Falstaff Brewing Corp. v. Iowa Fruit & Produce Co.

• Decision Date: 21 May 1940
• Docket Number: No. 11478.,11478.
• Citation: 112 F.2d 101
• Parties: FALSTAFF BREWING CORPORATION v. IOWA FRUIT & PRODUCE CO.
• Court: U.S. Court of Appeals — Eighth Circuit

112 F.2d 101 (1940)

FALSTAFF BREWING CORPORATION v. IOWA FRUIT & PRODUCE CO.

No. 11478.

Circuit Court of Appeals, Eighth Circuit.

May 21, 1940.

W. C. Fraser, of Omaha, Neb. (W. M. McFarland and Crofoot, Fraser, Connolly & Stryker, all of Omaha, Neb., on the brief), for appellant.

Milton R. Abrahams and John L. Barton, both of Omaha, Neb. (Abrahams, McGrath & Frenzer and Crossman & Barton, all of Omaha, Neb., on the brief), for appellee.

Before STONE, GARDNER, and SANBORN, Circuit Judges.

STONE, Circuit Judge.

This is an appeal by the defendant from a judgment on verdict for $7,350 for breach of contract and for conspiracy to breach a sales agency contract and to harm the business of the plaintiff.

To furnish the setting for this controversy, a brief outline of the facts is given — stating such, of course, in the view favorable to appellee. Plaintiff (appellee) was engaged, at Council Bluffs, Iowa, in a wholesale business, handling fruits, vegetables and specialties. It had a two story building with railroad connections, loading and shipping facilities and refrigerated rooms. Among the specialties handled by it was near beer. About 1917 or 1918, it commenced handling such products of the Potosi Brewing Company; and, after sale of beer became legal in Iowa (in 1933), it sold the beer of this brewery, as wholesale agent, in about twenty counties in southwestern Iowa. This beer business progressed until plaintiff had about two hundred regular customers for this Potosi beer, by May, 1935.

About the middle of May, 1935, defendant requested plaintiff to take the exclusive wholesale agency for Falstaff Beer (brewed by defendant) in certain counties (then being served by plaintiff with Potosi beer) in southwestern Iowa. The particular concern of defendant was the sale of pint bottles of beer, which it was selling for retailing at a lower price than other beers. The situation of plaintiff as to its agency for Potosi beer was explained to defendant and it was told that plaintiff would not "sidetrack that company's business". It was agreeable to defendant that it should have "a square deal" as to bottled beer and that plaintiff "would not endeavor to change any customers purchasing Potosi draft beer unless they voluntarily wanted to change over to Falstaff." With this understanding, an oral contract was made for such exclusive agency for Falstaff beer for one year with estimated average sales of 2,000 cases a month.

At the time this contract was made, plaintiff had three employees (Pickrell, Musgrove and Strother) who, respectively, devoted part or all of their time to sales of beer. Each of these had personal acquaintances and contacts with customers — a matter of much importance in selling beer. Plaintiff put the sale of Falstaff beer in charge of these same salesmen who offered both Potosi and Falstaff brands. The average sales required by the contract were complied with as well as all terms except the promptness in paying for some shipments — however, these failures were taken care of and waived so that there was no violation of the contract existent on December 6, 1935.

On that date, plaintiff received a letter from defendant (dated December 4th) informing him that "effective December 5th we have appointed another distributor to take over the territory which had formerly been allotted to you." The new distributor was J. B. Christensen who had, theretofore, been selling beer (under a State retailer's license) at a place called Miami Club, located in or near Council Bluffs. Immediately, Christensen took over the Falstaff business employing the same three above salesmen who had been theretofore working for plaintiff. The State wholesale license for this distributing business of Christensen was taken out in the name of one of the men, Musgrove.

