Full opinion text
MEMORANDUM OPINION, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDERS JOHN W. OLIVER, Senior District Judge. I. Introduction This case is before us a second time. The first time the case was considered, this Court granted preliminary injunctive relief. See ABA Distributors, Inc. v. Adolph Coors Co., 496 F.Supp. 1194 (W.D.Mo.1980). On appeal, the Eighth Circuit in ABA Distributors, Inc. v. Adolph Coors Co., 661 F.2d 712 (8th Cir. 1981), dissolved the preliminary injunction granted and remanded the case to this Court suggesting that the parties and Court expedite trial on the merits. In accordance with that implicit direction of the Court of Appeals, the parties eventually entered into a stipulation in which they agreed that plaintiff’s claim for permanent injunctive relief should be presented for this Court’s determination on the merits in accordance with procedures agreeable to the parties and approved by the Court. The procedures agreed upon in the stipulation of the parties provided that: 1. The case as above defined is hereby submitted to the Court for its decision on the merits on the basis of all the evidence adduced by the parties in support of and in opposition to plaintiff’s motion for a temporary restraining order and plaintiff’s motion for a preliminary injunction, together with the following additional evidentiary data: (a) Abe Gustin will testify, either in person or by affidavit, that should the notice of March 21, 1980 be set aside, ABA could resume its operation of the distributorship immediately.... (b) Abe Gustin will testify, either in person or by affidavit, that should the termination notice of March 21,1980 be set aside, there are several qualified, financially sound, potential purchasers for ABA’s distributorship.... (c) Defendant Coors will submit the deposition of William Cox. 2. The parties recognize that defendant Coors contends that Coors may justify its asserted termination of the ABA/Coors Agreement by proving, through subsequently discovered evidence, that dishonesty or violation of state and federal law by ABA existed at the time of termination (March 21, 1980), even though such evidence was not known to Coors on that date. Specifically, defendant Coors states that it believes that the evidence recited in Exhibit A, attached hereto, should be admitted in evidence in determining the questions presented as stated in paragraph 5 below. 3. The parties recognize that plaintiff ABA objects to the evidence outlined in Exhibit A, and contends that the evidence set forth in Exhibit A is not admissible in evidence under applicable law. Further, ABA does not admit the facts alleged in Exhibit A. 4. The parties agree that the Court should and will consider the question of evidence stated in paragraphs 2 and 3 above as the first question for decision. The parties further agree that in the event the Court concludes that plaintiff’s objection to the evidence outlined in Exhibit A should be sustained, the Court shall proceed to determine the merits of plaintiff’s claim for permanent injunction on the basis of the evidentiary data stated in paragraph 1 above. In the event the Court concludes that plaintiff ABA’s objection to the evidence outlined in Exhibit A should be overruled, the Court shall immediately set the case for further discovery (if not completed), and a hearing in order to afford defendant Coors an opportunity to adduce the additional evidence outlined in Exhibit A attached hereto and to afford plaintiff ABA a like opportunity to cross-examine defendant Coors’ witnesses and to adduce any additional rebuttal evidence under the circumstances. The Court will promptly set a discovery schedule, if such discovery has not been completed. Although the parties stated in paragraph 5 of the stipulation that they were “unable to agree on the questions of law to be presented to the Court for its determination,” it is clear that the parties’ stated disagreement was more apparent than real. As will be later developed in detail, the parties are in full agreement in regard to the substance of the controlling questions of law presented for decision under the procedures provided in the stipulation; their disagreement relates only to the form and the manner of how those questions should be stated. Paragraph 5 of the stipulation therefore included nine questions of law which ABA submitted for determination, and five questions of law which Coors submitted for determination in the same paragraph. Paragraph 6 of the stipulation established an agreed time schedule under which proposed findings of fact, proposed conclusions of law and briefs in support and in opposition were to be filed. Paragraph 7 contained the important agreement of the parties that “the parties agree that, except as above stated, neither side wishes to adduce any additional evidence and that all disputed questions of fact shall be decided on the evidence as above stipulated.” The parties are in complete agreement that the first question of law which this Court should decide is “whether the March 21, 1980 notice of termination may be supported by subsequently discovered evidence.” The language in which that question of law is stated illustrates the real agreement of the parties in regard to the substance of the legal question presented for determination. The language in which the legal question is stated is quoted from the question of law submitted by ABA in its subparagraph (g), contained in paragraph 5 of the stipulation. Coors, in its subparagraph (a) of paragraph 5 of the stipulation, used exactly the same language to submit the legal question which it proposed should be considered first by this Court. Coors, however, in its separate submission of the identical question of law submitted by ABA, did no more than add a clause to the language submitted by ABA in order that Coors could include its factual argument that the “subsequently discovered evidence,” in fact demonstrated “the existence of adequate cause for such termination.” In part III of this memorandum opinion, we shall state the reasons why we have concluded that the March 21,1980 notice of termination may not be supported by subsequently discovered evidence. In light of that conclusion, it is apparent that the material factual circumstances relating to our determination of the legal questions presented are not in dispute. We will state our findings of fact in the next part of this opinion and will then consider and decide the legal questions submitted by the parties. II. Findings of Fact 1. Plaintiff ABA distributors, Inc. (ABA) is a Missouri corporation with its principal place of business at 1909 Vernon Street, North Kansas City, Clay County, Missouri. 2. Defendant Adolph Coors Company (Coors) is a Colorado corporation engaged in the business of brewing and selling Coors beer products from its brewery in Golden, Colorado. Coors transacts business and enters into contracts in the Western District of Missouri. 3. ABA has been authorized to do and was doing business in the State of Missouri as a distributor of Coors beer products. 4. Service of process has been properly made upon Coors in Golden, Colorado. 5. From June 1, 1978 to March 21, 1980 Coors had no distributors nor did Coors sell beer in any states east of the Mississippi River. 