# Petition for Writ of Certiorari — Dayton Rubber Co. v. Cordovan Associates, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0022%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1960 - **Citation:** 364 U.S. 299 ## Text \ . * \ — o % | INTHE eae Supreme Court vf the United Stites Me ponte Tria, oo No, Dayron Repoen Company. Petitions y * é. CORDOVAN Associates, Dconporsrrep ¢ PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR By THE SIXTH CIRCUIT 9 Pita ()) kBeL ING Pie KREL, SCHAEFER AND Epprine. Phivd National Bark Poruildanre Davton, Ohio . senied Javes bk. Corny Shereham Biaaiding Washineton, DO «, ™ Miorie YN for I, fifiouer ° ? 4 Patess or 3veox S. Adams. Wasnincion, D.C gt “any! o — J Q INDEX - ° Page Opinien below ....... es eeercece peso CeeENeeresecete -1 GRE AE EEE ARO 2 Question presented .............6.ccceces sadadidena” i “Rule Teg ol ew 8 ESE ol eae en 5 Reasons for granting the writ ...................... x 5 | betnnddthieks 16 DT Sobclestonveunduudaueccwd Mpatstdechien la AGQOMEEE BD oon s ccc ccccccegeeess EE ae PE pee 12a RIPE Sbicndddecccss nedeneeennea en ehheaweh 13a ETE EE oe, ener Neen 17a CITATIONS CASES: " Bishop v. United States, 223 F.2d 582, 390 U.S. 96] & Central Ry. Signal Co. v. Letelen, 194 F. 2d 310 ...9, 10 Chicago, Burlington & Quincy R. Co: v. Dnited States, SE iinet ccecccdddendnuensaeees 9 Coleman v. Sears, Roebuck & Co., 238 F.2d 206 . 4) CLR. vy. Consolidated Premium Iron Ores, Limited, i tin ndedeneveeneocens amen 10, 11 Commissioner v. Duberstein, — U.S. — (decided June Dt Miievi cit eciihe ene anes bandas de 11, 12,15 Dixie Sand & Gravel Corporation vy. Holland, 255 F. Dt titenscsvtenehecadnedéumentecccennocene 11 Graver Tank Co. v. Linde Air Proawcts Co., 339 US. Dt tectcienkusnsatee dan ToVC so cccccceseccvcess 11, 15 Gudgel v. RE aME ED » cccnscctnadcccsuces 11 r Hycon Manufacturing Co. v. H. Koch & Sons, 219 F ie ee eh ae ak CE a cus Lopesnnes 9 Kaye v. Smitherman, 225 F.2d 583 ......5 00.0... i) a iid ee - y ] , Index Continued : ° Page devaft Foods Company v. CAR. 232 F. |. ee 9 Letcher County v Dekoe, Ve Lf A. C6 11 McAllister v. U niled State * 2 | Say 10, 11 Rich v. Pappas, 229 F.2d ge SESS 11 . Seagrare Corp. v. Mount, 232 FP. 2d 389.2... 66-6 -- 9,11 BE. H. Sheldon and Co. vy. R., 914 F.2d G55 ...... 1] Stevenot v. Norberg, 210 F. 2a" 615 Bs LES = i) Teras Co. ¥. R.O "Brien Co... BB TB BUSS .ccccces i) United States v. Allinger, 975 4 J rer 11 United States vy. One 1950 Buick. Sé&yn, 231 F. 2d 2 United States v. United States Gyps eeriadeepheeepitiges: ~ ASO, 11, 12, 15 of ORE MOA A | ee eee eee 11 ae LA fr Seren Sere 10 Wright v. C LR., CITE Se 10 Junker vy. C.LR., 256 F. 2d 190-35. Sinetactesaaees 10,11. Reu:* . ° ° | ‘wa Rule 52, Federal Rules of Civil Procedure U.S. > FS eee eee eeeeee eens éeawe 2, 3,7, 8, 10, 16 P an — —_ — a4 ) amin IN THE _ Supreme Court of the Anited States Oc = T ERM, 1960 No. , ————— \ Sf — y AyYTON RupBer Company, Pé?titioner 7 -— CoRDOVAN ASSOCIATES, INCORPORATED * PETITION FOR A WRIT OF\CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR , THE SIXTH CIRCUIT ( | —_ \Patitioner, The Dayton Rubber Company, \prays thatp writ of certidrari issue to review the judginent of the Court of Appeals for the Sixth Cireuit entered in the above entitled case on June 6, 1960. OPINION BELOW a The District Court did not render an opinion. Its A findings and conclusions were entered on May 6, 1956 (Appendix A, infra, pp. la-Jla) and, its order of | deela ratory judgment was filed June 8, 1959 (Appendix, > | 1S, infra, p. 12a). The opinion of the Cireuit Court of Appeuls (Appendix C, infra, pp. 13a-17a) is not yet ’ \ reported, i » JURISDICTION Yhe judgment of the Court of Appeals was entered on dune 6, 1960° (Appendix D, infra, p. Wa). A timely petition for a rehearing was denied on July of 1960. The’ jurisdiction of this court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED o This was an action for a declaratory judgment instituted by the Dayton. Rubber Company against Cordovan Associates, Incorporated, .to resolve the _______ question of whether or not Dayton, by reason of its contract. with Cordovan, was required to accord to approved distributors of Cordovan, for the period from June 1, 1958 to the termination of the contract on - October 31, 1958, the same prices that it acecrded te its other chain