate a group of automobiles sold under the same trade name, such as the Plymouth, Dodge, Valiant or DeSoto; *fn2" and that the term 'body style' means and refers to a particular type of automobile, such as a two-door, four-door, hardtop or convertible. Accepting, as the Court does, these meanings and definitions of the quoted words, it is thus clear that ...


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