Karpinski v. Collins

SHOEMAKER, P. J.

Plaintiff John Karpinski brought this action against defendants Gene and Ruth Collins and the Santa Clara Creamery to recover secret rebates which plaintiff was allegedly compelled to pay defendants in order to secure and retain a Grade A contract for the sale of plaintiff’s milk.

Plaintiff, the sole witness at the trial, was a dairyman. Prior to April 1962, he had sold his milk to a cheese factory under a contract entitling him to what in the business is called the Grade B price, which was established by the federal government and was approximately 60 percent of the Grade A price, which was established by the state. (The Grade A price was 44 cents per gallon and the Grade B price 27 cents per gallon.) Plaintiff testified that it was financially impossible for a dairyman in the Santa Clara Valley to remain in business without a Grade A contract.

Around April 1, 1962, defendant Gene Collins, the president of the Santa Clara Creamery, called on plaintiff and offered him a Grade A contract for the sale of his milk if plaintiff would pay him a rebate or “kickback” of four and one-half cents a gallon during the life of the contract. Plaintiff accepted the offer because no other Grade A contracts were available and he had no other choice.

On April 1, 1962, a formal contract was prepared whereby plaintiff agreed to sell the Santa Clara Creamery 51,600 pounds of Grade A milk per month, and the creamery agreed to purchase said milk at the Grade A price for the Santa Clara marketing area. The contract was terminable by either party upon 30 days’ notice.

Thereafter, plaintiff furnished the milk and was paid the specified price. President Collins would then bill plaintiff for monthly “feeding charges” in an amount equal to the agreed rebate of four and one-half cents per gallon of milk delivered. No feeding services were ever performed by Collins or the Santa Clara Creamery.

Approximately one year after the contract had gone into effect, Collins informed plaintiff that he needed money to pay off a debt or he would lose the creamery; that if he did not loan him $6,500, Collins would terminate his contract and find

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another dairyman who could raise the money. Collins promised to repay the loan by reducing the rebate one and one-half cents per gallon during the life of plaintiff’s contract.