One hundred years ago, secret sourcing was considered fraud.

The recent proliferation of new bourbon brands has included many brands distilled and aged by existing distilleries but sold under new, often “historic,” names.  Of course, a new brand seeking to capitalize on the bourgeoning bourbon market wouldn’t have time to create a recipe and age for the minimum years, let alone the ten to twenty-plus years of these super-premium brands.  That reality makes “sourcing” bourbon common today, and it gives bourbon enthusiasts a chance to play detective where the new brands aren’t upfront.  (Many are upfront about it.) 
Diageo’s Bulleit Bourbon is one of my favorites, but it’s also one of the better-known current-day examples of undisclosed sourcing.  Bulleit claims to be a product of the “Bulleit Distilling Company, Lawrenceburg, Kentucky.”  It’s widely accepted that Bulleit is really made by Four Roses in Lawrenceburg, but last month my Four Roses tour guide insisted that Four Roses can’t possibly make all of the Bulleit, so at least there’s some mystery.
It turns out that sourcing bourbon is not a new practice, however.  Litigation between an Ohio wholesaler and the H.E. Pogue Distillery in the early 1900’s provides an example of an early sourcing contract.  The court in H.E. Pogue Distillery Co. v. Paxton Bros. Co., 209 F. 108 (E.D. Ky. 1913) was faced with claims by Pogue that Paxton Bros. had breached its contract to purchase a large quantity of Pogue bourbon.
Paxton Bros. was a Cincinnati-based spirits wholesaler.  By the late 1800’s, Paxton Bros. had found success with its Edgewood Whiskey blend, and there was wide recognition of its trademark rotund, tuxedo-and-fez-wearing man, known simply as the “Edgewood Man.”
Pogue, of course, is one of the more significant historical names in Kentucky bourbon.  After suspensions in operations during prohibition and changes in ownership and closure after World War II, the Pogue family is back in business again.  http://www.oldpogue.com/history/#.  Located in Maysville, Kentucky, near the legendary site where many say bourbon was born (the old Bourbon County), the Pogue distillery was one of the top bourbon distilleries in the late 1800’s and early 1900’s.

 

The Wine and Spirit Bulletin reported in its April 1, 1906 edition that Pogue had sued Paxton Bros. for $30,000 because the alleged breach of contract by Paxton.  The U.S. District Court’s 1913 opinion (by Judge Andrew McConnell January Cochran, who like the Pogues, was a Maysville native) recites that Paxton Bros. contracted to purchase 12,500 barrels of bourbon from Pogue, which Pogue was to distill and then age in its warehouse.
But these 12,500 barrels were to be labeled not with the Pogue name, but instead as having been distilled by Paxton Bros. or possibly under its Edgewood trade name.  The parties tried to find a way under their contract for bottling the bourbon under the Paxton or Edgewood name, which certainly would have been difficult given the tight government regulations of the time.  In fact, federal law at the time would not have allowed the distillery to be operated as the H.E. Pogue Distillery and, at the same time, stamp and label the bottles showing another’s name.  Recognizing this dilemma, Pogue and Paxton apparently agreed that even though Pogue was in fact going to produce the bourbon and sell it to Paxton, the Pogue distillery would be leased to its namesake, H.E. Pogue, who would operate it as “H.E. Pogue as the Paxton Bros. Company.”
This maneuver, they believed, would allow the bourbon to be labeled as having been distilled by Paxton.  Judge Cochran found this arrangement to be “the perpetuation of fraud on the public” by representing that Paxton “had made the whisky, which in fact [Pogue] had made.”  Because of this “fraudulent” purpose, the court held that the contract was void and it dismissed Pogue’s claims.
 
So the fat man in the fez got out of his contract to buy Pogue’s bourbon, but H.E. Pogue would be happy to see that his family is still making bourbon, while Edgewood is barely remembered in history.  Even so, it’s too bad that, 100 years later, in some cases there is less transparency among some brands who try to hide their sourcing.

James E. Pepper – fact or fiction?

