Archer-Daniels-Midland Company v. Paull

• Decision Date: 13 September 1961
• Docket Number: No. 16709.,16709.
• Citation: 293 F.2d 389
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: ARCHER-DANIELS-MIDLAND COMPANY, Appellant, v. R. C. PAULL, Virginia Paull and Paull's Hatchery, Inc., Appellees.

293 F.2d 389 (1961)

ARCHER-DANIELS-MIDLAND COMPANY, Appellant, v. R. C. PAULL, Virginia Paull and Paull's Hatchery, Inc., Appellees.

No. 16709.

United States Court of Appeals Eighth Circuit.

August 4, 1961.

Rehearing Denied September 13, 1961.

Wright W. Brooks, Minneapolis, Minn., Garvin Fitton, Harrison, Ark., for appellant.

James Blair, Crouch, Jones, Blair & Cypert, Springdale, Ark., and J. E. Simpson, Berryville, Ark., for appellees.

Before SANBORN, VOGEL and VAN OOSTERHOUT, Circuit Judges.

SANBORN, Circuit Judge.

Archer-Daniels-Midland Company (hereinafter referred to as "ADM"), a Delaware corporation with its principal place of business in Minneapolis, Minnesota, has appealed from so much of the judgment in this nonjury case as awarded damages to R. C. Paull and Paull's Hatchery, Inc., of Berryville, Arkansas, upon counterclaims asserted by them, and required ADM to bear its own costs.

The action was brought by ADM in the spring of 1960 against R. C. Paull, Virginia Paull, and Paull's Hatchery, Inc., (an Arkansas corporation) to recover the amount alleged to be due on certain promissory notes signed or guaranteed by them. In its amended complaint ADM asked for judgment against R. C. Paull for $35,234.07 with interest, and judgment against Virginia Paull and Paull's Hatchery, Inc., for $16,322.93 with interest. Jurisdiction was based on diversity of citizenship and amount in controversy.

The defendant R. C. Paull in his answer, filed June 20, 1960, denied that he was indebted to the plaintiff on the notes signed by him, and denied their validity. He set up a counterclaim asserting that ADM contracted to finance him for the year 1959 in the growing of 40,000 bronze-breasted turkeys, to be raised on range, in consideration of his agreeing to feed the turkeys with feed produced by ADM and to use other items produced by it for the growing of turkeys; that he did everything necessary for raising the turkeys, and was ready, willing and able to perform the contract, but that ADM, upon demand for performance, failed to provide financing; that the profit made on bronze-breasted turkeys in northern Arkansas in 1959 was $1.50 per head and that he was damaged by the plaintiff's breach of its contract to finance the raising of turkeys in the amount of $60,000. He asked for judgment in that amount against ADM.

Paull's Hatchery, Inc., in its answer, filed June 24, 1960, denied any indebtedness to the plaintiff, and set up the following counterclaim:

"1. That the plaintiff, Archer-Daniels-Midland Company, did covenant, contract and agree to purchase or to provide financing for growers in order to enable said growers to purchase 90,000 turkey poults to be hatched by the defendant, Paull\'s Hatchery, Inc., in the year 1959; that 50,000 poults were to be purchased at a price of 50¢ per poult and 40,000 poults were to be purchased at a price of 50¢ per poult; that the Paull\'s Hatchery, Inc., pursuant to this contract, had breeder turkey flocks placed with growers, Frank Snyder, Ray Ross and Lex Smith and paid all expenses necessary to provide eggs to hatch the said 90,000 turkey poults; that in excess of 140,000 eggs were laid by said breeding flocks and brought to the hatchery owned by the defendant, Paull\'s Hatchery, Inc., and that the hatching of said eggs was undertaken but that the Archer-Daniels-Midland Company neglected, failed and refused to purchase or to provide financing for the purchase of said poults except for 4,600 poults which it purchased at 50¢ per poult.

"2. That the defendant, Paull\'s Hatchery, Inc., did everything necessary to perform said contract and was at all times ready, willing and able to perform and did perform its part of said contract agreement.

"3. That the defendant, Paull\'s Hatchery, Inc., was unable to sell or otherwise dispose of the poults hatched pursuant to said contract and was forced to destroy, by drowning, 40,000 turkey poults and other poults were given away or sold for nominal amounts and the unhatched eggs disposed of in a similar manner.

"4. That the breach, failure and refusal of performance by the plaintiff, Archer-Daniels-Midland Company, damaged this defendant, Paull\'s Hatchery, Inc., in the amount of $47,700.00.

"Wherefore, the defendant, Paull\'s Hatchery, Inc., having fully answered herein, prays that the plaintiff\'s amended complaint be dismissed; that it have judgment against the plaintiff, Archer-Daniels-Midland Company, on its counterclaim in the amount of $47,700.00, interest and its costs herein expended and for such other relief as to which it may prove itself entitled."