store ‘customer, White Stores, Ine. After a non-jury trial of two weeks duration, the trial judge held that Dayton was not so required. In the course of detailed findings, the trial judge found that: There was no provision, either o1 rea@pritten, - nor were there facts from whicl erence could be drawn, that Cordovan prices were to be * tied fo White prices under all circumstances. The Court of Appeals reversed the judgment of the trial court because it disagreed with that finding. It held that this was an inference or con¢lusion drawn frem the facts with which it was free to disagree - wninhibited by the clearly erroneous test of Rule 52 of the Federal Rules-of Civil Procedure, 28 U.S.C.A., following 723(¢). : © The sole question is whether the Court of Appeals erred.in failing to apply to the finding above mentioned the clearly-erroneous test of Rule 52. ° -_-—- . —— ¥ os 3 . | RULE INVOLVED — ° Rule-52 of the Federal Rulessof Civil Procedure [28 U.S.C.A.] provides in part as follows: (a) Errects In-athactions tried upon the facts Without a jury or with an advisory jury, the court ‘Shall find the facts specially and state separi: ély its conclusions of law thereon and direct the entry of the apprepriate judgment ; and in grant- ing or reftising interloqutory injunctions the court shall. similarly set forth the findings of fact and conclusions of law Which constitute the grounds of its action. Requests for findings are not neeessary for purposes of review, Findings of fact shall not be set aside anless cleaady erroneous, and due régard shall be given to the opportunity of the, trial court -to judge of the credibility of the Witnesses. ¢ STATEMENT | ‘The Dayton Rubber Company, petitioner herein ir an Ohio corporation. It is a manufacturer, among other things, of automobile tires and tubes. On November 1, 1956, it entered into a contract with | Cordovan Associates, Incorporated, a «Virginia cor- ' poration, under which it agréed ‘to manufacture and sell to customers’ approted hy Cordovan . Associates tires amd tubes bearing the brand name ‘ Cordovan. Cordovan’s approved customers were chain store operators of automotive retail businesses located thronghaut a large area of the United States. The contract was for a term of two years (November 1, 1956, to October 31, 1958), and required ‘that Dayton sell Cordovan brand tires Aid tubes to the approved distributors at prices ‘““*prevarling on date: of ship- ment.’* Sales were made to the various, Cordovan distributors until the termination of the contract on a @ « * 4 e October 31, 1958. However, a dispute. arose as to the prices Dayton ‘could properly charge the Various distributors for the items sold to thém’ during the period = from June 1,, 1958 tS October 31, 1958. Cordovan contended that the phrase ‘‘prices pre- vailing on date of shipment’? entitled its distributors to the same prices Dayton charged its other chain store customer White Stores, Inc. Dayton contended that ‘yfices prevailing on date of shipment’? refer- enced a pricing formula and that it was free to enter into a new contract with White Stores without being under obligation toxenter into a similar contract with Cordovan. Since there were numerous Cordovan dis- tributors located in sevéral differént jurisdictions who owed Dayton large sums for tires and tybes ‘sold ta them during tle period in question, Dayton, > to avoid-a multiplicity of suits, brought an action “for a declaratory judgment to obtain a eonstruction—~of the contract and a decision as to the rights and obligations of the parties under it. i) After a pon-jury trial of two weeks’ duration, the trial judge made dethiled findings of fact and entered judgment in favor of Dayton coneludiny that the prices charged Cordovan distributors. by thé rubber company. Were préper and in accordancé with the. contract between Dayton and Cordovan. In brief, the trial judge found that from 1947 to 1956, the Dayton Rubber Company hadsold tire easings and tubes through its thain store division to poth White Stores, Inc., and the approved distributors of Cordovan Associates bilimg them on an_ identical “cost justification basis,’’ though it had no written contract with eifher customer (Apdx. 3a). - Fluctua- tions in prices, Which generally came aboutsquarterly, » ‘ ® | 2 ~ _. follows : oe 5 - : , | Were applied uniformly and? identically