Lackawanna Leather Co. v. Martin & Stewart, Ltd.

• Decision Date: 02 May 1984
• Docket Number: Nos. 82-2221,82-2264,s. 82-2221
• Citation: 730 F.2d 1197
• Parties: 38 UCC Rep.Serv. 475 The LACKAWANNA LEATHER COMPANY, Plaintiff-Appellee-Cross Appellant, v. MARTIN & STEWART, LTD., Defendant-Appellant-Cross Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1197

730 F.2d 1197

38 UCC Rep.Serv. 475

The LACKAWANNA LEATHER COMPANY, Plaintiff-Appellee-Cross Appellant, v. MARTIN & STEWART, LTD., Defendant-Appellant-Cross Appellee.

Nos. 82-2221, 82-2264.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 10, 1983.

Decided March 30, 1984.

Rehearing Denied May 2, 1984.

Robert L. Berry, Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., for plaintiff-appellee-cross appellant.

William L. Edmonds, Carter, Sar & Edmonds, Sioux City, Iowa, for defendant-appellant-cross appellee.

Before BRIGHT, JOHN R. GIBSON and FAGG, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Martin & Stewart, Ltd., appeals from a judgment in favor of Lackawanna Leather Company resulting from damaged cattle hides purchased by Lackawanna from Martin & Stewart. Martin & Stewart allege that the verdict was not supported by sufficient evidence and that the trial court erroneously instructed the jury. Lackawanna cross-appeals from the district court's order denying it prejudgment interest. We affirm the judgment of the district court. ¹

Lackawanna, a manufacturer of upholstery leather, purchased two truckloads of cattle hides from Great Plains Processing, a hide supplier partly owned by Martin & Stewart. The first truckload, containing 973 hides, was delivered on August 1, 1979, and was stored in the Lackawanna plant. The second, containing 930 hides, was delivered on August 9 and was stored in a separate tin warehouse. Upon delivery, a small number of the hides were visually inspected by Lackawanna employees for excessive water, dirtiness, foul odor or "anything crawling." No such damage was discovered. Lackawanna paid Martin & Stewart $95,212.31 for the hides plus freight charges.

Lackawanna began processing the hides on September 26. Four hundred hides from the August 1 shipment first had the salt and hair chemically removed. They were then sorted and split. This splitting process revealed the hide damage. Of the one hundred forty-four hides that were split, ninety-four were found to have grain damage. Subsequent inspection revealed that about two-thirds of the entire August 1 shipment was found to have similar damage. Lackawanna and Martin & Stewart personnel initially concluded that the damage was due to excessive water in the hides, and the second truckload was returned to Great Plains on October 2 to be rebrined. On October 9, two shipments of hides received by Lackawanna from Iowa Beef Processors (IBP) were rejected because hide beetles were discovered. Shortly after the IBP delivery, beetles were discovered for the first time in Lackawanna's tin warehouse. At the same time, Lackawanna received a laboratory report stating that the hide damage resulted not from water but from beetles. On October 16 one hundred thirty-five of the rebrined hides were returned to Lackawanna from Great Plains. Upon removal of the hair, the same type and extent of damage previously detected was discovered. On October 24, Lackawanna formally notified Martin & Stewart that the hides were defective due to hide beetle damage. The damaged hides were ultimately resold to Martin & Stewart for $20,000.00.

Lackawanna brought this action against Martin & Stewart in January, 1980. The chief issue at trial was whether the hide damage existed at the time of delivery or occurred while the hides were stored at the Lackawanna facility. The case was tried to a jury on the alternative theories of revocation of acceptance and breach of warranties. After the jury returned a verdict in favor of Lackawanna, the district court denied Martin & Stewart's motion for a judgment notwithstanding the verdict or, in the alternative, for a new trial.

I.

Martin & Stewart first argue that the verdict was not supported by legally sufficient evidence of revocation of acceptance or breach of warranties. It claims that Lackawanna produced no direct evidence of beetle infestation at the time the hides were delivered, and therefore relied exclusively on circumstantial evidence to infer the existence of predelivery damage. Martin & Stewart assert that when circumstantial evidence forms the sole basis for the verdict, Nebraska law requires that the circumstances be such that the conclusion reached by the jury is the only one that can fairly and reasonably be drawn. As it believes that the inference of post-delivery damage to be equally plausible, Martin & Stewart argue that the evidence was insufficient to support the verdict.

