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Wisconsin Liquor Co. v. Park & Tilford Distillers Corp.

May 21, 1959


Author: Hastings


HASTINGS, Circuit Judge.

Appellant, Wisconsin Liquor Co., brought this suit in three counts to recover treble damages for injuries due to alleged antitrust violations and also for damages arising from an alleged breach of contract.

Count I of the original amended complaint named Park & Tilford Distillers Corporation (Park & Tilford) and Affiliated Distillers Brands Corporation (Affiliated) as defendants and alleged that they had entered into an illegal agreement and conspiracy in January of 1955 in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2 to deprive appellant of its distributorship and to monopolize the distribution of Affiliated and Park & Tilford products in the Milwaukee trade area by supplying Bonded Spirits Corporation (Bonded Spirits) with Park & Tilford products at discriminatorily low prices and by granting Bonded Spirits unlawful rebates and allowances to the injury of appellant in its relations with its customers and accounts. Park & Tilford was named as sole defendant in Counts II and III. Count II charged a breach of a contract designating appellant exclusive distributor of Park & Tilford products in four counties in the Milwaukee area. Count III set forth that Park & Tilford had violated Sections 2 and 3 of the Robinson-Patman Act, 15 U.S.C.A. §§ 13, 13a, by selling its liquors to Bonded Spirits, a distributor in competition with appellant, at discriminatorily low prices and by granting it unlawful rebates, discounts and allowances with the intent and purpose of destroying appellant as a distributor of Park & Tilford products.

Shortly before the trial, appellant sought leave to file a so-called supplemental complaint alleging that in March, 1958, pursuant to the continuing conspiracy charged in the original complaint, Schenley Industries, Inc. (Schenley) having acquired 90% of the stock of Park & Tilford, effected a statutory merger with Park & Tilford and that the purpose of the acquisition of the stock and merger was to restrain trade and create a monopoly in violation of Sections 1, 2 of the Sherman Act, supra, and Section 7 of the Clayton Act, 15 U.S.C.A.§ 18. It was alleged that Schenley sought to eliminate Park & Tilford as an independent company and competitor, to place distributors of Schenley at a competitive advantage over Park & Tilford distributors, thus depriving the latter's distributors, including appellant, of the business of selling Park & Tilford products and to lose (purposely) valuable franchises owned by Park & Tilford for the distribution of certain named imports to the injury of Park & Tilford and its distributors.

Appellees objected to the filing of this supplemental complaint as representing such a variance from the original complaint that they would be prejudiced in the preparation of their case for trial. Leave to file was denied by the trial judge who indicated his reluctance to try Schenley for a Section 7 violation under a complaint charging a general conspiracy with Schenley as one of the conspirators but not named as a party defendant.

At the close of its case, appellant asked leave to amend its complaint to conform to the evidence. The amendment named Park & Tilford and Affiliated as co-conspirators along with Schenley and Bonded Spirits in the continuing conspiracy described above. The trial court denied such leave indicating that it would not thus "put its stamp of approval that the evidence" conformed to such an amendment. It did, however, grant leave to file the amendment "without any provision that it does conform to the evidence."

Subsequently, on motion by appellees made at the close of appellant's evidence, the trial court directed a verdict as to Count I on the ground that there was no substantial evidence of a conspiracy. Park & Tilford also moved for a directed verdict as to Count III and this was acceded to by appellant. Count III was thereupon dismissed with prejudice and is not involved in this appeal. The trial court overruled a similar motion by Park & Tilford on Count II and the case went to the jury on the breach of contract question. The jury returned a verdict on this count in favor of appellant and assessed damages at $100,000. Park & Tilford then moved for judgment notwithstanding the verdict and in the alternative for a new trial. The trial court granted the motion for judgment n. o. v. on the ground that there was no substantial evidence of any loss suffered by appellant through the breach of contract; and, in the alternative, granted the motion for a new trial.

We have carefully considered the record and, having viewed the evidence on the antitrust issue raised in Count I in the light most favorable to appellant as we must,*fn1 have been unable to find any evidence of a conspiracy which would have required the trial judge to send this question to the jury. In presenting its case, appellant departed completely from its original allegations charging a conspiracy on the part of Affiliated and Park & Tilford to sell to Bonded Spirits at discriminatory prices and to grant it rebates, discounts and allowances; and, instead, sought to establish the existence of a conspiracy, of which Schenley was allegedly the guiding light, to put an end to Park & Tilford as an independent company and competitor of Schenley, and to accord Schenley distributors a competitive advantage over the then existing Park & Tilford distributors.

There was testimony to the effect that in the fall of 1954 Schenley opened negotiations with Arthur D. Schulte, president of Park & Tilford, for the purchase of his holdings in that company. On June 15 of that year, appellant had entered into the contract as exclusive distributor for Park & Tilford in the Milwaukee area, replacing Bonded Spirits as such distributor. Appellant's sales manager testified that one of the chief reasons for appellant's acceptance of the distributorship contract was the fact that Park & Tilford had a franchise to distribute a number of well-known foreign brands which it claimed was a tremendous sales stimulant. The Schulte holdings in Park & Tilford were sold to Schenley on December 31, 1954 and constituted a controlling stock interest in that company. Schulte testified that just prior to the sale he had expressed doubts to Ralph Heymsfeld, vice president of Schenley, whether Distillers Company Limited, the owner of Vat 69, one of imports referred to above, would agree to continue the franchise with Park & Tilford if the sale were made because of "DCL policy * * * not to permit more than one of its major brands to be distributed by the same importer * * *." Heymsfeld testified that Schulte had informed him that "he [Schulte] would give no representations and made no warranties that foreign sellers would continue those contracts in effect after they had terminated." The record shows that, after the purchase of Schulte's holdings by Schenley, the imports were eventually terminated as follows: Vat 69 and Booth's Gin on December 31, 1955, Harvey's Wines on December 31, 1956 and Heidsieck Champagnes on October 15, 1956.

The record further shows that Schenley appointed one Stanley L. Brown president of Park & Tilford shortly after it acquired the controlling interest in that company. Brown was under contract directly to Schenley. It is also apparent that from the time Schenley acquired its controlling interest in Park & Tilford the possibility of a merger was considered.

During 1956, Park & Tilford experienced losses of over $3,000,000. Brown, in the annual report to the stockholders, indicated that "the loss of our [Park & Tilford's] import distributorships has been the main cause of the serious drop in sales volume. Also relating to the loss of our imports was its subsequent effect in weakening our distributor relationships."

Appellant had terminated its distributorship contract with Park & Tilford in August of 1955. The reasons later voiced for such termination were the fact that part of its exclusive territory had been granted to Bonded Spirits and that it was becoming increasingly clear that Park & Tilford would lose its import distributorships.

Park & Tilford was merged with Schenley in April of 1958, which was more than two and one-half years after appellant terminated its distributorship arrangement and almost two years after ...

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