6. When Coors sells its beer products to a distributor, it parts with title and dominion over those products. Its contract with that distributor contains certain requirements (quality control), thereafter applicable to the beer. 7. On or about June 1, 1978 ABA and Coors entered into an agreement whereby ABA was appointed a distributor of Coors beer products to resell Coors beer products in a specified geographical area described in said agreement. 8. The specified geographical area described in the agreement included the Kansas City metropolitan area north of 31st Street in Jackson County, Clay County, Platte County and Ray County. 9. Sector Distributing Company, Inc., is the Coors’ distributor immediately to the north of ABA’s geographical area. 10. Southside Distributing, Inc. is the Coors’ distributor immediately to the south of ABA’s geographical area. 11. In order to obtain the agreement with Coors, ABA was required to have available approximately $1.4 million dollars, which money was made available by ABA and was expended for capital investments, trucks and equipment, the leasing of warehouse space, and the establishment of accounts and clientele. 12. ABA has expended time and effort promoting Coors beer products. 13. ABA has developed a successful and ongoing business in its territory, and has established successful and ongoing business relationships with its customers and potential customers. 14. In January, 1979 Abe Gustin, President of ABA, was called to Golden, Colorado for a meeting of several Coors distributors and Coors officials. 15. At that meeting, the group of distributors was informed that Coors believed that these distributors were selling Coors beer products outside of the geographical areas defined in their agreements. 16. Abe Gustin, in a private meeting with Coors officials during January, 1979, informed Coors officials that he was not selling Coors beer products outside of ABA’s geographical area and stated that Milgrams, a large retailer served by ABA, might be reselling beer outside of the geographical area. 17. In January, 1980 Abe Gustin was called to Golden, Colorado for a meeting with Coors officials who informed him that they believed that ABA was making sales of Coors beer products outside of ABA’s geographical area. 18. Abe Gustin informed Coors officials that ABA was making no direct sales outside of its geographical area, and that ABA was selling Coors beer only to licensed accounts in ABA’s geographical area. 19. Abe Gustin told Coors representatives at a January, 1979 conference and again at a January, 1980 conference that ABA had only sold beer to licensed accounts in its assigned geographical area. 20. In March, 1980, a Coors distributors’ conference was held in Phoenix, Arizona, at which Peter Coors made a speech to a group of distributors at one session. 21. Peter Coors announced to the group of distributors at the Coors distributors’ conference that immediate termination without notice to any distributor would result if Coors discovered that any Coors distributor was selling Coors beer outside of the geographical area contained in that distributor’s agreement. 22. No evidence was adduced that Coors ever sent any written notice or any other written information to its distributors describing the policy change which had been orally announced by Peter Coors at the Phoenix meeting in early March, 1980. 23. No representative of ABA attended the session during which Peter Coors made his speech. 24. The only manner in which Coors’ distributors were ever informed of the policy change was orally by Peter Coors’ speech at the Phoenix meeting in early March, 1980. 25. ABA did not, in fact, receive any notice, either oral or written, announcing that a distributorship would be terminated immediately without notice upon Coors’ discovering that a distributor was selling Coors beer products outside of the distributor’s geographical area. 26. Beginning February 23, 1979 until March 8,1980, Coors hired Paul G. Corbett, a private investigator, to maintain surveillance on ABA’s warehouse. 27. Corbett was instructed to report to Coors any beer deliveries or pickups which appeared to be “out of the ordinary.” 28. The surveillance was conducted by Corbett and others employed by him. 29. On March 8,1980 Corbett telephoned Leo Bradley, Coors’ counsel, and informed Bradley that Corbett had observed three “bobtail” trucks leaving the ABA warehouse and delivering beer to be loaded onto a semi-trailer truck several blocks away. 30. No written report was submitted at that time to Leo Bradley. 31. No further investigation or inquiry was conducted by Mr. Corbett or others in his employ. 32. Corbett made no inquiries at ABA about this delivery. 33. Corbett did not follow or attempt to ascertain the destination of the semi-trailer truck. 34. No other investigation of ABA was ever conducted by any Coors official or person employed by Coors prior to the March 21, 1980 notice of termination. 35. On March 19, 1980, Abe Gustin was called to Golden, Colorado and informed by Coors officials that the agreement between Coors and ABA was terminated, and that ABA could no longer be a distributor of Coors beer products. 36. At the March 19, 1980 meeting, Coors did not charge that ABA had sold Coors beer out of state but did charge that ABA had been dishonest with regard to out-of-state sales. 37. Coors officials informed Abe Gustin that he would not be permitted to sell ABA to anyone. 38. Coors officials called representatives of Sector Distributing Company and South-side Distributing, Inc. and requested that they come to Golden, Colorado for a meeting on March 19, 1980. 39. After Abe Gustin’s March 19, 1980 meeting with Coors officials, at which he was informed that ABA would be terminated as a distributor, Coors officials then met with the representatives of Sector and Southside and informed them that ABA’s geographical market area would be temporarily divided between them. 40. On March 21, 1980 a written letter of termination was delivered from Coors to ABA to be effective on March 21, 1980. Although the first paragraph of the March 21, 1980 letter stated that ABA had been “terminated” at the March 19, 1980 meeting, the parties have proceeded on the basis that Coors purported to act pursuant to Paragraph 11(1) of the Agreement when it terminated ABA without notice, effective March 21, 1980. 41. The termination letter was signed by Melvin Linn, Vice President of Regional Sales of Coors. 42. Melvin Linn had not read the investigative report by Paul Corbett prior to terminating ABA. 43. Paul Corbett had made an oral report to Leo Bradley, who then reported the conversation to Melvin Linn. 44. Linn relied upon the representations by Leo Bradley, Coors’ counsel, in terminating ABA. 45. Neither Melvin Linn nor any other Coors official conducted any additional investigation of the ABA distributorship other than that contained in the Corbett report prior to notice of termination. 46. Melvin Linn did not draft the letter of termination which Coors sent to ABA. 47. Melvin Linn signed the letter of termination to ABA without questioning its contents. 48. Coors has never given ABA any notice of termination under either subparagraph (1) or subparagraph (2) of Paragraph IX of the Agreement between Coors and ABA. 49. Coors never served ABA with any written notice of termination prior to the notice of termination contained in the March 21, 1980 letter. 50. At the time Coors wrote ABA on March 21, 1980, neither Melvin Linn nor any other Coors official had any actual knowledge that ABA was “in violation of state and federal law,” as stated in that letter. 