Franklin Distributing Co., Inc. v. Crush Intern. (U.S.A.), Inc.

• Decision Date: 10 October 1986
• Docket Number: No. 86-92-II,86-92-II
• Court: Tennessee Court of Appeals
• Parties: FRANKLIN DISTRIBUTING CO., INC. and E. Thomas Gray, d/b/a Gray Enterprises, Inc., Plaintiffs-Appellants, v. CRUSH INTERNATIONAL (U.S.A.), INC.; Sun Drop Bottling Co., Inc.; Julian Johnson, Individually and as Executor of the Estate of Mary Smith Johnson; David Johnson, Sr. and wife, Mary Wade Johnson, David Johnson, Jr. and wife, Beverly Johnson, Glenn Gordon and wife, Jo Anne Gordon, all individually and d/b/a J & G Building Partnership, William N. Wall and wife, Roberta M. Wall; and Herb Helton, Defendants-Appellees, and Marshall County Soft-Drink Distributors, Inc., Third-Party Defendant. 726 S.W.2d 926

Page 926

726 S.W.2d 926

FRANKLIN DISTRIBUTING CO., INC. and E. Thomas Gray, d/b/a Gray Enterprises, Inc., Plaintiffs-Appellants, v. CRUSH INTERNATIONAL (U.S.A.), INC.; Sun Drop Bottling Co Inc.; Julian Johnson, Individually and as Executor of the Estate of Mary Smith Johnson; David Johnson, Sr. and wife Mary Wade Johnson, David Johnson, Jr. and wife, Beverly Johnson, Glenn Gordon and wife, Jo Anne Gordon, all individually and d/b/a J & G Building Partnership, William N. Wall and wife, Roberta M. Wall; and Herb Helton Defendants-Appellees and Marshall County Soft-Drink Distributors, Inc., Third-Party Defendant.

No. 86-92-II

726 S.W.2d 926

Court of Appeals of Tennessee,

Western Section, at

Nashville.

Oct. 10, 1986.

Application for Permission to Appeal to

Supreme Court Nov.

12, 1986.

Application to Appeal Denied by

Supreme Court Jan. 5, 1987.

Boult, Cummings, Conners & Berry, Davis H. Carr, Robert S. Patterson, Samuel D. Lipshie, Nashville, and Dubois & Graham, James T. DuBois, Columbia, for plaintiffs-appellants.

Kirkland & Ellis, William A. Streff, Jr., Chicago, Ill., and Colley and Kennedy, Jerry C. Colley, Columbia, for defendant-appellee Crush Intern. (U.S.A.).

FARMER, Judge.

This case originated in Chancery Court of Maury County with the plaintiffs, Franklin Distributing Company, Inc., (Franklin) and E. Thomas Gray, president and owner of Franklin, seeking a declaratory judgment that Franklin is the sole distributor of Sun Drop Cola in Maury and Williamson Counties. The Sun Drop trademark is owned by Crush International, (U.S.A.), Inc., (Crush) and the soft drink is bottled in Middle Tennessee pursuant to a franchise agreement between Crush and Sun Drop Bottling Company, Inc., of Pulaski, (Sun Drop Bottling). Crush and Sun Drop Bottling were named as defendants along with the J & G Building Partnership and its individual partners which own Sun Drop Bottling, and three independent distributors. All parties moved for summary judgment. The Chancellor granted summary judgment as to some parties but not others. In particular, the Chancellor granted Crush's motion but denied the plaintiffs', Franklin and Gray. Pursuant to an interlocutory appeal, the plaintiffs are before us challenging only the trial judge's dismissal of Crush from the case.

The question that is before this Court is whether any genuine issue of material fact exists that Crush, as a franchisor, clothed the bottling company as a franchisee, with apparent authority, thereby binding Crush to contracts entered into by Sun Drop Bottling. We find that no genuine issue of a material fact has been raised and affirm.

In determining whether Rule 56 of the Tennessee Rules of Civil Procedure has been satisfied, this Court must view the pleadings, depositions, answers to interrogatories, affidavits, and admissions in a light most favorable to the opponents of the motion for summary judgment. Price v. Mercury Supply Co., 682 S.W.2d 924, 929 (Tenn.App.1984), and Bennett v. Mid-South Terminals Corp., 660 S.W.2d 799,800 (Tenn.App.1983). This Court will proceed to deny summary judgment if the material facts are in dispute, or if there is uncertainty as to whether the material facts are in dispute, or if there is disagreement between the parties as to the inferences to be drawn from the material facts. Knapp v. Holiday Inns, Incorporated, 682 S.W.2d 936,940 (Tenn.App.1984).

The material facts in the instant case are as follows: On February 4, 1976, Crush and Sun Drop Bottling entered into a franchise agreement whereby the bottling company would manufacture, bottle, and sell Sun Drop Cola within much of the Middle Tennessee area. While Sun Drop Bottling covenanted to use its best efforts to sell the soft drink within its designated territory, the bottling company was expressly prohibited from selling, transferring, assigning or otherwise disposing of its rights and privileges under the franchise agreement without first obtaining written consent from Crush.

