Ard Dr. Pepper Bottling Co. v. Dr. Pepper Co.

• Decision Date: 27 February 1953
• Docket Number: No. 14276.,14276.
• Citation: 202 F.2d 372
• Parties: ARD DR. PEPPER BOTTLING CO. v. DR. PEPPER CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

202 F.2d 372 (1953)

ARD DR. PEPPER BOTTLING CO. v. DR. PEPPER CO. et al.

No. 14276.

United States Court of Appeals Fifth Circuit.

February 27, 1953.

M. B. Montgomery, Jackson, Miss., Hugh v. Wall, Brookhaven, Miss., Barnett, Jones & Montgomery, Jackson, Miss., for appellant.

C. B. Snow, Jackson, Miss., Snowden M. Leftwich, Dallas, Tex., Butler, Snow & O'Mara, Jackson, Miss., for appellees.

Before HUTCHESON, Chief Judge, and STRUM and RIVES, Circuit Judges.

RIVES, Circuit Judge.

This appeal is from a judgment rendered upon a directed verdict in favor of the defendant, appellee. For convenience, the appellant, plaintiff, will be hereafter referred to as Ard and the appellee, defendant, as Dr. Pepper.

The complaint seeks the recovery of damages in the amount of $150,000.00 for the alleged wrongful, willful, and malicious breach of a bottler's license agreement entered into between Ard and Dr. Pepper in 1938. The answer admits the cancellation by Dr. Pepper of the license agreement on July 27, 1950, and alleges that Dr. Pepper in good faith determined that Ard had not complied with the terms and provisions of the license agreement, and that under the provisions of the agreement Dr. Pepper's determination as to these matters authorized it to cancel the agreement and was final and conclusive.

The district court in the course of its instructions to the jury directing a verdict for the defendant, Dr. Pepper, stated that the cases of Goltra v. Weeks, 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074; Standard Construction Co. v. Brantley Granite Co., 90 Miss. 16, 43 So. 300; Shepherd v. Union Central Life Ins. Co., 5 Cir., 74 F.2d 180; and Lanier v. New York Life Ins. Co., 5 Cir., 88 F.2d 196, were controlling and made it imperative that the directed verdict be given. The view of the district court is fairly summarized in the concluding paragraph of its charge to the jury:

"The Dr. Pepper Company, when it lets these contracts out, naturally is looking to the future. It puts at least a fair part of its business in the hands of its dealers and it, therefore, has the right to reserve unto itself the determination of whether or not the contract is being carried out to its satisfaction. The company, in good faith, and I think after a full and thorough investigation, and after an ample opportunity to Ard Dr. Pepper Bottling Company to take up the matter with it, determined that the contract was not being carried out to its satisfaction and, therefore, it had the right to cancel the contract. That being the law, it is the duty of the court to instruct the jury to return a verdict to find for the defendant"

By the bottler's license agreement entered into between Dr. Pepper and Ard on the 20th day of July, 1938, Dr. Pepper granted to Ard the exclusive license to bottle in a designated territory consisting of a number of counties in Mississippi a soft drink known as "Dr. Pepper", provided for the price and terms at which Dr. Pepper was to sell syrup to Ard, and agreed that "such exclusive license shall continue so long as Dr. Pepper Company, or its successors or assigns, continue the manufacture of Dr. Pepper syrup, unless sooner terminated under the provisions hereinafter set out."

Among Ard's agreements were the following (emphasis supplied):

"(a) To accept Dr. Pepper as its leading drink * * *.

"(b) To use modern, automatic and sanitary equipment throughout, of such character in all bottling operations as are, or may be, required and approved by the Grantor.

