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F.j. Weddige Co., Inc. v. Pabst Sales Co.





Appeal by plaintiff from the Circuit Court of Kane county; the Hon. CHARLES A. O'CONNOR, Judge, presiding. Heard in this court at the May term, 1952. Appeals dismissed. Money judgment modified and as modified is affirmed. Opinion filed September 30, 1952. Rehearing denied January 19, 1953. Released for publication January 19, 1953.


Rehearing denied January 19, 1953

On October 21, 1948 Pabst Sales Company, a Delaware corporation, and therein referred to as "Pabst" and F.J. Weddige Company, an Illinois corporation, therein referred to as "distributor" entered into a written agreement which recited that Pabst was engaged in the business of selling Pabst beer and ale manufactured by Pabst Brewing Company and that Pabst desired to allot to distributor a certain territory and grant to distributor the right to sell Pabst beer and ale and by said instrument did grant unto the distributor the right to sell Pabst Blue Ribbon beer and ale to retailers or retail customers located in a described territory which included all of Kendall county and portions of Kane, De Kalb, Du Page and La Salle counties and the distributor agreed that it, as such distributor of Pabst products, would purchase from Pabst all products necessary to supply and satisfy the needs of distributors' customers and that the distributor would not purchase, sell or deal in any other beer or ale. The agreement then obligated Pabst not to ship any beer or ale to any person, firm or corporation for resale or use in said territory other than to distributor nor authorize any person, firm or corporation to ship or consign any beer or ale to any person, firm or corporation for resale or use in any place within the described territory, other than to the distributor prior to mailing, or otherwise sending or delivering, notice of intention to terminate said agreement, or receiving such notice from the distributor as provided in said agreement.

This agreement then provided that the distributor should maintain a place of business, warehouses, and adequate distribution facilities to properly service the customers of the distributor and carry an adequate stock of Pabst beer and ale to supply its trade, and then continued:

"9. Either party may terminate this agreement at any time by sending to the other party a written notice of such intention at least three days prior to the date of such proposed termination, such notice to be sent either by telegraph, mail, or by other means of delivery. Immediately upon sending notice of termination by Pabst, or upon receipt by Pabst of such notice given by the distributor, Pabst may ship or deliver, or any distributor designated by Pabst may ship or deliver, beer and ale to any firm, person or corporation it desires in said territory. Any termination of this agreement shall, at the election of Pabst, operate as a cancellation of all orders for beer or ale which may have been placed with Pabst by distributor, whether, or not the beer or ale so ordered has been shipped prior to receipt of notice of such termination but shall in no way extinguish any indebtedness or liability or obligation of the distributor to Pabst.

"10. Upon the termination of this agreement Pabst shall, if lawfully authorized so to do, repurchase from the distributor and the distributor shall, if lawfully authorized so to do, sell to Pabst, all of the beer and ale purchased by distributor from Pabst and then on hand and in good condition in possession of the distributor, at the net price paid for same by distributor to Pabst, plus actual transportation charges paid by the distributor thereon, and plus any state tax actually paid by the distributor thereon, and plus the amount of the deposit, if any, paid by distributor to Pabst on the barrels, kegs, cases, or bottles containing such beer or ale; or, if directed so to do by Pabst, the distributor shall sell such beer and ale at said price to any other distributor who may be designated by Pabst. In either event, whether such beer and ale is repurchased by Pabst or sold by distributor to another distributor designated by Pabst as herein provided, payment therefor may be made, at the election of Pabst, by credit to distributor's account to the extent of any balance that may be owed by distributor to Pabst. Upon the termination of this agreement the distributor shall immediately either return to Pabst, or deliver to another distributor designated by Pabst, as Pabst shall elect, any and all empty barrels, kegs, cases and bottles, received by distributor hereunder, and Pabst shall concurrently, at its election, either refund to the distributor or credit to his account the aggregate amount of any and all deposits made by the distributor to Pabst with respect thereto.

"11. It is agreed that the rights of the distributor hereunder shall be personal to the distributor only, and shall not be assignable or transferable by the distributor, and that this agreement shall not be construed in any way to constitute the distributor an agent for Pabst for any purpose whatsoever, and the distributor, in selling, purchasing, or distributing said beer or ale shall be engaged in its own independent and entirely separate business.

"12. This agreement supersedes all previous agreements between the parties hereto relating to the purchase, sale and distribution of said beer and ale. The parties agree that this agreement embodies all the terms, agreements and understandings between the parties hereto. It is further agreed that neither this contract nor any of the terms thereof may be changed or modified except in writing duly approved and signed by a proper corporate officer of Pabst, and that no agent of Pabst, except a proper corporate officer thereof, has any authority to contract for Pabst or bind Pabst upon any contract whatsoever."

On October 26, 1951 Pabst, acting by and through its executive vice-president, dispatched, by registered mail to the distributor the following letter: "This is to advise you that the agreement between us dated October 21, 1948, is hereby terminated, effective November 3, 1951. We regret that circumstances have made it necessary to change our distributing arrangements in your territory." This letter was duly received by the distributor on October 29, 1951.

On November 20, 1951 the distributor filed its verified complaint in the circuit court of Kane county. This complaint is voluminous and consists of sixty-six typewritten pages of the record. Among other things it alleged that in 1930, F.J. Weddige was engaged in a well and successfully established food-distributing business and at the solicitation of Pabst began the sale and distribution of Pabst Blue Label Malt and Near Beer, and thereafter began the sale and distribution of Pabst Blue Ribbon beer and ale and continued as such distributor until 1948 at which time the F.J. Weddige Company, Inc. was organized as a corporation and succeeded to all the rights, title and business interest of said F.J. Weddige, who was the majority stockholder and president of said corporation and that the wholesale sale and distribution of Pabst Blue Ribbon beer and ale has been carried on pursuant to successive written agreements, the most recent of which was the said agreement of the corporation and Pabst dated October 21, 1948.

