Farmers Comm. Co. v. Burks

• Decision Date: 30 September 1998
• Docket Number: No. 16-98-02.,16-98-02.
• Citation: 130 Ohio App.3d 158,719 NE 2d 980
• Parties: FARMERS COMMISSION COMPANY, Appellee, v. BURKS, Appellant.
• Court: Ohio Court of Appeals

130 Ohio App.3d 158

719 NE 2d 980

FARMERS COMMISSION COMPANY, Appellee, v. BURKS, Appellant.

No. 16-98-02.

Court of Appeals of Ohio, Third District, Wyandot County.

Decided September 30, 1998.

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G. Scott McBride, for appellee.

E.R. Wead, for appellant.

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HADLEY, Judge.

Defendant-appellant, Charles Frederick Burks, is appealing from the March 2, 1998 judgment of the Wyandot County Court of Common Pleas granting summary judgment to plaintiff-appellee, Farmers Commission Company ("Farmers Commission"). After a review of this matter, the court hereby removes this appeal from the accelerated calendar and issues an opinion in accordance with App. R. 12.

In April and May 1995, Burks allegedly entered into four Hedge to Arrive ("HTA") contracts with the U.S. Commission Company¹ through its agent, John Stoneburner, to sell twenty thousand bushels of corn with the futures delivery month of December 1995. Farmers Commission claims to have sent Burks a purchase confirmation letter for each contract; Burks, however, contends that he did not see the confirmation letters until May 1996 when he requested to see the alleged contracts. Burks elected to roll his contracts forward until July 1996 and he sold his 1995 harvested corn on the open market.

On June 6, 1996, Burks's attorney sent a letter to Farmers Commission stating that he was advising Burks not to honor any of the proposals concerning HTA situations unless Farmers Commission had proof of service of the contracts upon Burks. On receipt of the letter, Farmers Commission suggested a meeting to resolve the dispute. No meeting occurred, and on July 2, 1996, Farmers Commission demanded payment for damages, stating that it had cancelled the contracts.

Farmers Commission filed suit against Burks and both parties filed motions for summary judgment. The trial court granted Farmers Commission's motion for summary judgment and awarded damages in the amount of $50,250.

It is from this judgment that Burks is appealing, assigning the following error:

"The trial court erred in grating sic summary judgment in favor of the plaintiff-appellee Farmers Commission Co. and against the defendant-appellant, Charles Frederick Burks."

From a thorough review of the record, it appears that Burks contends that having the evidence construed most strongly and favorably in his favor, there are genuine issues of material fact as to the following nine items: (1) whether there was the requisite meeting of the minds to form contracts between Farmers Commission and Burks, (2) whether the defense of the Statute of Frauds is valid, (3) whether the written contract terms and conditions were valid or if they needed to be explained, (4) whether Farmers Commission had a duty to inform Burks of the risks involved in a HTA contract and whether Farmers Commission breached that duty by misrepresentation, (5) whether the oral agreements violate the regulations established by the Commodity Futures Trading Commission, (6) whether Burks had the ability to deliver on the contracts in July 1996, (7) whether Farmers Commission improperly cancelled the agreements, (8) whether Farmers Commission could have mitigated its damages by letting Burks buy out the contracts while his damages were less, and (9) whether the amount of damages is correct.

Summary judgment is appropriate when (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made. State ex rel. Howard v. Ferreri (1994), 70 Ohio St.3d 587, 589, 639 N.E.2d 1189, 1192-1193.

When reviewing a summary judgment motion, we must independently review the record to determine if summary judgment was appropriate. Morehead v. Conley (1991), 75 Ohio App.3d 409, 411-412, 599 N.E.2d 786, 787-788 Therefore, we will review the trial court's granting of summary judgment de novo. Childers v. Whirlpool Corp. (1995), 106 Ohio App.3d 52, 56, 665 N.E.2d 256, 257-258 citing Smiddy v. Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 30 OBR 78, 78-79, 506 N.E.2d 212, 214-215.

It is well settled that the party seeking summary judgment bears the initial burden of showing that no genuine issue of material fact exists for trial. Dresher v. Burt (1996), 75 Ohio St.3d 280, 293-294, 662 N.E.2d 264, 273-275; Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115, 526 N.E.2d 798, 801-802. Once the initial burden has been met, the nonmoving party then has a reciprocal burden to set forth specific facts showing that there is a genuine issue for trial. Dresher, 75 Ohio St.3d at 293, 662 N.E.2d at 273-274.