My last post, about “How Woodford Reserve got to keep the (old) name of its distillery,” followed the 1880-81 litigation between James Pepper and Labrot & Graham over the name of the “Labrot & Graham’s Old Oscar Pepper Distillery.”  James Pepper was the grandson of Elijah Pepper, who in 1812 became the first distiller on Glen’s Creek where Woodford Reserve is now located, and he wanted to stop Labrot & Graham from using the Pepper name.
After James Pepper’s bankruptcy in 1877 and loss of the family distillery described in the court’s ruling, his financial fortunes seemed to have reversed.  The current owners of the Pepper brand, Georgetown Trading Co., describe James Pepper as a “larger-than-life bourbon aristocrat[, who] raced thoroughbreds, traveled in a private rail car, and introduced the world to the ‘Old-Fashioned’ cocktail.”  They add that he lived for extended periods of time at the Waldorf Astoria Hotel and “socialized with other American captains of industry, including John D. Rockefeller, Theodore Roosevelt, C.V. Vanderbilt, Charles A. Pillsbury, Fred Pabst, Charles Tiffany, and William Steinway.”  I wonder if those captains of industry knew about the bankruptcy? 
Bankruptcy is not mentioned in Georgetown Trading Co.’s historical review (http://www.jamesepepper.com/history.php), which simply characterizes the loss of the family distillery as involving a sale by James Pepper so he could move to Lexington to build “the largest bourbon distillery in the U.S.”
While the facts recounted in Pepper v. Labrot [& Graham], 8 F. 29 (C.C.D. Ky. 1881) seem to contradict this current-day spin on how the Pepper family lost its distillery, the case might also prove that James Pepper made some exaggerations too.  The marketers at Georgetown Trading Co. posted this August 22, 1887 “‘top secret’ letter … from James E. Pepper himself,” which claims that “Old Pepper Whisky” is made in the same way and with the same formula used for more than 100 years by three generations of the Pepper family:
The facts recounted in Pepper v. Labrot [& Graham] seem to contradict this 100-year claim too.  Indeed, the Court quoted one of James Pepper’s pre-bankruptcy (presumably sometime between 1874 and 1877) advertisements where he gave credit to James Crow, who we all know did not revolutionize bourbon distilling until the 1830’s (which was different from how Elijah Pepper would have made his bourbon).  James Pepper’s advertisement does not mention his grandfather or any family bourbon enterprise dating back to the 1700’s:
Having put in the most thorough running order the old distillery premises of my father, the late Oscar Pepper, (now owned by me,) I offer to the first-class trade of this country a hand-made, sour-mash, pure copper whisky of perfect excellence. The celebrity attained by the whisky made by my father was ascribable to the excellent water used, (a very superior spring,) and the grain grown on the farm adjoining by himself, and to the process observed by James Crow, after his death by William F. Mitchell, his distillers. I am now running the distillery with the same distiller, the same water, the same formulas, and grain grown upon the same farm.
But my favorite part of the 1887 “top secret” letter is its conclusion, which sounds like a dig at Labrot & Graham, and which probably reflects Pepper’s dissatisfaction with the court’s 1882 ruling that Labrot & Graham could continue to use the name “Old Oscar Pepper Distillery”:  “Our Mr. Jas. E. Pepper is the only one of his name who has been engaged in the Distilling business in Kentucky for over twenty years, and therefore any whisky offered to the trade as a genuine ‘Pepper’whisky is fraudulent unless distilled by us.”
This is part of what I love about bourbon – every brand has myths, legends and stories to tell, and they’ve been telling those stories for over 200 years.

How Woodford Reserve got to keep the (old) name of its distillery.

