Hefley v. Jones, 80-1692

• Decision Date: 07 September 1982
• Docket Number: No. 80-1692,80-1692
• Citation: 687 F.2d 1383
• Parties: Richard HEFLEY and Kent Martin d/b/a Agri Investment Services, Appellees, v. Harry JONES, Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1383

687 F.2d 1383

Richard HEFLEY and Kent Martin d/b/a Agri Investment

Services, Appellees, v. Harry JONES, Appellant.

No. 80-1692.

United States Court of Appeals, Tenth Circuit.

Sept. 7, 1982.

Terry W. Tippens, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Okl., and E. Edd Pritchett, Pritchett & Schnetzler, Oklahoma City, Okl., for appellees.

Tom M. Cummings, Grove & Grove, Oklahoma City, Okl., for appellant.

Before BARRETT, DOYLE and LOGAN, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

Jones appeals from judgments providing for damages after a trial to the court, and two orders of partial summary judgment. All has to do with a claim for breach of contract in which jurisdiction is based on the diversity of citizenship clause. The appellees Hefley and Martin, doing business as Agri Investments Services, are cattle brokers and feedlot owners who operate in Kansas. Jones is also a cattle broker, as well as a cattle rancher, in Oklahoma.

Two contracts were entered into on March 2 and March 16, 1978. Jones contracted to sell to one Bruce Bonnett, a cattle broker, 500 heifers and 1,500 steers. Delivery on the heifer contract was to take place between May 15 and June 15. In addition to the heifer contract, there was a contract pertaining to the sale of steers. Delivery on the heifers was to be May 15 and June 15 and the steers were to be delivered September 1 and 15. Jones had purchased these cattle from R & L Cattle Co. who had bought them from farmers and ranchers.

On March 6, Bonnett contracted to sell to appellees the same heifers which he had bought from Jones. Then on March 24 the same steers in the Bonnett-Jones contract were sold by Bonnett to the appellees. The Hefley-Bonnett contracts were not designated as assignments of the Bonnett-Jones contracts.

There are two other contracts which are significant between Bonnett and Jones which were dated March 9 and April 10 of 1978. In these agreements, Jones was to purchase 1,000 heifers from Bonnett and 2,050 calves. After signing the contracts, Jones proceeded to obligate himself to sell the heifers to R & L Cattle Co. and the calves to Oklahoma Livestock. Jones gave Bonnett a total of $81,500 in cash as a down payment on the March 9 and April 10 purchases.

In the first part of May, Jones became cognizant of the fact that Bonnett was in severe financial difficulty and would be unable to deliver the 1,000 heifers and the 2,050 calves. Jones, as a result of this, was placed in a difficult position. The price of cattle was rising. Jones suffered a loss because he had to go out in the marketplace in order to be able to deliver the heifers and calves under his contracts with R & L Cattle Co. and Oklahoma Livestock. Bonnett disappeared and Jones lost his $81,500 down payment as well.

On or about May 14th, Jones learned that Bonnett had contracted with appellees with respect to the 508 heifers due between May 15 and June 15, and the 1,500 steers due in September. The appellees demanded delivery on these animals from Jones as if Jones' March 2 and 16 contracts with Bonnett had been assigned to the appellees. Jones received no notice of this assignment until September of 1978.

Jones refused to deliver either the heifers or the steers to appellees as a result of his claimed right to set off against Bonnett over Bonnett's inability to deliver the 1,000 heifers and 2,050 calves. Jones sold the 508 heifers and 1,500 steers that appellees had contracted to buy. This sale was in the open market and yielded approximately $100,000 in profit over and above the price Bonnett had agreed to pay. Jones' refusal to deliver to appellees brought about this suit for breach of the March 6 and March 24 contracts between appellees and Bonnett.

The appellees Hefley and Martin had suffered damages as a result of Jones' failure to deliver because, as cattle brokers, they had obligated themselves to sell the 508 heifers and 1,500 steers to other cattle dealers. The heifers were sold by appellees to Arnold Young, a Texas trader, on March 10. Young then sold the rights of the heifers to Heinold Cattle Market, the final stop in this chain. The 1,500 steers were assigned by appellees to Willard Sparks of Memphis, Tennessee, on April 23. When Jones refused to perform, Hefley and Martin had to cover for the cattle they were unable to produce. They did this by agreeing to reimburse Arnold Young for $39,457.50 as evidenced by a promissory note. Young had settled with Heinold, who did go into the marketplace and buy heifers at the higher present market price. Appellees agreed in the note to prosecute this suit to try and obtain Young's damages. To settle with Sparks, appellees forgave a debt one of Sparks companies owed the appellees' feed lot; this amounted to $9,245.67.

