Hale v. George A. Hormel & Co.

• Decision Date: 09 May 1975
• Court: California Court of Appeals Court of Appeals
• Parties: Earl R. HALE and Gayle H. Hale, Plaintiffs and Appellants, v. GEORGE A. HORMEL & CO. and Welch Foods, Inc., Defendants and Respondents. Civ. 13833.

Page 144

121 Cal.Rptr. 144

48 Cal.App.3d 73

Earl R. HALE and Gayle H. Hale, Plaintiffs and Appellants, v. GEORGE A. HORMEL & CO. and Welch Foods, Inc., Defendants and Respondents.

Civ. 13833.

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

May 9, 1975.

Howser, Gertner & Brown, Richard A. Brown, Jr. and Daniel P. Broderick, Newport Beach, for plaintiffs and appellants

Tuttle & Taylor and Antonio Rossmann, Los Angeles, for defendant and respondent Welch Foods, Inc.

Kindel & Anderson and Edward J. Wallin, Santa Ana, for defendant and respondent George A. Hormel & Co.

KERRIGAN, Associate Justice.

Earl Hale and his wife ('Hale') entered into a written agreement with Universal Marketing Enterprises Co. ('Universal') whereby Universal agreed to sell Hale 39 coin-operated vending machines for $25,000 and to find Hale suitable sites or locations for the machines in the Coachella Valley area (Palm Springs and environs). The Hormel and Welch filed motions for summary judgment. Summary judgments were granted and Hale appeals. Hale maintains that there were triable issues of fact which could not be summarily resolved.

machines were to be utilized to dispense 8-ounce cans of Welch's fruit drinks and delivery was to be accomplished within ninety days. [48 Cal.App.3d 76] Unfortunately, Hale paid the entire purchase price before receiving any machines. Universal's president advanced excuse after excuse for his firm's failure to effect delivery within the contract period or thereafter. Ultimately, Hale demanded the return of his investment and $5,000 was repaid. When the balance was not forthcoming, Hale sued Universal and its president and sole shareholder ('Newhope') for $20,000 for breach of contract and for general and punitive damages for fraud. In the same suit, in separate counts, Hale also sought damages for negligent misrepresentation from Welch Foods, Inc. ('Welch'), the national manufacturer of Welch's fruit products, and George A. Hormel & Co. ('Hormel'), Welch's west coast distributor, on the basis that Welch permitted Universal to use its name in advertising the machines and that Hormel's regional manager highly recommended Universal to Hale before he signed the contract and paid the purchase price.

We have determined that the trial court acted with propriety in granting the summary judgments inasmuch as no material misrepresentations were made by agents of Welch or Hormel and the court properly concluded that Hale could not establish a cause of action for negligent misrepresentation against either firm.

FACTS

In March, 1973, Hale saw some advertisements in the Los Angeles Times directed to readers who might be interested in becoming part-time distributors of Welch's drinks. The ad had been placed by Universal. In response to his telephone request, Hale was sent a packet of written materials by Universal. Included in the materials was a list of references, including Universal's attorney, Universal's bank and 'Hormel Meats, Adam Brown, Regional Manager, Foods Division.' Three phone numbers were listed for Brown.

Hale called Brown and the following conversation took place: ¹

'Q: Do you do business with Universal Marketing Enterprises Co.?

'A: Yes.

'Q: Are they a large account with you, and how many cases of Welch's 8--ounce can drink do they buy from you per month?

'A: Well, that would be difficult to answer on the phone at this time, but they are a new company and they do buy a lot of cases from us.

'Q: Do you feel they are a reputable company?

'A: Yes. They pay their bills and we have no problems with them.

'Q: How does Hormel fit in with Universal Marketing Enterprises Co.?

'A: We are the distributors of Welch's vending can items and sell the product to Universal Marketing Enterprises Co. so that they can solicit distributors such as you would be.

'Q. Do you think that Universal Marketing Enterprises Co. is a good company?

'A: Oh, yes. They are just getting started, but with Welch's products, they have great promise.'

Hale was contacted by Newhope, Universal's president, and a meeting was arranged in the Hale home in Costa Mesa on March 29. Newhope represented that the opportunity to purchase a Welch distributorship was made possible by the recent development by Welch of a new 8--ounce On April 24, Hale paid Newhope the balance of the purchase price of the machines ($20,665).

vending can. Samples of these cans bearing the Welch inscription were displayed. At the end of the conversation, Hale signed an agreement to purchase 300 cases of Welch's drinks and 39 vending machines and paid Newhope $5,000.

