Laredo Hides Co., Inc. v. H & H Meat Products Co., Inc.

Decision Date31 May 1974
Docket NumberNo. 837,837
Citation513 S.W.2d 210,16 UCCRep.Serv. 78
CourtTexas Court of Appeals
Parties16 UCC Rep.Serv. 78 LAREDO HIDES COMPANY, INC., Appellant, v. H & H MEAT PRODUCTS COMPANY, INC., Appellee.

Jim Denison, Jack Skaggs, Paul Lee Wiley, Stiernberg, Skaggs & Koppel, Harlingen, for appellant.

M. V. Vela, Vela & Vela, Harlingen, Luther H. Soules, III, Oppenheimer, Rosenberg, Kelleher, & Wheatley, San Antonio, for appellee.


BISSETT, Justice.

This is a breach of contract case. Laredo Hides Company, Inc., the buyer, sued H & H Meat Products Company, Inc., the seller, to recover damages for breach of a written contract for the sale of cattle hides. Trial was to the court without a jury. A take nothing judgment in favor of defendant was rendered. Plaintiff has appealed.

The controlling facts of the case are undisputed. H & H Meat Products Company, Inc. (H & H) is a meat processing and packing corporation, located in Mercedes, Texas. It sells cattle hides as a by-product of its business. Laredo Hides Company, Inc. (Laredo Hides) is a corporation, located in Laredo, Texas. It purchases cattle hides from various meat packers in the United States and ships them to tanneries in Mexico.

A written contract dated February 29, 1972, was executed whereby Laredo Hides agreed to by H & H's entire cattle hide production during the period March through December, 1972. Among other provisions, the contract provided:

'Terms: Cash upon delivery--deliveries to be made at least twice a month.'

The agreement was signed on behalf of Laredo Hides by Camilio Prada (Prada), its president, and on behalf of H & H by Liborio Hinojosa (Hinojosa), its vice president and general manager.

On March 3, 1972, the first delivery of hides was made under the contract. On that occasion, as had been the practice regarding deliveries under prior contracts between the parties, the hides were picked up at H & H's plant in Mercedes by a truck which was owned by Lozano Transfer Company, whose office is located in Laredo. The trucking company was Laredo Hides' agent for payment and receipt of deliveries of hides from H & H. At the time of delivery of the hides on that day, the truck driver delivered a Laredo Hides check to H & H in payment for the shipment. The check was accepted by H & H, the hides were loaded, and the truck returned to Laredo.

On Friday, March 17, 1972, Laredo Hides, having been notified that the next load of hides was ready for delivery, issued its check for $9,000.00, payable to the order of H & H, and delivered the same to Lozano Transfer Company so that the truck driver could take it with him and give it to H & H the next day, when he picked up the hides. On Saturday morning, March 18th, Esteban Lozano (Lozano), the owner of Lozano Transfer Company, upon arrival at the office, discovered that the truck driver (who had already left for H & H's plant) had forgotten the check. Lozano then telephoned H & H, talked to Hinojosa, and told him what had happened. Lozano asked Hinojosa: 'What do you want me to do?' Hinojosa answered: 'Don't worry about it; just mail it.' According to Hinojosa, that was the extent of their conversation. Lozano, however, testified that during the conversation he told Hinojosa that he could send the check that day (March 18, 1972) to Mercedes because 'one of my boys was going to Brownsville', but that Hinojosa advised him that such was not necessary and 'told me to send it by mail'.

Lozano further testified that on the day in question, March 18, 1972, at about 10:00 A.M., which was after he had talked with Hinojosa, he gave the order to mail the check to H & H. Heriberto Oribe, Lozano's clerk, testified that the envelope to H & H was given to him mid-morning on March 18th and that he deposited it in a mailbox in the vicinity of the post office, Laredo, that morning.

The driver of the truck, shortly after arriving at H & H's plant in Mercedes, told Hinojosa that he did not have the check. Hinojosa told him that he had talked with Lozano and that he (the driver) should 'load up'. The truck was, accordingly, loaded with the hides, and was driven back to Laredo, where its cargo was delivered to Laredo Hides.

