California Beverage & Supply Co. v. Distillers Distributing Corp.

• Decision Date: 27 March 1958
• Citation: 158 Cal.App.2d 758,323 P.2d 517
• Parties: CALIFORNIA BEVERAGE & SUPPLY CO., a corporation, Plaintiff, Respondent and Cross-Appellant, v. DISTILLERS DISTRIBUTING CORPORATION, a corporation, Defendant, Appellant and Cross-Respondent. Civ. 22419.
• Court: California Court of Appeals Court of Appeals

Page 517

323 P.2d 517

158 Cal.App.2d 758

CALIFORNIA BEVERAGE & SUPPLY CO., a corporation, Plaintiff, Respondent and Cross-Appellant, v. DISTILLERS DISTRIBUTING CORPORATION, a corporation, Defendant, Appellant and Cross-Respondent.

Civ. 22419.

District Court of Appeal, Second District, Division 2, California.

March 27, 1958.

Rehearing Denied April 21, 1958.

Hearing Denied May 21, 1958.

Lawler, Felix & Hall, John M. Hall, Los Angeles, for appellant and cross-respondent.

J. Albert Hutchinson, San Francisco, for respondent and cross-appellant.

FOX, Presiding Justice.

This litigation grows out of a contractual relationship between plaintiff and defendant concerning the distribution of Calvert distilled spirits. Plaintiff was awarded damages for two asserted breaches of the contract. As to these issues defendant has appealed. Plaintiff also sought damages for other alleged breaches of contract and for certain tortious conduct, including unfair competition, conspiracy and restraint of trade. The trial court directed a verdict in defendant's favor upon all these issues. Plaintiff has appealed from this portion of the judgment.

This case is the companion of A.B.C. Distributing Co. v. Distillers Distributing Corp., 154 Cal.App.2d 175, 316 P.2d 71, recently decided by this court. The issues in the two cases are substantially the same, ¹ and that decision is controlling on many of the issues raised herein.

Plaintiff is a wholesale distributor of alcoholic beverages. It purchases from manufacturers and other distributors and resells to retail dealers. Defendant is, by virtue of successive mergers, the successor to Calvert Distillers Corporation. It manufactures Calvert products and sells them to distributors. Prior to June, 1951, plaintiff had been a distributor of Calvert products in Los Angeles and Orange counties pursuant to a verbal agreement with Calvert. There were also several other Calvert distributors active in those areas over the years, but by 1951 only three were active: plaintiff, Simon Levi, and A.B.C. During the period prior to June, 1951, each of the three distributors had been at liberty to sell Calvert products in competition with the others to any retail liquor licensee anywhere within those areas. After June, 1951, Calvert restricted Simon Levi, A.B.C. and plaintiff each to an assigned territory. Since the territory assigned to each of the distributors was different, the result was that each distributor had an exclusive area for the sale of Calvert products. As of March 1, 1952, plaintiff and the other two distributors contracted in writing with Calvert. Each of the contracts covered a period of one year. At the termination of the first contract plaintiff entered into a second written contract with Calvert, effective March 1, 1953. This is the contract involved in the present litigation. The contract appointed plaintiff 'as a distributor' of Calvert products. The territorial restrictions were essentially the same as before.

In June, 1953, the distributors were notified by Calvert that there would be an 'opening up' of the territory--i.e., the distributors would no longer be confined to assigned territories; instead, each would be permitted to sell anywhere in the entire territory. The distributors were happy about the new arrangement and readily agreed to its adoption. In effect the written contracts were modified by an executed oral agreement concerning territorial restrictions.

In October, 1953, Calvert appointed the Don W. Snyder Company as a Calvert distributor for a territory which included Los Angeles and Orange counties. Plaintiff protested this appointment but continued its dealings with Calvert just as before.

On February 2, 1954, Mr. Froelich, a representative of Calvert, called on the president of plaintiff, Mr. Hillinger, and asked him if it was true that plaintiff was planning to 'take on' a competing line of distilled spirits. Mr. Hillinger indicated that plaintiff was considering the matter but had made no definite decision. The next day Mr. Froelich told Mr. Hillinger over the telephone that plaintiff's contract would not be renewed. A letter dated February 1, 1954, from Hillinger to Calvert stated: 'Please be advised that we are desirous of renewing our contract at the expiration of our agreement.' Mr. Froelich replied by letter on February 4, stating: 'As I advised you previously * * * we do not intend to renew your contract.'

