San Francisco Brewing Corp. v. Bowman

• Decision Date: 10 August 1959
• Citation: 343 P.2d 1,52 Cal.2d 607
• Court: California Supreme Court
• Parties: SAN FRANCISCO BREWING CORPORATION (a Corporation), Appellant, v. Clyde A. BOWMAN, Respondent. Sac. 7025.

Page 1

343 P.2d 1

52 Cal.2d 607

SAN FRANCISCO BREWING CORPORATION (a Corporation), Appellant, v. Clyde A. BOWMAN, Respondent.

Sac. 7025.

Supreme Court of California, In Bank.

Aug. 10, 1959.

P. M. Barceloux, Burton J. Goldstein, Goldstein, Barceloux & Goldstein, Elbert W. Davis and Hoffman, Davis & Martin, San Francisco, for appellant.

Price & Morony, Grayson Price, Chico, and J. Albert Hutchinson, San Francisco, for respondent.

PER CURIAM.

This cause was transferred to this court after decision by the District Court of Appeal, Third Appellate District. Upon further consideration, we adopt as the opinion of this court the opinion of the District Court of Appeal prepared by Presiding Justice Van Dyke, with the omissions and additions hereinafter indicated.

Plaintiff San Francisco Brewing Corporation brought this action on September 30, 1954, against defendant Clyde A. Bowman, doing business as Bowman's Beverage Company. Plaintiff alleged that defenant was indebted to it in the sum of $18,027.14, being the balance due on an open account for beer sold and delivered during the preceding two years. Defendant's answer admitted his indebtedness to plaintiff in the sum alleged, but asserted that nothing was due because of offsetting demands. He also cross-complained for damages in the sum of $162,000 for breach of contract. The jury returned a verdict in favor of defendant and fixed his damage at $36,040. Judgment was entered accordingly in favor of defendant in the sum of $18,012.86 (the amount of the verdict less the admitted indebtedness sued on). Plaintiff appeals.

Viewing the evidence, as we must, in support of the verdict, it appears that in 1935 defendant was a partner with his father in the business of distributing carbonated beverages and beer in Butte County. Late in 1935 or early in 1936 plaintiff entered into an agreement with the partners by which they were given the exclusive right to distribute and sell its products in Butte County with the exception of the towns of Gridley and Biggs. Plaintiff agreed to furnish all of its products which the partners could sell, and the partners agreed to sell and distribute these products, to furnish sufficient equipment, manpower and warehousing to fill the demands for these products in the territory, to furnish sufficient capital to buy and maintain a reasonable inventory and geenrally to promote sales within the county. The agreement was to continue as long as the partners, to use defendant's expression, 'took care of the territory.' At that time the products of plaintiff with which the parties were concerned were two brands of beer known as 'Golden State' and 'Pilsen Gold.' Early in 1937 plaintiff discontinued those brands and substituted a brand known as 'Burgermeister,' which product the partners continued to sell and distribute. The partnership between defendant and his father was dissolved around 1938, and for a while thereafter defendant continued individually to distribute Burgermeister under the same conditions which had applied to the preceding partnership business. After a period defendant entered into a second partnership which in turn continued the distribution of plaintiff's beer. At plaintiff's request this partnership was dissolved in 1950. Thereupon defendant, as an individual, continued the distribution of plaintiff's product under the same conditions as had originally been agreed upon until July 28, 1954, when plaintiff without notice and without cause cancelled the distributorship, refused to continue supplying its product to defendant and gave the exclusive right for the distribution thereof in Butte County to another. During all of the time defendant individually and in partnership had distributed plaintiff's product in Butte County up to a date in February, 1954, the business had included the distribution of a rival product known as 'Acme' beer. This had been with knowledge of and without objection by plaintiff until February, 1954, when it requested defendant to discontinue the distribution of the rival product, assuring him that if he would terminate his Acme distributorship, plaintiff would then continue his exclusive right to distribute Burgermeister. Accordingly, defendant complied with plaintiff's desires, terminated his Acme distributorship and concentrated his sales efforts on Burgermeister. On the first of June, 1954, he met plaintiff's further demand that he employ a sales promotion and display man ( ). ¹ Shortly prior to termination he met a further demand of plaintiff that he purchase specialized motor equipment for the delivery of its product. Also in order to serve the convenience of plaintiff by enabling it to maintain a uniform schedule of production throughout the year, defendant had for many years met the demands of plaintiff to build up his inventory during slack seasons beyond his distribution requirements. This required him to provide storage for the large inventory thus accumulated, which requirement he met by constructing a warehouse in Chico in 1951. Defendant testified generally that in all things he had performed the duties cast upon him by his agreements with plaintiff.