The complaint then alleged that the successful establishment and operation of a beer-distributing business required constant effort, good salesmanship and the expenditure of much effort and money in sales promotion and equipment; that plaintiff did all this and purchased and equipped a warehouse with expensive refrigerating equipment and motor equipment for the purpose of transporting supplies and making deliveries and employed a competent staff of employees, such as salesmen, truck drivers and warehouse and office employees and that the capital investment of the plaintiff at the time the complaint was filed exceeded $100,000.

The complaint also alleged that in 1933, F.J. Weddige was engaged in the wholesale sale and distribution of whiskey and other alcoholic liquors in substantially the same territory described in the agreement of October 21, 1948 and successfully carried on said business until 1948 when at the request of Pabst he discontinued the same in order to conform in all respects to the policies established by Pabst; that upon divers occasions since 1933 the representatives of Pabst represented to F.J. Weddige that "he could keep said distributorship as long as he lived and did a good job" or "as long as he desired, provided he did a good job" and that "he would be a Pabst distributor as long as he looked after the business" and that "he had no worry because of his good record"; that after the incorporation of the plaintiff substantially similar representations were made and also that plaintiff could retain the distributorship "as long as he (Weddige) lived and was connected with the company." It was then alleged that the policies of Pabst, the promotional efforts of F.J. Weddige and of the plaintiff, the introduction of the representatives and employees of Pabst to the customers of the plaintiff and the disclosure of confidential business information to the representative of Pabst had the effect of creating a valuable good will for Pabst and for Pabst beers and ales and placed Pabst in a position to seize and take over the business of plaintiff; that plaintiff relied upon the representations of the representatives of Pabst and upon the good faith and honesty of Pabst; that it had done a good job and had a good record as shown by the fact that out of 228 retail outlets for beer and ale in its territory, plaintiff had 225 customer accounts, all of which were obtained through the efforts of F.J. Weddige and the plaintiff; that in 1947 the gross sales of F.J. Weddige amounted to $414,828.35; that in 1948 Weddige and the plaintiff had gross sales amounting to $375,812.54; that in 1949 plaintiff had gross sales of $282,085.02; that in 1950 plaintiff had gross sales of $257,814.59 and for the first nine months of 1951 plaintiff had gross sales of $217,535.15, upon all of which gross sales plaintiff realized a substantial stated profit. The complaint then alleged that this business of supplying and selling, at wholesale, the customers of the plaintiff, with beer and ale and the good will incident to said business is a valuable property right built up over a period of 18 years which is now the property of the plaintiff.

The complaint then alleged that one of Pabst's employees for several years prior to the latter part of 1950 had been one A.A. Konitzer; that Konitzer had been field representative of Pabst in the territory assigned to the distributor and as such field representative had exercised supervisory authority and control over the operations of the distributor and had acquired knowledge and information with respect to the business operations of the plaintiff, its salesmen and customers; that prior to October 26, 1951 Konitzer, in furtherance of a scheme and plan to seize and appropriate the business of the plaintiff commenced efforts to replace plaintiff, as distributor, and acquire for himself the assignment of authorized distributor for Pabst and attempted to undermine and did succeed in undermining plaintiff's position and standing with Pabst and conspired with certain officials and employees of Pabst to bring about the termination of plaintiff's assignment as distributor and induce Pabst to terminate plaintiff as such authorized distributor and appoint him, Konitzer, as such distributor; that Konitzer, in furtherance of said plan has induced two of plaintiff's employees to leave the employ of plaintiff and enter the employ of Konitzer and has sought to induce others to do so; that Pabst appointed Konitzer its authorized distributor effective November 5, 1951 and has furnished him with supplies and is permitting Konitzer to sell and distribute Pabst products in the same territory plaintiff had theretofore been the distributor; that Pabst would continue so to do unless enjoined by this court; that Konitzer has notified all of plaintiff's customers by letter dated November 1, 1951 that starting on November 5, 1951 he, Konitzer would serve them as distributor for Pabst products; that since November 3, 1951 Pabst has refused to deliver its products to the plaintiff or accept orders therefor and has sent three representatives into the territory in its attempt to induce plaintiff's customers to transfer their patronage to Konitzer and has supplied Konitzer with Pabst export beer which is in great demand but which was not made available by Pabst to the plaintiff.

The complaint makes Pabst Sales Company and Konitzer, defendants and charges that the effect of the conduct of Pabst and Konitzer is to deprive plaintiff of its business and permit Konitzer to seize and appropriate that business for his own use and profit. The complaint prays that a temporary injunction issue without notice and without bond enjoining Pabst from soliciting or attempting to persuade or induce customers supplied by the plaintiff in the described territory to transfer their patronage as retail beer dealers of Pabst beers and ales to any person, firm or corporation other than the plaintiff; from selling or delivering Pabst beers and ales to anyone other than the plaintiff as the authorized distributor of Pabst or from selling or permitting the sale of Pabst beers and ales to any retail beer dealers except through the sale and distribution thereof by the plaintiff; that upon a hearing a perpetual injunction issue against both defendants and that the plaintiff have a money judgment against them for $150,000. Copy of the contract of October 21, 1948, the letter of October 26, 1951 from Pabst to the plaintiff, terminating the contract, ...

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