Brooks Cotton Co. v. Williams, W2011–01415–COA–R9–CV.
| Decision Date | 23 April 2012 |
| Docket Number | No. W2011–01415–COA–R9–CV.,W2011–01415–COA–R9–CV. |
| Citation | 381 S.W.3d 414 |
| Parties | BROOKS COTTON COMPANY, INC. v. Bradley F. WILLIAMS. |
| Court | Tennessee Court of Appeals |
OPINION TEXT STARTS HERE
Oscar C. Carr, III, Don L. Hearn, Jr., and Patrick T. Burnett, Memphis, Tennessee, for the appellant, Bradley F. Williams.
C. Barry Ward and Richard S. Townley, Memphis, Tennessee, for the appellee, Brooks Cotton Company, Inc.
J. STEVEN STAFFORD, J., delivered the opinion of the Court, in which ALAN E. HIGHERS, P.J., W.S., and DAVID R. FARMER, J., joined.
This interlocutory appeal concerns the question of whether a farmer may be considered a merchant for purposes of the Uniform Commercial Code Statute of Frauds. Appellant farmer allegedly entered into an oral contract to sell his cotton crop to Appellee cotton company. The farmer failed to deliver the cotton and the cotton company sued for specific performance. The farmer defended the suit by arguing that the alleged oral contract was unenforceable due to the Statute of Frauds. The cotton company countered that the farmer was a merchant for purposes of the merchant exception to the Statute of Frauds. The trial court granted partial summary judgment in favor of the cotton company, finding that the farmer was a merchant for purposes of the Statute of Frauds. We hold that a farmer may be considered a merchant for purposes of the Uniform Commercial Code Statute of Frauds, the determination of which is a mixed question of law and fact. However, because the question of whether this particular farmer qualifies as a merchant raises genuine issues regarding the inferences to be drawn from the facts, we reverse the grant of partial summary judgment and remand to the trial court for a trial on the merits.
Defendant/Appellant Bradley F. Williams is a cotton and soybean farmer with a high school education. According to Plaintiff/Appellee Brooks Cotton Company, Inc. (“Brooks Cotton”), on or about August 5, 2010, Mr. Williams entered into a oral contract to sell his 2010 cotton production to Brooks Cotton. The alleged contract was recorded in the Brooks Cotton purchase book on August 6, 2010 and provided that Mr. Williams would sell his entire 1000 acre cotton production to Brooks Cotton. The price allegedly agreed upon was $0.20 per pound over the guaranteed government loan amount of $0.542 per pound, totaling $0.742 per pound of cotton.1 At the time of the alleged agreement, Mr. Williams had not yet harvested his cotton.2 According to the record, Mr. Williams ultimately produced approximately 1206 bales of cotton in 2010. If the contract had been performed as allegedly agreed, the total contract price for Mr. Williams' cotton would have been approximately $446,000.00. Brooks Cotton sent written confirmation of the alleged agreement to Mr. Williams on or about September 4, 2010, nearly thirty days after the contract was allegedly agreed to on the phone. Mr. Williams asserts that he never entered into an oral contract with Brooks Cotton, although he did not call or write Brooks Cotton to object to the written terms sent to him.
Mr. Williams did not deliver all of his 2010 cotton production to Brooks Cotton. On October 30, 2010, Mr. Williams partially performed on the alleged oral contract, delivering 307 bales of the estimated 1206 bales of cotton produced by his farm in 2010. Mr. Williams refused to deliver the remaining cotton, asserting that there was not a valid contract between Mr. Williams and Brooks Cotton.
On or about November 18, 2010, Brooks Cotton filed a Complaint for Specific Performance, Injunctive Relief, and Damages against Mr. Williams. An injunction hearing was held on November 30, 2010. Mr. Williams testified at the hearing regarding his experience and skills in marketing cotton, stating that he had been a cotton farmer for approximately twenty-five years. Mr. Williams testified that, in the majority of the years prior to 2010, he had entered into a contract with Brooks Cotton to sell his cotton crop. In most of those years, however, Mr. Williams agreed to the contract in person at Brooks Cotton's office after the cotton had been harvested, rather than over the telephone prior to the harvest. Mr. Williams did testify that he was familiar with the practice of “booking” cotton over the phone, as he had previously “booked” his cotton with Brooks Cotton in 2003. Mr. Williams testified, however, that he did not “book” his cotton with Brooks Cotton in August 2010, but that he merely called to discuss cotton prices. In addition, Mr. Williams explained his process for determining the price at which he will sell his cotton, wherein he reviews the selling price of his cotton crop in the previous three years. Although Mr. Williams testified that he receives daily texts regarding the price of cotton, he explained that he was not familiar with the common practice of “hedging” 3 engaged in by many cotton merchants. David Brooks of Brooks Cotton explained that hedging is a common practice in the cotton trade. In addition, Mr. Williams testified that he never uses his potential cotton crop as collateral on loans to finance the cotton crop, instead relying on various equipment and land. Mr. Williams went on to testify that he owed approximately $400,000.00 to the bank in loans, but that he had approximately $40,000.00 in bank accounts due to his off-season construction work. Based on the testimony, the court issued a preliminary injunction on the sale of Mr. Williams' 2010 production of cotton.