Thereafter, plaintiff commenced distributing the competing line. It continued to order Calvert products in March, 1954, but these orders were not filled. Plaintiff commenced this action on November 1, 1954.

Before discussing the points raised by defendant's appeal, we must consider the question of the renewal of the written contract between plaintiff and Calvert. The contract in this respect is exactly the same as the one before this court in the A.B.C. case, and we there held that the provision in question did not give the distributor an option to renew and that Calvert could refuse to renew the contract if it so desired. 154 Cal.App.2d at pages 183, 184, 316 P.2d at pages 76-77. Furthermore, the contract states that a distributor wishing to renew must 'apply for renewal not less than 30 days before March 1, 1954.' Plaintiff's notice of desire to renew the contract was sent less than 30 days before March 1, 1954. It is therefore clear that the contract between plaintiff and Calvert was not renewed in 1954. By its terms this contract expired at the end of February, 1954.

Defendant's appeal concerns the two asserted breaches of contract found by the trial court. The trial court ruled as a matter of law that the appointment of Snyder as an additional Calvert distributor was a breach of contract. The court also ruled as a matter of law that Calvert breached the contract by failing to deliver 162 cases of liquor during February 1954. The court submitted to the jury only the question of damages arising from these two breaches of contract.

Defendant contends that the court erred in ruling as a matter of law that the appointment of the Snyder Company as an additional distributor in the fall of 1953 was a breach of an implied provision in the contract. Defendant's contention is correct. The trial court should have ruled as a matter of law that there was no such implied provision in the contract. The situation in the instant case is substantially the same as in the A.B.C. case, and we there held that as a matter of law there was no such implied provision and hence no breach of contract (154 Cal.App.2d at page 187, 316 P.2d at pages 78-79). Our opinion in the A.B.C. case fully discusses the law on this subject, so it need not be repeated here. It is there pointed out that the law is clearly against plaintiff's proposition that the contract impliedly prohibited the appointment of Snyder as an additional distributor.

Nor may the trial court's ruling be sustained on the basis of an 'executed oral amendment' to the 1953 contract. Plaintiff seeks to fortify its position on this point by certain testimony of Mr. Hecht, who was president of the A.B.C. Distributing Company, to be effect that when the matter of opening up the restricted territory was discussed with him in the latter part of May, 1953, Mr. Taub, who represented Calvert, stated that each of the distributors (California Beverage & Supply Company, Simon Levi and A.B.C.) would service the whole territory and nothing was said about Calvert considering the addition of a new distributor. This evidence does not establish any oral agreement prohibiting an additional distributor. Moreover, it must be borne in mind that this conversation was not had with a representative of plaintiff and is not the conversation upon which plaintiff must rely as the basis for an oral amendment prohibiting the addition of another Calvert distributor. The only conversation upon which plaintiff may rely took place in June between Mr. Hillinger, plaintiff's president, and Mr. Taub, representing defendant. Mr. Hillinger testified that during that conversation 'nothing was mentioned' about the addition of any new or different distributors in the territory. There was no other reference to that subject matter. It is thus apparent that there is no substantial basis for finding 'an executed oral amendment' between plaintiff and Calvert to the effect that no additional distributor would be appointed for the territory. The only purpose of the conversations mentioned above was to inform the respective distributors that the territorial restrictions of each distributor were being removed and that each distributor would be free to service the entire territory. The judgment must therefore be reversed as to the Snyder issue.

Defendant's next contention is that the trial court erred in ruling as a matter of law that Calvert failed to deliver 162 cases of liquor in February, 1954, thus causing a breach of the contract. The evidence sustains this contention. The trial court construed paragraph 12 ² of the contract as allowing plaintiff 30 days after March 1, 1954, to sell Calvert's products, even though the contract terminated on February 28. The court then construed paragraph 5 ³ as permitting plaintiff to have at least a 45-day inventory (if Calvert had supplies available to fill plaintiff's orders) on hand at the end of February, 1954. The court concluded that the difference between the amount of this 45-day inventory (1,584 cases) and the amount which plaintiff actually had on hand at the beginning of March (1,422 cases) represented the number of cases which Calvert should have delivered to plaintiff to avoid being in breach of the contract. Although we agree with the court's interpretation of the two paragraphs in question, we cannot accept the court's directing a verdict for plaintiff. It seems perfectly clear that under the contract defendant was under no obligation to deliver to plaintiff during February, 1954, more cases of...