Burgermeister Brewing Corp. v. Bowman

• Decision Date: 18 May 1964
• Citation: 227 Cal.App.2d 274,38 Cal.Rptr. 597
• Parties: BURGERMEISTER BREWING CORPORATION, a corporation, Plaintiff and Respondent, v. Clyde A. BOWMAN, dba Bowman's Beverages, Defendant and Appellant. Clyde A. BOWMAN, dba Bowman's Beverages, Cross-Complainant and Respondent, v. BURGERMEISTER BREWING CORPORATION, a corporation, Cross-Defendant and Appellant. Civ. 10776.
• Court: California Court of Appeals Court of Appeals

Page 597

38 Cal.Rptr. 597

227 Cal.App.2d 274

BURGERMEISTER BREWING CORPORATION, a corporation, Plaintiff and Respondent, v. Clyde A. BOWMAN, dba Bowman's Beverages, Defendant and Appellant.

Clyde A. BOWMAN, dba Bowman's Beverages, Cross-Complainant and Respondent, v. BURGERMEISTER BREWING CORPORATION, a corporation, Cross-Defendant and Appellant.

Civ. 10776.

District Court of Appeal, Third District, California.

May 18, 1964.

Rehearing Denied June 12, 1964.

Hearing Denied July 15, 1964.

P. M. Barceloux, Burton J. Goldstein, Goldstein, Barceloux & Goldstein, and Hoffman, Davis & Martin, San Francisco, for plaintiff-cross-defendant-appellant.

Grayson L. Price, Chico, and J. Albert Hutchinson, San Francisco, for defendant-cross-complainant-respondent.

PIERCE, Presiding Justice.

This litigation commenced in 1954. Plaintiff ('Burgermeister') filed a complaint against defendant ('Bowman') for $18,027.14 for beer sold and delivered. Bowman's answer admitted the indebtedness but he cross-complained for damages for Burgermeister's repudiation (by premature termination) of a beer distributorship contract. A first trial and jury verdict for Bowman on his cross-complaint was appealed by Burgermeister and reversed and remanded for retrial for error in instructions. (San Francisco Brewing Corporation v. Bowman, 52 Cal.2d 607, 343 P.2d 1.) In the first trial Bowman had claimed (1) an implied, and alternatively (2) an express contract. On retrial Bowman by amendment pleaded an express oral contract with express termination provisions exclusively. Verdict after the second trial was for Bowman for $46.000. ¹

The principal amount of the admitted beer account owed Burgermeister was offset against this. In addition, the judgment debited Bowman with interest. Burgermeister appeals from the damage award on Bowman's cross-complaint. The latter appeals from the allowance of interest.

On the appeal of Burgermeister we hold (1) that substantial evidence at the second trial supports the jury's implied finding that there existed between the parties an oral contract creating a beer distributorship for an expressly agreed-upon term, towit: as long as Bowman should continue to use his best efforts to promote and solicit the sale of the brewery's products and 'took care of the territory;' that Bowman, on his part, had performed the agreement for 19 years, incurring substantial expense and providing facilities to build up a valuable distributorship for the marketing of the brewery's beer. (2) Such a contract is not one lacking mutuality; it is not illusory. It is not terminable at will. (3) It was not within the statute of frauds as a contract which by its terms must endure beyond one year. (Code Civ.Proc. § 1973, subd. 1.) (4) Decision on the previous appeal of this case does not establish a 'law of the case' contrary to the conclusions reached above. (5) The trial court did not erroneously instruct the jury either on the issues relating to liability or regarding damages.

The appeal of Bowman attacking an allowance to Burgermeister of $9,937.48 interest must be sustained. Although Bowman was not entitled to prejudgment interest on his unliquidated claim for breach of contract damages, when the amount of Bowman's damages had been determined and was offset against appellant's claim this prevented interest from accruing on the latter.

Appeal by Burgermeister

The events out of which the contract in litigation arose began late in 1935 or early in 1936, when defendant was a partner with his father in the business of distributing carbonated beverages. At that time Burgermeister, then San Francisco Brewing Corporation, through its president and credit manager, entered into an oral contract with Bowman and his father under which the Bowmans were to sell the brewery's products. The distributorship was to be exclusive in Butte County, except in the towns of Gridley and Biggs. According to Bowman's testimony, duration of the contract was provided for as follows: 'Mr. Lunsmann told me on that occasion that if I took on their product and built that product up, that I would have all of the beer that I needed from that brewery as long as I took care of the territory and did a good job * * * he assured me that I would have an exclusive territory.' The testimony of Burgermeister's credit manager in this regard was: 'A. Well, something to the effect as long as he could sell satisfactorily why it should be his exclusive territory, that is correct. Q. Well as to satisfaction, that was to do a satisfactory job? A. Yes, that is right.'