The petition sets forth the contract; and performance on the part of plaintiff until December 4, 1935, when defendant, without cause, withdrew the agency as of the next day. The allegation is that this withdrawal, constituting a breach of the contract, was the result of a conspiracy between the defendant and Christensen. It is further alleged that in pursuance of this conspiracy Christensen was given the exclusive sales agency in place of the plaintiff and that a few days later and for the effective carrying out of and as a part of such conspiracy, the conspirators hired away from the plaintiff the three employees who had been engaged in the sale of this and Potosi beer for plaintiff; that these employees constituted practically the entire sales force of plaintiff in the sale of beer and that they were placed by defendant upon the same routes to serve the same customers and trade as when they were with plaintiff. As a result of the breach of the contract and of the conspiracy plaintiff prayed $3,000 damages for loss of profits; $25,000 damages for diminution and destruction of its business; and $25,000 exemplary damages — a total of $53,000.

The answer of defendant denies all essential averments of the petition and states a counterclaim for $689.87 as a balance for beer and cooperage sold to plaintiff.

The charge took from the jury a consideration of exemplary damages and the verdict was to plaintiff for $7,350 damages and to the plaintiff upon the counterclaim. Defendant appeals.

Appellant argues here nine matters which may be generally grouped under five headings as: Insufficient evidence; right to cancel contract; no conspiracy to injure plaintiff's business; erroneous admission of one item of evidence; and claimed error in the charge to the jury on the subject of damages.

Insufficiency of Evidence.

As to the insufficiency of the evidence, appellant levels its argument at five specific matters as to each of which it claims there was no substantial evidence. These matters are as follows: Participation of appellant in any conspiracy; any improper cancellation of contract; any improper hiring away of servants of appellee; as to actual damages, and as to evidence sufficient to defeat the counterclaim.

The matters of participation in conspiracy, cancellation of the contract and hiring away of the servants may be treated in one statement of the evidence. Naturally, such statement is made from the standpoint of all evidence and proper inferences therefrom which are favorable to appellee. So considered the evidence justifies the following statement as to the situation.

That a contract was entered into whereby appellee became the exclusive sales agent of appellant in the designated territory for one year with average sales requirement and with other conditions not necessary to set forth. That this contract was fully complied with up to the time of its termination by appellant, with the exception that some payments due from appellee were not promptly made but as to these no point was made, the appellant continuing to ship beer thereafter and the account between the parties being brought to a satisfactory condition before and at the time of the termination of the contract.

That a representative of appellant was a party to an understanding whereby this agency would be taken from appellee and transferred to Christensen. That in the working out of this understanding and to make it effective Christensen, with the knowledge and active approval of appellant's agent, hired away from appellee, without its knowledge, the employees who had been actively engaged in the sale of beer for appellee in this territory. That the effectiveness of sales of beer depends almost entirely upon the personality of the salesman, his acquaintance with the territory and with the trade therein. That the results of these acts were that appellee was deprived of its agency without just cause and was seriously crippled in its business or ability to protect itself by the loss of these salesmen who had built up and upon whom depended the entire beer business of appellee.

The above evidence is entirely sufficient to justify a verdict of the jury that there was a conspiracy, in which appellant was a party, to breach this contract with appellee and to destroy his business of selling beer which had been built up in this territory and consisted not only of the brand handled for appellant but of another brand known as Potosi.

Appellant contends that it had a right to terminate this contract because it was indefinite as to duration and quantity to be purchased and because it had not been performed by appellee. The evidence as to the contract is that it was for a definite period of one year with an estimated average minimum of 2,000 cases per month. The well nigh undisputed evidence is that appellee performed its part of the contract with the above noted exception as to prompt payment which was waived by the conduct of appellant and entirely cured before and at the time appellant terminated the contract. This was an agency not a sales contract.

The evidence concerning damages, both through loss of profits on this contract and through injury to the business of appellee by the hiring away of its employees, seems sufficient. As to damages through loss of profits from the breach of the contract, the evidence is necessarily not exact. Ordinarily, loss of profits cannot be precisely shown. All that is necessary is to show a state of facts where it is reasonable to infer there would be a loss of profits and where the amount of such loss is shown approximately. This contract was breached after being in force almost exactly six months out of the contract year. The evidence showed the number of cases of bottled beer and of other character of beer sold by plaintiff during these first six months, with the price and the profit. There were 16,956 cases thus sold (as admitted by the answer) upon which a profit of thirty-nine cents per case was made, resulting in a total profit on bottled beer of $6,612.84. This beer cost $20,516.76. The total amount of beer of all kinds bought by appellee cost $22,370.46. The...