Desbien v. Penokee Farmers Union Co-op. Ass'n

• Decision Date: 23 July 1976
• Docket Number: No. 48022,48022
• Citation: 552 P.2d 917,220 Kan. 358
• Parties: , 20 UCC Rep.Serv. 102 Arthur DESBIEN et al., Appellees, v. PENOKEE FARMERS UNION COOPERATIVE ASSOCIATION, Appellant.
• Court: Kansas Supreme Court

Page 917

552 P.2d 917

220 Kan. 358, 20 UCC Rep.Serv. 102

Arthur DESBIEN et al., Appellees, v. PENOKEE FARMERS UNION COOPERATIVE ASSOCIATION, Appellant.

No. 48022.

Supreme Court of Kansas.

July 23, 1976.

Syllabus by the Court

1. Rules respecting the construction to be given ambiguous language in a contract prepared by one of the parties are stated, discussed, and applied.

2. A conversion is an unauthorized assumption and exercise of the right of ownership over personal property belonging to another.

3. Unless otherwise explicitly agreed in a contract for sale of personal property, where delivery is to be made without moving the goods and if the goods are at the time already identified and no documents are to be delivered, title passes at the time and place of contracting. (K.S.A. 84-2-401(3)(b).)

4. Where the buyer of goods sold on credit has received delivery of the goods and title has passed to him, he is not guilty of a conversion of the goods if he fails to pay the purchase price on the agreed date of payment.

5. A mere assertion of ownership of personal property without some actual interference with the right of possession of the owner, does not constitute a conversion of the property.

Jack N. Stewart, of Hampton, Royce, Engleman & Nelson, Salina, argued the cause, and Robert F. Glassman, Hays, was with him on the brief for appellant.

Allen Shelton, of Clark & Shelton, Hill City, argued the cause, and was on the brief for appellees, Arthur Desbien, Stanley Desbien, and Eugene Desbien, and C. N. Clark and Russell Pennington.

Randall W. Weller, of Jones & Weller, Hill City, argued the cause, and was on the brief for appellees, Loren Johnson and Leon Stephen.

PRAGER, Justice:

This appeal involves three cases filed by seven wheat farmers against the defendant-appellant, Penokee Farmers Union Cooperative Association, for breach of seven contracts for the purchase of wheat. Because the same basic issues of fact and law were involved in the actions, they were consolidated in the district court for purposes of trial and they have been consolidated on this appeal.

In case No. 8206 in the district court the plaintiffs-appellees are Arthur Desbien, Stanley Desbien, and Eugene Desbien. We will refer to them as the Desbiens. The plaintiffs-appellees in case No. 8211 are Loren Johnson and Leon Stephen. In case No. 8213 the plaintiffs-appellees are C. N. Clark and Russell Pennington. All of the plaintiffs are voting members of the Penokee Coop. The Coop among its other activities provides a market for wheat grown by the plaintiffs and other wheat farmers in the area. The Coop has in excess of 1200 voting members and operates grain elevators in Hill City, Bogue, and Penokee, Kansas. Clair Summers is the general manager of the Coop and is in charge of all three elevators. Charles Knipp is the manager of the Bogue elevator.

During the year 1973 Penokee Coop entered into contracts with various farmers for the purchase of the farmer's wheat at a price specified in the contract subject to adjustments for higher or lower market grades. During 1973 the Coop had difficulty in transporting purchased grain to market because of the shortage of railroad cars to ship the grain. In most instances the farmers entered into contracts with the Coop for the sale of their wheat at the time of harvest or shortly thereafter and in each of the cases involved here the plaintiff sold his wheat at a price substantially less than the market price for wheat which later developed. According to the evidence each wheat farmer had the option of contracting for payment for his wheat by the Coop either during 1973 or deferring payment until the calendar year 1974 for income tax purposes. Each of the plaintiffs selected the deferred payment contract so that payment for his wheat would be in 1974. Because of the difficulties in transportation of the wheat to terminal markets, the deferred payment contract was also of benefit to the Coop. The inability of the Coop to deliver wheat promptly to the terminal markets caused it to have a shortage of money for making payments to the individual farmers.

This litigation arose because of certain provisions contained in each wheat-purchase contract pertaining to the time of payment for the wheat by the Coop. The contract as drawn was ambiguous and it is understandable how the parties could have a bona fide dispute as to its meaning. All of the contracts entered into by the seven plaintiffs were essentially the same. Each contained three clauses concerning the time of payment which were somewhat contradictory. These provisions were as follows:

(1) 'It is . . . agreed that the Owner shall receive payment for this grain only after shipment is made to terminal markets.'

