Idaho Falls Bonded Produce and Supply Co. v. General Mills Restaurant Group, Inc.

• Decision Date: 28 June 1983
• Docket Number: No. 14523,14523
• Citation: 105 Idaho 46,665 P.2d 1056
• Parties: IDAHO FALLS BONDED PRODUCE AND SUPPLY COMPANY, an Idaho Corporation, Plaintiff-Respondent, Cross-Appellant, v. GENERAL MILLS RESTAURANT GROUP, INC., formerly known as Red Lobster Inns of America, Inc., a foreign corporation, Defendant-Appellant, Cross-Respondent.
• Court: Idaho Supreme Court

Page 1056

665 P.2d 1056

105 Idaho 46

IDAHO FALLS BONDED PRODUCE AND SUPPLY COMPANY, an Idaho Corporation, Plaintiff-Respondent, Cross-Appellant, v. GENERAL MILLS RESTAURANT GROUP, INC., formerly known as Red Lobster Inns of America, Inc., a foreign corporation, Defendant-Appellant, Cross-Respondent.

No. 14523.

Supreme Court of Idaho.

June 28, 1983.

H. William Furchner, Blackfoot, for defendant-appellant, cross-respondent.

Douglas Roy Nelson, of Sharp, Anderson, Bush & Nelson, Idaho Falls, for plaintiff-respondent, cross-appellant. SHEPARD, Justice.

This is an appeal from a judgment against General Mills Restaurant Group, Inc., formerly known as Red Lobster Inns of America, Inc., resulting from its refusal to pay for potatoes it admittedly received. On appeal, defendant-appellant General Mills (herein referred to by the name of its subsidiary, Red Lobster Inns) asserts that the evidence at trial does not support the finding of the trial court that Red Lobster Inns was the actual purchaser of the potatoes. We affirm the judgment against Red Lobster Inns, but on the cross-appeal of Idaho Falls Bonded Produce we reverse the trial court's determination of interest awardable on the judgment.

The accepting and weighing of evidence is a matter for the discretion of the trial court and the findings of the trial court will not be reversed unless clearly erroneous. I.R.C.P. 52(a). See also Cheney v. Palos Verdes Investment Corp., --- Idaho ---, 665 P.2d 703 (1983); Rueth v. State, 103 Idaho 74, 644 P.2d 1333 (1982); Javernick v. Smith, 101 Idaho 104, 609 P.2d 171 (1980). Here we find no error in the finding of the trial court that the defendant Red Lobster Inns was the principal and actual purchaser of the potatoes. What could be characterized as overwhelming evidence militates against the argument of Red Lobster Inns that Empire Distributing Company of New York acted herein as an independent buying broker and that Empire, not Red Lobster Inns, was the entity legally responsible for payment of the potatoes. We disagree with this allegation of defendant's and we note that the evidence is conclusively to the contrary.

Idaho Falls Bonded Produce, with offices in Idaho Falls, Idaho, engages in packaging and shipping of fresh Idaho potatoes for nationwide distribution. General Mills, through its subsidiary Red Lobster, operates a chain of restaurants throughout the United States.

In September 1975, John Francher was produce purchasing agent for defendant Red Lobster, and, while at a convention in Sun Valley, Idaho, he approached John Stanger, the president of plaintiff Bonded Produce, to arrange a supply of Idaho baking potatoes for the Red Lobster restaurants. Stanger indicated interest in dealing with Red Lobster and checked a trade reference book for the credit and business practice rating of Red Lobster, noting that Francher was listed therein as Red Lobster's produce buyer. Some weeks later, Francher telephoned Stanger, indicating that Francher was prepared to begin ordering potatoes by phone and that Red Lobster desired to use a buying broker, A.J. Sales, to handle the purchases. Stanger determined that A.J. Sales had an excellent credit and business practice rating and agreed to the arrangement, i.e., Bonded Produce would receive orders from Francher to ship potatoes to various locations and would then invoice A.J. Sales as the buying broker. The parties dealt with each other through A.J. Sales from November or December 1975 until June 1976. Those transactions through A.J. Sales, the invoices and payments, are not in issue, and Bonded Produce agrees that if it had not been paid for dealings conducted by A.J. Sales, it would have had no claim against Red Lobster.

In June 1976, Red Lobster notified Bonded Produce that it was not satisfied with the performance of A.J. Sales and that it would thereafter purchase from Empire Distributing Company of New York. However, Bonded Produce investigated Empire's ratings and found that Empire was a new company without an established financial record. This finding prompted Stanger to call Francher to express concern over Empire's lack of credentials and to indicate that Bonded Produce would not deal with Empire. Testimony indicated that Francher then agreed that Empire would simply function as Red Lobster's billing agent and that the account would be guaranteed by Red Lobster. All other arrangements relating to ordering and delivery continued to be handled by Red Lobster, with Empire only doing the invoicing. ¹

In August 1976, Empire had become delinquent in payments owed to Bonded Produce for potatoes shipped to the Red Lobster account. In September, Stanger and Francher again met at Sun Valley, where Francher gave Stanger a check written on Empire's bank account bringing the delinquent billings up to date. Francher promised to keep the billing current, and Stanger testified that in reliance upon that representation, Bonded Produce continued shipping to Red Lobster's account. According to Stanger, he was again assured by Francher that Red Lobster would "guarantee the whole program."

Thereafter, Empire's accounts with Bonded Produce continued to be delinquent and Bonded Produce attempted unsuccessfully to contact Francher. Bonded Produce also attempted unsuccessfully to call Empire. Some weeks later, Hadway, an agent of Red Lobster, called Stanger, stating that Red Lobster had found internal problems with its accounting procedure and was investigating and seeking Francher. Hadway requested that Bonded Produce immediately notify Red Lobster's jobbers and distributors that they should pay Bonded directly rather than remitting payment through Empire. By such process, Bonded Produce was able to recover about one-quarter of its outstanding Red Lobster accounts. The remaining moneys owing to Bonded had already been paid to Empire. In September 1976, Bonded Produce filed a complaint with the U.S. Department of Agriculture under the Perishable Agriculture Commodities Act, naming Red Lobster as purchaser and Empire as billing agent, for non-payment of roughly $34,000 for agricultural goods shipped in interstate commerce. This complaint was later withdrawn.

In December 1976, representatives of Red Lobster and Bonded met to discuss the unpaid Empire accounts. Following this meeting, Red Lobster proposed that Bonded continue service to Red Lobster and that the arrears be recovered by the addition of a 20cents premium to every hundred weight of potatoes invoiced to distributors for Red Lobster. Bonded Produce agreed and continued to ship potatoes to Red Lobster's distributors, intending to have no claim against Red Lobster if those jobbers and distributors did not pay. That course of dealing between the parties lasted through 1978, but the extra premium on the shipment was paid only occasionally. Bonded Produce concluded that the arrangement would not result in payment of the delinquency and filed the instant action in August of 1979.

At trial, Red Lobster asserted that it was not responsible as either a purchaser or a guarantor of Bonded Produce's dealings with Empire. Although there was some dispute in the evidence regarding whether Red Lobster actually received all of the shipped potatoes and as to the amount of credit to which Red Lobster was entitled as a result of the...