Texsun Feed Yards, Inc. v. Ralston Purina Company
| Decision Date | 27 August 1971 |
| Docket Number | No. 30145.,30145. |
| Citation | 447 F.2d 660 |
| Parties | TEXSUN FEED YARDS, INC., Plaintiff-Appellee-Cross Appellant, v. RALSTON PURINA COMPANY, Defendant-Appellant-Cross Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Thomas W. Hathaway, Johnson, Hathaway & Jackson, Tyler, Tex., for defendant-appellant.
Ernest Langley, Witherspoon, Aikin, Thomas & Langley, Hereford, Tex., for plaintiff-appellee.
Before COLEMAN, SIMPSON and RONEY, Circuit Judges.
Rehearing Denied and Rehearing En Banc Denied August 27, 1971.
Texsun Feed Yards, Incorporated, (Texsun), a Texas corporation, a feed lot operator of Hereford, Texas, brought this suit against the Ralston Purina Company (Ralston), a Missouri corporation doing business in Texas, in the district court seeking damages for negligence, breach of warranty, and strict products liability in connection with Ralston's sales of feed supplement to Texsun during the spring of 1967. The jury awarded Texsun $27,000 as compensation for refunds, rebates, and adjustments which Texsun made to its customers and $10,000 as compensation for Texsun's loss of profits and diminished business reputation. The trial judge set aside the $10,000 award and entered judgment for $27,000 for Texsun, 311 F.Supp. 644. The case comes to us on Ralston's appeal and Texsun's cross-appeal with respect to the setting aside of the $10,000 award for lost profits and loss of business reputation. For the reasons which follow, we affirm the $27,000 judgment in Texsun's favor and reverse with respect to the cross-appeal, reinstating the $10,000 award set aside by the lower court.
A feed lot sells livestock feed and services to its customers, who own the cattle on the lot. The cattle are brought to the yard by the customers and placed in the care and custody of the feed lot operator. The operator prepares and feeds to the cattle a ration designed to top the cattle off to slaughter weight and quality in the shortest time possible for the least cost per pound of gain. Except for veterinary services, the other usual services rendered by the feed lot to the customer are furnished as an incident to the feeding operation, the value of such services being included within the price of feeding. When the beef animals reach the desired finish weight, or at such other times as the customer may elect, he removes his cattle from the feed yard and pays his feed bill.
Rations fed to cattle by feed lot operators are scientifically designed combinations of feed grains, roughage, and additives. These additives include such items as medicines, vitamins, hormones, protein concentrates, and other substances designed to assist in putting on the most additional weight for the least cost. Ralston Purina Company and like organizations customarily furnish the additives to feed yards as a "package", known in the trade as the "ration supplement".
As noted, the common objective of feed lot operators and their customers is to create circumstances under which the cattle gain weight as quickly as possible. This is achieved by inducing the beef animals to consume feed at an increased rate. While leading of course to higher feed lot bills to the cattle owner, the increased consumption also reduces the time necessary for the cattle to attain the desired weight, getting the cattle ready for market faster. The ration supplement is designed to induce the cattle to consume feed at a higher than normal rate.
The Ralston Purina Company manufactures and distributes various kinds of additives, supplements, and other chemical and nutritional elements for livestock feed. As an aid to customers and as an inducement to increased sales, Ralston and its competitors offer the services of staff expert animal nutritionists, who advise feed lot operators as to the proper type of ration supplements, how to use them and in what quantities and what combinations with other feeding elements so as to provide the most efficient total ration. All these activities are focused on helping lot operators add the maximum additional weight to the animals being fed at the lowest possible cost. Since the basic ingredients of the ration: hay, grain, silage and like components are normally deficient in many of the elements required for the most efficient nutrition, the function of the ration supplement is to make up for these deficiencies. It is thus the most important part of the ration.
For a substantial period of time prior to March 1967, Texsun purchased ration supplements from Ralston and availed itself of the services of Ralston's nutrition consultants. Ralston during this time represented that its ration supplements were appropriate for the intended purpose and Texsun relied upon Ralston and its staff nutritionists with respect to the design and mix of the rations fed by Texsun to its customers' cattle.
In March 1967, Texsun began to purchase a different ration supplement from Ralston. Ralston's assigned nutrition consultant, Dr. Mel Karr, advised Texsun to feed the new ration supplement to the cattle in Texsun's yard at the rate of 1.5 pounds per head per day. Texsun followed Dr. Karr's instructions, with disappointing results. It was subsequently determined that Dr. Karr should have told Texsun to supply the ration supplement to the cattle at the rate of 2 pounds per head per day.
Soon after Texsun began feeding the new ration supplement at the rate of 1.5 pounds per head per day, the rate of weight gain of the cattle in the yard decreased. To compensate for this diminished rate of gain, Texsun kept many of its customers' animals in the yard longer than usual to attain the desired gain in weight. This additional time in Texsun's yard resulted in higher costs per pound of gain. Some of Texsun's customers removed their cattle from Texsun's yards because they were dissatisfied with the rate of gain. Texsun's customers demanded that Texsun extend cash refunds and account adjustments to compensate them for the additional feeding periods required to bring the cattle up to the desired marketing weight. In the spring of 1967 Texsun made cash refunds, rebates, and adjustments to its customers in an aggregate of $35,858.22.