to: shipments going to both customers (Apdx. 3a). In 1956," Dayton entered ‘into. a written contract with White Stores, Ine., for’the sale of such tires-rid tubes. This contract‘was for a ternt of thice years, commencing August 1, L956 (Apdx. 4a). Thereafter, on November 1, 1956, it entered into-a similar con- tract with Corgovan Associates for a term of two years (Apdx. 4a). The contract with * Cordovan ‘contained the following paragraph with regard to prices for tires and tubes purchased pur@iant to such ” P ‘e q contract : ) ° 9. Price. Supplier will invoice buver’s associates and approved ‘distributors for Cordovan brand casings and tubes purchased hereunder at prices ‘ prevYailing on date of shipment. Such prices are subject to addition, of any and all excise. sales, or manufacturer’s tax levied by lawfukuthority on the merchandise purchased under this contract. The corresponding provision in the White contract ‘found (Apdx. 4a) that in fact the prices charged the dJwo customers on sales subsequent 40 the written cou. étracts continued to be identical for the same kind, quality and size of tires and tubes (Apdx. 5a). The trial judge also found that for the fiscal vear ending October 31, 1957, there was established and "The cotrespondiQy provision in the White contract read as “). Prices. Supplier will invoice Buyer and approved dis- tributors for Whitesbrand casings and tubes purchased here- under at prices prevailing on Yate of shipment. Such: prices are subject to addition of any dnd ali excise, sales or manufac. turer’s ‘tax levied by lawful authority on the merchandise pur- * chased tinder this agreement.’’ . * A -Was in all- material respects identical’ and it was ° + 6 ‘ os in effect, as a part of. the pricing pdliey of the chain. store Givision, a yearly: volume rebate program, Pts . o . . ss - program was identical in its previstons for both Cordovan Assovciates.and White Stores, Ine. (Apdx. -5a).. li practice, the volume rebate program accorded somewhat more favorable prices to the Cordovan dis- tributors than to White Stores and, on February 1, - 1 a x : 1958, Dayton proposed that for the fiscal year ending October 31, 1958, it would set up a volume rebate’ pregram based on the result of the combined pur- chases of White Stores and Cordovan distributors for such fisealear. This was designated as a super- bonus program and was accepted by both Cordovan and White on February 2, 1958 (Apdx. 6a). The trial _judge held that by initiation of a super-bonus program, Dayton made a concession to Cordovan and White in- the prices charged,, which concession was Yadhin ithe terms of the contract providing for ** prices prevailing on: date of shipment” (Apdx. 6a). In his comments, the trial judge observed that Cordovan and White had been customers of the chain store division of Dayton for a long period of time and that, throughout the dealings, there was always an effort on the part of cagh to obtain more favorable prices. (Apdx. 10a). On June 12, 1958, Dayton, responding. to. market pressures (AYpdx. 7a), presented a new plan of pricing to White which was called ‘tbased on cost’” pricesy as distinguished from the old plan of so-called ‘cost justification” (Apdx. Ja). The new plan of pricing * was made retroactive to June 1, 1958. The trial judge found. this new plan was an entirely different method of pricing and was not included in paragraph 5 of the contracts calling#for ‘‘prices prevailing on date of shipment”. The new plan afforded White prices o 7] approximately 10° lower than the prices accorded tnider the old formula. The trial judge further fyund that throughout the montlis of April; Mav and June of 1958, negotiations also took place hetween Cordovan_and Dayton with respect to a new or amended contract to take the place of the contract, the construction of whieh was In issue (Apdx. 6a-7a). He found that the purpose of thesy negotiations on the part of Cordovan was to obtain more favorable prices, a ‘cost plus’* basis of pricing and a different method of operation (Apdx. 7a). These negotiations proved abortive and no new! contract eventuated, though on June 26, 1958, Davton offered Cordovan Associates a new>contract with the same pricing plan which had been given to White Stored Certain conditions in the new contract were refused by Cordovan, and, accordingly, until the expiration of its contract on October 31, 1958, charges were made To Cordovan under the “prevailing price clause’? and these charges the trial jndge concluded were proper, On review, the Court of Appeals observed) that basiely Cordovan contended “that all parties under- stood the prices were to be the same to each of the two large chain store customers.’ The court held that the decisive question was whether or not this conten-« — tion Was correct. It then observed that the trial] judge had stated in his findings that “(tjhere was no pro- Vision, either oral or written, nor were there facts from which an inference Gould be drawn that Cordovan prices were to be tied to White prices under all cireumstances.’? The Court of Appeals said this was actually. an. inference or -conelision frem the facts With which it was free to disagree, uninhibited by the clearly erroneous test of Rule 52 of the Federal Rules of Civil Procedure. The Court did disagree and dis- agreeing reversed the judgment of the District Court. 8 Im noting its disagreement the Court of Appeais referred to the **manifest meaning of the language used,’ to the “uniform pricing policy”? of Dayton and to the practical interpretation placed on the contract by the parties (Apd®. 15a-16a): In these areas it dis- agreed with the District Court and thus found, contrary to the District Court, that all parties understood that the prices were to be the same to each of the two large | chain store customers under all circumstances (Apdx. Ida, 17a). Consequently, it decided that the more fa- vorable prices negotiated by White inured to the benefit of Cordovan distributors. The court did not comment upon the fact that the trial court had found, in effect, that ‘prices Prevailing on date of shipment’? had reference to a pricing formula, the so-called (cost justification formula); it did not comment upon the — fact that the White contract was entered into before the Cordofan contract and was for a term of three ars rather than the two vear term of the Cordovan contract. Nor, did the court refer or comment upon the fact found by the trial court that Cordovan, like White, had tried to obtain a differeyg cost basis though Cordovan sought ‘‘cost plus’? prices at the time that White agreed to accept prices ‘‘based” on cost.”’ These factors were not alluded to by the Court of Appeals even though it disagreed with the District Court and reversed its jydgment. REASONS FOR GRANTING THE WRIT (1) This ease emphasizes the conflict that exists hetween the cirenits as to the application of the clearly erroneous test of Rule 52. On the one hand, there is a line of authority holding that inferences and con- clusions drawn by the trial judge are ‘not to be rejected by a reviewing court unless clearly erroneous. These i) ? . cases frequently cite and rely upon the deeision of this Court in United States v. U.S. Gypsum Co., 333 US. 364, 394. On the other hand, there is a line of authority that holds that findings which embody inferences and conclusions can be set aside when the reviewing court disagrees with the position of the trial court. These authorities cither ignore or seek to distinguish the holding of this eourt in d'nited States v. U.S. Gypsum Co., supra. In Teras Co. vy. R. O'Brien d& ('o,, 242 F. 2 526, the Court of Appeals for the First Circuit observed that there is a singular lack of unanimity not only lwtween but within individual circuits with regard to the right of a reviewing court to disregard what it termed ultimate findings, when based upon written or un) -nuted evidence and the court collected some of the more recent examples? of such disagreement. \ court notes the following recent examples of conflict - CoNt free to disregard ultimate findings when based upon writ- ten-or undisputed evidence: Kraft Foods Co. v. Commissioner of Internal Revenue, 2 Cir., 1956, 232 F. 2d 118; United States v. One Y 1950 Buick Sedan, 3 Cir., 1956, 231 F. 2d 219 (court reaches result by indicating an ultimate “inference” js not a “‘finding of fact.’’) ; Seagrave Corp. vy. Mount, Cir., 1954, 212 F. 2a: Chicago, Bur- lington & Quincy R. Co. y. United States, 7 Cir’ 1955, 221 F. 2d SIL; Stevenot v. Norberg, 9 Cir., 1954, 210 F. 2d 615. _ Court cannot reverse such findings merely because it disagrees With them, but must conclude they are ‘‘clearly erroneous’’; Cen- tral Ry. Signal Co. v. Longden, 7 Cir., 1952, 194 F. 24 310; Coleman \. Sears, Roebuck & Co., 8 Cir, 1956, 238 F. 2a 206; Hycon Manu- facturing Co. ¥. H. Koch & Sons, 9 Cir., 1955, 219 F. 9 353, cer- tiorari denied, 1955, 349 U.S. 993, 75 S. Ct. 881, 99 L. Ea. 1278; Auye v. Smitherman, 10 Cir , 1955, 225 F. 24 583, certiorari denied, 15, $50 U.S. 912, 76'S. Ct. 197, 100 L. Ed. 800; Bishop v. United States, 1955, 96 U.S. App. D.C. 117, 223 F, 24 582, judgment vacated and remanded, 1956, 350 U.S. 961, 76'S. Ct. 440, 100 L. Ed. 539 semble. . 