This witness also testified there was no quota fixed, that Bowman's only obligation was to dispose of 'all he could sell by using his best efforts.' Performance commenced immediately after this conversation.

At the time the brewery marketed two brands, 'Golden State' and 'Pilsen Gold.' In 1937 these were discontinued and the brand 'Burgermeister' was substituted. Bowman continued to sell this brand until the termination of the contract.

The ownership of the distributorship business went through a number of transmutations during the 19 years which followed the agreement's inception. In 1937 the father and son partnership was dissolved and the son continued as an individual proprietor until 1942, when a second partnership with two others was formed. Later one of these partners withdrew and in 1950, according to Bowman, Burgermeister's manager instructed him 'to get rid of' his other partner. Bowman complied and continued in business as an individual until the brewery's termination of the contract in June of 1954.

As stated above, over the years Bowman (in addition to buying out the unsatisfactory partner) was required to and did do the following things: (1) He bought a new line of expensive trucks 'painted Burgermeister colors' and with 'Burgermeister signs on them exclusively,' (2) He received and handled deliveries of beer which had been 'palletized.' This involved handling with fork lift units. (3) Burgermeister's advertising program became increasingly extensive and commencing in June 1950 Bowman (and other distributors) were required to contribute a cent and a half a case to the brewery's advertising fund. (4) Until 1953 or 1954 Bowman had been permitted to and had distributed Acme beer as well as Burgermeister; Burgermeister then required Bowman to discontinue this. Bowman complained: '[F]rom time to time you fellows have shoved all kinds of things down my throat,' but acceded to the brewery's demand when he was assured no further demands were going to be made. The brewery representative promised '[w]e feel that everything will be very find then, and we will just go along as we have in the past.' ² (5) In 1953 the brewery adopted a policy of operating its plant at maximum capacity on a year-round basis and Bowman was required to accept an allocated increased quantity of beer unsalable in winter. The augmented inventory had to be stored, necessitating the construction of a new warehouse and the building of an addition on the existing warehouse. The cost: $27,500. (6) In 1954 to increase sales, Bowman was also required to, and did, employ one Clyde Lindstrom to handle sales promotion. Almost immediately thereafter Burgermeister terminated Bowman's distributorship without notice. The only explanation given was the brewery didn't like Bowman's operation.

Burgermeister contends that this contract was illusory--lacking mutuality--because it bound the brewery by its promise to keep effective the distributorship as long as Bowman exerted his best efforts to sell the brewery's beer and 'took care of the territory' but that there was no corresponding promise on the part of Bowman to exert his best efforts or to 'take care of the territory.' Substantial space is devoted in the briefs of both parties to discussion of whether the evidence had or had not shown such a promise on the part of Bowman and also whether a statement made by Bowman's attorney in a colloquy between counsel during the course of the trial constituted a stipulation that Bowman had in fact given no promise of faithful and satisfactory service. We find determination of this factual issue immaterial.

It is true that 'a promise which in terms reserves the option of performance to the promisor is insufficient to support a counter-promise.' (1 Williston Contracts, Rev. Ed., sec. 105, p. 417; 1A Corbin on Contracts, sec. 163, p. 76; Mattei v. Hopper, 51 Cal.2d 119, 122, 330 P.2d 625.) But this is a rule applicable to contracts wholly executory and, as stated by Professor Corbin (op. cit. p. 76): 'In every case of this kind, however, the agreement should be scrutinized carefully to see whether the promisor did not give some consideration that was not affected by his power to cancel, and also whether there has not been a part performance that makes up for the defects of the consideration.' (Emphasis supplied.)

Assuming, without deciding, that Bowman had not promised to exert his best efforts to sell Burgermeister's beer or to take care of the territory, he had in fact done so for a period of 19 years, had provided a fleet of trucks, painting them with Burgermeister advertising, had contributed to the brewery's advertising fund, had built warehouse facilities and had enlarged his inventory beyond his winter needs, etc. Such a contract is not merely an executory promise for a promise. Professor Williston describes such a contract as 'an exclusive option by which the manufacturer promises to deal through no others within the defined territory * * * so long as the dealer desires to handle his products * * *. If there is sufficient consideration, this option is clearly a contract and is so held.' (4 Williston on Contracts, rev. ed., sec. 1027a, p. 2850.) There was sufficient consideration given here.

Nor was this contract, as contended by Burgermeister, within the statute of frauds as being '[a]n agreement that by its terms is not to be performed within a...