The franchise agreement did not indicate the method by which Sun Drop Bottling would distribute the soft drink. Crush was aware that its bottling companies would generally use either driver salesmen who distributed the Sun Drop products from trucks owned by the bottler, or independent distributors who purchased the Sun Drop products from the bottler and then distributed these products from their own trucks.

Franklin was an independent distributor which acquired the distributorships to Williamson and Maury Counties via Gray. Gray acquired the Williamson County distributorship in 1973 prior to the formation of Franklin. That year, Gray negotiated with William N. and Roberta M. Wall who were then the independent distributors for Williamson County.

During the parties' negotiations, Gray became convinced that the Walls had a franchise to sell Sun Drop products in Williamson County. Gray states that he based this belief upon the representations of the Walls and of Sun Drop Bottling. On August 18, 1978, the Walls and Gray executed a contract whereby the Walls purported to "sell, transfer and assign to [Gray] their franchise and right to distribute products offered by the Sun Drop Bottling Company ..." Further, the Walls referred to their rights as exclusive. Gray purchased this "franchise" for $60,000 directly from the Walls.

On October 30, 1978, Franklin, which by this time was incorporated, and Sun Drop Bottling executed a contract entitled, "Sun Drop Bottling Company, Incorporated Distributor Agreement." Gray signed the distributorship agreement stating that he had purchased the exclusive rights to Williamson County from the Walls and that this contract between Franklin and Sun Drop Bottling was to provide Gray with a source for his drinks within the area.

In 1979 Gray, acting again on behalf of Franklin, initiated negotiations with Herb Helton, who was the independent distributor for Sun Drop Bottling for Maury County. The parties executed a contract on September 28, 1979, whereby Franklin purchased the Maury County distributorship for $150,000 directly from Helton. As signatory to the contract, Gray believed that the distributorship was exclusive. The terms of the contract indicate that Helton agreed to sell to Franklin his rights in Sun Drop products which were an "exclusive distributorship." Gray claims that Sun Drop Bottling also informed him that Helton "owned Maury County."

On October 8, 1979, Franklin and Sun Drop Bottling once again entered into a "distributorship agreement," this one covering Maury County. Unlike the previous agreement, this contract made explicit references to the franchise agreement that Sun Drop Bottling had with Crush. Moreover, the distributorship agreement provided that, "[t]he provisions of this contract between bottler and distributor are to be construed in subordination to said franchise agreement ... and in case of conflict ... the franchise agreement shall prevail." Although Sun Drop Bottling purported to attach a copy of the franchise agreement to the contract, there was no such attachment.

Then in June, 1980, (according to plaintiffs' complaint) Crush provided Franklin with a copy of the franchise agreement between it and Sun Drop Bottling. From the franchise agreement, Franklin became aware that it had not purchased exclusive distributorships in Maury and Williamson Counties and brought this action.

We must first consider whether Franklin and Gray may raise the issue of apparent authority on appeal. Crush asserts that (1) Franklin's and Gray's motion for summary judgment precludes them from now arguing that a genuine issue of material fact exists, and (2) Franklin and Gray failed to raise the apparent authority issue at the trial level.

The essence of Crush's first argument is that Franklin and Gray may not assert on appeal that material facts exist after stating in its motion for summary judgment that no material facts exist. The State Supreme Court has held that a party does not have "to stand" on its motion for summary judgment. "When a plaintiff's motion for summary judgment has been overruled, he has simply lost a preliminary skirmish and must proceed to trial." Williamson County Broadcasting Co. v. Williamson County Board of Education, 549 S.W.2d 371, 372 (1977). While the Tennessee courts have not addressed Crush's argument in the context of an interlocutory appeal, we find that a party does not have to stand on his summary judgment motion for purposes of such an appeal. At the "motion stage" of the trial, both parties may be relying upon differing theories of law. Thus, the facts which are material for purposes of one party's motion for summary judgment may be immaterial for the purposes of the other party's motion for summary judgment. As stated by the Sixth Circuit Court of Appeals:

Each, in support of his own motion, may be willing to concede certain contentions of his opponent, which concession, however, is only for the purpose of the pending motion. If the motion is overruled, the concession is no longer effective. Appellants' concession that no genuine issue of fact existed was made in support of its own motion for summary judgment. We do not think that the concession continues over into the Court's separate consideration of appellee's motion for summary judgment in his behalf after appellants' motion was overruled.

Begnaud v. White, 170 F.2d 323, 327 (6th Cir.1948). See also Walling v. Richmond Screw Anchor Co., 154 F.2d 780 (2nd Cir.1946), cert. denied, 328 U.S. 870, 66 S.Ct. 1383, 90 L.Ed. 1640 (1946). Moreover, the Fifth Circuit Court of Appeals has held as recently as 1979 that, where cross motions are filed for summary judgment, the losing party is not estopped from asserting on appeal that genuine issues of fact exist.

A plaintiff, having lost on his motion for a summary judgment, would be free to argue on review that there were issues of material fact which should have been resolved before deciding the case by summary...