51. At the time Coors wrote ABA on March 21, 1980, neither Melvin Linn nor any other Coors official had any actual knowledge of any “dishonesty” by ABA with Coors “concerning deliveries and sales for resale outside of Missouri.” 52. The agreement between ABA and Coors did not provide for termination without notice for sales by ABA outside of its geographical area. 53. During the time Mr. Kotulic served as Coors’ area manager in ABA’s territory, he believed ABA was performing well and he never forwarded any written complaint or criticism of ABA to Coors. 54. Mr. Kotulic was present and operating as a Coors’ representative in ABA’s market territory for approximately a year and one-half prior to March 21, 1980. 55. Coors’ representative Kotulic did not know of any shipment of beer by ABA to eastern accounts. 56. Approval of the ex parte termination of ABA by Coors would result in the destruction of ABA’s business. 57. Approval of the ex parte termination of ABA by Coors would result in loss of all profits to ABA. 58. Approval of the ex parte termination of ABA by Coors has and would result in loss of all goodwill to ABA. 59. Approval of the ex parte termination of ABA by Coors would result in loss of capital investments by ABA. 60. Approval of the ex parte termination of ABA by Coors could eliminate any possibility that ABA could recoup its capital investment. 61. Coors’ proposed findings of fact Nos. 6 and 7 establish that “prior to January, 1979” Coors merely “suspected that ABA was involved in the sale of beer to eastern markets without compliance with the quality control requirements of the distributorship agreement,” and that “[t]hat suspicion was at least in part based upon testimony that someone in Washington, D.C. was purchasing Coors beer from Distillers Marketing, and Distillers Marketing was located within the ABA territory.” (emphasis ours). In like manner, Coors’ proposed findings of fact Nos. 8, 9, 11, and 12 each reflect that “from January, 1979 to January, 1980” Coors “became additionally suspicious;” that in “both January of 1979 and January of 1980,” ABA was “told of Coors’ above mentioned suspicions;” and that “subsequent to January, 1980 Coors became additionally suspicious that ABA was involved in the sales of Coors beer in eastern foreign markets, without compliance with the quality control requirements of the distributorship agreement.” (emphasis ours). Coors concedes in its proposed findings of fact Nos. 13 and 14 that “Coors employed Paul Corbett,” (see finding of fact No. 26 above) “as a result of those suspicions ” and that “[specifically included in Coors’ suspicions of ABA’s activities was its role, in conjunction with Distillers Marketing, in the sale of Coors beer in eastern markets.” (emphasis ours). 62. Coors made no request to inspect ABA’s distributor’s operations concerning Coors beer, including an inspection of all of ABA’s books and records, in accordance with Paragraph II (14) of the Agreement to determine whether its suspicions were or were not well founded. Nor did Coors serve ABA with any notice, as required by Paragraph IX(2) of the Agreement, that Coors had determined that ABA had breached or was in default of any term or condition of the Agreement. Rather, as Coors’ proposed findings of Fact No. 20 establishes, Coors elected to act pursuant to Paragraph 11(1) of the Agreement and to serve ABA with the March 21, 1980 ex parte termination letter which, as that proposed finding of fact states, was “predicated on ABA’s [alleged] dishonesty with Coors in connection with sales of Coors beer in eastern markets, and the possibility that such sales might constitute violations of state or federal law.” (emphasis ours.) 63. The factual circumstances concerning Distillers Marketing establish that: (a) By August 22, 1978 ABA had begun selling Coors beer to Distillers Marketing; (b) Distillers Marketing is a liquor and beer wholesaler located in North Kansas City, Missouri; (c) The sale of Coors beer from ABA to Distillers Marketing continued from August, 1978 into March, 1980; (d) Between August of 1978 and March 21, 1980, ABA made a substantial number of sales to Distillers Marketing; (e) In connection with some of such sales to Distillers Marketing, Mr. Gustin prepared Double A invoices reflecting sales to Distillers Marketing and concurrently prepared ABA invoices. The latter ABA invoices were prepared for bookkeeping purposes in order to put Coors on notice of the interrelationship between Bill Oberbeck of Milgram’s and Distillers Marketing; (f) Mr. Gustin wrote the number of the Missouri liquor license of the Mil-gram’s retail store on some of the invoices to which the invoice was addressed and some of the invoices addressed to Milgram’s were sent to Distillers Marketing, where a stamp and signature were affixed to them. None of the persons whose signatures were affixed to the invoices were employed by Milgram’s; (g) Some of the Coors beer sold by ABA to Distillers Marketing was physically loaded by ABA employees onto trucks designated by Distillers Marketing and on some occasions when ABA employees loaded beer on trucks designated by Distillers Marketing, ABA employees were handed checks made payable to Distillers Marketing. All such checks received by ABA employees were delivered to Distillers Marketing; (h) When asked whether ABA had any knowledge of the sale of Coors beer in eastern markets, Mr. Gustin explained to Coors representatives about the interrelationship between Milgram’s, Distillers Marketing, and Bill Oberbeck. Indeed, Mr. Gustin told Coors officials that he suspected Distillers Marketing of selling Coors beer in eastern markets; that Distillers Marketing was closely interrelated with Mr. Bill Oberbeck of Mil-gram’s; that Milgram’s had stores in the territories of several Coors distributors in addition to ABA; and that all of the Coors beer being sold by Distillers Marketing might not necessarily be coming from ABA; and that (i) Some of the sales of Coors beer from ABA to Distillers Marketing were billed to Distillers Marketing on invoices of AA Beverage Sales and duplicate bookkeeping invoices were prepared reflecting that beer sales were billed to Milgram’s. The reports prepared by ABA and submitted by it to Coors, as distinguished from ABA’s books and records, did not include sales made to Distillers Marketing. 64. We reject all of Coors’ proposed findings of fact which we have not thus far made as proposed or as we have modified particular findings of fact proposed by Coors, for the reason those proposed findings are clearly based on subsequently discovered evidence within the meaning of the stipulation. Examination of the findings of fact proposed by Coors which we have rejected shows that Coors, in support of its proposed findings of fact, relied either on the deposition testimony of William Cox, taken June 8, 1981, upon document inspection made after March 20, 1980, or upon depositions or hearing testimony taken long after Coors sent ABA its March 21,1980 ex parte termination letter. We also expressly find that even if all of the data cited and relied upon by Coors is considered to be admissible, such evidentiary data is not sufficient to support an ex parte termination pursuant to Paragraph 11(1) of the Agreement, in that such data neither established “dishonesty” nor a “violation of [any] local, state, and federal laws and regulations applicable to Distributor’s business.” 