Karl Wendt Farm Equipment Co. v. International Harvester Co.

931 F.2d 1112 (6th Cir. 1991)

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Nature of the Case

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Facts

D decided to go out of the farm equipment business after a dramatic downturn in the market for farm equipment. In 1974 P and D had entered into a 'Dealer Sales and Service Agreement' ('agreement') which established P as a dealer of D goods in Marlette, Michigan. The agreement provided specific provisions for the termination of the contract upon the occurrence of certain specified conditions. D negotiated an agreement with J. I. Case Co. and Tenneco Inc. ('Case/Tenneco') to sell its farm equipment division to Case/Tenneco. The sale took the form of a sale of assets. Case/Tenneco did not acquire D's existing franchise network. Rather, it received 'access' to D dealers, many of whom eventually received a Case franchise. There were some 400 'conflicted areas' in which both a Case and a D dealership were located. In these areas, Case offered only one franchise contract. Marlette, Michigan was such a 'conflicted area' and P was not offered a Case franchise. P filed this action alleging breach of D's Dealer Agreement and several other causes of action. All P's allegations save the breach of contract action were disposed of before trial. D filed a counter-claim against P for debts arising out of farm equipment, and parts advanced to P on credit. The court allowed D's defense of impracticability of performance to go to the jury on the contract action. The jury returned a verdict of no cause of action on the contract, and the district court denied P's motion for J.N.O.V./new trial, which was based on the invalidity of the impracticability defense. The court ordered a directed verdict for P as to D's defenses of frustration of purpose, an implied covenant limiting the duration of the contract and a defense relating to whether Section 2 of the agreement permitted D to cease production of all its product lines. The court's directed verdict on the viability of these defenses forms the basis of D's cross-appeal. The court issued an order that P was indebted to D in the amount of $253,839.69 on D's counter-claim. P refused to tender the goods until the court determined whether it was entitled to a credit pursuant to the repurchase provisions of the Michigan Farm and Utility Equipment Franchise Act. D moved for an order finding P in contempt for defying the April 1 order. The court affirmed its April 1 order and ordered return of the goods. After selling the equipment D asked the court for a deficiency judgment. P asserted the proper amount of the deficiency was $180,379.21 rather than a higher figure claimed by D. The parties stipulated to the $180,379.21 figure and the court entered a judgment in that amount. P appeals from the judgment claiming that the court erred in not applying the provisions of the Farm Act in determining damages on D's counter-claims.