Drager v. Carlson Hybrid Corn Co.

• Citation: 56 N.W.2d 18,244 Iowa 78
• Decision Date: 15 December 1952
• Docket Number: No. 48128,48128
• Parties: DRAGER et al. v. CARLSON HYBRID CORN CO., Inc.
• Court: United States State Supreme Court of Iowa

Page 18

56 N.W.2d 18

244 Iowa 78

DRAGER et al. v. CARLSON HYBRID CORN CO., Inc.

No. 48128.

Supreme Court of Iowa.

Dec. 15, 1952.

Mallonee & Mallonee, Audubon, for appellant.

Jones, Cambridge & Carl, Atlantic, for appellees.

GARFIELD, Justice.

Plaintiff Drager owns and supervises the operation of two adjoining quarter-section farms. Plaintiff Rabe occupies one farm, plaintiff Thomsen the other. They are Drager's sons-in-law. Defendant corporation grows, buys and sells hydrid seed corn. This is a law action to recover the agreed price of $3.50 per bushel for 3,290 bushels of seed corn grown by plaintiffs and sold to defendant during 1948. The answer and counterclaim alleges a breach of implied warranty in the sale. At the close of the evidence the trial court directed a verdict for plaintiffs on both defendant's counterclaim and the full amount of plaintiffs' claim. From judgment thereon defendant has appealed.

Plaintiffs' petition alleges that during March or April, 1948, they made an oral agreement with defendant whereby plaintiffs agreed to sell and defendant agreed to buy all seed corn raised by plaintiffs in 1948 at the agreed price of $3.50 per bushel, defendant was to furnish the seed and truck the corn from the farms to its plant; plaintiffs grew the corn, delivered to defendant 3,290 bushels during the fall and winter of 1948-9 and duly performed all conditions of the contract on their part; defendant has refused to pay for the corn except that $2,000 was paid. Judgment is asked for $9,515 with interest from August 1, 1949.

Defendant's answer and counterclaim denies the allegations of the petition. Division II, alleges the making of the oral agreement substantially as alleged by plaintiffs; that at the time of the agreement plaintiffs knew defendant was agreeing to buy the corn produced by them for the purpose of selling it at retail for hybrid seed and defendant, in entering into the agreement, was relying upon plaintiffs' skill, judgment and experience as growers of hybrid seed corn; at the end of the 1948 season plaintiffs delivered to defendant 3,290 bushels of corn for seed purposes; in selling the corn to defendant with the knowledge and under the circumstances aforesaid plaintiffs impliedly warranted it to be reasonably suitable for retail sale as seed; that 1,410 bushels of the corn was unsuitable for resale as hybrid seed corn and its only value was for sale as feed; if the corn had been suitable for seed it would have been worth $10 per bushel but, being unsuitable for seed, it was not worth more than $1.10 per bushel and consequently defendant was damaged $12,549 for which judgment was asked. Plaintiffs' reply denies the allegations of Division II of the answer and counterclaim.

At the conclusion of trial to a jury the court directed a verdict against defendant not only on Division II of its answer and counterclaim but for the full amount of plaintiffs' claim. From judgment thereon defendant has appealed. The court's ruling on Division II indicates it was based on failure of proof as to (1) the measure of damages and (2) reliance by defendant on the seller's skill or judgment. Plaintiffs' motion for directed verdict on their claim, which defendant contends was made upon a suggestion by the court, merely asserts as a ground 'that the evidence * * * is so clear and unequivocal a jury could find in no other fashion.'

Of course it is our duty under innumerable decisions to consider the evidence in the light most favorable to defendant. The three plaintiffs testified for themselves. Elmer Carlson, controlling owner of defendant corporation, and four of its employees were witnesses for defendant.

The oral agreement in question was made between plaintiff Drager for himself and coplaintiffs and Elmer Carlson for defendant. Drager had grown hybrid seed corn for himself and for sale to different companies for about nine years before 1948. The first transaction between Drager and Carlson was initiated by Drager in the spring of 1946 when Carlson purchased 600 or 700 bushels of Drager's 1945 hybrid seed corn at $3 per bushel. In April, 1946, Drager and Carlson entered into a written contract under which Drager agreed to grow hybrid seed corn for sale to Carlson in 1946 at $3 per bushel at Drager's farm, Carlson to furnish the seed. The contract provided: 'First party (CARLSON) RESERVES the right to reject any and all of the crop for seed in event it does not for any reason in the judgment of first party quality for seed corn. * * * rejected corn will be weighed and delivered back to the grower.'