10 The seriousness Of the disggreement that exists between the circuits is reflected in the two different lines of authority that have developed within the Sixth Cireuit. In the instant case the court ‘singled - out a particular finding which it held embodied an inference or conclusion, and. so holding felt free to disagree uninhibited by the clearly erroneous test of Rule 52. It could support its position by citing authorities both from within the Sixth Cireuit and from other cireuit® Nevertheless, the position taken is in sharp contrast to the holding of a different panel of the same court in Wright CLR. 274 F. 2d 883, 884 (decided February 20, 1960), where the court did apply the clearly erroneous test to the inferences and conclusions of the trial judge. In that case the court said— We consider the inferences and conclusions of the trial judge to be*logical and reasonable and _not clearly erroneous. Rule 3?2(a) F.R.Civ.P., 28 ULS.C.A. being applicable, the decision of the Tax Court will not be disturbed. United States v. United Stas Gypsum Co., 333 U.S. 364, 399, 68S. Ct. 525, OWL. Ed. 746; McAllister v. United o States, 348 U.St 19, 20, 76.8. Ct. 6, 99 L. Ed. 20; Central Ry. Signal Co. vy. Longden, 7 Cir., 194 F. 2d 310, 318; Wise v. CALR., 6 Cit., 260 F, 2d 354. / It will be observed that the court in that case was relying wpon the decision of this court in United States vw U.S. Gypsum Co., 3336 U.S. 364; and McAllister \. Uneted States, 348 U.S. 19, 20. It also relied upon a decision’ another circuit as well as a prior decision of the Sixth Circuit. The fact is that ‘in several recent opinions, Willett v. C.LR., 277 F. 2d 586 (C. A. 6, 1960); CLLR. ve Consolidated Tron Ores | Limfted, 265 F, 2d 320 (C..A. 6, 1959); and, in Vunker 1] . V. Commissioner, 256 F, 2d 130 (C. A. 6, 1958), the Court of Appeals for the Sixth Circuit has expressly referred to this contliet,’ noting that it exists not only Within the Circuit but that there is a contlict between the circuits. In the recent Willett case, supra, the court said Counsel for the petitioners @ontend that the erroneous rule is not applicable to cone drawn by the Trial Judge from undisputed ‘learly In Commissioner of Internal Revenue v. Con- solidated Premium Tron Ores, Limited, supra, it Was pointed out by this Court that not only is there a conflict in fhe Cirenits on this point but there are also contlicts on it within the, Circuits, This is true in the Sixth Circuit. (See cases cited in the Consolidated Premium Tron Ores ease.) On this question we adhere to the.#pew expressed in the Consolidated Premium. 1% Pres case, \ a. 8 While this Court has in such cases at Giited States v. US. Gypsum C0., 333 US. 364, 395; Graver Tank & Mio. Co. Ine. y. Linde Air J ’roducts Co,, 336 U.S. 271, 275-276; MeAillister y. United States, 348 US. 19, 20; and, Commissioner vy. Daberstein, — US, — * The position taken by the court in this case as to the application of the cleagly erroneous test is wholly inconsistent with the Posi- tion. taken in other recent cases in the same court. See United States-¥—Atenger, 275 F. 2d 42] (decided March 3, 1960) ; and, Willett v. CLULR., 277 F. 2d 586 (decided April 12, 1960). and is ineonsistent with the holding in CLLR. y. Consolidated Premium Tron Ores Limite d, 265 F.2d 856 (C. A. 6, 1959); Dirie' Sand & Gravel Corp, ¥. Holland, 255 ¥. 