The opinion of the court was delivered by: Will, District Judge.
The plaintiff, Hammond Corporation (Hammond), a Delaware
corporation having its principal place of business in Illinois,
brings this diversity action under 28 U.S.C. § 1332, against the
General Electric Credit Corporation (GECC), a New York
corporation having its principal place of business in
Connecticut. The plaintiff has filed a two count complaint
seeking compensatory damages of $94,215.75 in the first count,
for the alleged breach of several financing contracts, and a
declaratory judgment in the second, finding that the plaintiff is
not liable to the defendant for a like amount under a separate
guaranty agreement. The defendant moves to transfer the instant
suit pursuant to 28 U.S.C. § 1404(a) to the federal district
court for the District of Massachusetts. For the reasons set
forth hereinafter, we find that the defendant's motion must be
denied.
The defendant entered into one such floor plan financing
agreement in March 1970 with Melody Ranch, Inc. (Melody), a
Massachusetts corporation which owns several Massachusetts retail
outlets which sell new Hammond organs. Under the original floor
plan financing agreement between Melody and GECC, the defendant
refused to extend credit to more than $150,000 worth of
inventory. Accordingly, in order to permit Melody to obtain an
additional $100,000 of financing from the defendant, the
plaintiff, on September 14, 1972, issued a written guaranty to
the defendant, which provided that:
Hammond Organ Company hereby guarantees payment in
event of default of payment by the above referenced
company [Melody] on a floor plan line of credit for
an amount not to exceed one hundred thousand dollars
[$100,000] for products manufactured by the Hammond
Organ Company.
The plaintiff in its guaranty agreement expressly distinguished
this additional $100,000 of financing from prior commitments,
stating that the guarantee would not extend to the original
$150,000 of credit. It also provided that the defendant must
conduct inventory inspections every 30 days and notify the
plaintiff of any sales made out of trust for which payment was
refused within 15 days as conditions precedent for recovery. The
term "out of trust" refers to financed sales made without an
accounting to GECC.
Based upon the plaintiff's written guaranty, the defendant
agreed to expand Melody's line of credit. It was soon discovered,
however, that Melody was making substantial sales out of trust in
violation of the floor plan agreement. In response to these
improprieties the defendant sent Melody a notice of default and
indicated that it was terminating the financing agreements on
January 11, 1973. Thereafter, on January 15, 1973, the defendant
notified the plaintiff that Melody had made $50,224.11 worth of
sales out of trust covered by the guaranty agreement and
requested reimbursement in that amount.
Subsequent to this January 15, 1973 request for funds, a
dispute arose between the parties as to first, the exact amount
of sales which Melody made out of trust, and, second, whether the
defendant had complied with the conditions necessary to establish
liability under the guaranty agreement. On February 6, 1973, the
defendant revealed that it had previously erred and that the
amount of Melody's out of trust sales was in reality $94,215.75,
and it increased its demand upon the plaintiff to that amount.
The plaintiff contends that the defendant has been unwilling or
unable to document that figure or, for that matter, any other
figure. The plaintiff further maintains that the defendant failed
to make the necessary inventory checks or to give the plaintiff
timely notice of the default as required by the guaranty
agreement and therefore is not entitled to the $94,215.75, even
if that was the proper amount.
The parties attempted to resolve their differences through
negotiations, but apparently were unyielding as to their
respective positions. Accordingly, in an unilateral attempt to
recover monies which it deemed due and owing, the defendant
claimed a set-off from separate payments owed to the plaintiff on
behalf of other GECC financed Hammond organ
dealers representing totally unrelated sales. Thus instead of
tendering $106,821.21, which was the invoiced amount billed by
the plaintiff on June 1, 1973, the defendant sent a check to the
plaintiff on June 20, 1973, for $12,605.46, which represented the
difference between the current invoice amount and the plaintiff's
alleged liability under the Melody guaranty agreement. Responding
to what the plaintiff characterizes as unjustifiable extra-legal
self help, the plaintiff filed this suit requesting in count one
the $94,215.75 withheld by the defendant and, in count 2,
declaratory relief finding that the plaintiff is not accountable
to the defendant for the $94,215.75 under the guaranty agreement.
Based upon the aforementioned facts, the defendant has offered
seven considerations in support of its motion to transfer. These
considerations are:
1. The primary focus of the plaintiff's complaint is
upon activities which ...