Bankers' Brewery

A consistent money-maker even during Prohibition, when it carried on with near-beer, was Prima Co., one of the only five Chicago breweries that survived the dry years. Founded in 1892, Prima built its name on brands like Rienzi. With the coming of Repeal the sons of the founder, Hilmar and L. Wainright Ernst, recapitalized their old family business, sold some stock to the public. Early in this revitalizing program, the Ernsts ran into difficulties, had to borrow heavily from two Chicago banks, First National and Harris Trust & Savings.

Shortly the banks became alarmed about their loans, installed their own brewery management in the person of Garnett C. Skinner, a high-powered adman who had capped a spectacular career in the Hearst organization with eight months experience in a small Chicago brewery. When Adman Skinner took over, Prima was selling 30,000 bbl. of beer per month. Under Adman Skinner, who made a $35,000 salary before he was 40 as advertising supervisor of all Hearst evening and Sunday newspapers, Prima's sales dropped swiftly to about 5,000 bbl. per month. Losses mounted and Prima was finally put into 776 reorganization. After contemplating the havoc caused by the Skinner policies, the Prima trustee decided to sue for damages. But instead of suing Mr. Skinner, the trustee sued the banks which had been responsible for Mr. Skinner.

Last week in Chicago Federal District Judge John P. Barnes awarded Prima $568,895 damages. Said the judge: "There are some facts and circumstances in this case that are shocking to the court, unaccustomed as it is to most of those practices that are sometimes loosely referred to as 'normal banking practice.' "

Shocked was Judge Barnes by the "speed and lack of deliberation" with which the bankers acted. After a chat with a First National vice president, a Harris Trust vice president suddenly announced to the Ernsts that unless they signed a contract giving full management powers to Adman Skinner, the Prima loans would be called and suits started against the Ernsts, who had personally guaranteed the Prima notes. The Ernsts signed the same day they received this ultimatum, and Mr. Skinner moved in.

Even more shocking to Judge Barnes was "the lack of care manifested by the officers of the Harris Trust & Savings Bank in the selection of this new manager." The speed with which the bankers acted and the lack of care in picking their representative, held the judge, were "equaled or exceeded by the diligence with which Mr. Skinner proceeded to tear down and destroy the organization, business and goodwill" of the old brewery.

"He knew nothing about the beer business but he had supreme confidence in his ability to sell anything," continued Judge Barnes, relating how Mr. Skinner tampered with the brewmaster's formulas and watered the beer 80%. "To his surprise and the disaster of the debtor [Prima] it was found that beer drinkers want not only color and foam but that they also want a particular kind of disagreeable taste."

When the old Prima salesmen met resistance to Mr. Skinner's watered product, the handsome, enthusiastic adman fired them, being under the impression that "anyone could sell beer if he just forced the issue hard enough." But even his new hirelings could not move the beer which by now was not only watered but stale. This, said Judge Barnes, "merely served to bring about further experimentation by Mr. Skinner."

If upheld on appeal Judge Barnes's decision will give pause to many another U. S. banker who contemplates taking over his debtor's business. But Chicago felt last week that whatever the merits of the decision banker-wise, the judge had gone out of his way to pillory Adman Skinner.

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