(2) 'Payment for grain shall be determined by the Purchaser on the basis of the date order of contracts on file with the Purchaser, the oldest outstanding contract receiving priority of payment.'

(3) 'In consideration of the above agreement of the Owner to sell this grain, it is agreed between the Owner and the Purchaser that the Owner is to receive payment for this grain on _ _, 19_ _.'

In each contract the specific date on which payment for the wheat was to be made was handwritten in the printed form by Charles Knipp, the Coop's Bogue elevator manager. The contracts of Stanley Desbien, Eugene Desbien, Loren Johnson, C. N. Clark, and Russell Pennington all provided that the owner was to receive payment for grain on January 1, 1974. Arthur Desbien's contract called for payment 'on/or January 32, 1974.' Leon Stephen's contract provided that payment was to be made 'after 1-1-74.'

Each contract provided for a date for completion of shipment by the purchaser. The three Deshien contracts provided for a shipment date of March 31, 1974. The contracts of Clark, Pennington, Johnson, and Stephen each provided for a shipment date of January 31, 1974. It is important to note that each contract provided for a payment date prior to the date for completion of the shipment of wheat by the purchaser. These contractual provisions raised questions as to how the contracts should be construed. Under each contract when was the individual farmer to be paid for his wheat-on the designated payment date of not until the grain was actually shipped to a terminal? Furthermore a question arose whether a farmer was entitled to be paid on January 1, 1974, or other payment date indicated, even though the individual farmer had not yet delivered his grain to the elevator. It was these questions which brought about the lawsuit between the farmers and the Coop.

The contentions of the opposing parties should be noted. The Coop took the position that each of the contracts should be construed to require the Coop to pay each individual farmer the contract price of his grain only after delivery of the grain by the farmer to the Coop elevator and after shipment of the grain by the Coop to terminal markets fater the 'delivery date' specified in each contract. Each of the farmers maintained that the contract meant just exactly what it said-that they were to be paid by the Coop for their wheat on January 1, 1974, or other payment date specified. Relying upon its construction of the contract, the Coop refused and failed to pay the individual farmers on January 1, 1974, or other payment date expressed in the contract. Each of the plaintiffs construed the Coop's failure to make payment on the payment date as a breach of his contract. In February 1974 the seven plaintiffs filed suit against the Coop alleging that the Coop had failed to pay the purchase price when due under the contract. Each of the plaintiffs requested a judgment for rescission of his contract or in the alternative sought damages for breach of contract. The Desbines' case was filed on February 7, 1974. Approximately one week later Johnson, Clark, Pennington, and Stephen filed similar actions. In each case the Coop filed an answer denying that it had breached its contract. In each of the actions filed by Clark, Pennington, Stephen, and Johnson, the Coop asserted a counterclaim contending that each of those defendants had failed and refused to deliver his wheat to the Coop and that the Coop had suffered damages by reason of breach of contract.

After the cases became at issue, a joint pretrial conference was held. The cases were consolidated for trial and the issues of fact to be determined by the court were stated to be as follows: (1) What are the meanings of these contracts? (2) Have the defendants breached the contracts, and if so, when? (3) Have the plaintiffs, or any one of them, breached the contracts, and if so, when? The original pretrial order was amended to include an additional issue for the court to decide: If there was a breach of contract, what is the measure, amount, and theory of damages, if any? With the cases in this posture they were tried together by the court sitting without a jury.

At the trial the primary witness relied upon by all parties was Charles Knipp, manager of the Coop elevator at Bogue. His testimony was somewhat rambling and frequently contradictory. He was in a difficult position at the trial because obviously his understanding of the intention of the parties to the wheat contract conflicted seriously with the express language used in each contract. The only other testimony offered by the plaintiffs was that of Russell Pennington, Eugene Desbien, and Loren Johnson, all of whom testified as to the price of wheat at the elevators during the first half of February 1974. The defendant Coop called as witnesses Clair Summers, general manager of the Coop and Charles Knipp. Following the trial, the district court made extensive findings of fact and conclusions of law and held generally in favor of all plaintiffs against the Penokee Coop. The trial court found among other things that the Coop had breached its wheat-purchase contract in each instance by failing to make payment to...