Wm. J. Lemp Brewing Co. v. Ems Brewing Co.

• Decision Date: 03 December 1947
• Docket Number: No. 9312.,9312.
• Citation: 164 F.2d 290
• Parties: WM. J. LEMP BREWING CO. v. EMS BREWING CO.
• Court: U.S. Court of Appeals — Seventh Circuit

164 F.2d 290 (1947)

WM. J. LEMP BREWING CO. v. EMS BREWING CO.

No. 9312.

Circuit Court of Appeals, Seventh Circuit.

November 5, 1947.

Rehearing Denied December 3, 1947.

Samuel H. Liberman and Gideon H. Schiller, both of St. Louis, Mo., and Bruce A. Campbell, of East St. Louis, Ill., for appellant.

Arthur A. Felsen, of East St. Louis, Ill., and Walter R. Mayne and M. Jack Garden, both of St. Louis, Mo., for appellee.

Before SPARKS, KERNER, and MINTON, Circuit Judges.

KERNER, Circuit Judge.

Plaintiff sued defendant to recover damages claimed to have arisen out of the wrongful termination and breach of a contract entered into by and between plaintiff, a Missouri corporation, William J. Lemp III, on the one part, and Central Breweries, Inc., an Illinois corporation, on the other part. By successive assignments from Central, defendant became a party to the contract. Defendant's motion for judgment on the pleadings was sustained. The court dismissed the complaint and entered judgment for costs against plaintiff. From this judgment plaintiff appeals.

The undisputed facts are that after 1892 and until the manufacture of beer became illegal, plaintiff manufactured a beer which achieved an outstanding reputation for quality and became widely known to the purchasing public in the States of Illinois and Missouri. In the year 1939 Central was engaged in the manufacture and sale of beer, and desired to acquire the right to use the name "Lemp" in connection with the sale of its beer. To achieve this purpose, on August 25, 1939, it entered into a written contract in which it agreed to pay plaintiff certain royalties on all beer brewed and sold by Central "Under a corporate name including the name `Lemp.'" In this contract Central was granted an option, for a period of five years, to purchase all of plaintiff's assets including the right to use plaintiff's corporate name. In October, 1939, Central caused its corporate name to be changed to Wm. J. Lemp Brewing Company and thereafter operated under that name, and beginning November 1, 1939, it manufactured beer which it sold under the Lemp name.

Prior to November 24, 1941, Wm. J. Lemp Brewing Company, formerly known as Central, was adjudicated a bankrupt in the United States District Court for the Eastern District of Illinois. November 24, 1941, pursuant to the order of the Bankruptcy Court, all of the bankrupt's assets, including its contract with plaintiff, were sold. November 17, 1941, defendant was incorporated under the laws of Illinois under the name of "Lemp Brewing Company" and ultimately became the owner of all of the bankrupt's assets, and thereafter until February 28, 1945, manufactured and sold beer under the Lemp name and paid plaintiff all the royalties as provided by the contract of August 25, 1939.

On November 30, 1944, defendant advised plaintiff of its intention to abandon the name "Lemp" as part of its corporate name and to discontinue use of the name "Lemp" in connection with its beer, and that from and after February 28, 1945, it would consider the contract of August 25, 1939 terminated. December 29, 1944, defendant changed its name to "Ems Brewing Company" and beginning March 1, 1945, discontinued the use of the name "Lemp" in connection with its beer.

Plaintiff in the first count of its complaint prayed that the court decree that the acts of defendant in abandoning "Lemp" as part of its corporate name in discontinuing the manufacture and sale of beer under the Lemp name, and in refusing to pay royalties constituted a breach of contract, and in the second count alleged that as a result of defendant's abandonment of the name Lemp as part of its corporate title and of its discontinuance of the manufacture and sale of beer under the Lemp name, it was damaged in the sum of $750,000.

After defendant had filed its answer, it moved for a judgment on the pleadings, on the ground that the contract upon which the claim was based provided for the payment of royalties only on beer brewed and sold under the name "Lemp," and that the contract was executory and terminable at the will of either party.

The District Court was of the opinion that the contract was complete within itself and did not admit of extraneous evidence to aid in its interpretation; that the complaint failed to state a claim upon which relief could be granted because defendant was under no obligation to continue the brewing and sale of beer under the name of Lemp or precluded from selling beer under any other name; that defendant was under no obligation to pay royalties to plaintiff upon any beer manufactured and sold under any name other than Lemp; and that five years after August 25, 1939, if the option to purchase was not exercised, the contract was terminable at will by either party and that the notice to terminate given by the defendant was reasonable.

In arguing for a reversal, plaintiff points to the fact that the contract recites that the parties "deem it to be to their mutual advantage that through their mutual cooperation and under their mutual supervision a high quality beer be manufactured and produced by the First Party Central, to be sold under a name or designation containing the name `Lemp.'" It calls attention to the opening paragraph of the royalty clause which provides for the payment of royalties on all beer manufactured and sold by Central, and to an exception contained in Clause (c) of that paragraph which provides: "In the event arrangements are made by First Party with the consent of...