Falcon, Ltd. v. Corr's Natural Beverages, Inc.

520 N.E.2d 831, 165 Ill. App. 3d 815, 117 Ill. Dec. 480, 1987 Ill. App. LEXIS 3646
CourtAppellate Court of Illinois
DecidedDecember 31, 1987
Docket87-0925
StatusPublished
Cited by18 cases

This text of 520 N.E.2d 831 (Falcon, Ltd. v. Corr's Natural Beverages, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Falcon, Ltd. v. Corr's Natural Beverages, Inc., 520 N.E.2d 831, 165 Ill. App. 3d 815, 117 Ill. Dec. 480, 1987 Ill. App. LEXIS 3646 (Ill. Ct. App. 1987).

Opinion

JUSTICE BUCKLEY

delivered the opinion of the court:

Falcon, Ltd., an Illinois corporation, and its president Thomas Paulus (plaintiffs), filed a three-count complaint against Corr’s Natural Beverages, Inc., also an Illinois corporation, and its chairman and chief executive officer Robert Corr (defendants), seeking to recover damages and to enjoin defendants’ breach of a distributorship agreement that gave plaintiffs the exclusive right and license to sell and distribute through wholesale distributors certain nonalcoholic beverages on a commission basis, throughout the State of Illinois, and to enjoin defendants’ tortious interference with plaintiffs’ contractual and prospective relationships with its subdistributors. Defendants appeal from the trial court’s order granting plaintiffs’ subsequent motion for a preliminary injunction. For the reasons set forth below, we affirm.

The distributorship agreement entered into by the parties in September 1985 provides, inter alia:

“1.9 Corr’s agrees and warrants that during the existence of this Agreement:
(a) It shall supply MASTER DISTRIBUTOR with a quantity of Beverages sufficient to meet the reasonable requirements under the price and terms agreed to by Corr’s and Master Distributor at the time of sale and from time to time thereafter agreed to.
(b) It will not sell, deliver, ship, consign or distribute in any manner other than as provided herein to any person, corporation, firm, partnership or entity for sale, resale or use within the Territory other than to MASTER DISTRIBUTOR.
(c) It will promptly forward to MASTER DISTRIBUTOR all inquiries it receives for the sale or purchase of the Beverages in the aforesaid Territory for MASTER DISTRIBUTOR’S sale, response, handling and delivery.
* * *
2.1(a) MASTER DISTRIBUTOR hereby agrees to Sell the Beverages as provided in this Agreement and may, as a Master Distributor, delegate the Sale of the Beverage by appointing wholesale distributors. *** Corr’s will grant MASTER DISTRIBUTOR the right to partition off the Territory to various wholesale distributors at its discretion ***.”

While the above agreement has no termination date, paragraph 5.3 lists the causes for which defendants could terminate the agreement. Paragraph 5.3(f) of the agreement provides that if plaintiffs vioíate the provisions of paragraph 5.3 or are in default in any other manner, defendants could terminate the agreement 60 days after receipt by plaintiffs of written notice of the breach. During this period, plaintiffs have the right to cure.

In a letter dated August 28, 1986, defendants notified plaintiffs that they considered them to be in breach of the agreement and that they intended to terminate the agreement 60 days after plaintiffs’ receipt of the letter. Defendants subsequently agreed to stay termination of the contract until October 31, 1986, pending negotiations between the parties.

On October 26, 1986, plaintiffs filed their complaint for injunctive and other relief against defendants and, the following day, moved for a temporary restraining order and preliminary injunction. On October 24, 1986, a temporary restraining order was issued, and on January 23, 1987, the trial court held an evidentiary hearing on the preliminary injunction motion.

Gary Repezza, defendants’ vice-president of sales, Dennis Weinhold, defendants’ national sales and marketing director, and Thomas Paulus attested to the following at the hearing. Pursuant to the September 1985 distributorship agreement, plaintiffs entered into separate agreements with several wholesale subdistributors whereby the wholesale subdistributors agreed to sell and distribute defendants’ beverages within a specified territory. In particular, plaintiffs established a “store/door delivery program” using their beer subdistributors, which facilitated defendants’ entry into the beverage market in all Chicago area Jewel stores, an arrangement which defendants were unable to obtain prior to their distributorship agreement with plaintiffs.

Shortly thereafter, defendants attempted to sell their beverages to Dominicks, but Dominicks declined the offer based on plaintiffs’ current beer subdistribution network. Dominicks agreed to accept defendants’ proposal only if Kehe Foods (Kehe), an existing Dominicks supplier, would deliver the product. Consequently, in March 1986, plaintiffs agreed to transfer the delivery of beverages to Jewel from their beer subdistributors to Kehe in exchange for Kehe's agreement to deliver defendants’ beverages to Dominicks. As a result, plaintiffs lost many of their beer subdistributors.

During this time, defendants entered into a new commission agreement with plaintiffs whereby plaintiffs were to receive $1 on chocolate and ginseng flavored beverages and $.61 on all other flavors, as opposed to the original $.25 commission per case. A memo dated March 27, 1986, sent from Weinhold to Robert Corr memorialized this arrangement. In May or June 1986, defendants became dissatisfied with this pricing system because plaintiffs were making too much money. Robert Corr himself admitted that he was unhappy with the new commissions.

Therefore, in June, July, and August 1986, defendants contacted plaintiffs’ subdistributors and instructed them to place their orders for beverages directly with defendants and not with plaintiffs, and further instructed that defendants would sell, deliver and invoice all beverages directly to them. Defendants sold approximately 25,000 cases of beverages to plaintiffs’ subdistributors during this period. When Paulus learned of these actions, he called Dennis Weinhold, and stated, “You are violating the contract. Either cease or we are going to end up in court.”

Robert Corr testified, however, that at a meeting on July 28 or 29, 1986, plaintiffs authorized defendants to directly invoice and ship to plaintiffs’ subdistributors in order to alleviate some of plaintiffs’ financial responsibility. While Paulus received a letter dated July 28 informing him of defendants’ intention to sell beverages directly to plaintiffs’ subdistributors, it contained no confirmation of plaintiffs’ consent. Subsequent to that meeting, defendants billed certain Falcon subdistributors directly while giving plaintiffs $.25 a case on credit. Corr admitted on cross-examination, however, that he had been directly billing City Sales, Inc., one of plaintiffs’ subdistributors which conducted wholesale business in Illinois as well as in Indiana, as early as May 30,1986.

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Bluebook (online)
520 N.E.2d 831, 165 Ill. App. 3d 815, 117 Ill. Dec. 480, 1987 Ill. App. LEXIS 3646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/falcon-ltd-v-corrs-natural-beverages-inc-illappct-1987.