Charles Guth
Encyclopedia
Charles G. Guth was an American businessman, who, as executive of the Loft Candy Company, purchased the trademark
and the syrup recipe of the twice-bankrupt
Pepsi-Cola Company. He was President of Loft Candy Company from 1930 to 1935 and President of Pepsi-Cola Company from 1931 to 1939.
where the police had to intervene to ensure it did not become a riot. He remained president of Loft until he resigned in 1935 amidst a stockholder revolt arising from his using Loft's resources to build his other company, Pepsi-Cola Company.
refused to give him concessions on the sale of the cola
in his drugstore. He stopped selling Coke and started selling Pepsi. When Pepsi-Cola Company went bankrupt (for the second time) on June 8, 1931, he bought it from Roy Megargel, for the price of $10,500. Megargel, however, kept a third of the 300,000 shares. Guth was also supposed to pay him a $25,000 annual royalty. Guth never paid the royalty and Megargel sued him for $11,000, even though the amount Guth owed was near $70,000. The lawsuit was settled out of court with Guth giving Megargel $35,000 and Megargel's giving Guth his 97,000 remaining shares.
However, Guth did not have any success with the company and almost declared bankruptcy himself. In a desperate bid, Guth approached Coca-Cola and offered to sell them the company but officials from Coca-Cola declined his offer, not even placing a bid. In 1935 he moved the entire company to Long Island City, New York.
After Loft chemists changed the recipe "more to his liking", Guth negotiated a contract to bottle Pepsi in a six ounce
bottle. After the product still failed to become a success, he introduced Pepsi in a twelve ounce format but with the same price as the six ounce drink. By 1933, Pepsi-Cola was sold in 313 stores in the United States and in 83 other countries. By 1936, his company was making two million dollars of profit
and had become the second largest soda company. That year alone, 500 million bottles of the cola were consumed.
to the company by failing to sell the syrup formula to Loft, and instead appropriating it for himself. Loft argued that while its president, Guth used Loft's assets, credit, finances, facilities and employees to build up the other company. Guth argued that the opportunity came to him personally and that it was out of Loft's business sector. Loft sued for the 237,500 shares that Guth owned (91% of Pepsi-Cola's total shares). He remained president of Pepsi during the process. In 1939, the Delaware
supreme court
rendered the verdict in favor of Loft.
Guth was then removed from the board and replaced with Walter Mack
. He was also ordered to give Loft $475,000. However, he remained general manager
while he appealed the verdict. He left Pepsi shortly before his appeal was denied. Loft merged with Pepsi in 1941, but kept the Pepsi-Cola name.
In American corporation law, the Guth rule now stipulates that no representative of a company should take a business opportunity for himself if the corporation is doing well enough financially to carry out the action, if the corporation is interested in it or if it is reasonably expected that the opportunity will do well and, if the opportunity is in the company's line of business.
reported that Guth wanted to acquire a new soft drink named "Noxie-Kola". BusinessWeek
reported that he resigned from Pepsi to start working on "Noxie-Cola". He died in 1948.
Trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
and the syrup recipe of the twice-bankrupt
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
Pepsi-Cola Company. He was President of Loft Candy Company from 1930 to 1935 and President of Pepsi-Cola Company from 1931 to 1939.
Loft Candy Company
In April, 1929, Charles Guth became Vice-President of the Loft Candy Company when Loft bought Mavis Candies, of which Guth was president at the time. In 1930, he was elected president at a stockholder conferenceMeeting
In a meeting, two or more people come together to discuss one or more topics, often in a formal setting.- Definitions :An act or process of coming together as an assembly for a common purpose....
where the police had to intervene to ensure it did not become a riot. He remained president of Loft until he resigned in 1935 amidst a stockholder revolt arising from his using Loft's resources to build his other company, Pepsi-Cola Company.
