Stan D. Bowles Distributing Co. v. Pabst Brewing Co.

• Decision Date: 03 July 1984
• Docket Number: No. 838SC428,838SC428
• Court: North Carolina Court of Appeals
• Parties: , 39 UCC Rep.Serv. 500 STAN D. BOWLES DISTRIBUTING COMPANY v. PABST BREWING COMPANY and Pabst Brewing Company, d/b/a Blitz-Weinhard Company and Jeffreys Beer and Wine Company.

Page 684

317 S.E.2d 684

69 N.C.App. 341, 39 UCC Rep.Serv. 500

STAN D. BOWLES DISTRIBUTING COMPANY v. PABST BREWING COMPANY and Pabst Brewing Company, d/b/a Blitz-Weinhard Company and Jeffreys Beer and Wine Company.

No. 838SC428.

Court of Appeals of North Carolina.

July 3, 1984.

Brown, Fox & Deaver by Bobby G. Deaver, Fayetteville, and George R. Kornegay, Jr., P.A. by Janice S. Head and George R. Kornegay, Jr., Mount Olive, for plaintiff-appellee.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan by Michael E. Weddington and Martha Jones Mason, Raleigh, for defendant-appellant Pabst Brewing Co.

WHICHARD, Judge.

I.

The facts giving rise to this action are that plaintiff and defendant Pabst entered into a written distributorship agreement on 23 January 1975. Plaintiff was a wholesale distributor for alcoholic malt beverage products. Defendant Pabst was a national brewer "engaged in the manufacture and sale of Pabst beer and Pabst ale." The agreement granted plaintiff the right to sell "Pabst beer and ale" in the counties of Wilson, Greene, Wayne, and Lenoir. The agreement also provided that "[n]otwithstanding the use hereinafter of the words 'beer and ale' and 'beer or ale,' or the use of the word 'Pabst,' this agreement shall apply to and cover only the product or products expressly first named above in this paragraph 1." The parties agreed that the agreement would be "governed by and interpreted in accordance with the laws of the State of Illinois."

On 24 January 1975 plaintiff and defendant Pabst entered into an amendment to the distributorship agreement. Paragraph four of the amendment provided that

[a]ny provisions in the distributorship agreements with the distributor which limit or restrict the sale and distribution of any Pabst beer products by the distributor to a particular geographical area or territory or to any type or class of customer are hereby modified to provide that such geographical area or territory shall hereafter constitute the distributor's area of primary marketing responsibility, and hereafter Pabst and the distributor shall have the right to sell and distribute Pabst beer products in any place or area that, and to any person to whom, Pabst or the distributor may be lawfully authorized so to do.

The above amendment was added to every Pabst distributor's contract regardless of what products the distributor was authorized to sell under the contract.

In March 1979 defendant Pabst entered into an "Asset Purchase Agreement" with Blitz-Weinhard Co., whereby defendant Pabst acquired all rights to Olde English 800 Malt Liquor. Blitz-Weinhard then served as a marketing division for defendant Pabst for Olde English 800. In August 1979 plaintiff placed an order with defendant Pabst for 2,184 cases of Olde English 800. Defendant Pabst did not fill the order. It contended that the right to distribute Olde English 800 had been granted to defendant Jeffreys. It also contended that it was not obligated to sell Olde English 800 to plaintiff because the contract did not include malt liquor.

Plaintiff then commenced this action for breach of contract. The court, sitting without a jury, found that defendant Pabst had breached the contract. It awarded plaintiff $168,000 for the diminution in the value of his franchise after the breach and $150,000 in punitive damages.

Defendant Pabst appeals.

II.

Defendant Pabst first contends the court erred in finding that it breached its contract with plaintiff by not selling Olde English 800 to plaintiff. It is undisputed that defendant Pabst did not sell Olde English 800 to plaintiff. This would not constitute a breach, however, unless the distributorship agreement, considered with the amendment, required such sale. Thus, the resolution of the issue depends on the interpretation given the agreement.

The court made findings of fact to the effect that Olde English 800 was a Pabst beer product and thus defendant Pabst was obligated to sell it to plaintiff. Ordinarily, "[t]he court's findings of fact are conclusive if supported by any competent evidence, and judgment supported by them will be affirmed even though there is evidence contra." Spivey v. Porter, 65 N.C.App. 818, 819, 310 S.E.2d 369, 370 (1984); see also Hunter v. DeMay, 124 Ill.App.2d 429, 438, 259 N.E.2d 291, 295 (1970). If the finding of fact is essentially a conclusion of law, however, it will be treated as a conclusion of law which is reviewable on appeal. Britt v. Britt, 49 N.C.App. 463, 470, 271 S.E.2d 921, 926 (1980); Wachacha v. Wachacha, 38 N.C.App. 504, 507, 248 S.E.2d 375, 377 (1978); see also Blackard Construction Co. v. Berry, 13 Ill.App.3d 768, 772, 300 N.E.2d 627, 630 (1973). The interpretation of a contract "has uniformly been treated as a question of law subject to review by the appellate courts." Davison v. Duke University, 282 N.C. 676, 712, 194 S.E.2d 761, 783 (1973); see also Rosenbaum Bros. v. Devine, 271 Ill. 354, 357, 111 N.E. 97, 98 (1915); Blackard Construction Co. v. Berry, supra.

