RONEY, Circuit Judge:
York Chrysler-Plymouth, Inc., C. C. York and Jerry A. York brought suit against Chrysler Corporation, Chrysler Motors Corporation and Chrysler Credit Corporation of Michigan on two counts of fraud and deceit, violation of the antitrust laws and violation of the Automobile Dealers Day in Court Act, 15 U.S.C. §§ 1221-1225. Chrysler Credit Corporation (Delaware) intervened and filed a claim against the plaintiffs for money due on a loan.
There was a jury verdict in favor of the defendants on three of the causes of action, but the jury returned a verdict in favor of the plaintiffs against Chrysler Corporation and Chrysler Motors Corporation for $107,000.00 on the action under the Dealers Day in Court Act. We affirm this judgment as to Chrysler Motors, but reverse and remand as to Chrysler Corporation.
The intervenor, Chrysler Credit Corporation (Delaware) obtained a verdict for $49,000.00 against C. C. York and Jerry A. York. Chrysler Credit seeks to have York Chrysler-Plymouth, Inc., added to the judgment and the Yorks seek to have the judgment set aside. We affirm.
In 1964, a representative of Chrysler Motors Corporation approached the Yorks with the proposition that they move their business from its downtown location to the new "automobile row" being developed on the outskirts of Mobile. The Yorks agreed to this suggestion, and on October 21, 1964, they entered into a Dealer Relocation Agreement with Chrysler Motors. This agreement contemplated that Chrysler Motors would buy land and construct a new facility which would then be leased to the dealership corporation.
There were two other significant occurrences in 1964. First, the Yorks became short of working capital and had to obtain from Commercial Credit Corporation a three month moratorium on the $70,000 loan which had been taken out in connection with purchase of the dealership. Second, Chrysler Motors Corporation performed a "Dealership Survey," which pointed out that the cash flow position of the dealership was precarious. The survey recommended, among other things, that the capital loan with Commercial Credit be renegotiated. The Yorks declined, however, to take this step.
Chrysler Motors then suggested that the Yorks might obtain needed working capital by reorganizing the dealership under the "Dealer Enterprise Plan." In general terms, the Dealer Enterprise Plan works this way. Chrysler Motors Corporation provides as much as 75% of the dealership's required capital, taking preferred stock in the dealership corporation in exchange. The dealer contributes a minimum of 25% of the capital, taking common stock in exchange. The preferred stock is retired gradually, out of the profits of the business, so that the individual dealer eventually becomes sole owner of the business. Until the preferred stock is retired, however, Chrysler Motors controls the dealership's board of directors.
The Yorks initially expressed an interest in the Dealer Enterprise Plan (D. E.) and, in fact, submitted a D. E. application in December of 1964. By the time the application had been approved, however, they had become concerned over the fact that under the D. E. Plan they would have to give up control of the dealership, so they advised Chrysler that they were no longer interested in a Dealer Enterprise operation.
In the fall of 1965, the Yorks accomplished the relocation of their dealership. In conjunction with the move, a number of changes were made. The dealership's name was changed from Barnes Motors to York Chrysler-Plymouth, Inc. The Yorks also changed their financing, severing their relationship with Commercial Credit Corporation and placing their retail and wholesale financing with Chrysler Credit Corporation. In addition, Chrysler Credit made the dealership a $40,000 capital loan, which was used to pay off the balance of the outstanding loan with Commercial Credit and an outstanding bank loan.
Since the name and location of the dealership had changed, it was necessary for the Yorks to enter into a new franchise agreement with Chrysler Motors. Chrysler Motors was dissatisfied with the financial condition of the dealership, however, and refused to give the Yorks the same "Direct Dealer Agreement" under which they had previously operated. Instead the parties entered into a "Term Sales Agreement," which differed from the Direct Dealer Agreement
In January, 1967, Chrysler Credit performed an audit of the dealership's books in connection with renewal of the $40,000 capital loan. According to this audit, (the accuracy of which is not admitted by plaintiffs) the dealership's net worth was a deficit of $2,000 and its working capital was a deficit of some $34,000. Chrysler Credit then performed a physical inventory of the automobiles in possession of the dealership and discovered that 22 new and used cars had been "sold out of trust."
