Fricker v. Uddo & Taormina Co.

• Decision Date: 21 June 1957
• Court: California Supreme Court
• Parties: Larry FRICKER et al., Plaintiffs and Respondents, v. UDDO & TAORMINA COMPANY (a Partnership), Defendant and Appellant. L.A. 24479.

Page 1085

312 P.2d 1085

48 Cal.2d 696

Larry FRICKER et al., Plaintiffs and Respondents, v. UDDO & TAORMINA COMPANY (a Partnership), Defendant and Appellant.

L.A. 24479.

Supreme Court of California, In Bank.

June 21, 1957.

Rimel & Johnston and Jack J. Rimel, Santa Ana, for appellant.

Mize, Larsh, Mize & Hubbard, Delbert L. Larsh and Royal E. Hubbard, Santa Ana, for respondents.

GIBSON, Chief Justice.

Plaintiffs, claiming that they are the assignees of part of the proceeds of a tomato crop which George Kikuchi had agreed to grow and sell to defendant canning company, seek to recover the amount of a crop order given to them by Kikuchi and accepted by defendant. ¹ Defendant has appealed from an adverse judgment contending that it is not supported by the evidence.

The case was submitted on stipulated facts which may be summarized as follows:

In March 1952 Kikuchi agreed to grow a tomato crop and to sell it to defendant. The contract provided that in the event defendant should advance moneys to Kikuchi for the growing and harvesting of the crop, Kikuchi should not permit any encumbrance to accrue against the crop except advances and crop orders. In April Kikuchi requested plaintiffs to supply soil fumigant for his farm on credit. Plaintiffs, knowing that Kikuchi had no assets except the proceeds which he could expect to receive from the crop, asked defendant if it would guarantee payment for the soil fumigant as it had done the previous year. Defendant refused to guarantee payment but stated that it 'would accept a crop order against the 1952 crop returns which would become due from defendant to Kikuchi.' Plaintiffs furnished the soil fumigant to Kikuchi and sent the bill to defendant for payment. Kikuchi approved the bill, and, on May 2, 1952, defendant wrote to plaintiffs: 'This will confirm that we have accepted a crop order instructing us to pay to you $4,074.91 from the return due George Kikuchi from Tomatoes delivered by him to us during the 1952 season.' Plaintiffs knew when they furnished the soil fumigant to Kikuchi that defendant had already charged the sum of $27,000 against Kikuchi's 1952 tomato crop account for moneys advanced.

After sending the letter to plaintiffs, defendant advanced to Kikuchi an additional $53,668. The major portion thereof was paid directly to third persons for purposes related to the growing of the crop. Certain of the advances, made both before and after the date of the letter, consisted of cash paid directly to kikuchi, and 'in the main' were used by him to pay necessary crop production expenses. Kikuchi, having no other income, used some of the cash advances to support himself and his family and some to make installment payments due upon farm machinery that he was purchasing and using full time in the production of the crop. On several occasions tomatoes were delivered to defendant, who credited Kikuchi's account with the amount of the gross proceeds. At no time did the credits for delivered tomatoes exceed the amount of previous advances. The venture proved to be unprofitable in that the total amount credited to Kikuchi was only $77,013, whereas the advances totaled $80,668. It is apparent from the stipulation that, while the gross proceeds were insufficient to cover all of the advances made by defendant to Kikuchi, the receipts were more than adequate to cover plaintiffs' crop order and the amount of the advances made prior thereto. Kikuchi has since been adjudged a bankrupt.

The complaint is in the form of a common count for money had and received, and the findings are to the effect that defendant became indebted to plaintiffs in the amount of $4,074.91 for money received for the use of plaintiffs, that the amount remains due, owing, and unpaid, and that plaintiffs requested and defendant refused payment thereof. The trial court in effect rejected defendant's contention that all of the advances made by defendant have priority over plaintiffs' crop order.

Defendant's letter of May 2 discloses that there was a crop order which instructed defendant to pay plaintiffs $4,074.91 from the return due to Kikuchi from tomatoes delivered by him to defendant during the 1952 season and that defendant accepted the order. It seems clear that, if the parties had expressly agreed at the time of the acceptance of the crop order that either the order or the advances by defendant should have priority, that agreement would be controlling. See, e.g., Garner v. Uddo & Taormina Co., 137 Cal.App.2d Garner v. Uddo & Taormina Co., 137 Cal.App.2d 819, 822, 290 P.2d 967.

Both the crop order and the acceptance are silent with respect to whether the crop order or the advances subsequently made by defendant should have priority. The crop order is conditioned upon the production of a tomato crop and the existence of a return due to Kikuchi from tomatoes delivered by him to defendant, and the record shows that tomatoes were delivered and that sums were credited to Kikuchi's account, but there is nothing to indicate that the order was conditioned upon the existence of a net balance due to Kikuchi from defendant at the end of the season, and the acceptance neither limits nor enlarges the scope of the crop order in this respect. The situation is not altered by the fact that in other transactions defendant had used a special form which provided that the acceptance of a crop order was subject to all advances made to the grower. Plaintiffs did not know that such a form had been used by defendant and were unaware of its provisions. Nor does the fact that defendant refused plaintiffs' request that defendant guarantee payment of the bill for the soil fumigant show an intention of the parties that advances made by defendant subsequent to the acceptance of the crop order were to have priority over plaintiffs' claims against the returns due from the tomato crop. A determination that plaintiffs' claim against the crop proceeds should have priority over defendant's advances made subsequent to the acceptance of the crop order obviously would not be the same thing as holding that defendant is liable, as a guarantor, beyond the amount of the proceeds which it derived from the crop.

The crop order operated as an assignment to plaintiffs of $4,074.91 from the returns due to kikuchi from the tomatoes to be delivered to defendant. As a general rule the rights of an assignee, including his rights in a fund to become due to the assignor, cannot be destroyed by payments made by the debtor to the assignor after notice of the assignment. See, e.g., Jones v. Martin, 41 Cal.2d 23, 27-28, 256 P.2d 905; A Farnell Blair Co. v. Hollywood St. Bk., 102 Cal.App.2d 418, 431, 227 P.2d 529; 2 Williston on Contracts (Rev. Ed.) § 433, pp. 1251-1255. Defendant contends in effect that this rule is not applicable here because, it argues, the advances made by it after the date of the crop order were necessary to the production of the crop, without these advances there would be no crop and nothing for either plaintiffs ...