Virginia Paull in her answer denied that she was indebted to the plaintiff.

ADM on June 28, 1960, filed its answers to the counterclaims of R. C. Paull and Paull's Hatchery, Inc., denying that it was in any way indebted to either defendant.

On September 14, 1960, the day trial commenced, the defendant R. C. Paull, by amendment to the counterclaim set up in his answer filed on June 20, 1960, added a Count II reading as follows:

"1. That the plaintiff, Archer-Daniels-Midland Company, did in fact covenant, contract, and agree to finance Poor Boy Feed Company in the growing of 40,000 bronze breasted turkeys, to be raised on range in the year 1959 in consideration of Poor Boy Feed Company\'s promise to feed said turkeys, feed produced solely by the plaintiff, and to use other items produced by the plaintiff necessary for the growing of turkeys.

"2. That Poor Boy Feed Company, a joint venture between one Louis Flentge and R.C. Paull, did everything necessary for the raising of said turkeys and was at all times ready, willing and able to perform said contract agreement but that the plaintiff, upon demand for performance of said contract, neglected, refused and failed to provide said financing, and that the defendant, R. C. Paull, has been damaged by this breach of contract on the part of the plaintiff in the amount of $60,000.00.

"Wherefore, the defendant and counter-claimant having fully answered herein, prays that the plaintiff\'s amended complaint be dismissed; that he have judgment against the plaintiff, Archer-Daniels-Midland Company, on his counterclaim in the amount of $120,000.00, for his costs herein expended and for such other relief as to which he may prove himself entitled."

At the beginning of trial the defendants stipulated "that the documents and exhibits attached to the plaintiff's complaint and amended complaint were in fact executed by the persons whose signatures are shown thereon and that the credits set forth in the plaintiff's complaint and amended complaint are proper credits of payments which were made on various obligations."

The case was tried on September 14 and 15, 1960, and was submitted upon the evidence adduced and briefs filed by counsel at the direction of the trial court.

On October 26, 1960, the trial court filed a statement of the issues, together with elaborate findings of fact, conclusions of law, and a memorandum opinion. 188 F.Supp. 277.

The court pointed out that the action arose from ADM's turkey financing program in northwest Arkansas for the years 1958 and 1959, that recovery was sought (1) on notes executed by R.C. Paull, which represented the loss incurred in 1958 by him individually and by Poor Boy Feed Company, a joint venture created by Paull and Louis Flentge in January, 1958, for raising turkeys financed by ADM; and (2) for financing advanced by ADM to Paull's Hatchery, Inc., for its 1959 turkey breeder flocks. The court also pointed out that R.C. Paull contended that ADM contracted to finance him individually for the growing of 20,000 range turkeys during 1959, and to finance the growing of 40,000 range turkeys in that year for the Poor Boy Feed Company, and that ADM had breached these contracts. The court further pointed out that Paull's Hatchery, Inc., in its counterclaim contended that ADM had contracted to provide the financing necessary to enable growers (farmers with whom turkey poults were placed to be raised to maturity) to purchase 90,000 poults to be hatched by the Hatchery.

In its findings the trial court described the method of financing the raising of turkeys by ADM as follows:

"The plaintiff conducted its turkey financing program in the customary fashion. It would receive a comprehensive financial statement from a grower upon commencing to do business with him. After the grower was once approved, the plaintiff would agree each year to finance up to a specified number of turkeys for the grower at a specified dollar amount per bird. As an example, the plaintiff might agree to finance for Farmer Jones 10,000 turkeys at up to $3.00 per turkey. The grower in turn agreed to use plaintiff\'s products exclusively in the growing of the flocks so financed. Upon receipt of the poults (baby turkeys) from the hatchery, the grower would execute a separate application on each flock indicating the number and type of turkeys in the flock and the location where they were to be raised. This enabled the plaintiff to keep track of the location of turkeys financed by it, and to determine production requirements of its mill. As each new flock was placed, the plaintiff would deduct the number of turkeys in the flock from its general commitment for the year. The grower would also execute a chattel mortgage covering the flock at this time. The plaintiff would pay the hatchery for the poults on behalf of the grower, and would also provide feed and medication up to the dollar limit for each turkey. When the turkeys were marketed, the processor would issue a check to the grower and the plaintiff jointly. The grower would endorse the check and forward it to the plaintiff who would deposit it. The plaintiff would then deduct the cost of the financing advanced on that particular flock, and would send the grower a check for the balance, if any."

The controverted issues arose out of the counterclaims asserted by the defendants R. C. Paull and...