A.B.C. Distributing Co. v. Distillers Distributing Corp.
| Decision Date | 04 October 1957 |
| Citation | 316 P.2d 71,154 Cal.App.2d 175 |
| Court | California Court of Appeals Court of Appeals |
| Parties | A. B. C. DISTRIBUTING CO., a corporation, Plaintiff and Appellant, v. DISTILLERS DISTRIBUTING CORPORATION, a corporation, individually and as successor to Calvert Distillers Corporation, The Calvert Distilling Co., a corporation, Carstairs Bros. Distilling Co., Inc., a corporation, and Chivas Bros. Import Corporation, a corporation, Defendants, Distillers Distributing Corporation, and Chivas Brothers Import Corporation, Respondents. Civ. 22084. |
J. Albert Hutchinson, San Francisco, for appellant.
Lawler, Felix & Hall, John M. Hall, Los Angeles, for respondents.
Appeal from a judgment or order of dismissal entered after motion for nonsuit had been granted and from the judgment for costs.
Plaintiff is a licensed importer. It purchases from manufacturers and other distributors alcoholic beverages for resale to retail dealers.
Defendant Distillers Distributing Corporation, herein referred to as 'Distillers' is by virtue of successive margers, successor to Calvert Distillers Corporation. Both are herein referred to as 'calvert.' Defendant Chivas Brothers Import Corporation is referred to as 'Chivas.'
There are five causes of action which compositely seek an accounting, damages and injunctive relief by reason of alleged unfair competition and, also, damages for alleged breach of contract. Count 1 charges an unlawful restraint of trade and unfair competition on the part of both defendants; counts 2 and 4 seek declarations of plaintiff's rights as to each of the defendants but both counts were on motion of plaintiff dismissed. 1 Count 3 alleges damages caused by Calvert by reason of its repudiation of its written contract; count 5 alleges damages caused by Chivas for breach of its oral agreement. The gravamen of the several counts 'is the appropriation of plaintiff's business by defendants and certain of their favored customers, pursuant to a pre-existing and continuing combination and conspiracy to restrain trade in, and to monopolize the distribution of, alcoholic beverages--in general and in plaintiff's area of operation--and the deprivation of profits and good will by means of wrongful refusal to deliver supplies for resale in accordance with contracts between the immediate parties.'
Count 1
Count 1 alleges the corporate existence of Distillers and its authority to do business in California; its successorship to Calvert by way of merger and declares that the transactions alleged were had with Calvert and Chivas; that plaintiff is the holder of all licenses necessary to permit it 'to engage in the wholesale distributing of alcoholic beverages within the State of California'- ; and is so engaged in such business principally within the County of Los Angeles; that defendants are licensed to be and 'are engaged in the manufacture, importation, exportation and sale of alcoholic beverages in foreign and interstate commerce within the United States' and to the extent licensed have so engened in such lines in the State of California; that defendants do not manufacture distilled spirits within California; that defendants are not authorized to conduct or participate in transactions respecting alcoholic beverages 'with persons licensed to sell alcoholic beverages at retail to unlicensed persons.'
That defendants import and manufacture a large number of 'distilled spirits products' of the varieties customarily purchased by the consuming public and competitive with defendants' principal competitors as to variety, quality and price range; that such products are sold in containers bearing labels and trade-marks owned and controlled by defendants and unavailable from any other source; that defendants distribute and sell a substantial propertion of all the potable distilled spirits sold and consumed in the United States; that certain of said products have been advertised and have customer acceptance whereas others have not been so advertised; that there is a tendency of the purchasing public to continue the use of products known to it and a reluctance to accept new products of the same general kind as a substitute therefor; that from time to time certain of defendants' products have been in short supply and have been allocated to their wholesale customers by some means unknown to plaintiff; that defendants have adopted the policy of distributing their products 'as a group sometimes known as each respective defendant's 'line', indifferently to the demand, customer acceptance, quality, price and competitive advantage or particular products' and have attempted to require the purchase of unpopular products as a condition to the purchase or allocation of acceptable products and have required their distributors to maintain in advance large stocks; 'that at all times defendants have determined, declared and controlled the prices from time to time to be charged by them of their immediate purchasers and by their purchasers upon resale thereby by means of contract provisions, implied agreements, arrangements, recording, and causing the recording thereof, and by other means.'