( ) (At plaintiff's request, the trial court instructed: 'If you find that a contract was made between plaintiff and a partnership of which defendant was a member, and that such partnership was later dissolved, then that contract had come to an end, and the rights of the parties must be governed by some new agreement either express or implied thereafter arising between the parties.' The verdict for defendant therefore implied a finding that by terminating the distributorship plaintiff breached a contract formed not earlier than 1950, when defendant individually became the Burgermeister distributor. There is no merit in plaintiff's contention that such a contract was neither alleged nor proved. While it is true that the period of oral negotiations which began in 1935 appears to have been the only time when conversations were had concerning all the terms of the agreement, it is also apparent from defendant's testimony that by their conduct the parties continued under the same general plan and agreement from that time forth and through the varying changes in the persons interested as distributors to and including the last four years during which defendant alone continued the same relationship. This evidence supports the jury's finding notwithstanding the absence of later discussion specifically directed to the formation of a new contract.)

Plaintiff further asserts that the court erred in giving an instruction which reads in part as follows: 'When the parties to an agreement undertake a course of dealing and do not expressly include in their agreement any definite stipulation or undertaking as to the time such course of dealing shall continue, the law implies that such course of dealing shall continue for such period of time as is reasonable in the nature of the business contemplated by the agreement, and such reasonable time is defined as that which is reasonable in the light of the course of the dealing and all the circumstances of the case and the reasonable contemplation and expectation of the parties. * * *'

The instruction went on to state that such an agreement could not be lawfully terminated by a party without either the consent of the other or lawful justification for termination or until a reasonable time after notice given by one party to the other of an intent to terminate. ( ) (This instruction is not subject to plaintiff's objection that the evidence showed only a relationship terminable at the will of either party.) Upon the subject of termination of exclusive sales and distribution contracts such as we have here, 4 Williston on Contracts, revised edition, section 1027A, page 2847 et seq., after pointing out that the validity of such contracts during their continuance is obvious, states that where the agreement contains no provision whatever for its termination it is properly held to be '* * * an enforceable executory contract, binding each party for a reasonable time.' (The jury might properly have found such a contract, containing no provision for termination. Williston) also further states (at p. 2852): '* * * It is the settled law of agency that if the agent or employee furnishes a consideration in addition to his mere servicxes, he is deemed to have purchased the employment for at least a reasonable period where the duration of the employment is not otherwise defined. A similar result should be reached though the dealer is a buyer-distributor rather than a technical agent, where in addition to undertaking to pay for the manufacturer's products as ordered, he promises to establish or maintain adequate sales and demonstration facilities or to provide a maintenance and repair service for handling said products.' See also J. C. Millett Co. v. Park & Tilford Distillers Corp., ( ) (D.C., 123 F.Supp. 484), and Long Beach Drug Co. v. United Drug Co., ( ) (13 Cal.2d 158, 88 P.2d 698; 89 P.2d 386).

Plaintiff charges other errors in instructions. In addition to the above instruction, the court told the jury that if no time limit was fixed in the contract between the parties during which the contract was to continue, it would ordinarily be terminable at the will of either party unless from all of the circumstances the jury should find that the mutual agreement expressly or impliedly contemplated a continuance for a reasonable time or provided a reasonable notice of termination; that in order for the termination to constitute a breach, defendant had to prove a promise on the part of plaintiff that it would not terminate the contract without notice or would have to prove a promise that the contract was to have continued in effect for some time beyond the date of actual termination as determined by the jury on consideration of all the evidence. Plaintiff declares that these last instructions conflicted with the other. ( ) (If...