2d 304 (C. A. 6, 1958); and Rich Vv. Pappas, 229 F. 2d 308 (C. A. 6,.1956). But views contrary to those expressed in the above cases are found in: Gudgel y. CIR, 273 F.2d 206 (C. A. 1999); Vunker vy, Commissioner, 256 FL 2d 130 (C. A. 6, 1958) ; E,W. Sheldon and Co. Vv. CULR., 214 F. 24 655 (CA. 6, 1954); Seagrave Corp. ¥. Mount, 212 F. 2d 389 (C. A. 6, 154): and, Leteher County v. Defoe, 151 F. 2d 987 (C. A. 6, 1945). “> 12 (decided June 13, 1960), considered and laid down guide posts as to the right of a reviewing court to reject the findings of a trial court, it nevertheless appears that the decisions of the several circuit eourts are far from harmonious. It is clear from the con- Hieding decisions that the various circuit, courts have divergent views as to the substance of this Court's prior decisions. Th®§plit in the authorities is manifest and is retlected in the conflicting decisions of indwidual circuits whieh produces a particularly undesirable situation beeause success or failure on review depends tuo often upon the fortuitous cireumstance of the make-up of the panel that hears the case. The question is one Which arises.in many cases and, asa consequence, ix obviously important. The guide posts which this Court has laid down, in this admittedly difficult area, are not sufficient as vet to bring harmony into the decisions and we believe, therefore, the Court might well consider the question raised as worthy of further consideration and elucidation. a (2) While the court below could, because of the contlicting decisions in the sevegal cireuits and within the cireuit, find some authority for its position in this case, We submit that it is clear the court actually failed to follow the authoritative decisions of this Court when it simply-neted its disagreement with the tinding in question and did not subject it to the clearly erroneous test. The courtbelow felt it was uninhibited by the clearly erroneous test because the finding in question was an “inference or conclusion”’, but it is clear from the authoritative decisions of this Court that io the extent this finding did involve inference from basic facts it should have been subjected to the clearly erroneous test. See, United States vo U.S. Gypsum Co, 3 US. 364, 395; Commissioner v. Duberstein, — US. — (decided June 13, 1960). . e - ¢ ‘ : ai The court observed that What was essentially at issne Was the understanding of the parties as to the meaning of the phrase * prices prevailing on date of shipment.” That understanding was a question of fact which the trial court hack the duty to resolve. This was not a ease in which the facts, as such, were undisputed. There were two Weeks of trial and HUMeros gvitnesses testified. In many areas the evidence was conflicting. This was particularly trie With regard to the pricing poliey of Davton and the significance of the various fait ‘ © la ‘ , APPENDIX A e ; pean oe F o : Findings of Fact and Conclusions of Law (Filed May 6, 1959.) Cecn, District Judge:° t This case was tried and sibmitted ta the Court upon * the pleadings, the evidence andvoral arguments of counsel. Upon consideration whereof, the Court makes the follow- ing Findings of Fact: | 1. Plaintiff, The Datton Rubber Company, hereinafter - for convenience referred to as “Daytén Rubber,” is a cor- poration organized and existing under and by virtue of ’ the laws of: the State of Ohio, and is a citizen of the State | of Ohio, * .° Aa = 2. Defendant, Cordovan Associatés, Incorporated, here- . i « ™ s * ° inafter for convenience referred to as ‘*Cordovan,” is at corporation ergénized and existing under and by virtue @ of the laws of the, State of Virginia, “and is a citizen of the State A Virginia, . ‘ 3. Cordovan i» ‘the owner, by conveyance and agsign- ‘ment from Automotive Associates, Ine., a corporation on - or about March 1956, of the trade-mark “Cordovan” and - the molds in which the “Cordovan” -bgand casings and tubes are manufactured. yes , - 4. Cordovan is engaged in the business of having manu- * b factured for its associate members and ‘approved distribu- tors *‘Cordovan” brand casings and tubes for resale by such associates and approved distributors, who are ( ‘hain Storé Operators of automotive retail businesses throughout: “tg . 4 large area of the United States. Such associate members ‘and approved distributors Jare hereafter, for convenience . \ sake, referred to as. **Cordovan Associates.” \ - 2a | : e e 9.*“Cordovan”™ brand casings and tubes have, since about 1947 and continuously since ‘that date and throughouf the term of the contract the subject pt this action, been mA&nu- . factured by Dayton Rabber for purchase and resale by automotive Chain Store businesses authorized to use the “Cordovan” brand by the owner of such mark aud molds. 