California Wine Ass'n v. Wisconsin Liquor Co. of Oshkosh

• Decision Date: 30 April 1963
• Docket Number: SHEBOYGAN-BADGER
• Citation: 20 Wis.2d 110,121 N.W.2d 308
• Parties: CALIFORNIA WINE ASS'N, a California corporation, Respondent, v. WISCONSIN LIQUOR CO. OF OSHKOSH, a Wis. corporation, Appellant. CALIFORNIA WINE ASS'N., a California corporation, Respondent, v. WISCONSIN LIQUOR CO. OF GREEN BAY, a Wis. corporation, Appellant.LIQUOR COMPANY, Appellant, v. CALIFORNIA WINE ASS'N., a California corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 308

121 N.W.2d 308

20 Wis.2d 110

CALIFORNIA WINE ASS'N, a California corporation, Respondent, v. WISCONSIN LIQUOR CO. OF OSHKOSH, a Wis. corporation, Appellant.

CALIFORNIA WINE ASS'N., a California corporation, Respondent, v. WISCONSIN LIQUOR CO. OF GREEN BAY, a Wis. corporation, Appellant.

SHEBOYGAN-BADGER LIQUOR COMPANY, Appellant, v. CALIFORNIA WINE ASS'N., a California corporation, Respondent.

Supreme Court of Wisconsin.

April 30, 1963.

Shea & Hoyt, Milwaukee, Ralph M. Hoyt and Hamilton T. Hoyt, Milwaukee, of counsel, for appellants.

David E. Beckwith, Jesse D. Miller and Foley, Sammond & Lardner, Milwaukee, for respondent.

BROWN, Chief Justice.

The Actions

Counterclaims were brought by defendant-appellant Wisconsin Liquor Company of Oshkosh, and by defendant-appellant Wisconsin Liquor Company of Green Bay, for damages for breach of exclusive distributorship contracts against plaintiff-respondent California Wine Association, which had previously commenced actions against these defendants for payments for merchandise received. Later plaintiff-appellant Sheboygan-Badger Liquor Company commenced an action against California Wine Association also for damages for breach of an exclusive distributorship contract.

These actions were consolidated for trial, and the two suits brought by the California Wine Association were settled by stipulation, leaving for trial only the counterclaims and the action by the Sheboygan-Badger Liquor Company. For convenience, the liquor companies will be referred to collectively as the 'Peckarsky Companies', and the California Wine Association as the 'Association.'

Trial was to the court which found among many other findings of fact that the Association wrongfully terminated exclusive distributorship contracts with the Peckarsky Companies. The trial court made several findings of fact regarding calculation of damages for breach of contract and awarded each of the Peckarsky Companies a separate amount which in the first two actions were setoffs against the amount owed to the Association for merchandise received. In each of these actions the Peckarsky Companies appeal from the whole of the judgment and the Association files notice of review.

The Facts

In 1933, Wisconsin Liquor Company, a Wisconsin corporation located in Milwaukee Wisconsin, was engaged in the wholesale distribution of whiskies, brandies, wines and other liquors in 19 contiguous counties in the eastern part of Wisconsin. It was equally owned by Sam Pokrass and Hyman Peckarsky. From 1937 to 1944, Herman E. Case was its general manager and handled virtually all of its affairs. Wisconsin Liquor Company had two large suppliers, National Distillers from which it purchased whiskies, and the Association from which it purchased brandies and wines. The Association, prior to 1951 known as the Fruit Industries, Ltd., is a co-operative organized under the California co-operative laws. It is technically known as a federated co-operative because a majority of its members are co-operatives in themselves. The Association manufactures and sells a complete line of champagne, wine and brandy, at both the popular price level and at the premium price level. Material here are its premium wine labeled 'Ambassador Wine', and its brandy labeled 'Aristocrat.' Walter Taylor was its chief executive officer, known as the vice-president and general manager until 1950, at which time Mario Perelli-Minetti became its chief officer.

Until his death in 1956, George Huckins represented the Association in its Chicago, Illinois, office for the 12 midwestern states, including Wisconsin. He also operated a brokerage partnership selling the Association's products to wholesalers and distributors. At various times Huckins had different partners, including for a time Herman Case.

In 1933, The Wisconsin Liquor Company was not only a distributor but was also a rectifier of wine and brandy. It bottled and labeled its own brandy and sold it along with certain brands from the Association. In 1941, immediately prior to the war, the amount of brandy sold was nominal. In that year there had been available surplus bulk brandy, and the Wisconsin Liquor Company purchased several hundred barrels of so-called prorate brandy in California. Early in 1942, the OPA established ceiling prices and as a result brandy began to become a better seller. In 1942, Herman Case approached George Huckins with a plan to sell this brandy to the Association, which would bottle it under its Aristocrat label. The Wisconsin Liquor Company would then buy the Aristocrat brandy back from the Association. This plan was adopted at a second meeting three months later. During this second meeting Walter Taylor was present, and the actual prices at which the bulk brandy was sold to the Association and repurchased by the Wisconsin Liquor Company was settled. Thereafter, the Wisconsin Liquor Company concentrated on the sale of Aristocrat brandy.