The “Labrot & Graham Distillery” is what Brown-Forman called its distillery in Woodford County, Kentucky, when it began producing its popular Woodford Reserve bourbon, although it has since renamed the distillery the “Woodford Reserve Distillery.”  But this relatively quiet name-change 10 years ago stands in stark contrast to naming disputes at the distillery midway through its 200-year history.
Perhaps the most important naming-rights issue involved a contentious lawsuit filed in October 1880 by the grandson of the original owner of the original distillery on the Woodford Reserve property against a partnership between French wine producer Leopold Labrot and Kentucky businessman, James H. Graham.  The ruling from this litigation – issued by a United States Supreme Court Justice – provides an invaluable outline of some of the earliest distilling operations in Kentucky and the perfection of the bourbon distilling process by James Crow.
According to Brown-Forman’s National Historic Landmark Nomination for the “Labrot & Graham’s Old Oscar Pepper Distillery,” it described the property as a “bourbon whiskey manufacturing complex in Woodford County, Kentucky, standing on a site that has been used for the conversion of grain into alcohol since 1812, when Elijah Pepper, a farmer-distiller, established his 350 acre farm.”  The case of Pepper v. Labrot [& Graham], 8 F. 29 (C.C.D. Ky. 1881) traces those early days of the property now known as Woodford Reserve.
Elijah Pepper, a Virginian who moved to Kentucky around 1797, established his first distillery behind the Woodford County Courthouse in Versailles around 1810.  By 1812, however, Elijah Pepper had acquired hundreds of acres along Glenn’s Creek, where he built his homestead, a grist mill and distillery, and where he established his family farm.  This appears to have been the first distillery on the Woodford Reserve property.
Elijah Pepper died in early 1831 and the distillery was operated by his son, Oscar N. Pepper.  Sometime after Oscar completed a new limestone distillery building in 1838, the distillery became known as the “Old Oscar Pepper Distillery.”  By 1833, and through 1855 (except for two years), Oscar Pepper employed the venerable James Crow as his distiller, and the distillery was renowned for its bourbon and for refining and defining what we know as bourbon today.
James Crow died in April 1856, but because of the fame gained by the Crow brand, “Old Crow” bourbon continued to be produced at the Old Oscar Pepper distillery by W. F. Mitchell, who had worked with and then succeeded James Crow as distiller.
Oscar Pepper died in June 1865, and it appears that the property containing the distillery was transferred by the Estate to Oscar’s youngest of seven children, O’Bannon Pepper.  O’Bannon was still a minor, which meant that Oscar’s wife, Nannie, controlled the distillery.  She leased the distillery property in 1870 to Gaines, Berry & Co. of Frankfort (the “& Co.” was none other than Col. Edmond H. Taylor, Jr.), although James E. Pepper – Oscar’s eldest son – may have managed the distillery.  Gaines, Berry & Co. produced “Old Crow Whiskey,” they called the distillery the “Old Crow Distillery,” and they continued to employ W. F. Mitchell as their distiller.
James Pepper sued his mother in 1872 to gain control of the distillery property, but that is another story for another blog.  James succeeded in taking control of the distillery and then partnered with Col. Taylor, who had separated from Gaines, Berry & Co., to make improvements to the distillery and continue operations.  In 1874 however, Gaines, Berry & Co. appear to have transferred the “Old Crow” trademark to another of their distillery operations, leaving James Pepper’s brand as “Old Oscar Pepper,” also known as “O.O.P.” bourbon.
James experienced financial hardships, and was declared bankrupt in 1877.  Through the bankruptcy, Col. Taylor appears to have taken sole ownership of the Old Oscar Pepper Distillery.  But Col. Taylor – who also owned other distilleries – experienced his own financial ruin shortly thereafter.  This led to the transfer of the Old Oscar Pepper Distillery to George T. Stagg, and finally to Labrot & Graham in 1878.
After his financial fortunes seemed to have reversed (another story for future blogs), James Pepper built a new distillery on Old Frankfort Pike in Lexington, Kentucky.  There, he hoped to continue to trade on his father’s name and the tremendous reputation achieved by his father and James Crow.
Now with his new financial footing, James Pepper took aim at Labrot & Graham, who continued to call his father’s distillery the Old Oscar Pepper Distillery.  James believed that only he should be able to use the “Pepper” name, and in 1880 he filed a lawsuit in federal court to gain back part of what he lost in bankruptcy.
Incidentally, this federal lawsuit between James Pepper and Labrot & Graham was so early in American judicial history that the United States Supreme Court Justices were still responsible for “circuits” throughout the country.  So the judge who presided over the litigation was Justice Thomas Stanley Matthews, who served on the United States Supreme Court from May 12, 1881 to his death in 1889.  Justice Matthews was a Cincinnati native who was first nominated to the Court by his former tent-mate, President (then-Colonel) Rutherford B. Hays, while Matthews served as a Lieutenant Colonel with the 23rd Ohio Infantry of the Union Army.  The Senate did not confirm Justice Matthews until President James A. Garfield re-nominated him, and even then Matthews was only confirmed by a vote of 24 to 23.
After reciting the history of the property and the claims and counter-claims being asserted, Justice Matthews noted and relied upon an advertisement used by James Pepper from the period when he owned the Old Oscar Pepper Distillery.  James touted his bourbon as follows:
Having put the most thorough running order the old distillery premises of my father, the late Oscar Pepper (now owned by me), I offer to the first-class trade of this country a hand-made, sour-mash, pure copper whisky of perfect excellence.  The celebrity attained by the whisky made by my father was ascribable to the excellent water used (a very superior spring), and the grain grown on the farm adjoining by himself, and to the process observed by James Crow, after his death by William F. Mitchell, his distillers.  I am now running the distillery with the same distiller, the same water, the same formulas, and grain grown upon the same farm.
Despite Oscar Pepper’s much earlier ownership of the distillery, James Pepper alleged that “Old Oscar Pepper” had not been used until 1874.  He alleged that the following brand that he burned on barrel heads was his trademark:
  
As might be expected, evidence was presented to the court proving that between 1838 and 1865, while Oscar Pepper operated the distillery, it was already commonly known as the “Oscar Pepper Distillery.”  Additionally, because of the fame of James Crow and his bourbon – known as “Old Crow” – the distillery was also known as the “Old Crow Distillery”, a name that continued in use after James Crow died in 1856 and after Oscar Pepper died in 1865.  Even Gains, Berry & Co. marketed themselves as “Lessees of Oscar Pepper’s ‘Old Crow’ Distillery.”
After James Pepper lost the property, and after the eventual acquisition by Labrot & Graham, Labrot & Graham used a similar trademark, and specifically used the name “Old Oscar Pepper Distillery.”

 

Labrot & Graham responded to the James Pepper lawsuit by explaining that they were using the name “Old Oscar Pepper Distillery” properly because the distillery they now owned was called the “Old Oscar Pepper Distillery.”  The court posed two questions:  (1) should Labrot & Graham be forced to change the name of a distillery that they purchased and denied the right to call the distillery by its name, and, conversely, (2) should James Pepper be allowed to continue to use the name of his father’s former distillery, when his new bourbon was not distilled there?
As might be expected by the way the court presented these questions, Labrot & Graham won the case.  Justice Matthews ruled that reference to “Old Oscar Pepper Distillery” meant the place of production, and was not a trademark.  Moreover, James Pepper could not truthfully use the phrase since he no longer owned the Old Oscar Pepper Distillery.
Without this ruling from Justice Matthews 132 years ago, the now-faded names etched in limestone at Woodford Reserve – “Old Oscar Pepper Distillery Est. 1838, Labrot & Graham Est. 1878” – might be missing part of history.