Martin & Stewart characterize the verdict as one based on circumstantial evidence. It argues that the evidence directly proved a number of facts, but still required the jury to infer the ultimate issue--whether the hides were damaged before receipt. However, expert witnesses testified that the hides were damaged before receipt. This was opinion evidence on the ultimate issue, and the test for circumstantial evidence was therefore inapplicable. Freemont Farmers Union Coop. Ass'n v. City of Freemont, 179 Neb. 576, 139 N.W.2d 369 (1966). ² The essence of Martin & Stewart's argument concerns the probative value of Lackawanna's expert testimony, the assessment of which is the jury's function. McKnelly v. Sperry Corp., 642 F.2d 1101 (8th Cir.1981); Doyle v. Union Ins. Co., 202 Neb. 599, 277 N.W.2d 36 (1979). We therefore apply the general test governing our review of the sufficiency of the evidence.

An appeal from a motion for judgment notwithstanding the verdict is reviewed under the same standard as a directed verdict. Compton v. United States, 377 F.2d 408, 411 (8th Cir.1967). That standard requires that we view the evidence in a light most favorable to the non-moving party. Decker-Ruhl Ford Sales, Inc. v. Ford Motor Credit Co., 523 F.2d 833, 836 (8th Cir.1975). In so viewing the evidence, we must:

(1) resolve direct factual conflicts in favor of the nonmovant, (2) assume as true all facts supporting the nonmovant which the evidence tended to prove, (3) give the nonmovant the benefit of all reasonable inferences, and (4) deny the motion if the evidence so viewed would allow reasonable jurors to differ as to the conclusions that could be drawn.

Dace v. ACF Industries, Inc., 722 F.2d 374, 375 (8th Cir.1983). This standard is substantially similar to that existing under Nebraska law. Barclay v. Burlington Northern, Inc., 536 F.2d 263, 267 (8th Cir.1976); Farmer's Coop. Elevator Ass'n Non-Stock v. Strand, 382 F.2d 224, 228 (8th Cir.), cert. denied, 389 U.S. 1014, 88 S.Ct. 589, 19 L.Ed.2d 659 (1967). ³

Applying the above standard, we cannot say that the verdict in favor of Lackawanna was unsupported by sufficient evidence. The evidence showed that of fifty thousand hides stored at Lackawanna, only Martin & Stewart hides were damaged in this manner. Although beetles were found in the tin warehouse which housed the August 9 shipment of hides before they were returned for rebrining, other hides stored there for longer periods did not suffer any damage. Experts testified that the hide damage was such that live beetles, discarded larvae skins and fecal matter should have been evident upon visual inspection. None were discovered. Experts also testified that the eating pattern indicated that the damage occurred while the hides were folded hair in, although they were delivered to Lackawanna and remained folded hair out. In light of this evidence, we cannot conclude that, as a matter of law, the damage occurred after delivery, and therefore the district court did not err in denying the motion for directed verdict.

II.

Martin & Stewart next allege three errors arising from the trial court's instructions to the jury concerning the elements of revocation of acceptance and breach of warranty. While state law determines the substance of jury instructions in a diversity action, the granting or denying of such instructions is controlled by federal law. Hrzenak v. White-Westinghouse Appliance Co., 682 F.2d 714, 719 (8th Cir.1982).

Parties are entitled to have their theory of the case presented to the jury if "legally correct, supported by the evidence and brought to the court's attention in a timely request." Board of Water Works Trustees of Des Moines v. Alvord, Burdick & Howson, Inc., 706 F.2d 820, 823 (8th Cir.1983). A litigant is not, however, entitled "to have the jury instructed in any particular language, so long as the jurors understand the issues and are not misled." Stineman v. Fontbonne College, 664 F.2d 1082, 1087 (8th Cir.1981). While it is error to instruct the jury on matters on which there is no evidence, Bartak v. Bell-Galyardt & Wells, Inc., 629 F.2d 523, 528 (8th Cir.1980), a district judge is given broad discretion in framing the instruction, and will not be disturbed on appeal if "the entire charge fairly and adequately contains the law applicable to the case...." Board of Water Works Trustees, 706 F.2d at 823. If this standard is met, technical imperfections or a lack of perfect clarity will not render the charge erroneous. Tribble v. Westinghouse Electric Corp., 669 F.2d 1193, 1197 (8th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 1767, 76 L.Ed.2d 342 (1983).

A.

Under the Nebraska Commercial Code, "[r]evocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it...." Neb.Rev.Stat. ch. 91 Sec. 2-608(2) (Reissue 1980). The two truckloads of hides were delivered to Lackawanna on August 1 and August 9. Acceptance was not revoked until October 24. In support of its assertion that Lackawanna did not revoke "within a reasonable time," Martin & Stewart introduced in evidence a booklet entitled Trade Practice for Proper Cattle Hide Delivery. The booklet, issued by hide buyers, states that inspection practices should include "[a] random sample inspection [of the hides] ... within five days after the unloading of the carrier." Based on this evidence of trade practice, Martin & Stewart requested an instruction that trade practice may be...