I

Burks contends that a genuine issue of material fact exists as to whether there was the requisite meeting of the minds between Farmers Commission and himself to form the alleged HTA contracts.

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty. Episcopal Retirement Homes, Inc. v. Ohio Dept. of Indus. Relations (1991), 61 Ohio St.3d 366, 369, 575 N.E.2d 134, 137, citing Restatement of the Law 2d, Contracts (1981) 5, Section 1. "An express contract connotes an exchange of promises where the parties have communicated in some manner the terms to which they agree to be bound." Cuyahoga Cty. Hosps. v. Price (1989), 64 Ohio App.3d 410, 415, 581 N.E.2d 1125, 1128. For a contract to exist, each party must consent to the terms of the contract, the parties must have a meeting of the minds, and the contract must be definite and certain. Episcopal Retirement Homes, Inc., 61 Ohio St.3d at 369, 575 N.E.2d at 137.

"In a basic HTA contract, farmers promise to deliver grain at a specific date in the future and purchasers promise to pay an agreed futures price set by reference to the Chicago Board of Trade (CBOT), plus or minus a basis, which accounts for local fluctuation in price. Eby v. Producers Co-op (W.D.Mich.1997), 959 F.Supp. 428 (fn 1). The basis can float until fixed by the farmer at any time prior to delivery. Id. If basis is not fixed prior to delivery, it will automatically be set by the terms of the contract. Id.

"HTA contracts may benefit farmers by permitting them to lock in a favorable price per bushel of grain well before harvest, avoiding the normal market downturn at harvest time. Id. The risk, however, is that grain prices could rise, as they did in the Fall of 1995, and a farmer could be forced to comply with the agreed price per bushel, well below current market value. Id." Countrymark Coop., Inc. v. Smith (1997), 124 Ohio App.3d 159, 705 N.E.2d 738.

Burks is a merchant under the definition section of the sales provisions of Ohio's Uniform Commercial Code, R.C. 1302.01(A)(5):

"`Merchant' means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction * * *."

R.C. 1302.01(A)(7) states that "`btween merchants' means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants." A farmer, such as Burks, with thirty years' experience in the industry, who previously sold crops, and keeps abreast of the farm market is "chargeable with the knowledge or skill of merchants" referred to in R.C. 1302.01(A)(7), in placing orders to sell corn. See Burkhart v. Marshall (1989), 63 Ohio App.3d 281, 578 N.E.2d 827. As both Burks and Farmers Commission were merchants who made agreements for the purchase and the sale of goods, corn, the agreements are governed by R.C. Chapter 1302. See Countrymark, supra, citing Burkhart, 63 Ohio App.3d at 284, 578 N.E.2d at 828-829.

In accordance, R.C. 1302.10(C) provides:

"Conduct by both parties that recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case, the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under Chapters 1301-1310, inclusive of the Revised Code." See Alliance Wall Corp. v. Ampat Midwest Corp. (1984), 17 Ohio App.3d 59, 63-64, 17 OBR 114, 118-119, 477 N.E.2d 1206, 1211 and Robinson Mem. Hosp. v. Hi Temp, Inc. (July 14, 1995), Portage App. No. 94-P-0096, unreported, 1995 WL 453430.

In April 1995, Burks went to Farmers Commission and met with John Stoneburner, an agent of Farmers Commission. In his deposition, Burks stated the following about his conversation with Stoneburner concerning his discussion in determining whether to enter into a HTA contract or a straight contract:

"A. And there was only a difference of like three to five cents or something. There wasn't much difference between an HTA and what I could have contracted at the time. And I questioned him about the HTA's. I said, How do they work? What would be the advantage?

"And he said, There is a couple of advantages. The first one is if you can't fill the contract, in other words if you contract thirty thousand bushel and you only have twenty thousand, you could roll the other ten thousand next year and get two forty-five or whatever for your corn.

"And I said—at that time, I said, Two forty-five, because we were contracting for two sixty-five.

"Then he said, You've got to set your basis, and that's when I found out what a basis was, and that's the difference between Chicago and what U.S. Commission Company is giving. And at that time, in September, it's suppose to be smaller, and that's the reason why you set it then, not when your bringing the corn in, because it's larger at that time.

"Q. Okay

"A. And he—he says—I said, Well—and he said, Another thing is if corn goes up, wouldn't you rather...