On June 30, 1945, the Wisconsin Liquor Company was split between Sam Pokrass and Hyman Peckarsky, its principal owners. The corporate entity, Wisconsin Liquor Company, continued to operate but under the ownership of Sam Pokrass and only in Milwaukee and Waukesha counties. The remaining 17 counties went to Hyman Peckarsky. Wisconsin Liquor Company transferred the physical assets which comprised the branch operations in Oshkosh and Green Bay and the shares of stock formerly held by the Wisconsin Liquor Company in the Racine Beverage Company, Badger Liquor Company and Sheboygan Liquor Company to Hyman Peckarsky in return for Peckarsky's Wisconsin Liquor Company stock.

Hyman Peckarsky and his son, Irvin, formed the Wisconsin Liquor Company of Oshkosh and the Wisconsin Liquor Company of Green Bay out of the former Oshkosh and Green Bay branches of the Wisconsin Liquor Company. In 1950, the Peckarskys sold the Racine Beverage Company which operated in the counties of Walworth, Kenosha and Racine, and the Sheboygan Liquor Company and Badger Liquor Company were consolidated into a new corporation known as the Sheboygan-Badger Liquor Company. The three surviving companies owned by the Peckarskys are the present appellants.

For a short period following the split between Peckarsky and Pokrass, the Peckarsky Companies were required to make all purchases of inventory from or through the Wisconsin Liquor Company then owned by the Pokrass family. After a few months the agreement which gave rise to the split was modified and the Peckarsky Companies were permitted to purchase inventory directly from the suppliers. The Peckarsky Companies first arranged for direct purchase with National Distillers, the company which had been the principal whisky supplier of the Wisconsin Liquor Company. Then they arranged for direct purchases from the Association in a meeting in Chicago with George Huckins. Prior to this conference in Chicago, the split between the Pokrasses and the Peckarskys had not caused any change in distribution with respect to the Association for it continued to sell to only one distributor in eastern Wisconsin, namely, the Wisconsin Liquor Company. After this conference, the Association sold directly to the Peckarsky Companies, and the latters were its sole distributors in that area.

From 1945 to 1959, the Peckarsky Companies sold virtually only Aristocrat brandy although it handled some competitive brands. Both the Peckarsky Companies and the Association vigorously promoted the sale of Aristocrat through extensive programs of salesmen's benefits and advertising. In March and April, 1947, the Association specifically authorized advertisements to be placed in a number of newspapers in Wisconsin cities describing the Peckarsky Companies as its exclusive distributor of Aristocrat brandy.

In 1947, Irvin Peckarsky learned that Kuechenberg a salesman for another company, was selling the Association's products in the city of Fond du Lac which was in the Peckarsky territory. Peckarsky contacted Richard Sayre, the Wisconsin representative of the Association, and protested. Sayre investigated and discovered that Kuechenberg was getting products from Sam Pokrass. Sayre and Huckins talked with Pokrass, and they secured the latter's promise to discontinue selling to Kuechenberg, which he did.

In April, 1951, after Herman Case left the Huckins' partnership, Joseph Lubar of the P & J Sales Company, Appleton, Wisconsin, persuaded Huckins to permit him to sell Ambassador wine and brandy which the Peckarsky Companies did not sell. When the Peckarskys learned of this matter they complained to Huckins who immediately ceased selling the Association's products to Lubar. In a letter to Joseph Lubar dated August 13, 1951, in which the P & J Company orders were cancelled, Huckins wrote that it was impossible to have two wholesalers in the same area.

By a letter written to Irvin Peckarsky in November, 1957, Perelli-Minetti a acknowledged that an exclusive dealership existed between the Association and the Peckarsky Companies. In this letter he sent a copy of another letter he had written to Irving Pokrass in which he discussed the merits of exclusive distributorships and stated:

'EXCLUSIVE TERRITORY--Both of us agree in an exclusive distribution system within any given territory. It protects the efforts of the distributor in building volume, its easier on the parties involved and it makes possible the fixing of responsibility on both supplier and jobber. * * *

'Our policy is one of an honest exclusive distributorship. We have enforced it on occasion when required to do so. We hope that this will not be true here.

'In short, if the exclusive distributorships are not respected by you, or by others coming into your territory, we will be forced to take appropriate action, and in any event, we must have a substantial increase in volume by the end of the year, or we shall feel free to consider other arrangements.'

From 1949 to 1961, in their 14 county territory, the...