65. The Agreement contains three separate provisions for termination. In the event a distributor is properly terminated ex parte for cause under Paragraph 11(1), such a distributor has no further rights under the Agreement. In the event, however, a distributor is terminated on either the 30 day notice provided in Paragraph IX(1) or the 90 day notice provided in Paragraph IX(2), such a distributor is entitled to a number of substantial rights under the Agreement. 66. Coors did not act in good faith and violated its duty of fair dealing when it attempted its ex parte termination of ABA under Paragraph 11(1) under circumstances which establish that Coors did not exercise its right of inspection and under circumstances which establish that Coors did not have actual knowledge of any dishonesty on the part of ABA or any actual knowledge that ABA was in violation of any state or any federal law. III. Conclusions of Law It is to be recalled, as we noted at the end of Part I of this memorandum opinion, that the parties stipulated that the first question of law this Court should consider and decide was “whether the March 21, 1980 notice of termination may be supported by subsequently discovered evidence, not known by Coors at the time of termination.” The parties recognized in paragraph 2 of their stipulation that “Coors contends that Coors may justify its asserted termination of the ABA/Coors Agreement by proving, through subsequently discovered evidence, that dishonesty or violation of state and federal law by ABA existed at the time of termination (March 21, 1980), even though such evidence was not known to Coors on that date.” The specific contention made by Coors was spelled out in paragraph 2 of the stipulation which stated that “Coors states that it believes that the evidence recited in Exhibit A [attached to the stipulation and set forth in footnote 3 above] should be admitted in evidence in determining the questions presented as stated in paragraph 5 below.” Paragraph 3 of the stipulation states that “ABA objects to the evidence outlined in Exhibit A, and contends that the evidence set forth in Exhibit A is not admissible in evidence under applicable law.” Paragraph 4 of the stipulation reflects the parties’ agreement that in the event the Court concludes that ABA’s objection to the evidence should be sustained, “the Court shall proceed to determine the merits of plaintiff’s claim for permanent injunction on the basis of the evidentiary data stated in paragraph 1 above.” Counsel appropriately directed attention to General Motors Corporation v. Lord, 488 F.2d 1096 (8 Cir. 1973), to illustrate the importance of the evidence question presented. That case involved appellate consideration of the district court’s action in granting plaintiff’s motion for new trial after the jury had returned a verdict in favor of the defendant in an action for an alleged failure to renew an automobile dealer’s franchise without just cause. The reason the defendant gave for the termination was that the plaintiff “had violated the Dealer Selling Agreement with GM by entering into an agreement for the sale by Phillips [the plaintiff] to Van Dyke [a third party] of all the stock of Phillips Motors.” At the trial of the case, however, “evidence was presented, over objection, which indicated that financial statements which Phillips Motors had submitted, on a monthly basis, to GM were falsified as to earnings and capital.” Evidence was also admitted which established that “the statements varied substantially from the Phillips Motors’ books and tax returns” and that “it was also learned that Phillips Motors had operated ‘out of trust’ condition with the bank which financed Phillips Motors’ new and used car purchases.” Both counsel and the Court recognize that the General Motors case is not precisely in point. For it is clear that the district court in the General Motors case specified grounds for granting plaintiff a new trial which did not present exactly the same question presented in the case at bar. It is nevertheless appropriate that we consider what was said in General Motors for the reason that Coors relies upon exactly the same line of cases cited and relied upon by Judge Bright in his concurring opinion, whereas ABA, by its citation of General Motors, obviously places reliance on the first line of cases cited by Judge Ross in the majority opinion in that case. General Motors concluded that the district court’s resolution of the evidence question did not justify the granting of mandamus for the reason that: The evidentiary issues confronted by the trial court, with respect to whether GM could rely on non-assigned reasons for termination as a defense to the law suit, are not simple. The trial judge’s resolution of the issue is not without support. See, e.g., Ohio & Mississippi R. R. v. McCarthy, 96 U.S. 258, 267-68, 24 L.Ed. 693 (1877); Luckenbach S.S. Co., Inc. v. W. R. Grace & Co., Inc., 267 F. 676, 679 (4th Cir.), cert. denied, 254 U.S. 644, 41 S.Ct. 14, 65 L.Ed. 454 (1920). On the other hand, resolution of the matter as GM urges also has support. See, e.g., College Point Boat Corp. v. United States, 267 U.S. 12, 16, 45 S.Ct. 199, 69 L.Ed. 490 (1925); 3 A. Corbin, Corbin on Contracts § 762 at 524-26 (1960). Coors argues that it is “entitled to rely upon ... subsequently discovered evidence to support its March, 1980 termination” (page 19 of Coors’ brief). Coors contended on page 20 of its brief that: All Coors here seeks is to show to the Court and rely upon facts subsequently discovered by it, not on another theory, but which actually support and confirm the facts and suspicions in its possession at the time of the termination. Coors merely wishes to show to the Court and rely upon subsequently discovered facts which in all regards confirm and corroborate the facts known and theories utilized by Coors in ordering the termination. Coors relies solely upon the College Point Boat Corporation line of cases and argues that the Ohio & Mississippi R. R. line of eases, which Coors suggest “at first blush seem to reach a contrary result ... are, however, distinguishable.” (page 20 of Coors’ brief). The Eighth Circuit did not consider that the two lines of cases were “distinguishable” in General Motors. That case suggested that the district court’s decision was supported on the one hand by the Ohio & Mississippi R. R. line of cases but that had the district court ruled the other way, its decision would have been supported by the College Point Boat Corporation line of cases. Such an analysis does not suggest that the two lines of cases are “distinguishable.” Cases which involve a choice of one of the two lines of authority discussed in General Motors seldom present completely similar factual circumstances. The rationale of one line of cases in this area of the law has been held to be applicable in some cases; the rationale of the other line of authority has been applied in other cases. We have carefully considered all of the cases cited by the parties and have conducted independent research in an effort to find cases close to the factual circumstances involved in the case at bar. Although we have not found any case precisely in point, we are satisfied as a result of that inquiry that the rationale of the Ohio & Mississippi R. R. Co. line of cases should be applied to the stipulated question presented in this case and that ABA’s objection to Coors’ subsequently discovered evidence