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07/25/88 Falcon, Ltd., Et Al., v. Corr's Natural Beverages

July 25, 1988

FALCON, LTD., ET AL., PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS

v.

CORR'S NATURAL BEVERAGES, INC., A/K/A R. J. CORR NATURALS, INC., ET AL., DEFENDANTS-APPELLANTS AND CROSS-APPELLEES



Before addressing the issues raised by this appeal, we must first determine whether the trial court's findings of contempt were criminal, civil, or both as different procedural rules will apply depending upon which category is being litigated. Plaintiffs maintain that the contempt was civil, defendants argue that it was criminal, and the trial court did not explicitly characterize its finding as either.

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

527 N.E.2d 504, 173 Ill. App. 3d 291, 123 Ill. Dec. 41 1988.IL.1141

Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding.

APPELLATE Judges:

JUSTICE BUCKLEY delivered the opinion of the court. CAMPBELL, P.J., and O'CONNOR, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BUCKLEY

Defendants, Corr's Natural Beverages, Inc., an Illinois corporation, and its president Robert Corr, appeal from an order of the trial court finding them, along with counsel Marvin Benn and Corr's national sales and marketing director Dennis Weinhold, in contempt of court and imposing fines and ordering defendants to pay plaintiffs, Falcon Ltd., also an Illinois corporation, and its president Thomas Paulus, among other things, commissions due. Defendants, Benn, and Weinhold were found to have violated a previous court order enjoining them from breaching a distributorship agreement with plaintiffs and tortiously interfering with plaintiffs' business relationships. In this appeal, defendants contend: (1) plaintiffs failed to establish a prima facie case of contempt against them and Benn; (2) a change of circumstances excused them from complying with the court's injunction order; (3) Weinhold's due process rights were violated as he was not informed of the charges against him prior to trial; (4) defendants, Benn, and Weinhold were all deprived of their right to a jury trial; and (5) there was no evidence of commissions due and owing plaintiffs. For the following reasons, we affirm the civil contempt finding against defendants, but remand for a redetermination of the amount of commissions due. We reverse the criminal contempt convictions of Corr, Benn and Weinhold and remand for a jury hearing with respect to Corr's and Benn's convictions, if so demanded.

The proceedings giving rise to this appeal were commenced in October 1986, when plaintiffs filed a complaint seeking to enjoin defendants' breach of a distributorship agreement that gave plaintiffs the exclusive right to sell and distribute defendants' beverages throughout the State of Illinois on a commission basis, and to enjoin defendants' interference with plaintiffs' contractual and prospective relationships with their subdistributors. On February 27, 1987, the trial court issued a preliminary injunction against defendants, their counsel, and their agents restraining them from terminating the agreement, from directly or indirectly soliciting, accepting or filling orders for beverages with plaintiffs' subdistributors or any other distributors except plaintiffs, from interfering or conspiring to interfere with plaintiffs' existing and prospective relationships with their distributors, from reducing plaintiffs' commission of $1 per case on chocolate and ginseng flavored beverages and $ .61 per case on other flavors, and from engaging in any conduct which interferes with plaintiffs' rights under the agreement. Defendants appealed the injunction order, but we affirmed its issuance in Falcon, Ltd. v. Corr's Natural Beverages, Inc. (1987), 165 Ill. App. 3d 815, 520 N.E.2d 831 (Falcon I).

Prior to this court's Disposition in Falcon I, plaintiffs filed a motion for a rule to show cause why defendants and their counsel Marvin Benn should not be held in contempt for failing to comply with the February 27 order. In their motion, plaintiffs alleged that on June 30, 1987, July 7, 1987, and July 8, 1987, they placed orders for 6,900 cases of defendants' beverages, all of which were appropriated by defendants, who shipped and invoiced the orders directly to plaintiffs' wholesale distributors. Copies of these purchase orders were included as an exhibit in plaintiffs' motion. The motion further stated that on May 1, 1987, defendants sold 1,931 cases of beverages to distributor Natural Beverages, Inc., without payment of any commissions to plaintiffs. Attached to plaintiffs' motion was a copy of a letter dated June 20, 1987, from defendants to plaintiffs' wholesale distributors instructing them to place all orders with and make payments to defendants directly and "not accept any invoices from Falcon Ltd. for shipments on or after July 1, 1987." Plaintiffs additionally alleged that Benn knew of defendants' actions and approved them.

On July 20, 1987, defendants filed a memorandum in opposition to plaintiffs' motion containing affidavits from Robert Corr, Dennis Weinhold, and two of defendants' employees. Included with Corr's affidavit were copies of several letters beginning May 20, 1987, written by Corr to Thomas Paulus in which Corr informed Paulus of various defaults by plaintiffs, and requested that they be remedied or otherwise certain actions would be taken. These letters bear either Benn's initials, a date stamp of the law firm Hamman and Benn, or both. While defendants admitted in their memorandum that "some of the specific alleged acts have indeed occurred," they contend that they were justified because of "a change of circumstances" since entry of the injunction. Specifically, they alleged plaintiffs "entirely abandoned their territory," causing defendants' sales in Illinois to "plummet."

Plaintiffs replied to defendants' memorandum, and affixed to their response were the affidavits of Thomas Paulus and Gloria Rex, plaintiffs' accountant. Also attached, among other exhibits, was a letter dated June 26, 1987, from Paulus to Corr in which Paulus denied the allegations contained in Corr's prior letters, and stated that it was Corr himself who was thwarting plaintiffs' efforts to sell defendants' beverages.

On August 11, 1987, the trial court commenced a hearing on plaintiffs' motion for rule to show cause. At that time, plaintiffs orally moved, over defendants' objection, to include Dennis Weinhold as an additional respondent to their motion. Rather than presenting testimony at the hearing, plaintiffs relied on the pleadings, affidavits, and exhibits previously submitted which the court found to "clearly show a violation" of the court's injunction order. Defendants then proceeded with their defense, calling both Robert Corr and Dennis Weinhold to the stand. Marvin Benn did not testify.

As in the memorandum opposing plaintiffs' motion, Corr and Weinhold admitted violation of the injunction, but testified that they were excused because there was a change of circumstances, namely that plaintiffs ceased business operations and therefore were not performing under the distributorship agreement. They explained that they were unable to call these circumstances to the trial court's attention as it lacked jurisdiction to modify the injunction once defendants appealed the issuance of that injunction. Corr also stated that he discussed the letters he sent to Paulus with his attorney Marvin Benn and sent draft copies of them to him before mailing them to Paulus.

Gloria Rex testified on behalf of plaintiffs in rebuttal. She stated that she overheard three telephone conversations between Corr and Paulus while performing accounting services at Falcon, Ltd.'s, offices. In the first conversation, Corr offered to purchase back the distributorship agreement from plaintiffs for $50,000 less $2,000 each day plaintiffs refused, and then threatened "to run Mr. Paulus out of business" and take his home, which was pledged as collateral for plaintiffs' debts. When Paulus replied that there was a court injunction, Corr told him he could "stick it up his ass and rotate on it." During a second conversation, using the same foul language, Corr refused to sell his Rocky Mountain Seltzer Water to plaintiffs for distribution to plaintiffs' subdistributors "to keep ...


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