Wayne Distributing Co. v. Schweppes U.S.A. Ltd.

• Decision Date: 04 March 1976
• Docket Number: No. 74-34-A,74-34-A
• Citation: 352 A.2d 625,116 R.I. 108
• Parties: WAYNE DISTRIBUTING CO. v. SCHWEPPES U.S.A. LIMITED et al. ppeal.
• Court: Rhode Island Supreme Court

Page 625

352 A.2d 625

116 R.I. 108

WAYNE DISTRIBUTING CO. v. SCHWEPPES U.S.A. LIMITED et al.

No. 74-34-Appeal.

Supreme Court of Rhode Island.

March 4, 1976.

[116 R.I. 116] Coffey, McGovern & Novogroski, John G. Coffey, Jr., Providence, for plaintiff.

Hinckley, Allen, Salisbury & Parsons, Robert W. Lovegreen, Providence, for Schweppes U.S.A. Limited and Jefferson Bottling Co.

Edwards & Angell, Richard M. Borod, Providence, for Pepsi Cola Metropolitan Bottling Co., Inc.

OPINION

JOSLIN, Justice.

In this civil action Wayne Distributing Co. ('Wayne') seeks compensatory and punitive damages from Schweppes U.S.A. Limited ('Schweppes') for the alleged breach of a distribution contract and from Pepsi Cola Metropolitan Bottling Company, Inc. ('Pepsi') for the alleged tortious interference with that contract. In addition Wayne asks that both defendants be enjoined from performing any act in derogation of its obtaining and distributing Schweppes products as provided for by the distribution contract. The case was tried to a Superior Court justice sitting without a jury and on October 26, 1973, a judgment was entered that in substance denied Wayne's claims for damages but enjoined Schweppes from terminating and Pepsi from interfering with the distributorship agreement prior to January 31, 1975. Both Wayne and Schweppes appealed, but the latter withdrew its appeal prior to the argument in this court.

Wayne v. Schweppes

The parties are in basic agreement on the facts pertinent to the litigation between Wayne and Schweppes. Wayne, a Rhode Island corporation, was organized in 1970, and until mid-1971 engaged solely in the distribution of malt beverages and wine to authorized purveyors of alcoholic beverages. At that time Pepsi was the only distributor in this state of the carbonated beverages produced by Schweppes, and it appointed Wayne a subdistributor. This appointment continued until late 1972 when Wayne's relations with Pepsi came to an end and it began to acquire Schweppes products either directly or indirectly from Schweppes. Finally, at a meeting in early 1973, Wayne received Schweppes' assurances that it had become an authorized Schweppes distributor. Neither then, nor at any other time, was there any discussion of the duration of the distributorship or whether it could be terminated at will or only for cause. On August 17, 1973 Schweppes notified Wayne that their agreement would be terminated effective September 1 of that year and this litigation followed.

At issue are the duration of a distributorship-type agreement of indefinite term and lacking any express provision regarding terminability, as well as the liability of a supplier for breach of contract in cancelling that kind of arrangement. These issues, although of first impression in this state, have been decided elsewhere with varying results. See generally 1 Corbin, Contracts § 96 (1963); Annot., 19 A.L.R.3d 196 (1968). ¹ Here the trial justice, as we comprehend his bench decision, concluded that in the circumstances of this case the distributorship arrangement was terminable without good cause but only after it had run for a reasonable time. Alternatively, his conclusion might have been that the arrangement was cancellable at the will of either party but only after reasonable prior notice to the other.

Which he selected is of no significance because Wayne does not challenge the rule of law applied by the trial justice and hence we accept whichever he adopted, not as the law of the state, but as that of this case. Wayne's argument, rather, is that the trial justice would have concluded differently had the arrangement of the parties been construed in accordance with their unexpressed intention. That intention, it argues, was that the agreement was not terminable except for cause, and in support it points (1) to the testimony of one of its executives that it would not have accepted the distributorship had it realized that it could be terminated without just cause; and (2) to the following testimony of a Schweppes vice president:

'Q. When you do appoint a distributor, it is your intention he be a distributor for Schweppes for a period of time?

'A. Um hum.

'Q. And do you have any idea at all as to what that period of time would be?

'A. No, idea, no.

'Q. Generally speaking, is it as long as he does a good job and gets the product out?

'A. Yeah.'

Even if it were proper for us to consider this asserted undisclosed intention of the parties in construing their agreement, ² we do not believe that the quoted testimony necessarily expresses the intention that Wayne imputes to it. Certainly it is equally reasonable to infer that it suggests no intention whatsoever with respect to termination, or indeed of any contemplation other than Schweppes' hope and expectation that its distributorships would be smooth, profitable and of indefinite duration. Indeed, this intention appears to be the more likely when the quoted testimony is read in conjunction with what immediately preceded: '* * * when one appoints distributors, one doesn't usually say in the same breath, we're going to fire you. One hopes they can stay with you for a while.' Moreover, the general understanding of Schweppes executives that the company's relationships with distributors like Wayne were cancellable at will is illustrated by what a longtime Schweppes employee said in the testimony which is set out in the margin. ³

In light of the foregoing, it does not seem to us that Wayne has sustained its burden of establishing that there was uncontradicted and unimpeached evidence requiring the trial justice to find as a fact ⁴ that the parties intended that their relationship was not cancellable except for cause. This conclusion is in no way altered by Wayne's further assertion that the uncontradicted evidence discloses a trade usage that distributorships are terminable only for cause. First, Wayne has not specified where in the record and the appendix evidence of the existence of that usage may be found, and we are under no obligation to consider evidence not so specified. Sup.Ct.R. 16(a). Moreover, the references to trade usage that we have found from our independent search of the record reveal Wayne's acquiescence in a ruling of the trial justice barring introduction of that kind of evidence as well as a substantial body of contradictory evidence produced by Schweppes denying the existence of such a usage.

Wayne's next assignment of error relates to the exclusion of Robert J. Burgess' testimony. He was an assistant director of marketing in the New England states for the Falstaff Brewing Company, a company engaged in the brewing and sale of malt products, and according to Wayne's offer of proof apparently would have testified concerning the cost to a distributor like Wayne of opening a Schweppes account. If that evidence had been admitted, Wayne asserts, it would have furnished the trial justice with a factual basis for determining what would constitute a reasonable time for the duration of its distributorship contract, that is, how long it would take to recoup its losses and earn a reasonable profit.

We consider Wayne's contention though we entertain doubts on the sufficiency of its offer of proof, ⁵ and our examination of the record indicates that the trial justice did not reject the evidence because of the insufficiency of the offer of proof or because he believed it irrelevant or at odds with the theory of law he had invoked. Instead, he apparently believed that Burgess' experience in marketing only malt products had not furnished him with the occupational or special experience required to permit an expression of opinion on the cost of persuading a malt products customer to add the Schweppes line to its stock in trade. That ruling went to the witness' experiential qualifications and a trial justice's ruling in that area will not be disturbed absent an abuse of discretion. Redding v. Picard Motor Sales, Inc., 102 R.I. 239, 247, 229 A.2d 762, 767 (1967). No such abuse was shown here. ⁶

In summary, Wayne's arguments have failed to convince us that we should interfere with the trial justice's disposition of its claim against Schweppes.

Wayne v. Pepsi

To prevail in its claim that Pepsi tortiously interfered with its relationship with Schweppes, Wayne was required to show: (1) the existence of a contract; (2) Pepsi's knowledge of that contract; (3) its intentional interference therewith; and ...