On Monday, January 23, 1967, following the audit and discovery of the out of trust condition, representatives of Chrysler Motors Corporation met at the offices of York Chrysler-Plymouth with the regional manager of Chrysler Credit to discuss the future of the York dealership. The Yorks did not participate in this meeting, but were told that Chrysler Motors Corporation was trying to "work something out." The following day Chrysler Credit asked the Yorks to surrender the assets of the dealership corporation, in accordance with the security agreements held by Chrysler Credit. That evening, after the necessary papers had been reviewed by the Yorks' attorney, Chrysler Credit took over the assets of the dealership corporation. At the same time Chrylser Motors Corporation asked the Yorks to sign a mutual termination of the franchise. On advice of their attorney, they refused. Wednesday Chrysler Motors again asked the Yorks to resign from the dealership and the Yorks again refused.
This action was instituted on February 16, 1967. The Term Sales Agreement was allowed to expire by its own terms two months later.
I. Chryslers' Appeal of the $107,000 Judgment.
A. C. C. York and Jerry A. York as Parties Plaintiff.
Although not signing parties to the franchise agreement, C. C. York and Jerry A. York were so inextricably woven into it that we believe they could assert a claim against Chrysler Motors under the Dealers Day in Court Act. Section 1221(c) defines a dealer as any person or corporation "operating under the terms of a franchise." The individuals would not come within the scope of the Act merely because they were sole stockholders, officers and directors of the corporate franchise holder. Schaffer v. Universal Rundel Corp., 397 F.2d 893 (5th Cir. 1968); Martens v. Barrett, 245 F.2d 844 (5th Cir. 1957). However, following the reasoning in Kavanaugh v. Ford Motor Company, 353 F.2d 710 (7th Cir. 1965), we believe that the Yorks were made essential to operation of the dealership by the agreement with Chrysler Motors. The Direct Dealer Agreement held by the Yorks at the old location recited that Chrysler Motors Corporation "has entered into this agreement relying on the active, substantial and continuing personal participation" of C. C. York and Jerry A. York, required them to maintain beneficial ownership and control of the stock in the dealership corporation, could be terminated if either of
Having thus visited upon the Yorks the personal responsibility for keeping the franchise viable, Chrysler Motors cannot now successfully maintain that they should be denied the benefits provided to dealers by the Dealers Day in Court Act. The trial court properly denied all moves to dismiss the individual Yorks as parties plaintiff.
B. Chrysler Corporation as Defendant.
The $107,000 judgment was entered against Chrysler Corporation and Chrysler Motors Corporation. Chrysler Corporation manufactures the automobiles but sells them only to Chrysler Motors Corporation, its wholly-owned sales subsidiary. Chrysler Motors has sole responsibility for distribution and marketing of Chrysler products, and it is this corporation alone which enters into franchise contracts with automobile dealerships.
Clearly both Chrysler Corporation and Chrysler Motors are automobile manufacturers as defined in the Act. Chrysler Motors is such because it is a "corporation which acts for and is under the control of such manufacturer or assembler [Chrysler Corporation] in connection with the distribution of said automotive vehicles." 15 U.S.C. § 1221 (a). Either could be sued for failure "to act in good faith in performing or complying with any of the terms or provisions of the franchise." 15 U.S.C. § 1222. However, there being no showing that would make either responsible for the acts of the other on an agency theory, and the facts indicating that they are separate legal entities each operating in its own sphere, only the one which has entered into a franchise agreement could be held accountable for performing or complying with it. Since Chrysler Corporation was not a party to the franchise and had no legal responsibility to plaintiffs for the acts of Chrysler Motors, which signed the franchise, it should have been dismissed from the suit and the judgment should not have been entered against it. R.A.C. Motors, Inc. v. World-Wide Volkswagen Corp., 314 F.Supp. 681 (D. N.J. 1970); Reliable Volkswagen Sales & Service Co. v. World-Wide Auto Corp., 216 F.Supp. 141 (D.N.J.1963); Cf., Southern Rambler Sales, Inc. v. American Motors Corp., 375 F.2d 932 (5th Cir. 1967), cert. den. 389 U.S. 832, 88 S.Ct. 105, 19 L.Ed.2d 92.
