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Hoffman v. Hock

Decided: January 21, 1952.


On appeal from an order of the Director of the Division of Alcoholic Beverage Control.

For affirmance -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Ackerson, J.


[8 NJ Page 401] The plaintiff, Phillip Hoffman, trading as the Hoffman Import and Distributing Company, is a licensed distributor or wholesaler of alcoholic beverages in New Jersey. He has operated either as a wholesaler or retailer in northern New Jersey since 1933. However, his present business as distributor or wholesaler of liquor under the above mentioned trade name, was begun in Jersey City in 1944. The defendant, Park & Tilford Import Corporation, licensed by New Jersey as a wholesaler and importer of liquor, including nationally advertised brands, was apparently a subsidiary

of and the outlet through which the defendant Park & Tilford Distillers Corporation, a licensed distiller and rectifier of alcoholic beverages in New York, sold and distributed its product in the State of New Jersey. In the summer of 1950, however, the first mentioned corporation was merged with and succeeded by the latter -- Park & Tilford Distillers Corporation. Accordingly, relief in this suit is now sought only against the last named corporation which, although primarily a distiller, is also a licensed distributor of its own product in this State and hereafter we may refer to both corporations generally as Park & Tilford or as the defendant.

In the years from 1937 to 1949 Park & Tilford distributed its own products throughout the State directly to retailers through its own salesmen and not through distributors, jobbers or wholesalers, with one exception, a distributor in Monmouth County located at Asbury Park. However, commencing in May, 1949, Park & Tilford began changing this method of direct selling (referred to as a "direct operation") by appointing on a "trial basis" local distributors as its representatives in several areas of the State. At that time it appointed a distributor in Atlantic City to cover the southern end of the State. Later in the same year it appointed two distributors in Trenton for the Mercer County area and in 1950 it appointed a distributor in Phillipsburg to handle the western part of the State in that area. In December, 1949, it authorized the plaintiff, Hoffman, and the Gilhaus Beverage Company to act as its distributors for Hudson County with the understanding that Park & Tilford would also continue direct distribution there by its own salesmen which it proceeded to do. In 1950 the National Wine and Liquor Company was appointed a distributor for Passaic County.

Hoffman's authorization as a distributor was never reduced to writing, no length of time was fixed for its duration and it is conceded that it was only on a "trial basis," although plaintiff maintains that this had reference to sales volume. During the year 1950 plaintiff devoted the major part of his selling effort to the distribution of Park & Tilford's product

with the result that some 960 additional accounts were opened up for those products and his total purchases from the defendant in this period amounted to $308,130.84. Comparison of this figure with the plaintiff's total sales receipts for the year 1950 discloses that he dealt principally in the Park & Tilford product. Nevertheless, Hoffman insists that he lost money in handling it because of initial promotional expenses, which loss he expected to make up by profits accruing in subsequent years.

However, in October of 1950, a policy committee of the sales division of the defendant, Park & Tilford, began to reconsider the method of its distribution and decided to return to its former policy of handling its own product in northern New Jersey without the use of other distributors. Accordingly, in December, 1950, the plaintiff was informed that his distributorship would terminate as of December 31, 1950. At approximately the same time the other distributorships which had been authorized in Hudson and Passaic Counties, on a trial basis, were likewise terminated and Park & Tilford thereafter resumed its prior practice of exclusive and direct sale of its product to retailers in the northern counties of the State, and to date no wholesaler has been appointed to any of the distributorships so terminated. No reason was given for the abrupt termination of the plaintiff's distributorship except that it was based upon "Company policy" prompted by economical considerations and the desire to get the best possible distribution in the State.

After the termination of his distributorship the plaintiff placed two orders with Park & Tilford for specified quantities of its nationally advertised brands of liquor, the first being accompanied by a check to cover payment. Defendant refused to fill these orders and the check was returned. Thereupon plaintiff instituted the present proceeding before the Commissioner (now Director) of the Division of Alcoholic Beverage Control for a determination of the question of whether or not the aforesaid refusals to sell were discriminatory and arbitrary within the intendment of chapter 264 of the Laws

of 1942 (N.J.S.A. 33:1-93.1-5), a supplement to the Alcoholic Beverage Act, R.S. 33:1-1 et seq., and if found to be so, then for an order requiring the defendant to fill said orders pursuant to the remedy therein provided. The pertinent provisions of the aforesaid supplement are as follows:

"1. There shall be no discrimination in the sale of alcoholic liquors by distillers, importers, and rectifiers of nationally advertised brands of alcoholic liquors to duly licensed ...

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