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Hoffman v. Red Owl Stores, Inc.

Supreme Court of Wisconsin
133 N.W.2d 267 (1965)


Red Owl Stores, Inc. (Red Owl) (defendant) owns and operates large grocery stores, and also extends franchises to stores operated by individuals. Hoffman (plaintiff) and his wife hoped to enter the grocery business and eventually operate a Red Owl store. Hoffman entered discussions with Lukowitz, Red Owl’s agent, who told him that he only needed $18,000 capital to franchise a Red Owl store. Lukowitz said that if Hoffman would invest this money, buy a lot and building, and relocate to the town of Chilton, Red Owl would set him up with his own store. Lukowitz also advised Hoffman to obtain a smaller independent grocery store to gain experience in preparation for the Red Owl store. Hoffman followed all Lukowitz’s instructions, and moved his family to Chilton. He eventually sold the independent grocery store and the family bakery to raise money for the Red Owl project. Negotiations continued and Lukowitz drew up a financial proposal for Hoffman. Instead of the $18,000 originally required, the final proposal required Hoffman to invest over $34,000 of his own funds in the project. The proposal required Hoffman to obtain $13,000 from his father-in-law for financing, but required the father-in-law to provide this as an outright gift. This proposal was unacceptable to Hoffman and negotiations terminated between the parties. Hoffman and his wife brought suit against Red Owl and Lukowitz for damages based on their reliance on the company’s representations. At trial, the jury held for plaintiffs and assessed damages. The trial court ordered a new trial on the issue of the damages for loss, if any, of the sale of Hoffman’s independent grocery store, fixtures, and inventory. Both parties appealed.

Rule of Law


Holding and Reasoning (Currie, C.J.)

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