D & S Farms v. Producers Cotton Oil Co.

• Citation: 16 Ariz.App. 180,492 P.2d 429
• Decision Date: 13 January 1972
• Docket Number: CA-CIV,No. 2,2
• Parties: D & S FARMS, an Arizona corporation, Appellant, v. PRODUCERS COTTON OIL COMPANY, a California corporation, Appellee. 1033.
• Court: Court of Appeals of Arizona

Page 429

492 P.2d 429

16 Ariz.App. 180

D & S FARMS, an Arizona corporation, Appellant, v. PRODUCERS COTTON OIL COMPANY, a California corporation, Appellee.

No. 2 CA-CIV 1033.

Court of Appeals of Arizona, Division 2.

Jan. 13, 1972.

Edgar Hash, Phoenix, for appellant.

Rawlins, Ellis, Burrus & Kiewit by William D. Baker, Michael S. Milroy and Michael V. Mulchay, Phoenix, for appellee.

HOWARD, Judge.

The controversy in this case centers around a claim for wrongful interference with a contractual relationship. The appellant, D & S Farms, was the defendant and counterclaimant in the trial court and shall hereinafter be referred to as D & S. The appellee, Producers Cotton Oil Company, was the plaintiff and shall hereinafter be referred to as Producers. Stanley Snitzer and Doris Snitzer were also defendants in the trial court and they shall be hereinafter referred to as the Snitzers.

The Snitzers owned a farm located in Pinal County, Arizona. In order to finance their farm operations the Snitzers, in 1962, borrowed money from Producers. The amount borrowed was evidenced by a promissory note and secured by a realty and chattel mortgage on the premises. In 1963 and 1964, additional sums were borrowed by the Snitzers from Producers which sums were also evidenced by promissory notes and secured by crop and chattel mortgages. Finally in 1968, after the Snitzers were in default on the notes and mortgages, a 'Revision, Extension, Assignment and Release Agreement and Security Agreement', (hereinafter referred to as the 'Assignment') was entered into between the Snitzers and Producers. This Agreement provided, Inter alia, that in addition to the lien to which Producers was entitled by virtue of its already existing mortgages, it was to have, as security, an absolute assignment as to rents, issues and profits from the lease of the farm. Under this Agreement Producers was authorized to collect the monies due the Snitzers and apply them to the indebtedness due Producers. Snitzers further promised that they would continue to pay the current payments on the notes.

When the Snitzers failed to make payments on the notes Producers filed this foreclosure action. In conjunction with the filing of the action, Producers also petitioned for the appointment of a receiver pursuant to the terms contained in all of the mortgages previously mentioned.

The Snitzers resisted the appointment of a receiver on the ground that the value of the real estate was adequate security for the various promissory notes. A hearing was held on the question of the appointment of a receiver. After hearing testimony, the trial court denied the petition for the receiver.

At the hearing on the appointment of the receiver it was brought out in the testimony that the Snitzers owned 80% Of D & S; that D & S was growing alfalfa on the premises in question; that Snitzers and D & S had an agreement whereby D & S was to get 'fifty percent of the value of the crop' and Snitzers were to get the 'other fifty percent'; and that D & S was contemplating entering into a contract for the sale of the alfalfa. At the time of the hearing it was not known exactly with whom the contract would finally be made, but the name of Hughes & Ganz Cattle Company, Inc. was mentioned as one of the likely parties. Approximately a week later Producers sent the following letter to Hughes & Ganz:

* * *

* * *

'Under the provisions of a certain Revision, Extension, Assignment and Release Agreement executed by Stanley Snitzer and Doris E. Snitzer, his wife, dated December 30, 1968 and recorded in Pinal County December 30, 1968 in Docket 556, page 403, all rents, proceeds and issues due Stanley and Doris Snitzer (arising out of the Snitzer Ranch located near Coolidge, Arizona) were assigned to Producers Cotton Oil Company. It is therefore, requested that any sums you now owe or sums due from you to Snitzer in the future be made payable to Producers Cotton Oil Company for the account of Stanley Snitzer.'

Three months went by after this letter was sent before Hughes & Ganz decided to make its checks for the alfalfa jointly payable to Producers and D & S. During the three month period Hughes & Ganz made its checks for alfalfa payable to D & S only.

D & S refused to accept the joint payee checks and upon the refusal of Hughes & Ganz to make them payable only to D & S, the court was petitioned to enter an order requiring payment only to D & S. This petition was granted.

On February 1, 1971, a Motion for Summary Judgment and Motion...