Farm Bureau Co-Op. Mill & Supply v. Blue Star Foods

• Decision Date: 13 November 1956
• Docket Number: No. 15587.,15587.
• Citation: 238 F.2d 326
• Parties: The FARM BUREAU CO-OPERATIVE MILL AND SUPPLY, Inc., and Ottis Watson, Appellants, v. BLUE STAR FOODS, Inc., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

238 F.2d 326 (1956)

The FARM BUREAU CO-OPERATIVE MILL AND SUPPLY, Inc., and Ottis Watson, Appellants, v. BLUE STAR FOODS, Inc., Appellee.

No. 15587.

United States Court of Appeals Eighth Circuit.

November 13, 1956.

COPYRIGHT MATERIAL OMITTED

E. J. Ball, Fayetteville, Ark. (David J. Burleson and J. R. Crocker, Fayetteville, Ark., were with him on the brief), for appellants.

Herbert Van Fleet, Joplin, Mo. (F. H. Richart, Seiler, Blanchard & Van Fleet and Watson, Richart & Titus, Joplin, Mo., were with him on the brief), for appellee.

Before GARDNER, Chief Judge, and WOODROUGH and VOGEL, Circuit Judges.

GARDNER, Chief Judge.

There are merged in this appeal two actions, one entitled in the trial court Farm Bureau Cooperative Mill & Supply, Inc., v. Blue Star Foods, Inc., and the other entitled Ottis Watson v. Blue Star Foods, Inc. As there was a common defendant in the cases and the parties to the separate actions were represented by the same counsel in each case the trial court consolidated the cases for trial and they were tried to the court without a jury. We shall refer to the parties in each case as plaintiff and defendant.

In the first of these cases, Farm Bureau Cooperative Mill & Supply, Inc. v. Blue Star Foods, Inc., plaintiff sought to recover judgment on the theory that the defendant had converted to its own use certain chickens belonging to one Watson on which it held a chattel mortgage. After alleging the fact of diversity of citizenship and the jurisdictional amount involved the complaint so far as here material charged:

"2. That on May 18, 1954, for value received, one Ottis Watson, of Route 7, Fayetteville, Arkansas, executed a promissory note in the principal amount of $13,599.00, with interest thereon at 6% per annum until paid, due and payable August 16, 1954 in favor of Arkansas Farm Bureau Finance, Inc., Fayetteville, Arkansas, and on that date of May 18, 1954, delivered said note to the said payee; that to secure payment of the said note, the said Ottis Watson did on May 18, 1954, execute and deliver to the said payee a chattel mortgage on 25,000 broilers, among other chattels, as particularly set out and described in said mortgage which was filed in the office of the Circuit Clerk and Ex-Officio Recorder of Washington County, Arkansas on June 2, 1954 at 1:45 P.M. a copy of which mortgage is attached hereto and made a part hereof; that said property was located in Washington County, Arkansas at the time of execution and delivery of said mortgage to said payee; that on September 2, 1954 said payee assigned and transferred said note and mortgage to plaintiff herein, for value received.

"3. Plaintiff states that after crediting said indebtedness with all payments made thereon there is a balance due plaintiff as of the date of filing of this complaint the sum of $9,280.84, plus interest, at 6% per annum until paid.

"4. That said indebtedness was due and payable in its entirety on August 16, 1954 and no part of the said sum of $9,280.84 has been paid.

"5. Plaintiff further states that legal title to the said mortgaged property was vested in plaintiff by virtue of said mortgage; that one Lester N. Glover did, on or about August 14, 1954 take possession of the said mortgaged chickens without making payment therefor; that the said Lester N. Glover did, subsequent to his taking possession of said mortgaged chickens, deliver the said mortgaged chickens to the defendant at Anderson, Missouri, without the knowledge or consent of this plaintiff or plaintiff\'s assignor; that according to plaintiff\'s information and belief, the mortgaged property so delivered to defendant was 40,810 pounds of chickens, and that the fair market value of said chickens, when they were taken by the said Lester N. Glover, was 23¢ per pound; that defendant in turn sold, conveyed and/or disposed of said mortgaged chickens to person or persons unknown to plaintiff, and that no part of the said indebtedness has been paid plaintiff or plaintiff\'s assignor by defendant, but that defendant appropriated and converted the proceeds from the sale of said chickens to defendant\'s own use and benefit, and that by reason of said unlawful appropriation and conversion, this plaintiff is entitled to recover from defendant the sum of $9,280.84 with interest thereon at 6% per annum from May 8, 1954 until paid."

Judgment was accordingly demanded for the sum of $9,280.84 with interest thereon at 6% per annum from May 8, 1954 until paid. Defendant answered, admitting the allegations of fact conferring jurisdiction on the court, but categorically and specifically denied all other allegations.

