Idaho Falls Bonded Produce & Supply Co. v. Egbert
| Decision Date | 28 June 1957 |
| Docket Number | No. 8347,8347 |
| Citation | 313 P.2d 327,79 Idaho 196 |
| Court | Idaho Supreme Court |
| Parties | IDAHO FALLS BONDED PRODUCE & SUPPLY COMPANY, a corporation, Plaintiff-Respondent and Cross-Appellant, v. Z. N. EGBERT and Louise Egbert, husband and wife, Defendants-Appellants and Cross-Respondents. |
Holden & Holden, Idaho Falls, for appellant.
Albaugh, Bloem, Barnard & Smith, Idaho Falls, for respondents.
This case involves an appeal by defendants-appellants and cross appeal by plaintiff-respondent. The parties will be referred to as plaintiff company or plaintiff, and as defendants. The action became one of the general nature of an accounting between the parties.
April 26, 1950, defendants, farmers, residents of Fremont County, entered into a written contract of joint venture with plaintiff company. The contract had to do with the raising of a crop of 'certified potatoes' during the 1950 growing season, on 150 acres of defendants' farm lands.
The contract, drawn by the president of plaintiff company provided that plaintiff advance certain sums to pay past due indebtedness of defendants; also, that plaintiff advance moneys needed during the growing season to pay certain expenses for the producing and harvesting of the crop; all such moneys so advanced to be secured by defendants' chattel mortgage.
Simultaneously with the execution of the contract, April 26, 1950, defendants executed and delivered their promissory note to plaintiff in the amount of $25,000, payable April 1, 1950, secured by a chattel mortgage encumbering the joint venture crop of 150 acres of potatoes, and defendants' crops consisting of 20 acres of barley, 140 acres of wheat, and 100 acres of alfalfa; also encumbering defendants' 22 head of cattle, 16 pieces of farm machinery and 3 motor vehicles. The chattel mortgage also secured further sums as may be advanced by plaintiff to defendants 'for any purpose,' including certain designated purposes, not to exceed $30,000.
September 2, 1952, plaintiff commenced action to foreclose the chattel mortgage, alleging a balance of $11,314.49 principal sum owing on the note together with interest at 8% per annum from October 19, 1951.
Defendants by answer and counterclaim denied any indebtedness owing to plaintiff company on the note and mortgage, and alleged overpayment of the same. Defendants set out the contract and requested an accounting of the proceeds of the potatoes grown and delivered to plaintiff pursuant thereto, and of all proceeds received by plaintiff from the sale of the potatoes; also cross complained for judgment against plaintiff in the sum of $344.04 as overpayment on the mortgage together with 6% interest from October 15, 1951; also for judgment in such sum as may be ascertained by the accounting to be due defendants from plaintiff.
The court heard a portion of the matter sitting with a jury, who answered certain propounded interrogatories. The Court, at the conclusion of the hearing, entered judgment March 18, 1955, in favor of plaintiff and against defendants in the sum of $3,559.98, together with costs.
Defendants appealed and plaintiff cross appealed from the judgment.
Both parties question the trial court's construction of the contract of joint venture. Plaintiff company also questions certain accounting procedure followed by the trial court; also a finding to the effect that plaintiff failed to account for a quantity of the joint venture potatoes.
Defendants assign error of the trial court allowing plaintiff company $2,800 as a storage charge by reason of the storage of certain of the joint venture potatoes in plaintiff's potato cellar in Idaho Falls, and in charging that amount as an expense against the crop. Defendants also assign error of the trial court in allowing plaintiff company $10,564.55 as a handling charge on potatoes which it accounted for, and $5,893.10 as a handling charge on certain potatoes which the jury found plaintiff failed to account for, totaling $16,437.65, and charging such sum against the crop.
The contract recites that it 'concerns a growing deal of approximately one hundred fifty acres of potatoes that are to be grown and cared for' on defendants' farm near Ashton.
Plaintiff company agreed to advance $17,848.62 to pay certain of defendants' past due indebtedness, and other money 'needed throughout the growing season * * * in the growing of the crop of certified potatoes on approximately one hundred fifty (150) acres of land' owned by defendants, and for harvesting the crop. The advances to be made 'for the growing and producing of crop' were for plowing, harrowing and preparing the land for seed bed; treating and cutting potato seed; fertilizer, planting, cultivation, irrigation, rogueing, and other unspecified expenses of producing and harvesting the crop.
Defendants were to furnish the 150 acres of farm land for growing the potatoes, the irrigation water, all equipment for handling the crop, and their services such as 'cultivating, watering, harvesting, etc.' They were to furnish the seed at $2.00 per cwt., their account to be credited for the total cost of the seed.
The contract then provided 'all expenses incurred in the producing of this crop' will be charged against defendants and that when the 'harvesting and selling of these potatoes take place' all sales will be credited to defendants' account; also that plaintiff company should have the exclusive right to sell and handle the potatoes.
The contract further provided, 'No expenses other than those mentioned herein shall be charged against the crop.'
The allowance of expense for storage of the potatoes to be paid from the proceeds of the venture does not appear provided for in the contract. The record shows, however, that the parties modified the contract in that regard. They discussed storage of the potatoes, the necessity therefor, and where the potatoes should be stored. They agreed that part of the potatoes would be stored in plaintiff's cellar in Idaho Falls, a part in defendants' cellar at Ashton, and a part in a commercial cellar at Chester. The expense of storage in the Chester cellar, paid by defendants, became a charge against the joint venture potato account.
The trial court therefore properly allowed plaintiff's claim for storage of $2,800, as a proper charge against the joint venture potatoes.
The trial court found that the handling charges made by plaintiff were for washing, sorting, grading, sacking and preparing for market the potatoes handled by plaintiff, stored in its cellar at Idaho Falls, as part of the necessary expense of producing and harvesting the crop.
Those 'handling' charges were not made until the winter and early spring following the 1950 growing season during which the crop of potatoes was grown or produced and harvested; nor did defendants know that plaintiff company had made any such charges against such portion of the crop stored in plaintiff's cellar at Idaho Falls until after plaintiff had filed its action against defendants. Noteworthy, the record does not show that any handling charges were made against the joint venture potatoes sold at the instance of defendants from defendants' Ashton potato cellar or from the Chester commercial storage cellar.
Analysis of the contract shows that expenses were to be charged for growing, producing and harvesting the crop and that no expense except as mentioned in the contract was to be charged against the crop. Since the handling charges do not appear included within the purview of the contract as deductible expense, and in the absence of an agreement between the parties that they be deducted, the said handling charges were improperly charged against the crop. Defendants' said assignments of error in that connection were properly taken.
Defendants next assign error of the trial court in holding that all net proceeds from the joint venture potatoes be divided between the parties prior to application of the net proceeds of the crop to payment of the sums secured by the chattel mortgage.
The contract provides that the 'parties of the contract shall share and share alike on a fifty-fifty basis.' The contract then provides, in mandatory language, 'However * * * the mortgage * * * shall be taken care of before any profits accrue to either party to this contract.' The effect thereof construed in conjunction with other provisions of the contract is, first, that all proceeds from the sale of the potatoes grown on defendants' 150 acres shall be used first, to repay all moneys advanced 'for any purpose' by plaintiff to defendants, secured by the mortgage; and second, that the proceeds then remaining shall be divided equally between the parties. (Emphasis supplied.)
Further, the record shows that the president of plaintiff company, who drafted the contract, using such words of plain import, so explained the contract to defendants.
Defendant Mr. Egbert testified:
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'A. Here's a paragraph * * *
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