Jos. Schlitz Brewing Co. v. Downey Distributor

Downey Distributor, a corporation, defendant and cross-complainant and Lucille C. Governale, individually and as executrix of the last will and estate of L. Gerome Governale, deceased, defendant in this action, appeal from a summary judgment entered against them on the complaint and cross-complaint herein in favor of Jos. Schlitz Brewing Company, plaintiff and cross-defendant.

Factual Background

Jos. Schlitz Brewing Company (Schlitz) is a manufacturer of beer. Downey Distributor (Downey) was a corporation engaged as a wholesale beer distributor in which the sole stockholders were the Governales. In August 1962, a written agreement was entered into between Schlitz and Downey entitled “Declaration of Terms,” which set forth various terms and conditions under which Downey would purchase beer from Schlitz for distribution to retail outlets. The agreement provided that either party could terminate at any time without cause and without notice. It further provided that Schlitz was granting no franchise or exclusive territory to Downey and that Schlitz could sell its products to others in the same trade area in which Downey might sell such products. In February 1973, a…