The Judge in the court below initially granted appellees' request for a partial summary judgment on the question of whether the contracts of March 6 and the 24 between the appellees and Bonnett were assignments of the contracts of March 2 and 16 between Jones and Bonnett over the sale of the 508 heifers and 1,500 steers. Thus, if these contracts were merely assignments, Hefley and Martin had the right to demand performance from Jones. Based on the depositions of Jones and his employee Moore the lower court held it to be the custom and usage in the Oklahoma cattle brokerage business that such contracts are mere assignments even where the language does not indicate this. No material factual issue was found to be in dispute on the assignment question. Accordingly, Hefley and Martin were within their rights in seeking performance from Jones.

A second motion by plaintiffs sought partial summary judgment. The court ruled that Jones had no right of set-off against Hefley and Martin over Jones' loss resulting from the dispute with Bonnett. Under Oklahoma law the lower court found that an assignee is subject to any defense that can be raised against his assignor if such defense could have been asserted against his assignor at the time of assignment. Since the Jones-Bonnett contracts of March 2 and March 16 were assigned to appellees by the Hefley-Bonnett contracts of March 6 and March 24, and in view of the fact that Jones did not find out until May that Bonnett would not deliver the 1,000 heifers and 2,050 calves, no set-off against appellees was possible.

Of procedural importance is appellant's motion filed sixteen days prior to trial seeking to amend his answer so as to assert that appellees were not the real parties in interest. Fed.R.Civ.P. 17(a). The court refused the request to amend because it was prosecuted with inexcusable delay; all the relevant facts were known to appellant from the time the suit began. Jones had moved for summary judgment on his real party in interest defense. However, the motion to amend the answer was denied, and so this issue became moot.

At the trial to the court on the question of damages the Judge awarded appellees the $39,457.50 along with 14% interest reflecting a promissory note between Young and appellees. Also, the debt for $9,245.67 between appellees' feedlot and that of Sparks was found to be a legitimate item of damages. Another $762 was granted as lost commissions reflecting the difference between what appellees paid to Bonnett and their contract with Young. And finally, pursuant to Oklahoma statute, the appellees were granted reasonable attorney's fees.

The appellant's major contentions here is that summary judgment on the assignment issue was improperly granted. Jones maintains that the custom and usage in the Oklahoma cattle business was a factual question on which there was much dispute between the parties.

The trial court determined that the Bonnett-Hefley contracts were assignments of the Jones-Bonnett contracts based solely on the depositions, which were taken to be true, of Jones and his employee Moore. These contracts were within the Oklahoma Uniform Commercial Code because cattle are "goods". Okla.Stat. Tit. 12A § 2-105 (1971) (all Oklahoma Code references will be to Title 12A). The Code section dealing with assignments, § 2-210, does not require the use of any particular language in order to effect an assignment. Comment 7 to § 2-210 explains that Article 2 of the Code does not deal with the proper form for assignment or the need for or effect of notice of assignment. Therefore, the case law of Oklahoma governs for § 1-103 indicates that the principles of law and equity shall supplement the Act unless the Code specifically states otherwise. In conjunction with the common law source, contractual language may be interpreted in accordance with the course of dealing between the parties and the usage of trade in the business at issue § 1-105.

To be noted is that under Oklahoma law no particular words are necessary to effect an assignment as long as the parties' intent to make such an assignment is apparent. Ingram v. Mandler, 56 F.2d 994, 996 (10th Cir. 1932); Cobb v. Baxter, 292 P.2d 389 (Okl.1956). The intent to assign may be ascertained by the custom and usage of the cattle broker trade or through the parties' course of dealing.

From an examination of the depositions of appellant Jones and his employee Al Moore, it appears that Jones and Moore have correctly described the dealings of cattle brokers when the same cattle are contracted for through the use of several instruments, these serve as mere assignments. The broker or the feedlot owner who is last in the chain receives the cattle directly from the initial seller, namely, the farmer or rancher. A down payment or deposit is made by each buyer all along the chain. Upon delivery to the final buyer full payment is made to the initial seller and the commissions are settled throughout the chain of purchases and sales. Thus, the usage of trade of assigning cattle through separate contracts was described by appellant's own testimony. We conclude that the lower court did not err in relying on...