For the fiscal years ending September 30, Texsun compiled the following financial history:
Cattle Profit
Year Capacity Sales (Loss)
1966 3,000 $700,000.00 $ 1,350.72
1967 5,000 $800,000.00 ($18,778.97)
1968 5,000 $600,000.00 ($16,044.23)
1969 $ 35,000.00
Texsun alleged in its complaint that the ration supplement supplied by Ralston was defective and that the defect in the supplement proximately caused Texsun to suffer economic losses. In addition to feeding an insufficient amount under Ralston's recommendations, the defect in the supplement claimed by Texsun was characterized in two ways: (1) there was some deficiency in the ration supplement of a nature known only to Ralston, or (2) the manner in which the ration supplement interacted with the other feed that Texsun was using led to a weight gain rate below acceptable levels. As the case developed, the latter theory emerged as the mainstay of Texsun's case.
Ralston sought to defend itself on several grounds. It denied that any warranty, express or implied, was ever given or inferred to Texsun with respect to the results that would be obtained from the use of the ration supplement; it denied that Texsun had relied upon the services and products furnished to Texsun by Ralston; it alleged that in some particulars Texsun had acted contrary to the instructions and advice of Ralston's staff nutritionist; it denied that the ration supplement was in any way defective; and it denied any responsibility for any of Texsun's alleged losses, costs, or expenses. As affirmative defenses, Ralston asserted that Texsun had been contributorily negligent in failing to utilize steam flaking process and equipment, in failing to exercise good management practices in order to prevent unusual and unreasonable wastage of feed and ration supplement, and in failing to follow the instructions and advice of Ralston's nutritionist; that Texsun had voluntarily made refunds and rebates to its customers, thereby insulating Ralston from liability for such losses; and that Texsun's claim for lost profits was so vague, uncertain, and speculative as to be wholly unrecoverable under Texas law.
At the close of all the evidence, Special Interrogatories (referred to below, following the Texas practice, as "special issues") were propounded to the jury. Because apparent inconsistencies in the answers of the jury constitute critical aspects of this appeal, we have set out in the margin the complete text of the questions and answers.1
After the verdict was returned, Texsun moved for judgment on the verdict and Ralston moved for judgment notwithstanding the verdict. The district court then filed a memorandum opinion2 in which he upheld the jury's award of $27,000.00 and set aside the award of $10,000.00 for lost profits as being without support in the evidence.
On this appeal, Ralston urges reversal of the $27,000,00 award for the following reasons:
1. Texsun was required first to seek judicial ascertainment of its liability to its customers as a condition precedent to the bringing of suit to recover damages for the amount of refunds, rebates, or allowances voluntarily made to such customers.
2. The jury's finding of contributory negligence on the part of Texsun bars recovery by Texsun under the doctrine of strict products liability. (Answers to Special Issues 8(a) and 8(b).)
3. The jury's finding of contributory negligence on the part of Texsun bars Texsun's recovery for breach of warranty for a particular purpose as provided by Section 2.315 of the Texas Uniform Commercial...
To continue reading
Request your trial
-
Continental Ins. v. Page Engineering Co.
...Cir.1980), cert. denied 450 U.S. 920, 101 S.Ct. 1368, 67 L.Ed.2d 348 (1981) (defective bull semen); and Texsun Feed Yards, Inc. v. Ralston Purina Co., 447 F.2d 660 (5th Cir.1971) (Texas law applied to weight gain of product-fed cattle).24 During a period in which the law is constantly expan......
-
Gregory v. White Truck & Equipment Co., Inc.
...Land Co. (1963), 212 Cal.App.2d 11, 27 Cal.Rptr. 814; Erdman v. Johnson Bros. Radio & Television Co., Inc., supra; Texsun Feed Yards, Inc. v. Ralston Purina Co., supra; Vernon v. Lake Motors, surpa; Burkhimer v. W. B. Lindsay Furniture Co., supra; Huebert v. Federal Pacific Elec. Co., Inc.,......
-
Indiana & Michigan Elec. Co. v. Terre Haute Industries, Inc.
...(10th Cir.1975), 525 F.2d 749; Westric Battery Co. v. Standard Electric Co. (10th Cir.1975), 522 F.2d 986; Texsun Feed Yards, Inc. v. Ralston Purina Co. (5th Cir.1971), 447 F.2d 660; Stott v. Johnston (1951), 36 Cal.2d 864, 229 P.2d 348; Dallman Co. v. Southern Heater Co. (1968), 262 Cal.Ap......
-
Berkeley Pump Co. v. Reed-Joseph Land Co., REED-JOSEPH
...P.2d 1152 (Ariz.App.1978) (expressly rejecting Cronin ); Liberty Mutual v. Sears, 406 A.2d 1254 (Conn.1978); Texsun Feedyards Inc. v. Ralston Purina Co., 447 F.2d 660 (5th Cir.1971) (feed supplement failed to increase weight of cattle, as intended. Strict liability held not to apply where p......