The basic rule of construction for contracts is that the court

seeks to ascertain the intent of the parties at the moment of execution. To ascertain this intent, the court looks to the language used, the situation of the parties, and objects to be accomplished. Presumably the words which the parties select were deliberately chosen and are to be given their ordinary significance.

Briggs v. Mills, Inc., 251 N.C. 642, 644, 111 S.E.2d 841, 843 (1960); see also Marshall Field & Co. v. J.B. Noelle Co., 81 Ill.App.2d 409, 414, 226 N.E.2d 454, 457 (1967); Brown v. Scism, 50 N.C.App. 619, 623, 274 S.E.2d 897, 899-900, disc. rev. denied, 302 N.C. 396, 276 S.E.2d 919 (1981). Further, "[w]here the terms of the contract are not ambiguous, the express language of the contract controls in determining its meaning and not what either party thought the agreement to be." Crockett v. Savings & Loan Assoc., 289 N.C. 620, 631, 224 S.E.2d 580, 588 (1976); see also Brown v. Miller, 45 Ill.App.3d 970, 972, 4 Ill.Dec. 649, 651, 360 N.E.2d 585, 587 (1977).

Here, the agreement granted plaintiff the right to distribute "Pabst beer and ale." Plaintiff contends that the clause in the amendment providing that "hereafter Pabst and the distributor shall have the right to sell and distribute Pabst beer products in any place or area" expands the Pabst products it could sell. We disagree for two reasons. First, the agreement provided that "[n]otwithstanding the use hereinafter of the words 'beer and ale' and 'beer or ale,' or the use of the word 'Pabst,' this agreement shall apply to and cover only the product or products expressly first named above in this paragraph 1." It is clear that defendant Pabst used the same form contract with all of its distributors. It inserted in paragraph one the particular products the distributor was authorized to sell. In light of this, a reference to Pabst beer products in the amendment, instead of a reference merely to Pabst or to beer and ale, does not appear intended to expand the type of products a distributor was authorized to sell in paragraph one. Second, paragraph thirteen of the agreement provides that "neither this contract nor any of the terms thereof may be changed or modified or waived except in writing." Paragraph four of the amendment, although it uses the terms Pabst beer products, instead of merely the term Pabst, does not attempt to change or modify the type of Pabst products the distributor can sell. Instead, it refers to the geographical area or territory for which a distributor will have responsibility. Since there is no written agreement modifying the type of Pabst products to be distributed as required by paragraph thirteen, paragraph one determines whether defendant Pabst was obligated to sell Olde English 800 to plaintiff.

Paragraph one grants plaintiff the right to sell "Pabst beer and ale." The question thus is whether those terms encompass malt liquor. Based upon the language of the contract and the evidence presented, we hold that the court was correct in finding that the contract required defendant Pabst to sell Olde English 800 to plaintiff.

The agreement states that "Pabst is engaged in the manufacture and sale of Pabst beer and Pabst ale." It makes no reference to any other type of product manufactured or sold by defendant Pabst. It thus could be concluded that any product manufactured or sold by defendant Pabst had to be included within the terms beer and ale. Further, the agreement grants plaintiff the right to sell "Pabst beer and ale." Since these are the only terms used to describe the products manufactured and sold by defendant Pabst, the logical interpretation is that the agreement grants plaintiff the right to distribute any product manufactured and sold by defendant Pabst. Plaintiff testified that "[p]rior to the time that Old English 800 came into North Carolina, ... there [were no] Pabst beer products authorized in this state that [plaintiff] did not distribute."

There also was sufficient evidence, though not decisive on the interpretation issue, to support the conclusion that the terms "Pabst beer and ale," as used in the agreement, included Olde English 800. First, plaintiff testified that his understanding of the agreement was that he was authorized to distribute any product defendant Pabst manufactured. Second, a bill of lading sent to defendant Jeffreys from defendant Pabst refers to "malt beverage beer." Third, the top of a case of Olde English 800 contained the language "rotate your stock, put new stock, higher numbers behind or beneath present stock, keep selling fresh beer." Fourth, in a semi-annual report to stockholders, defendant Pabst used the term beer to describe all Pabst products sold. The secretary for defendant Pabst stated that in the report beer was used as "a generic word [which] include[d] beer, ale, malt liquor, stout, saki." Finally, there was evidence that although there is a technical distinction between...