In Ottis Watson v. Blue Star Foods, Inc. plaintiff sought to recover the alleged unpaid purchase price for certain chickens sold to the defendant and damages for alleged breach of contract for defendant's failure to buy all of plaintiff's chickens. Omitting all allegations going to the jurisdiction of the court plaintiff in this action alleged:

"2. That on or about August 14, 1954, plaintiff entered into an oral contract with one Lester N. Glover, of Cave Springs, Arkansas, under the terms of which contract the said Lester N. Glover agreed to purchase, at the agreed price of 23¢ per pound, approximately 25,000 head of chickens from plaintiff, the said 25,000 chickens being all of plaintiff\'s chickens which were ready for market at that time; that on or about August 14, 1954, the said Lester N. Glover took possession of approximately 13,500 of the said chickens, had them loaded in trucks and removed them from plaintiff\'s possession in compliance with the terms of the said contract; that the said 13,500 chickens taken by the said Lester N. Glover weighed 40,810 pounds, the agreed purchase price thereof being $9,386.30, but the said Lester N. Glover did not make payment thereof to plaintiff, and no part of said sum has been paid, although due demand thereof was made to the said Lester N. Glover.

"3. That notwithstanding the contract existing between Lester N. Glover and plaintiff as aforesaid, the said Lester N. Glover did not return to take possession of the remaining chickens of plaintiff, although plaintiff held the said chickens for Lester N. Glover under the terms of the said contract; that by reason of the breach of contract by Lester N. Glover, and as a direct result thereof, this plaintiff was forced to take a loss of 6¢ per pound on the remaining chickens, or a total of $1,980.00, plus $200.00 additional labor costs, a total of $2,180.00.

"4. That on or about January 27, 1955, plaintiff discovered that the said Lester N. Glover was in fact an agent of defendant, and that the said Lester N. Glover entered into the said contract to purchase plaintiff\'s chickens as agent for defendant, and that the said Lester N. Glover was acting within the scope of his authority as such agent for defendant in entering into the said contract with plaintiff, and that Lester N. Glover was acting within the scope of his authority as agent for defendant when he took possession of the first lot of chickens as aforesaid; that the first lot of chickens, amounting to 40,810 pounds was delivered to defendant at Anderson, Missouri.

"5. That by reason of the purchase of plaintiff\'s chickens, and the contract to purchase chickens as aforesaid, by defendant\'s agent, and as a direct result thereof, this plaintiff is entitled to recover from defendant the sum of $11,566.30, plus interest thereon at the legal rate from August 14, 1954 until paid."

Defendant admitted the allegations going to the jurisdiction of the court and in effect denied all other allegations, and charged that the complaint did not state facts entitling plaintiff to any relief.

As has been observed, the actions were consolidated for purposes of trial and were determined by a judgment pursuant to findings of fact and conclusions of law, duly made and entered in favor of defendant and against the plaintiffs on all the issues, and each of the plaintiffs has appealed.

Bearing on the material issues in Farm Bureau Cooperative Mill & Supply, Inc. v. Blue Star Foods, Inc. 137 F. Supp. 490 the court found that:

"* * * it is evident that it cannot recover from defendant for at least two reasons. The first is that under Rule 17 of Federal Rules of Civil Procedure, 28 U.S.C.A., `Every action shall be prosecuted in the name of the real party in interest\', and Farm Bureau has no title to the conversion action which it here asserts, because it was not the owner of the note and mortgage at the time of the claimed conversion — August 14 to August 18, 1954 —, for the note and mortgage was owned by the finance company at that time and when the alleged conversion occurred, and the title to that cause of action became vested in it, and it did not endorse and deliver the note nor assign the mortgage until September 2 thereafter, and the assignment was but a simple assignment of the mortgage and did not purport to assign the cause of action in conversion — already vested in the finance company. * * *

"The second reason why plaintiff, Farm Bureau, cannot recover, is that, as shown by the evidence above recited, the finance company, while the holder of the mortgage, expressly authorized Watson to sell, and consented to his sale, of the mortgaged chickens at such time, and at such price and to such purchaser as he might choose. This, under the Arkansas law and the general law of the subject, released the lien of the mortgage as to the chickens that were so sold."

In seeking reversal in Farm Bureau Cooperative Mill & Supply, Inc. v. Blue Star Foods, Inc., plaintiff urges that (1) the court erred in holding that plaintiff was not the real party in interest because Rule 17(a) of the Federal Rules of Civil Procedure authorizes a holder of a negotiable instrument to sue in his own name to enforce his rights thereunder, (2) the court erred in holding that plaintiff waived its lien because waiver of the lien was not pleaded...