Opinion ID: 1927150
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Heading: Implied Exclusive Distributorship.

Text: Exclusive distributorship contracts between a manufacturer and a wholesaler have caused no little confusion in the law. These contracts in order to be binding, unless based upon a present valuable consideration, must impose upon each of the parties some obligation such as mutual promises. See Annos. 14 A. L. R. 1300, 1301, and 26 A. L. R. (2d) 1139. We have often held that mere forbearance of a distributor to sell competitors' products in an area without any undertaking to order any of the manufacturer's products at all is lacking for want of mutuality. Hoffmann v. Pfingsten (1951), 260 Wis. 160, 168, 50 N. W. (2d) 369. See also Teipel v. Meyer (1900), 106 Wis. 41, 81 N. W. 982; Pessin v. Fox Head Waukesha Corp. (1939), 230 Wis. 277, 278, 282 N. W. 582, and Strauss v. Eulberg Brewing Co. (1947), 250 Wis. 579, 27 N. W. (2d) 723. However, we recognize, and there is authority in other states so holding, that a promise to promote the sale of the manufacturer's product or a bona fide effort to pursue the contract is sufficient consideration for an exclusive distributorship contract. Hoffmann v. Pfingsten, supra, at pages 168, 169; Clarke Floor Machine Co. v. De Vere Chemical Co. (1960), 9 Wis. (2d) 517, 522, 101 N. W. (2d) 655; Graham v. Lamp (1921), 174 Wis. 373, 376, 183 N. W. 150. Authorities in other states: Fred Allen Automobile Supply Co. v. H. W. Johns-Manville Co. (1918), 211 Ill. App. 217, discussed in 26 A. L. R. (2d) 1168, 1169; J. C. Millett Co. v. Park & Tilford Distillers Corp. (D. C. Cal. 1954), 123 Fed. Supp. 484, 493; Hunt Foods v. Phillips (9th Cir. 1957), 248 Fed. (2d) 23, 30.  In the present case, the trial court found that the promises which supported the exclusive arrangement were implied by the conduct of the parties. An implied promise is not prevented from being a sufficient consideration by the fact that it is implied by the court from the conduct or from words that are not in express promissory form. 1 Corbin, Contracts, p. 456, sec. 144. The trial court found that the exclusive distributorship contract was oral. This finding cannot be sustained because the record does not reveal any oral contract. But in the trial court's decision it referred to the contract as implied. We can look to the decision of the trial court for material findings not covered by the formal findings of fact. Morn v. Schalk (1961), 14 Wis. (2d) 307, 313, 111 N. W. (2d) 80. Therefore, we will view the finding of the trial court as one referring to an implied contract rather than an orally expressed one. The law is well settled in Wisconsin that by the conduct and words of the parties the court can imply a contract. See Wojahn v. National Union Bank (1911), 144 Wis. 646, 667, 129 N. W. 1068; Hooper v. O. M. Corwin Co. (1929), 199 Wis. 139, 144, 225 N. W. 822. See also Restatement, 1 Contracts, p. 27, sec. 21, comment a; 1 Williston, Contracts (3d ed.), p. 49, sec. 22A. Therefore, the finding of the trial court must be sustained that there was an implied exclusive distributorship based upon sufficient consideration unless it is against the great weight and clear preponderance of the evidence. The record shows that in 1945 the Peckarsky Companies and the Association began directly to undertake their marketing relationship. At that time the Peckarsky Companies, although newly organized, were well known to the Association, for the Association had conducted business with them when they were part of the Wisconsin Liquor Company. The Peckarsky Companies had established facilities, personnel,  and a market for the Association's product as well as a defined territory in which it operated. The Association, on the other hand, also had an established business and had marketed their products in the territory in question with success in previous years. The Association at that time was interested in marketing their products in the Peckarsky territory due to the split between the Peckarsky family and the Pokrass family. Although it is not known whether there was any express contract arising from the 1945 meeting or subsequent meetings between the Association and the Peckarsky Companies, the following undisputed facts occurred: From 1945 until February, 1959, the Peckarsky Companies were the only distributors of the Association, and with respect to Aristocrat brandy, they promoted and sold it to the virtual exclusion of other brandy handled. In their promotion and sale, they used and maintained their facilities, serviced the territory, retained inventories, and performed other functions with respect to the Association's product normally found in exclusive distributor contracts. In return, the Association promoted its products by extensive advertising and benefits to the Peckarsky salesmen. The record shows that there were incidents in which the Association policed the Peckarsky territory by having salesmen from other distributors selling its product removed from the Peckarsky area. In 1947, the Association authorized advertisements to be placed in a number of newspapers in Wisconsin cities describing the Peckarsky Companies as its exclusive distributor of Aristocrat brandy. Upon that authorization the Peckarsky Companies placed such advertisements. In a letter written by Perelli-Minetti, in 1957, the Association recognized that the Peckarsky Companies were the exclusive distributors and that these arrangements would be enforced.  As a result of the promotions by both parties and the use of the Peckarsky facilities, the Aristocrat brandy increased in annual sales from 6,191 cases in 1947 to 33,315 cases in 1960. Until the termination of relations, the Peckarsky Companies were the leading distributors in Aristocrat brandy in the entire United States in absolute volume. We conclude that in view of these undisputed facts the finding of the trial court that there was an implied exclusive distributorship based upon the implied promises of the Peckarsky Companies to promote and sell the Association's products, to provide and maintain adequate warehousing and clerical facilities for the servicing of the territories, and to carry an adequate inventory in return for an exclusive distributorship with effective policing is not against the great weight and clear preponderance of the evidence. Therefore, we sustain the court's finding that there was an implied exclusive distributorship and that there was mutuality of obligation existing between the two parties.