West Coast Winery, Inc. v. Golden West Wineries, Inc.

FOX, J. pro tem.

In its complaint plaintiff alleged four causes of action. The first count alleged a breach of contract based upon defendant’s failure to return wines delivered by the plaintiff to the defendant upon an agreement of exchange; the second count alleged fraud in inducing the plaintiff to make the exchange agreement, in that the defendant fraudulently represented to the plaintiff that the defendant had a large contract for the delivery of wines from a wholesale winery, and from which wines the defendant would return to the plaintiff, within ten days or two weeks, the requisite wines pursuant to the exchange agreement; the third count alleged that the defendant converted the wines delivered by the plaintiff under the exchange agreement; and the fourth count alleged that defendant owed plaintiff $36 for work and labor in transporting wines between Roscoe, California, and Los Angeles, California.

The defendant admitted owing the $36 claimed in the fourth count, and the court found that there was.no conversion under the third count.

The court found that the parties had entered into an agreement to exchange approximately 5,000 gallons of wine; that defendant had committed a breach of its agreement of exchange in that it had failed and refused to return to the plaintiff 4,321 gallons of wine as agreed, and that by reason of such breach plaintiff was entitled to recover as damages the retail price of said wine, viz., $1.54% per gallon. The court also found in favor of the plaintiff on the second count. From the ensuing judgment defendant appeals.

Defendant’s arguments may be reduced to two questions: (1) was the transaction a sale or an exchange; and (2) did the court apply the proper measure of damages in allowing plaintiff the retail selling price ?

It is defendant’s contention that the transaction was

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a sale by the plaintiff who had both a wholesale and a retail place of business, to the defendant who operated only as a wholesaler, at the wholesale ceiling price of 45 cents per gallon. The court, however, found against the defendant on this issue and there is ample evidence to support such finding. Mr. Lotito, an officer of the plaintiff corporation and who represented plaintiff in the transaction, testified that he called defendant’s place of business and told them that his company had a large quantity of port and more tokay than it needed and that it would like to get some white wines, muscatel, white port and angelica. Later, Mr. Joseph Heitler, president of the defendant corporation, telephoned Mr. Lotito and asked him to come to defendant’s place of business. There, Mr. Heitler said to Mr. Lotito, according to the latter’s testimony, “ ‘You have port and tokay, and I have some orders to fill, and I have a contract with Bear Greek Winery Association, and you wanted muscatel and sherry, and white port; if you give me this wine, in about a week or ten days, just as soon as the Bear Creek ships the sherry, I will be willing to return it to you, because I have a contract with them. ’ So I, in good faith, made the deal; that is, I took his word. I took his word that he had a contract with the Bear Greek people, that he would return my wine in exchange for a different flavor I gave him,-that he would return it to be back in about a week or ten days.” This testimony is corroborated by the witness Sidney Witkowski who was present at the conversation between Mr. Heitler and Mr. Lotito. Further support for the trial court’s determination that the transaction was an exchange is found in plaintiff’s exhibits 1 and 2. In exhibit 1 is plaintiff’s invoice No. 14605 which shows the delivery to defendant from plaintiff of “12-50 gal. bbl. Port, 593 gal.” Across the face of the invoice is written the following “to be exchanged for Light Fortified Wine.” In the lower right hand corner of the invoice are two initials which Mr. Lotito testified are “ J. H.” and stand for Joseph Heitler. Invoice No. 14606, also a part of plaintiff’s exhibit 1, shows the delivery to defendant from plaintiff of “10-50 gal. bbl. 488.50 gal.) Port.” Following the word “terms” the word “Exchange” is written. A third invoice is contained in this exhibit which shows the delivery to defendant from plaintiff of 3,965 gallons of tokay and port in bulk. These deliveries were made pursuant to the deal between plaintiff and defen