E. L. Husting Co. v. Coca Cola Co.

• Decision Date: 12 June 1931
• Citation: 237 N.W. 85,205 Wis. 356
• Parties: E. L. HUSTING CO. v. COCA COLA CO. ET AL.
• Court: Wisconsin Supreme Court

205 Wis. 356

237 N.W. 85

E. L. HUSTING CO.

v.COCA COLA CO. ET AL.^a1

Supreme Court of Wisconsin.

June 12, 1931.

Appeal from a judgment of the Circuit Court for Milwaukee County; E. T. Fairchild, Circuit Judge.

Action in equity by the E. L. Husting Company against the Coca Cola Company, the Western Coca Cola Bottling Company, the Wisconsin Coca Cola Bottling Company, and the Milwaukee Coca Cola Bottling Company, wherein there was no service upon, or appearance by, the Western Company. From a judgment dismissing the complaint, plaintiff appeals.--[By Editorial Staff.]

Affirmed as to defendant first named, reversed as to defendants third and last named, and remanded, with directions.

FOWLER, J., dissenting.

This action was commenced June 9, 1923, by the E. L. Husting Company, a Wisconsin corporation, as plaintiff, against the defendants. The action was in equity to enjoin the defendants from an unlawful interference with plaintiff's rights acquired under a contract dated January 10, 1917, between plaintiff and the defendant Western Coca Cola Bottling Company, whereby plaintiff was given the exclusive right to purchase Coca Cola syrup for bottling purposes, to bottle and sell bottled Coca Cola, and to use the trade-mark, trade-name, labels, etc., in Milwaukee county. There was no service upon, or appearance by, the Western Company.

The complaint alleges the execution of the contract, the acquisition of rights thereunder, and the expenditure of time, labor, and money in the business of manufacturing and selling bottled Coca Cola in Milwaukee county. It alleges the fulfillment of the terms and provisions of the contract on its part, and breach of the contract by the Western Company, and thereafter interference with plaintiff's rights by the defendants. The appearing defendants interposed answers to plaintiff's complaint in the nature of general denials.

Upon the action being first called for trial on September 27, 1926, the appearing defendants interposed a supplemental answer in the nature of a plea in abatement. This answer alleged that as the contract was one between the Western Company and the plaintiff, the Western Company was an indispensable party. Further, that the contract between the parties had been lawfully terminated on January 1, 1920, and had not been in force since that date. Denial of the facts alleged in the supplemental answer was made by the plaintiff, and trial demanded. The trial court, however, sustained the supplemental answer without trial, and dismissed plaintiff's complaint. On appeal to this court, the judgment was reversed. E. L. Husting Co. v. Western Coca-Cola Co. et al., 194 Wis. 311, 216 N. W. 833, 836. It was there held that the Western Company was not an indispensable party to the litigation, and that the dismissal of the action was not required by section 260.19 (1), Stats., which provides that “when a complete determination of the controversy cannot be had without the presence of other parties, or any persons not parties to the action have such interests in the subject-matter of the controversy as require them to be made parties for their due protection, the court shall order them to be brought in.” It was held that this statute applies only to such third persons as are within the jurisdiction of the court and consequently so situated as to be within the power of the party to join.

Upon remittitur the action was tried before the Honorable E. T. Fairchild and evidence presented, and on April 23, 1930, the court rendered its decision, filed its findings and entered judgment on July 9, 1930, dismissing plaintiff's complaint on the merits. The decision was grounded upon plaintiff's laches.