6. White Stores, Inc, hereafter, for convenience sake, referred to as ‘*White,’? is a corporation with its principal office in Wichita Falls; Texas, and is now, and at all times since about 1947 has been, the owner of the trademark and name ‘*White” as applied to casings and tubes, and the owner of the molds in which such casings and tubes were manufacturing for it by Dayton Rubber. White Stores, Inc., operates a Chain Store retail business in the aufomotive field in Texas and nearby States. ‘7. Prior to November 1, 1956, for several years, Dayton Rubber manufactured its own private brand casings under the trademark anil name “Road King” for purchase for resale by chain store automotive businesses, . 8. Since. about 1947, Dayton Rubber has operated a di- vision of its business under a division of its company generally known and described as its “Chain Store Di- vision.”’ | . At all times since the organization of ‘such Division, seed Rubber has conducted its operations in the manu- facture and sale of ‘Cordovan,’ "and ‘*White,” and “Roa King” casings and tubes by and through its Chain Stere | Division, and. purchasers of casings and tubes manufae- tured and sold by Dayton Rubber through its Chain Store Division consisted only of Cordovan Associates, White, and purchasers of the “Road King” brand. ‘10. Billing prices of casings and tubes manufertared and sold by Dayton Rubber through its Chain Store Division | -were established on what is knowy in the trade as a “Cost Justificafion” basis. - ~— : ~ s ; . Si 11. At all times prior to August 16, 1956, and ‘continu- ously thereafter until June 1, 1958, the net billing prices of the Dayton Rubber for tires (casings) and tubes of the sameSyuality, kind, and size sold by it through its Chain ‘Store Division were identical as hetween all customers of the Chain Store Division of Dayton Rubber, including White and Cordovan Associates. The ‘‘net billing price,” as herein uséd, sometimes referred to in the trade as “base billing price,’? means the gross billing priée less ‘‘mold wnortization” charge in the case of Cordovan, dnd “price equalization” charge for amortization of White molds in the case of White, ' ns 12. For several years prior to August 16, 1956, there Was a pricing policy established and in effect in the Chain Store Division of Dayton Rubber, applicable alike to all customers of such Division, whereby identical base or net’ billing prices were established for all tires and tubes sold through such Division to all customers thereof, namely, Cordovan, White and Road King, and that Cordovan Axsso- ciates ‘and in particular representatives thereof constitut- ing the Bourd of Directors of Cordovan, had been told of this uniform pricing policy, andgthat base or net billing prices for tires and tubes of the same kind, quality and “ize were identical as between all customers of such Di- Vision. ° 13. Prices‘as established by Dayton Rubber in its Chain Store Division fluctuated from time to time with indust ry '. conditions, but fluctuations so o curring. were applied uni- formly and identically as to all eustomérs of such Chain Store Division. Prices, as established in the Chain Store’ Division, were revised from time to time, generally on a - quarterly basis, and shipments made during any such quarterly period were at the prices as established and then in effeet for such quarterly period. This policy was known to Cordovan Associates, White, and customers of the Road King brand, being all’of the customers of the Chain Store 4a v Division throughout the time of their respective purchasing from such Chain Store Division. tracts between Daytén Rubber, Cordovan, Cordovan Asso- 14. Prior to Dera & 1996, there were no written con- ciates, or White. / 15. In the Summer of 11956, prior to August 1, 1956, Dayton Rubher concluded to abandon its efforts to pro- mote sales of its own Road King brand through its Chain Store Division, and to promote its sales to chain stores through expansion of Cordovan Associates and Whtite re- tail sales outlets. In adopting this policy, Dayton Rubber desired to;#ssure itself for a proposed period of at least three years of the purchase from Dayton Rubber of all of the tire and tube requirements of all Cordovan Associates and White, and proposed to uate h a written contract ae- cordingly. : 16. Such written contracts, as prepared by Dayton Rub- ber and so proposed to Cordovan and