The opinion of the court was delivered by: BEEKS
This action was instituted by the licensee for certain cities in Kitsap County of Avis Rent-A-Car System, Inc., to test the validity of a purported termination by Avis of the license agreement between them. This Court's jurisdiction is grounded upon diversity of citizenship and the requisite amount in controversy. The parties have stipulated to all the relevant facts, and both have moved for summary judgment.
On April 1, 1963, the parties entered into a written license agreement which had been drafted by Avis. Paragraph 14 of that agreement, which dealt with termination, provides in relevant part as follows:
The other relevant portion thereof is paragraph 17, which reads:
17. This Agreement shall be construed in accordance with the law of New York.
Avis gave notice to plaintiff of termination of the license agreement by registered letter dated November 27, 1967, and received a few days thereafter. The letter stated no cause for the termination, and the parties have stipulated that, "for purposes of this lawsuit Avis is basing its claim of termination solely on its right under the license agreement to terminate without cause." The letter of termination further provided, "This termination shall be effective as of midnight, March 31, 1968." The decisive question is whether the notice of termination was sufficient, under the terms of the license agreement.
The threshold problem for determination is, what was the latest date Avis could terminate the agreement without cause? The agreement, signed April 1, 1963, provides that Avis can terminate only with cause after five years from the date of signing. The parties differ on whether April 1, 1968 comes within that initial five year period. The Court is convinced, however, that under the New York statute cited by Avis, and the cases interpreting that statute, the day the agreement was signed is excluded in counting the five year period; and therefore April 1, 1968 was within the period, and Avis had the power to terminate on that date without cause.
The next problem is to determine what the notice provision required of the parties for a valid termination. Plaintiff takes the position that, under Section 14, the agreement could only be terminated on one of four dates: January 1, April 1, July 1, or October 1. This construction is patently incorrect, as a careful reading of that clause will show. Under its provisions, the agreement can be terminated at any time. For notice of the termination to be valid, however, it must be given 90 days prior to the quarterly date which preceded the termination date. If the termination date happened also to be a quarterly date, 90 days' notice was sufficient.
From this, it is apparent that, for a termination on April 1, 1968, notice was required at least 90 days prior thereto; but for a termination on March 31, 1968, notice was required at least 90 days prior to January 1, 1968.
Avis gave its notice of termination in November of 1967. Such notice therefore would be sufficient for a termination on April 1, 1968, but not for a termination on March 31, 1968.
The problem before the Court, therefore, reduces to whether the notice given by Avis, which provided, "This termination shall be effective as of midnight, March 31, 1968," specified a ...