Pepsi-Cola
Charles Guth owned a family business, Grace Company, which made syrups for soft drinks in a plant in Baltimore, Maryland. Then, became interested in the company after Coca-ColaCoca-Cola
Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in more than 200 countries. It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke...
refused to give him concessions on the sale of the cola
Cola
Cola is a carbonated beverage that was typically flavored by the kola nut as well as vanilla and other flavorings, however, some colas are now flavored artificially. It became popular worldwide after druggist John Pemberton invented Coca-Cola in 1886...
in his drugstore. He stopped selling Coke and started selling Pepsi. When Pepsi-Cola Company went bankrupt (for the second time) on June 8, 1931, he bought it from Roy Megargel, for the price of $10,500. Megargel, however, kept a third of the 300,000 shares. Guth was also supposed to pay him a $25,000 annual royalty. Guth never paid the royalty and Megargel sued him for $11,000, even though the amount Guth owed was near $70,000. The lawsuit was settled out of court with Guth giving Megargel $35,000 and Megargel's giving Guth his 97,000 remaining shares.
However, Guth did not have any success with the company and almost declared bankruptcy himself. In a desperate bid, Guth approached Coca-Cola and offered to sell them the company but officials from Coca-Cola declined his offer, not even placing a bid. In 1935 he moved the entire company to Long Island City, New York.
After Loft chemists changed the recipe "more to his liking", Guth negotiated a contract to bottle Pepsi in a six ounce
Ounce
The ounce is a unit of mass with several definitions, the most commonly used of which are equal to approximately 28 grams. The ounce is used in a number of different systems, including various systems of mass that form part of the imperial and United States customary systems...
bottle. After the product still failed to become a success, he introduced Pepsi in a twelve ounce format but with the same price as the six ounce drink. By 1933, Pepsi-Cola was sold in 313 stores in the United States and in 83 other countries. By 1936, his company was making two million dollars of profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
and had become the second largest soda company. That year alone, 500 million bottles of the cola were consumed.
Lawsuit
In 1935, Loft sued Guth for breaching his duty of loyaltyDuty of Loyalty
Duty of Loyalty is a term used in corporation law to describe a fiduciaries' "conflicts of interest and requires fiduciaries to put the corporation's interests ahead of their own." "Corporate fiduciaries breach their duty of loyalty when they divert corporate assets, opportunities, or information...
to the company by failing to sell the syrup formula to Loft, and instead appropriating it for himself. Loft argued that while its president, Guth used Loft's assets, credit, finances, facilities and employees to build up the other company. Guth argued that the opportunity came to him personally and that it was out of Loft's business sector. Loft sued for the 237,500 shares that Guth owned (91% of Pepsi-Cola's total shares). He remained president of Pepsi during the process. In 1939, the Delaware
Delaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
supreme court
Supreme court
A supreme court is the highest court within the hierarchy of many legal jurisdictions. Other descriptions for such courts include court of last resort, instance court, judgment court, high court, or apex court...
rendered the verdict in favor of Loft.
Guth was then removed from the board and replaced with Walter Mack
Walter Staunton Mack Jr.
Walter Staunton Mack Jr was a U.S. drink businessman and financier. He was president of Pepsi-Cola Company from 1938 until 1951 after taking over from Charles Guth...
. He was also ordered to give Loft $475,000. However, he remained general manager
General manager
General manager is a descriptive term for certain executives in a business operation. It is also a formal title held by some business executives, most commonly in the hospitality industry.-Generic usage:...
while he appealed the verdict. He left Pepsi shortly before his appeal was denied. Loft merged with Pepsi in 1941, but kept the Pepsi-Cola name.
In American corporation law, the Guth rule now stipulates that no representative of a company should take a business opportunity for himself if the corporation is doing well enough financially to carry out the action, if the corporation is interested in it or if it is reasonably expected that the opportunity will do well and, if the opportunity is in the company's line of business.
Post-Pepsi
In a 1939 article, Time MagazineTime (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
reported that Guth wanted to acquire a new soft drink named "Noxie-Kola". BusinessWeek
BusinessWeek
Bloomberg Businessweek, commonly and formerly known as BusinessWeek, is a weekly business magazine published by Bloomberg L.P. It is currently headquartered in New York City.- History :...
reported that he resigned from Pepsi to start working on "Noxie-Cola". He died in 1948.