That at all times defendants distributed their products through licensed wholesale distributors; that defendants employed salesmen known as 'specialty' men who visited customers of the distributors, solicited orders and submitted the same to the distributors for delivery; that for this purpose defendants sought to discover the identity of the customers of such distributors.
That prior to 1945, one Moyer was doing business as A. B. C. Distributing Co. and was the distributor for Calvert; that during 1945 plaintiff entered into negotiations with Moyer 'for the purchase of the business, stocks, good will, accounts, customer lists and physical properties and distributorships of Moyer'; that during such negotiations, in response to plaintiff's inquiry, 'defendants expressly and affirmatively assured and represented to plaintiff that, in the event of the purchase of said business of Moyer by plaintiff, said defendants would appoint plaintiff their distributor in place and instead of Moyer and would continue the distribution of their said products by and through plaintiff as such distributor'; that on July 2, 1945, plaintiff purchased the business of Moyer and on the same day entered into an oral contract of distributorship with 'said defendants'; that thereafter the contract was renewed from time to time to and including January 21, 1952; that on January 1, 1951, plaintiff entered into a similar oral distribution agreement with defendant Chivas for the distribution of Chivas products; that the Chivas contract was renewed, from time to time, to and including February 5, 1954; that both contracts have been duly performed by plaintiff.
That plaintiff, at its own expense, used its best efforts to increase the volume of sales of defendants' products and 'to this end * * * expanded its facilities, increased the numbers of its employees and established additional suitable facilities'; that the purchase of defendants' products by plaintiff's customers progressively increased in volume and amount, 'exceeding on the 1st day of January, 1952, annual purchases from plaintiff of defendants' products in excess of fifteen thousand five hundred (15,500) cases at sales prices in excess of plaintiff's cost of acquisition of One Hundred Thousand Dollars ($100,000) per year; and would have continued to so progressively increase in volume and amount in the absence of defendants' wrongful conduct, as hereinafter set forth.'
That defendants are, and each of them, is 'an affiliate and member of a combination of in excess of twenty corporations * * * engaged in the importation, manufacture and sale of alcoholic beverages in foreign and interstate commerce in the United States and in trade and commerce within the State of California'; that such combination 'imports, manufactures and sells * * * in excess of twenty-five per cent (25%) of all alcoholic beverages' and that the aggregate gross sales of the alleged combination are in excess of $700,000,000 per year; that each member of the combination is in competition with other persons and in 'pretended competition' with each of the other members of the combination; that the combination 'is organized, carried out and managed by stock ownership, common directors and officers, planned common courses of action, conferences, committees, correspondence and exchange of information'; that each member of the combination was 'created and acquired by Distillers Corporation-Seagrams, Ltd. * * * and is owned by Distillers Corporation-Seagrams, Ltd. directly and through subsidiary corporations of said combination.'
That the members of the combination, including the defendants, 'have combined, agreed, conspired and acted together as a combination of capital, skill and acts for the purpose * * * and effect of unfairly competing with other persons engaged' in the same business, and of 'restraining, restricting and hindering competition, trade and commerce therein by means of said combination'; that this has been accomplished by placing the following conditions upon the sale to, and resale by, distributors such as plaintiff: (1) allocation of customers; (2) allocation of territories; (3) requirements for minimum purchases and stated percentages of the distributor's aggregate business in the products of members of the combination, and (4) the enforcement of agreements, expressed and implied, 'requiring distributors and other purchasers to give notice to members of said combination in advance of dealing in any alcoholic beverage product produced or sold by any person other than a member of said combination.'
That on July 1, 1951, 'defendants wrongfully demanded that plaintiff surrender its said distributorship with respect to substantial...
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