In order to understand the case it will be necessary to identify the defendants. The Coca Cola Company is a Delaware corporation engaged in the manufacture of Coca Cola syrup, which, when mixed with carbonated water, forms the beverage known as Coca Cola. This corporation is a successor to a Georgia corporation of the same name. In 1899, the Georgia company made a contract with J. B. Whitehead and B. F. Thomas, granting the latter the exclusive right to bottle and sell bottled Coca Cola under the trade-mark “Coca Cola” in certain portions of the United States, in consideration of the promise of these individuals to erect a Coca Cola bottling plant and to supply the territory with bottled Coca Cola made from syrup purchased exclusively from the Georgia company, the latter agreeing to sell all the syrup used by Whitehead and Thomas in such business. The Coca Cola Bottling Company is a Tennessee corporation which succeeded to the rights of Whitehead and Thomas as to certain states of the United States, including Wisconsin. On April 24, 1915, a contract was made between the Coca Cola Company and the Coca Cola Bottling Company, redefining their mutual rights and obligations within the defined territory. The Coca Cola Company subdivided the territory thus acquired and transferred its rights and obligations with respect to a fractional portion thereof, including Wisconsin, to the Western Coca Cola Bottling Company, an Illinois corporation. This Illinois corporation is identified with the Coca Cola Bottling Company and the stockholders of the Coca Cola Bottling Company own the stock in the Western Company. No such identity of ownership or control has ever existed as between the Coca Cola Bottling Company and the Coca Cola Company. The Western Coca Cola Bottling Company, named as one of the defendants but not served is, as stated, the assignee of the Coca Cola Bottling Company. It has no direct relation to the Coca Cola Company. The Wisconsin Coca Cola Bottling Company is a Delaware corporation organized by H. J. Hinschey, William Friedman and others, none of whom were stockholders in, or subject to, the domination or control of the Western Company, or the Coca Cola Bottling Company or the Coca Cola Company. The only connection between the Wisconsin Coca Cola Bottling Company and the Western Company is by virtue of a contract dated March 20, 1923, whereby the Western Company transferred to the Wisconsin Company the right to vend bottled Coca Cola in certain counties of Wisconsin, including Milwaukee county. The Milwaukee Coca Cola Bottling Company is a Wisconsin corporation organized in 1923, by the same individuals who organized the Wisconsin Company, and is a subsidiary of the Wisconsin Company, its capital stock all being held by the Wisconsin Company and its issuance having been in consideration of the assignment by the Wisconsin Company of its exclusive right to sell bottled Coca Cola in Milwaukee county. The business of the plaintiff company consists in bottling and selling a full line of soda water beverages. It was established more than fifty years ago, and has been conducted ever since at the same location. On February 23, 1910, the Western Company conveyed to the E. L. Husting Company bottling rights for Milwaukee county. This contract remained in force until January 10, 1917, when a new contract between the parties conveying the same rights was made. By the terms of the contract the plaintiff company was granted by the Western Company the exclusive right in Milwaukee county to use the trade-mark “Coca Cola” on all labels and designs pertaining thereto in connection with the product bottled Coca Cola. The Western Company agreed to furnish the party of the second part sufficient syrup for bottling purposes to meet the requirements of the plaintiff, provided it could obtain such syrup from the Coca Cola Company. It provided that the plaintiff should have no interest in the Coca Cola labels except the right of usage in connection with bottled Coca Cola. It also provided that this contract should in no way interfere with the use of the name Coca Cola in connection with the fountain product of the Coca Cola Company. The plaintiff agreed not to manufacture, deal in, sell, use, or handle any product that is a substitute for or an imitation of Coca Cola, or any product that could be used unfairly with Coca Cola. It made certain agreements as to the manner in which Coca Cola was to be bottled; further agreements to buy the syrup from the Western Company, and to pay therefor at a specified price; to invest in a plant and equipment, and to keep the plant and equipment in such a condition as would be sufficient to meet satisfactorily the demands of the business; to allow the Western Company to inspect the premises; not to bottle or sell the product except in the territory referred to in the contract unless rights to do so were duly obtained from parties having those rights; to order, for the purpose of bottling Coca Cola, the distinctive bottle and crowns from designated manufacturers. The sixth paragraph of the contract provides that “failure of the party of the second part (plaintiff) to properly and vigorously push the sale of bottled Coca Cola and use the minimum hereinafter named shall be deemed a violation of this contract, and party of the first part shall have the option to terminate same, by written notice, addressed to the last known place of business of party of the second part. For the purpose of determining that the party of the second part is properly pushing Coca Cola, party of the second part shall be required to bottle and sell at least 2,000 gallons of Coca Cola Bottlers' syrup per year.”

Under the contracts of 1910 and 1917 the plaintiff purchased from the Western Company the following amounts of syrup in terms of gallons: 1910, 1,570; 1911, 1,810; 1912, 1,548; 1913, 1,285; 1914, 1,207; 1915, 1,096; 1916, 1,185; 1917, 1,239; 1918, 837; 1919, 1,153. In 1917, by letter dated May 17th, the Western Company called attention to the extreme scarcity of materials and the sharp rise in prices due to war conditions. The plaintiff was asked to co-operate by returning empty barrels due to the difficulty of securing supplies in this direction. On October 31, 1917, the Western...