C. Legal Right to Terminate.
The fact that Chrysler Motors may have had grounds for lawful termination of the automobile dealership does not permit this court to set aside a jury verdict after a trial which provided ample opportunity for this defense to be asserted. Frank Chevrolet Co. v. General Motors Corp., 419 F.2d 1054 (6th Cir. 1969) does not hold otherwise. There the court affirmed a summary judgment which merely held that the sales performances of the dealer in that case consistently fell below acceptable standards in violation of the agreement between the parties and that the refusal to renew the contract did not constitute an act of bad faith under the statute.
The Dealers Day in Court Act contemplates a cause of action even upon the assertion of legal rights if there is a failure of good faith in the exercise thereof. Assuming issues of fact which would support a finding of lack of "good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, canceling, or not renewing the franchise," it is up to the jury to determine the redemption value of the facts indicating that the action could have been taken in good faith. The Act specifically permits the assertion of the dealer's failure to act in good faith as a defense. 15 U.S.C. § 1222. The Act is not as concerned with what
We hold that to the extent that this issue was presented, the jury must have resolved it against Chrysler, and to any extent that it was not presented below, we cannot consider it on appeal. Hanley v. Chrysler Motors, 433 F.2d 708 (10th Cir. 1970); Pan-American Life Ins. Co. v. Alvarez, 374 F.2d 92 (5th Cir. 1967), cert. den., 389 U.S. 829, 88 S.Ct. 89, 19 L.Ed.2d 85.
D. Sufficiency of the Evidence.
Chrysler Motors finally urges that there was insufficient evidence to support the jury's verdict of a violation of the Dealers Act. Although not necessarily compelling, the evidence provides a sufficient basis for the jury's decision, as viewed most favorably to the plaintiffs. Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969).
The pivotal question that the jury had to determine concerned the alleged failure of the defendant to exercise "good faith" in its dealings with the plaintiffs and the coercive or intimidating effect of such dealings upon them. By its very nature, this determination must be made on inferences drawn from the evidence. It is derived from a subjective analysis of the facts. Reasonable men might differ. Thus, the jury verdict must stand.
Section 1221(e) of the Act defines the "good faith" against which defendants' acts were to be considered.
The broad theory which the Yorks presented at trial was that Chrysler Motors wanted a high volume Chrysler-Plymouth dealership in the Mobile area without regard to the advantage or disadvantage to the dealer.
That certain specific conduct has been held not to constitute a violation of the Act in certain cases does not lead to the conclusion that such conduct would not violate the Act in the setting of another case.
II. The $49,000 Judgment.
A. Chrysler Credit's Motion to Add York Chrysler-Plymouth, Inc. to $49,000 Judgment.
Chrysler Credit's claim was asserted against York Chrysler-Plymouth, Inc., C. C. York and Anyce York, his wife, and Jerry A. York and Mary V. York, his wife. The jury returned a verdict against only C. C. York and Jerry A. York. It did this by using a form verdict, prepared by the court, which listed the names of C. C. York and Jerry A. York and their two wives. The jury struck out the names of the wives and did not write in the name of York Chrysler-Plymouth, Inc.
Chrysler Credit moved to amend or correct the judgment by adding York Chrysler-Plymouth. The court denied the motion. Chrysler Credit claims an abuse of discretion on two grounds. First, an affidavit of the foreman of the jury says that the jury intended the verdict to be against the dealership corporation as well as against the Yorks. Second, Chrysler argues that it is not logical that the jury intended to return a verdict against the guarantors, C. C. York and Jerry A. York, and not against the principal debtor, York Chrysler-Plymouth.
As to the first argument, we see no reason not to apply the well-established rule that a single juror cannot be heard to impeach the verdict of the whole jury. McDonald v. Pless, 238 U.S. 264, 35 S.Ct. 783, 59 L.Ed. 1300 (1915); Complete Auto Transit, Inc. v. Wayne Broyles Eng. Corp., 351 F.2d 478 (5th Cir. 1965); compare Fox v. United States, 417 F.2d 84 (5th Cir. 1969).