Several motions were subsequently filed in the trial court that are not the subject of this appeal.4 Importantly, Mr. Williams filed a motion for summary judgment on December 21, 2010, asserting, inter alia, that he was not a merchant under Tennessee's version of the Uniform Commercial Code (“U.C.C.”); therefore, the merchant exception to the Statute of Frauds did not apply and there was no valid contract between himself and Brooks Cotton. In the alternative, Mr. Williams argued that, if he was considered a merchant for purposes of the U.C.C., no valid contract existed because the written memorialization was not sent to him within a reasonable time.
Brooks Cotton filed a response in opposition on February 24, 2011, arguing that Tennessee did not provide an exception that prevented farmers such as Mr. Williams from being considered merchants under the U.C.C., and that the statutory definition of a “merchant” pursuant to Tennessee Code Annotated Section 47–2–104 was broad enough to encompass Mr. Williams.
Mr. Williams filed an answer to the complaint on February 16, 2011, denying the material allegations contained therein.
On March 7, 2011, Brooks Cotton filed a cross-motion for partial summary judgment, arguing that Mr. Williams should be considered a merchant for purposes of the merchant exception to the Statute of Frauds and that the notice to Mr. Williams was sent within a reasonable time. To support the motion, Brooks Cotton supplemented the record with the depositions of several area farmers, many of whom testified that the practice of orally booking cotton was common in the trade. Many of the farmers, however, testified that they were familiar with the practice of hedging, and that they had engaged in hedging themselves. Brooks Cotton also submitted Mr. Williams' deposition, wherein he testified that he receives several monthly farming periodicals, such as Cotton Grower and Tennessee Farmer.
The trial court heard oral argument on the cross-motions on April 19, 2011. The trial court orally ruled that Mr. Williams was a merchant under the U.C.C. and granted partial summary judgment in favor of Brooks Cotton on that limited issue (the trial court did not determine whether Mr. Williams ever entered into an agreement with Brooks Cotton or whether the memorialization of the alleged contract was made within a reasonable time). The trial court also orally granted Mr. Williams' motion for interlocutory appeal pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure. Accordingly, the trial court denied Mr. Williams' motion for summary judgment.
On May 9, 2011, the trial court entered its ruling denying Mr. Williams' motion for summary judgment and granting partial summary judgment to Brooks Cotton. The order granting the motion stated:
The Court is persuaded that a transaction between merchants is one with respect to which both parties are charged with the knowledge or skill of merchants. The Court concludes that the transaction here between a long-time farmer and a longtime buyer for the sale of cotton is one between merchants. In considering the questions at issue, the Court notes that cases which hold that the farmer is [a] merchant[s][sic] reflect on the fact that today's farmers are involved in far more than simply planting and harvesting crops. Based on the depositions [of various area farmers not involved in this litigation regarding the knowledge and skill of farmers with regard to the sale of crops] ... the Court is persuaded that Bradley Williams and today's Tennessee farmer possess an extensive knowledge and sophistication regarding the purchase and sale of crops.
On May 19, 2011, Mr. Williams filed a written Motion for Permission to File Interlocutory Appeal, which the trial court granted on June 23, 2011. This Court granted Mr. Williams' Application for Permission to File Interlocutory Appeal on September 7, 2011 on a single issue, which is taken from Mr. Williams' brief:
Whether the trial court erred in denying Mr. Williams' motion for summary judgment and granting Brooks Cotton's motion for partial summary judgment by finding that Mr. Williams was a merchant as a matter of law under the merchantexception to the Uniform Commercial Code Statute of Frauds? 5
Because this case was adjudicated by summary judgment, we first note that a trial court's decision on a motion for summary judgment...
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