should be sustained. Accordingly, we answer the stipulated legal question of “whether the March 21, 1980 notice of termination may be supported by subsequently discovered evidence, not known by Coors at the time of termination” in the negative. IV. Conclusions of Law [Continued] Five of the remaining questions of law submitted by the parties pursuant to paragraph 5 of the stipulation are closely related and will therefore be determined in this part of this memorandum opinion. ABA submitted the following questions in its portion of paragraph 5 of the stipulation: (a) Whether Coors wrongfully terminated the Agreement with ABA by breaching the Agreement; (h) Whether R.S.Mo. §§ 407.400 et seq. is applicable to a beer distributorship; (b) Whether Coors wrongfully terminated the Agreement under R.S.Mo. §§ 407.400 et seq. Coors submitted the following closely related questions in its portion of paragraph 5 of the stipulation: (d) Whether R.S.Mo. § 407.405 is applicable to a beer distributorship and, if so, whether the requirement for a 90-day termination notice actually invalidates a termination notice in disregard thereof, or merely entitles the terminated party to recover, as damages, the loss incurred by the failure to provide such notice. (c) Whether the issuance of the requested permanent injunction would have the effect of inappropriately extending to ABA the benefits of a distributorship beyond the times described in the distributorship agreement or guaranteed by R.S.Mo. § 407.405. The five questions submitted under paragraph 5 of the stipulation present, in substance, the basic questions of (1) whether under the factual circumstances Coors breached the Agreement by attempting to terminate without notice and (2) whether R.S.Mo. §§ 407.400 et seq., are applicable to a beer distributorship. The answer to those questions depends upon whether Coors violated any duty owed ABA under either the applicable common law of Missouri or any statutory duty imposed by R.S.Mo. §§ 407.-400 et seq. A. We conclude in regard to the first question that Coors breached the duty of good faith and fair dealing which it owed ABA under applicable Missouri law when it attempted, without actual knowledge of any facts to support the grounds stated in its March 21, 1980 letter, to terminate ABA without notice under Paragraph 11(1) of the Agreement. Section 205 of the Restatement of Contracts, Second, p. 99 states that “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” Comment e. to Section 205 of the Restatement of Contracts, Second, entitled “Good faith in enforcement,” makes clear that “[t]he obligation of good faith and fair dealing extends to ... the litigation of contract claims and defenses” and that violations of that obligation include the “abuse of a power ... to terminate the contract.” The Reporter’s Note in support of Comment e. to Section 205, id. 104, noted that “several courts have found that an express power to terminate a contract at will was modified by a duty of good faith” and directed comparison to particular sections of the Uniform Commercial Code. While Section 205 is a new section of the Restatement of Contracts, Second, see Reporter’s Note, id., p. 103, we are satisfied that the courts of Missouri will adopt and apply that section of the Restatement in the same manner that the courts of Missouri have in the past consistently adopted and applied various other sections of the original Restatement of Contracts and various other sections in the Restatement of Contracts, Second. Any question about whether the duty of good faith and fair dealing reflects the law of Missouri was removed by the Missouri Legislature’s adoption of R.S.Mo. § 400.1-203 in 1963. That section of the Uniform Commercial Code provides that “every contract or duty within this chapter imposes an obligation of good faith in its performance or enforcement.” ABA cited and relied upon a number of sections of the Uniform Commercial Code other than R.S.Mo. § 400.1-203 in partial support of its argument that “the attempted termination of ABA violates Coors’ obligations under Missouri law to deal in good faith and reasonably with ABA.” See pages 5 to 10 of ABA’s brief. While R.S.Mo. § 400.1-203 codifies the same legal principle stated in Section 205 of the Restatement of Contracts, Second, and therefore supports our conclusion that Section 205 of the Restatement reflects the applicable law of Missouri, we do not believe it is either proper or necessary to discuss the other paragraphs of the Uniform Commercial Code or the cases from other jurisdictions construing those sections which are cited and relied upon by ABA in its brief, for the reason, as Coors correctly points out, that neither side submitted any question in paragraph 5 of the stipulation which presented any question concerning the applicability of those additional sections of the Uniform Commercial Code. Arnott v. American Oil Co., 609 F.2d 873 (8 Cir. 1979), illustrates the fact that the duty of “good faith and fair dealing” stated in Section 205 of the Restatement of Contracts, Second, has been adopted as part of the common law of many states other than Missouri. That case, which involved South Dakota law, also illustrates the close relationship between the enactment of franchise legislation by various states and the common law duty of good faith and fair dealing imposed independent of statutes. The plaintiff alleged in American Oil Co. that “Amoco breached the fiduciary duty owed to Arnott by terminating his lease without good cause and by not dealing with Arnott in good faith during the term of the lease agreement.” Id., 876. The district court “instructed the jury that a fiduciary relationship existed between the defendant and the plaintiff.” Id. 880-81. The Court of Appeals noted in American Oil Co. that although “South Dakota, in accord with [the] modern trend, enacted the South Dakota Franchise Act, S.D. Compiled Laws, ch. 37-5A (1977) in 1974 .. . this statute is not controlling since the Arnott lease agreement was initiated in 1973.” Id. 883. The American Oil Co. court, however, expressed approval of the district court’s “view that South Dakota, in enacting the 1974 Franchise Act, 'was codifying what was really the common law in South Dakota, anyway.’ ” Id. 883. In affirming a judgment for the plaintiff, American Oil Co. held that “the current trend of authority recognizes that a franchise relationship exists between a service station dealer and the oil company whose trademark the dealer is promoting. Inherent in a franchise relationship is a fiduciary duty.” Id. 881. It added that “further indication of the fiduciary nature of a franchise relationship is found in the recent surge of general franchise legislation.” Id. 883. Unlike the factual circumstances in American Oil Co., it is clear that R.S.Mo. § 407.400 was enacted before the Coors and ABA Distributorship Agreement was signed. Our discussion of that statute will establish that Coors owed ABA a fiduciary duty of good faith and fair dealing under the statutory law of Missouri as well as the Missouri common law. B. The second question to be determined is “whether R.S.Mo. §§ 407.400 et seq. is applicable to a beer distributorship,” as submitted in ABA’s subparagraph (h) of paragraph 5 of the stipulation and as submitted by the first clause of the question submitted by Coors in its subparagraph (d) of Paragraph 5 of the stipulation. We conclude that the submitted question must be answered in the affirmative for the reasons we now state. Chapter 407 of the present revised statutes of Missouri is not a model of legislative clarity. We have the benefit, however, of the gloss placed on that Chapter by the Supreme Court of Missouri in Brown-For- man Distillers Corp. v. McHenry, 566 S.W.2d 194, 196 (Mo.S.Ct. en banc 1978). The McHenry court noted that “the title to the bill by which Chapter 407 was originally enacted in 1967 stated that it related ‘to certain merchandising practices.’ ” The McHenry court further noted that seven years later, the Missouri General Assembly enacted further legislation on the same general subject of “merchandising practices.” It was particularly noted that “House Bill 1132, enacted in 1974, ... defined [‘franchises’] for the first time . .. and prohibited the cancellation of a franchise agreement without notice.” Id. 196-97. House Bill 810, as amended on the floor of the Missouri Senate and adopted by the Missouri General Assembly in 1975, made other amendments to the laws of Missouri “relating to certain merchandising practices.” The full text of House Bill 810, with the parts added on the floor of the Senate by Senate amendment No. 1 italicized, is set forth as an appendix to the McHenry case. Id., 198-200. The constitutionality of the 1975 legislation was attacked in McHenry on the grounds that (1) the floor amendment to House Bill 810 adopted in the Senate changed the original purpose of that bill and (2) the title of the bill as enacted contained more than one clearly expressed subject in violation of Art. Ill, §§ 21 and 23 of the Constitution of Missouri. This Court is under duty to recognize and apply the construction which the McHenry court placed on Section 407.400(1) in which a “franchise” was first defined by the Missouri General Assembly when it passed House Bill 1132 in 1974. See Laws of Missouri, p. 896, § 1. For it is clear that the Supreme Court of Missouri did place a definitive construction on the meaning of a “franchise,” as defined in the 1974 legislation, quite independent of what impact, if any, the 1975 legislation may have had on the definition of a “franchise” as that definition is now contained in present Section 407.400(1). In regard to the scope of coverage of House Bill 1132, passed in 1974, the Supreme Court of Missouri noted the arguments made by counsel in McHenry. That court noted that it was argued that (1) “when Chapter 407 was enacted in 1967 it dealt with ‘consumer protection’ and the liquor industry was not covered by its terms” and that (2) “contracts or agreements between the distiller or supplier of intoxicating liquor and the wholesaler are not ‘franchises’ within the meaning of the law adopted by passage of House Bill 810.” Id., 196. The Supreme Court of Missouri noted in McHenry that the “trial court concluded that the agreements these plaintiffs had with various wholesalers are franchises within the meaning of these statutes” and held that “we concur in that holding.” The McHenry court made clear that it was its view that “the law adopted by the enactment of House Bill 1132 [in 1974] applied, before the passage of House Bill 810 [in 1975], to merchandising practices within the liquor industry” and that “the passage of House Bill 810, as amended, made it clear this industry had the same protection in this area of merchandising as other businesses.” Id. 197. The McHenry court cited and relied upon Carlo C. Gelardi Corp. v. Miller Brewing Co., 421 F.Supp. 233 (D.N.J.1976), to support its conclusion that under the 1974 legislation “the liquor industry . . . had the same protection ... as other businesses.” Miller Brewing Co. involved the question of whether the New Jersey Franchise Practices Act applied to a beer distributorship agreement. We have already concluded that “the Miller Brewing Company litigation presented a factual and procedural situation quite close to that presented in the case at bar.” 496 F.Supp. at 1203. We now note that the New Jersey Act, like the 1974 Missouri Act, did not expressly cover the liquor industry. The first paragraphs of both the New Jersey Act and the 1974 Missouri Act in which a “franchise” was defined, consistent with similar legislation in many other states, were identical. Miller Brewing Company, in the case which pended in the District of New Jersey, as does Coors in this case, “questioned whether its relationship constituted a ‘franchise’ within the meaning of the Act.” 421 F.Supp. at 234. Judge Barlow concluded that the failure of the New Jersey legislature to specifically name the liquor industry as being within the coverage of the Act was not significant and that, absent clear legislative intent to the contrary, the Act should not be read “to exclude particular industries . .. from the protection of the Act.” 421 F.Supp. at 234, fn.l. The New Jersey Act required that a 60 day notice of termination be served in which the reasons for termination were to be stated. See N.J. State Ann. 56:10-5, set forth in footnote 17 on page 246 of 421 F.Supp. The district court in Miller Brewing found that Miller had not served such a notice as required by the Act and therefore entered an- order “directing Miller to comply with the sixty-day notice provision of N.J.Ann. § 56:10-5.” The conclusion of the Supreme Court of Missouri in McHenry that the 1974 Missouri legislation was broad enough to cover the liquor industry is, however, a significant statement of state law in regard to how the franchise protection statutes of Missouri should be construed by this Court. The question of whether the courts of Missouri would hold that the 1975 enactment of House Bill 810, as amended on the floor of the Senate, was intended to remove and exclude the liquor industry from the coverage of Missouri’s 1974 legislation is not, in our considered judgment, controlled by the considerations stated in footnote 4 of the majority opinion of the Court of Appeals in ABA Distributors, Inc. v. Adolph Coors Co., supra, at 715, fn.4. That footnote stated the following: The district court noted that ABA’s motion presented “questions related to the notice of termination to which plaintiff may be entitled under the Missouri Franchise Act... 496 F.Supp. at 1203. No finding relative to the likelihood of resolving these questions favorably to ABA was made. The parties have not argued or briefed the details of the application of the Missouri Act. We note, however, that the Act by its terms protects only wholesalers licensed to sell “spirituous liquor and wine containing alcohol in excess of five percent by weight . . .. ” R.S.Mo. § 407.