* * * * * *

"(e) To at all times loyally and faithfully promote the sale of and secure thorough distribution of Dr. Pepper throughout every part of said territory and to all dealers therein, and to develop an increase in volume of sales of Dr. Pepper satisfactory to the Grantor. And in this connection, the Grantee agrees, represents and guarantees that the said territory included in this license, and every part thereof, and all dealers therein, can, and will be fully covered, solicited and worked by the Grantee in a systematic and business-like manner now, and at all times hereafter while this license agreement remains in effect. The determination and judgment of Dr. Pepper Company as to whether or not this clause is being complied with when made in good faith, shall be sole, exclusive and final, and such determination by the Dr. Pepper Company that this clause is not being complied with shall in addition to any other grounds herein mentioned, be grounds for forfeiture of this license at the option of Grantor.

"(f) To allow representative of the Grantor to enter the premises of the Grantee at any reasonable time and make examinations to see that the bottling is being properly done, under sanitary and other conditions herein set forth.

* * * * * *

"(k) To maintain a bottling plant at Brookhaven, in the County of Lincoln, in the State of Mississippi, during the duration of this license. * * * * Grantee shall add to the equipment and facilities of each such plant as often and in such amount as shall be necessary and required of Grantee by Dr. Pepper Company acting in good faith.

"(1) * * * Grantee shall continue during the life of this license to expend annually, at least an amount equal to fifteen (15¢) cents per gallon for each gallon of syrup purchased and used by the Grantee in the above territory during the previous year, for advertising Dr. Pepper, * * *."

Stated to be "For The Further Mutual Protection And Benefit of the parties" it was agreed in part as follows (emphasis supplied):

"1. That both the Grantor and Grantee shall be released from any obligations herein undertaken in the event and to the extent that same shall become reasonably impossible of fulfillment because of war conditions, strikes, fires, storms, breakdowns in machinery, or any other conditions reasonably beyond the control of either party.

"2. That neither this license agreement, nor any interest therein, shall be sold, transferred, assigned, etc.

* * * * * *

"5. That in case of the violation of any one or more of the terms or provisions of this license agreement by the Grantee or in the event Grantee fails, within the judgment of the Grantor, to faithfully comply with provisions as above set out, then Grantor shall be entitled to cancel or terminate this license upon giving written notice mailed to Grantee by registered mail and addressed to his last known place of business, and upon notice being given of such cancellation as herein provided, this license agreement and all rights hereunder shall be terminated and at an end, provided, however, that in the event of the termination of this license agreement as herein provided, or in any other manner, such termination shall not release the Grantee from the payment of any amount which may then be owing to Grantor. And upon any termination of this license agreement Grantee shall discontinue the use of the name of `Dr. Pepper\' and the bottling of said product. The judgment and determination of Dr. Pepper Company when made in good faith, as to the failure of Grantee to comply with any of the terms of this license, shall be, and is hereby, made conclusive and final. The failure of Dr. Pepper Company to exercise its option to forfeit this license on account of any one, or more, breaches of any of the covenants and obligations to be performed by Grantee shall never operate to or be construed as a waiver of or an estoppel to assert the right to forfeit or terminate this license for any contemporaneous or subsequent breaches or violation of any of the covenants or agreements on the part of Grantee. The Grantee agrees, in the event of the termination of this license agreement as herein provided, or any other termination thereof, that Grantee shall at the request of Grantor turn over and deliver to the Grantor, or to such person as may be designated by the Grantor, all unused Dr. Pepper advertising matter in the possession of the Grantee sold to Grantee by Grantor and Grantor will pay the price it received therefor, and Grantee upon any termination of this license further obligates himself to resell to Dr. Pepper Company at the same price it was sold to him, any Dr. Pepper syrup then in good and merchantable condition, that he has on hand at the time of such termination, and Dr. Pepper Company agrees to repurchase the same.

"6. It is further understood and agreed that Grantee may, upon giving ninety (90) days\' written notice by registered mail, addressed to the office of Grantor, at Dallas, Texas, cancel this license at any time."

The agreement was supplemented by an instrument dated April 29, 1940, in matters not here material.

The letter of cancellation dated July 27, 1950, fairly sets out the grounds upon which Dr. Pepper claimed the right to cancel and terminate the license agreement:

"You have failed to carry out and perform the terms, provisions and obligations imposed upon you by Dr. Pepper Bottler\'s License Agreement No. 329-A issued to you on July

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