Drager and defendant performed the 1946 contract. In March, 1947, Drager moved off the farm he had been occupying and Rabe moved on it. In 1947 Drager and his coplaintiffs grew seed corn for sale to defendant at $3 per bushel under an oral agreement, defendant again furnishing the seed. The oral agreement for 1948 (the year in controversy) called for a price of $3.50 per bushel at the farm, defendant to furnish the seed as in 1946 and 1947.

At different times in the fall and winter of 1948-9 plaintiffs delivered to defendant at the farm a total of 3,290 bushels of 1948 shelled corn. As each load arrived at defendant's plant a sample was taken for testing and it was all put in one bin, unmixed with other corn. Defendant's general foreman testifies he noticed quite a lot of rotten and cracked kernels. Carlson and an employee say 7 1/2 per cent of all corn delivered was damaged by mold or other causes and was unsatisfactory for seed.

In November, 1948, after part of the corn was delivered Carlson told Drager he was not satisfied with it. About April 1 (1949), after Drager returned from California, Carlson informed him 1410 bushels of this corn graded out as unsuitable for seed on the 'gravity machine,' it could be sold for $1.25 a bushel, market price for feeding corn, or Drager could have it back. Drager refused to take a discount on the corn and apparently refused to take back any of it. In the meantime, about January, defendant paid Rabe and Thomsen each $1,000, after part of the corn had been delivered.

We consider now whether the evidence would warrant a finding of implied warranty in the sale of the corn. Section 554.16(1), Code 1950, I.C.A., provides: 'Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller's skill or judgment, whether he be the grower or manufacturer or not, there is an implied warranty that the goods shall be reasonably fit for such purpose.'

This part of the uniform sales act contains two vital requirements: (1) That the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, and (2) it appears the buyer relies on the seller's skill or judgment. See Brandenberg v. Samuel Stores, 211 Iowa 1321, 1324, 1325, 235 N.W. 741, 77 A.L.R. 1161; Kurriss v. Conrad & Co., 312 Mass. 670, 46 N.E.2d 12, 16; 46 Am.Jur., Sales, section 356.

There can be little doubt defendant made known to Drager (and through him to his coplaintiffs) that the corn it was purchasing from plaintiffs was for the particular purpose of resale for hybrid seed. Drager as a witness in effect so admits.

Plaintiffs well knew defendant was engaged in the purchase and sale of hybrid seed corn. Drager testifies with regard to the 1948 agreement, 'I suppose it was an agreement to produce hybrid seed, parent stock. * * * I assumed the production that would come off the parent stock would be used by defendant for seed.'

We think too there is substantial evidence that in agreeing to purchase plaintiffs' corn for resale as seed Carlson relied on the sellers' skill or judgment, especially Drager's. It is an important consideration in this connection that Drager was an experienced grower of hybrid seed corn and Carlson knew this. A claim of implied warranty of fitness has more frequently been upheld where the seller is the manufacturer or grower of the product than where he is a mere dealer. See Annotation 168 A.L.R. 581, 583, 586, and earlier annotations therein referred to; 1 Williston on Sales, Rev.Ed., sections 235, 240; 46 Am.Jur., Sales, section 356. See also Ideal Heating Co. v. Kramer, 127 Iowa 137, 143 102 N.W. 840.

As previously stated, for nine years before 1948 Drager had grown hybrid seed corn for himself and for sale to different dealers. Some of those years he had caused corn grown by him to be certified for seed. Without going into detail, it appears much care must be used in producing certified seed in order to pass inspection. Drager had gone around checking different cornfields for certification. He had been asked by authorities from Ames if he would consider a position as an examiner of seed for certification. Drager supervised the growth and detasseling of his corn. In 1948 he hired 30 to 40 people to detassel and was out with them every day.

Drager had a special dryer, an 18-foot steel bin heated by fuel oil to dry the corn after it was harvested. The 1948 corn was put in this dryer after many bad ears were thrown out. Other damaged ears were thrown aside for feed when the corn from the dryer was shelled.

There is no evidence defendant exercised any supervision over the production of the corn in question. As might be expected, Carlson went to Drager's farms twice in 1948 to estimate the yield. Once was on a Sunday in detasseling time. The other occasion was in September. The corn defendant purchased from Drager in 1946-7 was satisfactory for hybrid seed.

Carlson testifies that when the 1948 agreement was made with Drager, 'I told him he would have to watch and sort the corn because the original corn he had done a good job on. He said he would do a good job and take care of it like he would for himself. * * *.

'Q. State whether or not you relied on the contract with Mr. Drager throughout the time related...