-400. Beer is not a spirituous liquor. See State v. Watts, 101 Mo.App. 658, 74 S.W. 377 (1903). It does not strain judicial notice to note that beer is not wine. Therefore, whether ABA may properly invoke the protections of the Missouri Franchise Act is open to question. Unlike the Court of Appeals, this Court has had the benefit of the briefs and arguments of counsel. We are satisfied that the courts of Missouri would not determine the question presented by taking judicial notice of the fact that “beer is not wine” or that “beer is not a spirituous liquor.” Nor do we believe that the courts of Missouri would consider the affirmance of a defendant’s conviction of a violation of § 3016 of the 1899 Missouri Revised Statutes in State v. Watts, 101 Mo.App. 658, 74 S.W. 377 (Mo.Ct. of App.St.L.1903), as a precedent controlling the question of law submitted by the parties in their stipulation. We are satisfied that the courts of Missouri would continue to place reliance on the rationale of Miller Brewing Company, as the Supreme Court of Missouri has already done in McHenry. We conclude that the courts of Missouri would therefore make inquiry as to whether either the language of House Bill 810, as amended, or any available legislative history suggests that the Missouri General Assembly intended to exclude any part of what the McHenry court repeatedly referred to as “the liquor industry” when it passed the 1975 legislation. Consistent with well established Erie principles, this Court must make the same inquiry. We note first that there is no legislative history to examine. Secondly, we conclude that the courts of Missouri would hold that the Missouri General Assembly intended to continue the coverage of its 1974 legislation, which McHenry held was broad enough to cover all wholesalers in the liquor industry, including but not limited to beer distributors, and that the Missouri General Assembly by its somewhat confusing use of the words “spirituous liquor and wine” in its 1975 legislation, did not intend to exclude and eliminate by negative implication any wholesaler of beer or any other wholesaler of “intoxicating liquor,” as that term is defined in R.S.Mo. § 311.020. The courts of Missouri, consistent with the courts of many other jurisdictions, infrequently restrict the coverage of statutes by application of concepts of negative implication. This is particularly the case where the objective and purpose of the statute under consideration is broad and obviously intended to prohibit what the legislature deemed to be a harmful practice. McHenry held that both the amendments proposed for the 1974 legislation by House Bill 810 and by the Senate floor amendment had “for their general purpose the security of business franchises: the prohibition of cancellation or termination of such franchise agreements without cause and notice.” 566 S.W.2d at 197. We do not believe that the courts of Missouri would conclude that the Missouri General Assembly, by its 1975 amendments to the 1974 legislation, intended to eliminate and exclude the coverage of beer distributors as it had earlier provided for their coverage in its 1974 legislation. We accordingly conclude that the stipulated question of “whether R.S.Mo. § 407.400 et seq., is applicable to a beer distributorship” must be answered in the affirmative. C. On page 4 of its brief Coors makes the following alternative argument in regard to Section 407.405: [E]ven if 407.405 were here applicable, Coors was entitled to terminate ABA’s distributorship without 90 days prior written notice. That statute would not here impose the 90-day written notice requirement for termination. That section states that: . . . except that when criminal misconduct, fraud, abandonment, bankruptcy or insolvency of the franchisee, or the giving of a no account or insufficient funds check is the basis or grounds for cancellation or termination, the ninety days notice shall not be required. Coors’ brief concedes, however, that the “facts” relied upon by Coors to support its alternative argument that “ABA was guilty of criminal misconduct and fraud” within the meaning of Section 405.405 are exactly the same “facts” upon which Coors attempted to rely to support its termination letter of March 21, 1980. Our finding of fact that Coors had no actual knowledge of any facts to support its charges of ABA’s “dishonesty” or of ABA’s “violation of state and federal law” when it wrote the March 21,1980 letter requires that Coors’ alternate Section 407.405 argument be rejected on the basis of the findings of fact made in connection therewith. D. To recapitulate, we answer the five stipulated questions of law set forth at the outset of this part of our Memorandum Opinion as follows: ABA (a). The question “whether Coors wrongfully terminated the Agreement with ABA by breaching the Agreement” is answered in the affirmative. ABA (h). The question of “whether R.S.Mo. §§ 407.400 et seq., is applicable to a beer distributorship” is answered in the affirmative. ABA (b). The question “whether Coors wrongfully terminated the Agreement under R.S.Mo. §§ 407.400 et seq." is answered in the affirmative. Coors (d). Coors’ subparagraph (d) submitted three separate but related questions. The first part of that question, “whether R.S.Mo. § 407.405 is applicable to a beer distributorship .... ” is answered in the affirmative. The second part of that question “. .. and, if so, whether the requirement for a 90-day termination notice actually invalidates a termination notice in regard thereto” is answered in the affirmative. The third part of that question “. . . or merely entitles the terminated party to recover, as damages, the loss incurred by the failure to provide such notice” is answered in the negative. Coors (c). The question “whether the issuance of the requested permanent injunction would have the effect of inappropriately extending to ABA the benefits of a distributorship beyond the times described in the distributorship Agreement or guaranteed by R.S.Mo. § 407.405” is answered in the negative. In order to further clarify the rationale of our decision of the stipulated questions submitted by the parties, we state the following additional formal conclusions of law in response to those proposed by the parties. 1. (ABA-5) The Distributorship Agreement between ABA and Coors established a franchise relationship. 2. (ABA-6) Under applicable Missouri law, the Distributorship Agreement imposed upon both parties a duty of good faith and fair dealing in the performance and the enforcement of that Agreement. 3. (ABA-7) Coors’ attempt, under the factual circumstances found in this case, to terminate ABA without notice breached its fiduciary duty to ABA, its duty of good faith and fair dealing owed by it to ABA, and breached the Distributorship Agreement between the parties. 4. (ABA-14) The relationship between ABA and Coors was a “franchise” within the meaning of R.S.Mo. § 407.400(1). 5. (ABA-15) ABA was entitled to at least ninety days notice of Coors’ attempted terminations under R.S.Mo. § 407.405. 6. (ABA-16) Coors’ attempt to terminate ABA without notice violated R.S.Mo. § 407.405. 7. (ABA-17) ABA is entitled to equitable relief under R.S.Mo. § 407.410. For purposes of still additional clarity, we expressly conclude that the three conclusions of law proposed by Coors in regard to the stipulated questions considered in this part of our memorandum opinion, as set forth in the footnote below, should be and are expressly rejected for the reason that such proposed conclusions of law are not consistent with applicable Missouri law. V. Conclusions of Law [Continued] A. The remaining questions submitted for determination under paragraph 5 of the stipulation relate to what remedy ABA may be entitled under the circumstances. Once again, the apparent disagreement of the parties in regard to the basic question presented is more apparent than real. ABA, in its subparagraph (i) of paragraph 5 of the stipulation, submitted the question of “whether ABA’s loss of its right to sell its distributorship may be adequately remedied by an award of damages.” The question submitted by Coors in its subparagraph (e) of paragraph 5 of the stipulation submitted exactly the same question to which it added a clause which stated “..., and is thus not