Famous Brands, Inc. v. David Sherman Corp.

814 F.2d 517 (8th Cir. 1987)

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Nature of the Case

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Facts

In 1982, Famous Brands (P), a liquor wholesaler in South Dakota began negotiating to buy Midland Distributors. According to P the ultimate purchase price depended on Midland’s suppliers’ consent to continuance of supply and doing business with any purchaser of Midland. P contends that the supply lines were like assets. Numerous contracts were made between P and Sherman (D) primarily because D controlled Midland’s supply of Everclear. On November 1, 1983, D wrote P telling P that if the Midland purchase goes through it would be more than happy to have P distribute Everclear and any other brands that Midland would be selling for D. P was told that it could count on D after the purchase of Midland. D, in fact, concedes these communications on appeal. Based on this background, P testified that Everclear was one of the franchises that P paid blue sky for. D supplied Everclear to P until February 20, 1985, when D told P that it was being terminated because P did not handle D’s proprietary lines. D requires that all its distributors carry all of its lines. P refutes this by evidence that its successor to the D line carried only a few of D’s products. Midland also carried only a few of D’s products besides Everclear. Both parties agree that a distributorship can continue indefinitely unless mutual problems cannot be resolved. P relies on the industry practice or custom for its claim that D’s statements created a perpetual, exclusive contract to distribute Everclear in South Dakota. The district court granted summary judgment to D because the terms of the contract were indefinite and there was no mutuality of obligation. This appeal resulted.