In the next four-five weeks, Newhope assured Hale of an early delivery date.

Around June 1, Hale saw some ads in the Desert Sun run by National Consolidated Beverage Company of Oakland (Hale had moved to the Palm Springs area). Hale contacted National and feigned interest in the ad. A representative of the firm visited Hale and stated that his company was selling vending machines fro the purpose of dispensing Welch's products. National's representative gave Hale a copy of the Hormel price list and a sample of Welch's vending machine cans. National's representative offered Hale an exclusive territory--the same territory that Hale was planning to operate in. ²

Hale contacted Newhope and told him National was offering an exclusive territory for the dispensing of Welch's products. In turn, Newhope contacted Adam Brown of Hormel and informed him that National was promising exclusive territories. Brown spoke to Hale and promised to contact Welch for the purpose of stopping National from making misleading representations.

By mid-June, Hale determined that Universal was incapable of furnishing him with the vending machines. He demanded his money back and (in September) Universal repaid him $5,000, and Universal's attorneys promised to furnish a confession of judgment for the balance. Later when Hale attempted to contact Brown at Hormel, he was told that Brown had been transferred to Colorado and that Brown may have been 'overly enthusiastic' in regard to Universal's prospects.

When the balance due him from Universal remained unpaid and the confession was not forthcoming, Hale filed suit against Universal, Newhope, Welch and Hormel in October.

Hormel and Welch submitted interrogatories to Hale and, in December, filed answers to the complaint.

In February 1974, Welch and Hormel moved for summary judgment.

Welch's motion for summary judgment was supported by the affidavit of its legal director which may be summarized as follows: Welch produces canned fruit drinks that can be sold through vending machines; Welch does not sell vending machines or direct or control the efforts of vending machine dealers or operators; Welch designated Hormel as its exclusive agent for the marketing of fruit drinks for use in vending machines; in accordance with its marketing agreement with Hormel, a purchaser of Welch's fruit drinks in the vending machine trade must deal with Hormel and may not deal directly with Welch; the marketing agreement prohibits Hormel from taking any action which would infringe upon the Welch trademark; Welch has no office in Los Angeles nor did it ever employ Adam Brown; Welch has no connection with Universal or Newhope and no contracts or agreements with that corporation or Newhope; Welch never consented to nor approved any advertising conducted by Newhope or Universal; Welch never received any inquiries regarding the trustworthiness, reputation or financial responsibility of Universal, Newhope or their associates; Welch never made any representation as to the trustworthiness, financial responsibility or reputation of Universal or Newhope; Welch never authorized Universal or Newhope to use the Welch name in advertising distributorships; the only time that Welch had been requested by Universal to use the Welch name in connection with Universal's Hormel's motion for summary judgment was supported by the affidavit of its District Manager for the Grocery Products Division and contained the following averments: His area of responsibility included the sale of vending can products manufactured by Welch; he was informed of Hale's claim that Universal placed newspaper ads referring to Welch's products with the agreement and consent of Hormel; he stated that Hormel never at any time consented to the use of the Welch name in advertising by Universal; under the Welch-Hormel west coast distributorship agreement, only Welch has the power to consent to the use of its name in advertising; Hormel had never vouched for the financial stability, integrity or honesty of any of its customers; while Universal had purchased Welch's vending can products (grape juice, apple-grape juice, orange juice and fruit punch) from Hormel prior to Hale's investment, Hormel's records indicated that Universal paid for the merchandise upon receipt and that Universal was not indebted to Hormel; and that the statement attributed to Adam Brown (Hormel's former district manager) to the effect that Universal had paid its bills to Hormel was a true statement.

advertising was in July 1973; Universal was advised that Welch did not and would not authorize the use of its name in Universal's advertising; the only contact that Welch ever had with Hale was when it received a letter dated May 29, 1973 (after Hale had contracted with Universal) requesting promotional assistance for the marketing of Welch's fruit drinks in connection with Hale's contemplated vending machine operation; that Hale was informed by letter that Hormel was Welch's exclusive distributor of products for the vending machine trade and that Welch had no control over vending promotions.

In opposition to the two motions, Hale relied on his answers to the interrogatories and the affidavit of Universal's attorney. The attorney's affidavit contained the following declarations: In July 1973 (after execution of the Universal-Hale contract), Universal...