an irreparable injury.” Part VI of our September 3, 1980 Memorandum Opinion, 496 F.Supp. at 1202-04, discusses the relief which this Court believed ABA might be entitled on the merits. We opened that discussion by stating that “if successful on the merits, plaintiff would, at the least, be entitled to have the termination attempted in defendant’s March 21, 1980 letter set aside as invalid.” We stated on the same page that: Even if it be assumed that the most plaintiff would be entitled to on the merits would be to have the March 21, 1980 notice set aside as invalid, such action would apparently reinstate paragraph VIII of the Agreement which would permit plaintiff to sell his distributorship on terms mutually agreeable to plaintiff and the purchaser, provided defendant Coors would give its approval of the new owner in writing. Should the attempted termination of March 21, 1980 be set aside as invalid on the merits and should defendant thereafter elect to terminate under paragraph IX(1), plaintiff might in that event, acquire rights as provided in paragraph VIII(2). And, in any event, should it be adjudicated that defendant has the right to terminate on thirty days notice, certainly plaintiff would have a thirty day period within which to arrange for an appropriate sale of the distributorship. We closed our Part VI discussion of remedy with the following paragraph: While we are not at all satisfied that plaintiff, on the merits, would ever be entitled to full reinstatement as a distributor for the defendant on any kind of permanent basis, we are satisfied and specifically find and conclude that the plaintiff has established a substantial probability of obtaining some equitable relief on the merits and that it would suffer irreparable injury within the meaning of the applicable standard if injunctive relief were denied. (Id. 1204) While the Court of Appeals dissolved the preliminary injunction issued by this Court and remanded the case for action consistent with its opinion, the majority opinion of the Court of Appeals affords substantial guidance in regard to the remedy ABA is entitied under the factual circumstances established after remand. The majority opinion of the Court of Appeals stated that: The district court may have based the grant of injunctive relief on the conclusion that ABA is likely to succeed in proving that Coors’ attempt at termination did not meet the cause and notice of requirements of the contract and, possibly, of Missouri law. The proper remedy for such violations would be an order for ABA [sic] to comply with the procedural requirements of the contract or Missouri law. [661 F.2d at 714-15] Further guidance is afforded by the Court of Appeals’ citation of Judge Barlow’s May 27, 1976 opinion in Carlo C. Gelardi Corp. v. Miller Brewing Co., 421 F.Supp. 233 (D.N.J.1976). That case, as above noted, concluded that the beer distributorship there involved was a “franchise” within the meaning of the New Jersey Franchise Act. The district court accordingly entered its order “directing Miller to comply with the 60-day notice provision” of that Act. The Court of Appeals also cited Guinness-Harp Corp. v. Jos. Schlitz Brewing Co., 613 F.2d 468, (2nd Cir. 1980) with approval. The district court in that case entered what the Court of Appeals considered to be a final injunction which set aside Schlitz’ attempted termination of a beer distributorship and required the parties to comply with the contract provisions contained in their distributorship agreement. In affirming the district court’s grant of final equitable relief in Schlitz Bros., the Court of Appeals concluded that the order of the district court simply “maintains the distributorship pending arbitration, and that is the relief for which Guinness brought this law suit.” The Second Circuit held that “to establish its entitlement to an injunction to enforce its interpretation of the status quo provision of the agreement, plaintiff must satisfy the traditional equitable standards for specific performance of a contract.” The court, of course, concluded that the plaintiff had satisfied those standards. Judge Walter Sanborn’s opinion in National Marketing Mach. Co. v. Triumph Mfg. Co., 13 F.2d 6 (8th Cir. 1926), is one of the leading cases in the country which sets forth the standards that a plaintiff must satisfy in order to be entitled to equitable relief. That case concluded that the following principles of equity were “established beyond debate or the necessity for the citation of authority:” The adequate remedy at law, which will preclude the grant of specific performance of a contract by a court of equity, must be as certain, prompt, complete, and efficient to attain the ends of justice as a decree of specific performance, and that: An injunction against the breach or the continuance of a breach of a contract is a negative decree of specific performance, and the power and duty of a court of equity to grant such an injunction is even greater, under the rules, principles, and practices in equity, than its power and duty to grant decrees of specific performance. Judge Walter Sanborn’s opinion in National Marketing was cited and followed in Snip v. City of Lamar, 239 Mo.App. 824, 201 S.W.2d 790 (1947). Laclede Gas Co. v. Amoco Oil Co., 522 F.2d 33 (8th Cir. 1975), a more recent Eighth Circuit case, reversed the Eastern District of Missouri and directed that court to enter a decree granting equitable relief in a case in which one of the parties wrongfully attempted to cancel a written agreement designed to provide propane gas distributorships to various residential developments in Jefferson County, Missouri. The Eighth Circuit recognized in Amoco Oil Co. that “it is axiomatic that specific performance will not be ordered when the party claiming breach of contract has an adequate remedy at law.” It concluded, however, that the rule stated was not an absolute one, holding that: However, in Missouri, as elsewhere, specific performance may be ordered even though personalty is involved in the “proper circumstances.” Mo.Rev.Stat. § 400.2-716(1); Restatement of Contracts, supra, § 361. And a remedy at law adequate to defeat the grant of specific performance “must be as certain, prompt, complete, and efficient to attain the ends of justice as a decree of specific performance.” National Marketing Mach. Co. v. Triumph Mfg. Co., 13 F.2d 6, 9 (8th Cir. 1926). Accord, Snip v. City of Lamar, 239 Mo.App. 824, 201 S.W.2d 790, 798 (1947). The standards stated in the cited cases support our conclusion that the question submitted under the stipulation of “whether ABA’s loss of its right to sell its distributorship may be adequately remedied by an award of damages,” must be answered in the negative. The majority opinion of the Court of Appeals in this case clearly indicated that should this Court find that Coors’ attempted termination did not meet the requirements of the contract or of Missouri law, the proper remedy for such a violation would be an order that required the parties to comply with the requirements of their contract and Missouri law. The remedy suggested by the Court of Appeals would be totally ineffective unless the parties, after Coors’ attempted termination is set aside as invalid, are restored to the positions which each occupied before Coors’ made its invalid attempt to terminate the Agreement without notice. The formal conclusions of law which we shall make later in this part of our memoran