White, were duly executed and delivered between Dayton Rubber and White (ish) vit No. D) tor a term of three years commencing “August 1, 1956,.and between Dayton Rubber and Cordovan ‘(Exhibit No. 1) tor » term of two years commencing No- vember 1, 1956, Cordovan at that time being unwilling to enter into such proposed contract for a term of more than two yeurs, ’ 17. The. contract with White contained the foliowing paragraph as to prices.to be charged for tires and tubes purchased from Dayton Rubber-under such contract: “5. Prices. Supplier will invoice Buyer ‘and ap- proved Uistributors tor White brand casings and tubes purchased hereunder at prices prevailing on date of shipment. Such prices are subject to addition of any and all excise, sales, or manufacturer’s tax levied by lawful authority on the merchandise purchased under this agreement.” & . Da , S o 4 tt . , rE. 8% lda — ° y = . 4 - ; ; ° . | i. . | 4 3 ae l6a . tomers a.lower price thane the other for the same item, when both have-contracts to receive goods at “prevailing prices.’’? There can be,only one **prevajling price’’ at a yiven time; afdy in the present context, it would fairiy mean the lowest price for the commodity which the seller gives to either of his two large buyers in conformity with: a contract provision for sales at ‘‘prevailing prices.” Throughout their ¢ourse of dealing, tt had been the uni- form pricing poliey of Dayton Rubber, Company to bill its two chain store customers af identical base, er net, billing prices for tires furnished. The prices fluctuated from‘time to time, but the fluctuations were applied “uniformly and identically as to alleustomers.” Tue Board of Directors of Cordovan Associates was told of this pricing policy; and this was the system which the parties followed without deviation. Thus, in departing from this.systeém by giving White Stores a lower price, for whatever reasori, and cor. respondingty refusing to lower thie price to Cordovan. As- sociates,. except under certain conditions, the appellee com- pany was ho longer selling to appellant at the “prevailing price’’ called for in tue contract between them. Even if the’ meaning of “prevailing prices” is not dis- closed by the actions of the parties up to the time the con- tract between Dayton*Rubber Company and Cordovan As. soicates was signed, their. own practical interpretation of the pricing clause in performing the contec*t would carry great weight—if indeed it did not control—in its interpre- tation. This has bee: the settled rile both in this circuit and in the State of Ohio. t'ederal Surety Co. vy. Bentley & Sons Co., 51 F. (2d) 24 (C. A. 6): See also Cincinnati v. “as Light & Coke Co., 53 Ohio St. 278, where the Ohio Su- preme Court held that w contract to furnish gas at the * “lowest average price at which gas shall or may be fur- nished to private indivigyals in’ the cities of New Orleans, Baltimore, New York, Louisville and PittsBargh,”. was sufficiently clear and unambiguous to be interpreted by the court. The court added that, in ease of doubt, the prae- ¢ 8 ee le ld V7a\_ tical interpretation which had been placed on the «ontract by the parties over a lox & period of time should be adopted as the proper one.’ It was stated, however, that “to have “any value as a practical construction, the course of dealing should be uniform, unquestioned and fully concurred in by both parties.” Such Was certainly the situation with re- spect to Dayton Robber Company and Cordovan Associates, - Incorporated, Pa ¢ ea = ' For the foregoing reasons, the Declaratory Judgment entered in the United States District Court is reversed, The case is remanded for entry of judement in accordance with this opinion. June 6, 1960 APPEAL from the United States District Court for the Southern District of Ohio. | , ' Tuts Cause came on-to be heard on the transcript of the record-from the United States District Court for the South- ern District of Ohio, and was argued by counsel. On Consteration Wuergor. It is now here orderéd and adjudged by this Court that the Declaratory Judgment of the said District Court in this cause be and the sanie is hereby reversed and the case remanded to the District Court for entry ef judgment in accordance, with the opinion herein. r ~ + - --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0022%3A2. Public record. Not legal advice.