Why Louisville’s Oscar Rehm Stars on YouTube

 

      

Shown here is the way a YouTube illustrator imagined that a Louisville, Kentucky, liquor dealer named Oscar E. Rehm might have looked.  Why this pre-Prohibition “whiskey man” is featured on a contemporary video involves a now century old breach of contract lawsuit he filed against a Kentucky distiller. If you want admittance to the bar, you had better be familiar with Rehm-Zeiher Co. vs. F. G. Walker Co.

Rehm came late to the whiskey trade.  His father, John Frederick Rehm, an immigrant from Baden-Wurttemberg, Germany, ran a Louisville grocery store and initially Oscar took up the occupation.  After a few years, he apparently decided that selling liquor was much more lucrative than peddling leaks and lettuce.  In 1904, he joined with two other Louisville locals to form the Rehm-Zeiher liquor company, incorporating with a capital stock of $10,000, divided into 100 shares of $100 each.  Rehm as president held 57 shares.  His partners shared 33.

From the outset Rehm, not a distiller himself, had a problem obtaining whiskey.  Although Louisville and the surrounding area boasted more distilleries than any other place in America, most established distillers had longstanding arrangements for sales to liquor dealers.  Moreover, the Kentucky-based “Whiskey Trust,” although weakening over time, had tied up much of the whiskey being produced in Kentucky and hiked prices.  Rehm needed a steady supplier to sustain his business.  

He found it in a distillery founded by Felix G. Walker, a resident of Nelson County, Kentucky.  Sometime before 1876, Walker had built a distillery approximately one mile west of Bardstown on the Bardstown-Boston Pike adjacent to College Creek.  By 1890, the distillery was mashing 240 bushels of grain daily with a yield of 20 barrels.  Shown here, the facility held two bonded warehouses with a capacity of 6,000 barrels.  It also had onsite bottling capability.  Walker’s successor as owner of the distillery, R.H. Edelen, had become friendly with Rehm.

According to Rehm’s court testimony, Edelen in November 1908, brought him a proposed contract, saying:  “Read this; I believe you can use this whiskey.”  It proposed that Rehm-Zeiher would buy 2,000 cases of Walker whiskey in 1909, 3,000 cases in 1910, 4,000 cases in 1911 and 5,000 cases in 1912.  There would be a set price for the four years. Rehm told the court he replied:  “That is too much whiskey for us; we are a young firm just building up our trade, and I don’t believe we can use it.”  He testified that Edelen then suggested:  “You don’t have to take it all if you can’t use it; you are a growing firm; your business will increase that much.”  On those grounds, Rehm claimed, he signed a contract — a scene rendered here by YouTube.

Rehm named the whiskey to be purchased from the Walker distillery, “Fernwood,” ironically the same name as a Henderson, Kentucky, cemetery.  As part of the deal Edelen agreed to bottle and label the whiskey and provide it by the case to the Louisville liquor house.  That apparently was enough to allow Rehm to anoint his company as “distillers” in his advertising.

As it turned out, Rehm-Zeiher took only about one-third of the agreed cases of Fernwood whiskey in both 1909 and 1910.  In 1911, by contrast, the Louisville company requested all 4,000 cases prescribed in the agreement.  The price of whiskey had risen sharply in the interim and at the set price Oscar Rehm anticipated windfall profits.  Obviously able to sell its whiskey elsewhere for considerably more than had been agreed with Rehm, the Walker distillery delivered only 1,004 cases. 

Crying breach of contract, Rehm and his partners took the matter to court.  Their attorneys argued that since under the contract F. G. Walker & Co. could have compelled Rehm-Zeiher to take all the agreed whiskey (but didn’t), the Louisville firm could compel Walker to deliver all 4,000 cases.  When a lower court found for the Walker company, Rehm appealed to Kentucky’s Court of Appeals, the state’s highest judicial body.  That court also found for Walker, ruling that a reservation in a purchase agreement by a buyer in which he may, at his own discretion, refuse to make a purchase voids the contract for lack of mutuality.  Over time, perhaps because of the alcoholic nature of the commodity, Rehm-Zeiher Co. vs. F.G. Walker Co. has become a classic court ruling in contract law.  Thus the case has gained multiple references on Internet legal sites and engendered a YouTube video used for bar exam preparation.

The legal setback for Oscar Rehm was followed in a few years by the imposition of National Prohibition.  His liquor house was shut down.   Rehm’s subsequent business foray was to start a company called Ream Motors “to engage in the automobile business in Louisville.”  He took his sons Oscar F. and Warren as partners.  When that enterprise fizzled, he shifted Rehm-Zeiher from booze to stocks and bonds, advertising as an investment firm.  That business died with the Great Depression.  When Prohibition was repealed in 1934, Rehm was 65.  He did not reenter the whiskey trade and died in 1956 at the age of 86.

Oscar Rehm was buried in Cave Hill Cemetery where so many luminaries in Kentucky whiskey history are interred.   Unlike many of them who have elaborate monuments to mark the spot, Rehm’s grave has a simple cement bench.   Anyone paying their respects may sit there and ponder the vagaries of life and time that have transformed Rehm’s failed lawsuit into a 21st Century legal icon.

Note:  This post was occasioned by finding the Fernwood bottle on line and tracking its origin to Oscar Rehm and then to the YouTube video that so graphically illustrates a case in contract law that may have achieved celebrity  because whiskey is involved.  The video was produced by Quimby Bar Review, an outfit that for $999 will help lawyer wannabes pass the bar exam.  To see the entire video (1.5 minutes) enter the case name.