As to the second argument, there is no rule of law that requires a jury's actions to be logical. It might seem just as illogical for the jury to strike the York wives from the judgment, when their liability was legally the same as their husbands'. But this it was free to do.
The trial judge did not abuse his discretion in refusing to amend the judgment to include York Chrysler. Wagner v. Pennsylvania R. R. Co., 282 F.2d 392 (3rd Cir. 1960); cf. United States v. Gould, 301 F.2d 353 (5th Cir. 1962).
B. York's Appeal from $49,000 Judgment Against Them in Favor of Chrysler Credit Corporation.
Chrysler Credit Corporation obtained the $49,000 jury verdict against C. C.
(1) Insufficiency of the Evidence.
There was sufficient evidence to show that the total debt due from York Chrysler-Plymouth, Inc. to Chrysler Credit Corporation, guaranteed by C. C. York and Jerry A. York individually, was $493,664.75. The total amount realized from the sale and disposition of the assets, including the automobiles delivered under the agreement, was $432,585.53. The difference exceeds the $49,000 jury verdict in favor of Chrysler Credit. The record is replete with testimony of how the total debt was computed and the various items that made up such total. The Yorks argue a different method of computation that would reduce this debt, but the matter was settled by the jury verdict.
Inasmuch as no motion was made for a directed verdict, we would not normally review the sufficiency of the evidence. Helene Curtis Industries, Inc. v. Pruitt, 385 F.2d 841 (5th Cir. 1967), cert. den., 391 U.S. 913, 88 S.Ct. 1806, 20 L.Ed.2d 652; DuPont v. Southern Pacific Co., 366 F.2d 193 (5th Cir. 1966); Stockton v. Altman, 432 F.2d 946 (5th Cir. 1970). In order to circumvent this rule, plaintiffs moved to amend the jury's award from $49,000.00 to $0.00. Although such relief might be appropriate where there is absolutely no evidence to support the verdict, such is clearly not the case here. See, Mumma v. Reading Co., 247 F.Supp. 252 (E.D. Pa.1965).
(2) Accord and Satisfaction.
On January 24, 1967, Chrysler Credit received automobiles and other assets from York Chrysler under an agreement which provides essentially as follows:
The parties cannot agree on the interpretation of this agreement.
In the first place, the Yorks claim that the assets were surrendered and accepted in payment of an unliquidated claim and that an accord and satisfaction took place which, as a matter of law, extinguished the entire claim. Hand Lumber Co. v. Hall, 147 Ala. 561, 41 So. 78 (1906).
The difficulty with this argument is simply that the agreement by its terms is limited to automobiles and assets delivered to and surrendered to Chrysler Credit. There were 17 new and 5 used cars, valued at $50,054.98, which had been sold out of trust and for which Chrysler Credit had not been paid.
In the second place, the Yorks take the position that the agreement acted as a release of the principal debtor and that being sureties they are likewise released. Knighton v. Curry, 62 Ala. 404 (1878); State v. Parker, 72 Ala. 181 (1882); McBroom v. Governor, 6 Port. 32 (1837).
This argument is foreclosed by the fact that the agreement did not act as a release of liability for the automobiles sold out of trust.
The Yorks further argue that when the jury failed to return a verdict against York Chrysler-Plymouth, Inc., it found that the principal debtor had been released and that the sureties were thus released as a matter of law. However, the guarantee agreement specifically provided that a release of York Chrysler would not affect the obligation of the individual Yorks.
This also answers the argument that Chrysler Credit failed to reserve its rights against the individuals with sufficient specificity. According to the terms of the agreements, no such reservation was necessary.
We have carefully reviewed every other argument as to error in the court below. That portion of the judgment of the district court which relates to the defendant Chrysler Corporation is reversed, and the cause is remanded to the district court for entry of an order dismissing the complaint against that defendant. In all other respects the judgment of the district court is affirmed.
Reversed and remanded in part; affirmed in part.
Also see: Swartz v. Chrysler Motors Corporation, 297 F.Supp. 834 (C.D.N.J. 1969); Mt. Lebanon Motors, Inc. v. Chrysler Corp., 283 F.Supp. 453 (W.D. Pa.1968); aff'd, 417 F.2d 622 (3rd Cir. 1969).