There were no communications between anyone representing Laredo Hides and anyone representing H & H on either Sunday, March 19th or Monday, March 20th. On Tuesday morning, March 21st, the check had not been placed in H & H's post office box in Mercedes. Hinojosa then telephoned Prada at Laredo. The time of this telephone call is disputed. Hinojosa testified that he placed the call between 10:30 and 11:30 in the morning. Prada testified that he received the call after 1:00 p.m. Hinojosa told Prada that the check had not arrived at the post office in Mercedes. Prada told Hinojosa that the check had been mailed. Hinojosa replied:

'. . . I don't believe you. I am going to give you one chance--get me the money by four-thirty, in my possession, or I won't sell you another hide'.

That was the extent of that conversation.

Miss Christina Valdez, Prada's secretary and office manager of Laredo Hides, telephoned Hinojosa on Tuesday, March 21st. Hinojosa, summed up the gist of this conversation in the following words:

'She kept telling me the check had been sent, and it was in the post office, and I said: 'look, I don't believe you, and I don't want to talk to you. But one thing, if you don't have my money to me by four-thirty, I won't sell you another hide'. She said: 'if you don't sell the hides to us, I am going to sue you'. And I said: 'Well, get at it'. And that was the end of it'.

Hinojosa further admitted that Miss Valdez telephoned him twice more on that Tuesday afternoon and that Prada telephoned him once more, but he refused to talk to either of them.

The ultimatum delivered by Hinojosa on Tuesday, March 21st touched off a flurry of activity in Laredo. Prada went to a bank in Laredo and between the hours of 2:00 p.m. and 3:00 p.m., arranged to transfer $9,000.00 directly to H & H's account in the Mid-Valley State Bank in Weslaco. After the transfer was arranged, two telegrams were sent to Hinojosa, one by the Laredo Bank, the other by Laredo Hides. Both informed him of the transfer of the funds and that payment on the check had been stopped. These telegrams were received by Hinojosa about 5:00 p.m., March 21st.

A. R. Vela, a vice-president of the Laredo Bank, testified that the transfer had to be arranged through correspondent banks in San Antonio. He telephoned Edward W. Rutledge of the National Bank of Commerce in San Antonio between 3:00 and 4:00 p.m. on March 21st. The National Bank of Commerce was not a correspondent bank of Mid-Valley State Bank. Upon receiving the call from Vela, Rutledge telephone Don Gentry, a vice president of the Mid-Valley State Bank, and asked for instructions. This call was made before 4:00 p.m. on March 21st. Gentry advised Rutledge that the Frost National Bank of San Antonio was their correspondent bank and the money should be paid to that bank for the account of Mid-Valley State Bank. This had to be done by a federal reserve draft, and as the National Bank of Commerce, the Frost National Bank and the Federal Reserve Bank each closed at 3:00 p.m., the actual transfer of the money could not be accomplished until the next day. Accordingly, on March 22nd, the $9,000.00 was paid by federal reserve draft to the Frost National Bank for the account of the Mid-Valley State Bank.

The check was received through the mail by H & H on the morning of Wednesday, March 22nd. Hinojosa then telephoned the Mid-Valley State Bank, inquired about the bank transfer, and was told that such a credit for the account of H & H had not arrived at the bank. He called the bank again Wednesday afternoon and was again advised that the credit had not arrived.

On Thursday morning, March 23rd, a bookkeeper at the Mid-Valley State Bank called Hinojosa and told him that the credit had arrived. The next day, Friday, March 24th, Hinojosa mailed the $9,000.00 check back to Laredo Hides, and refunded $1,237.02 to Laredo Hides, since the $9,000.00 received by H & H by way of bank transfer amounted to more than the amount of money due on the hides that were delivered on March 18th.

Hinojosa treated the failure to make payment before 4:30 p.m. on March 21, 1972, as a breach of the agreement which gave H & H a right to cancel the contract. On March 30, 1972, Prada called Hinojosa and asked if a shipment of hides would be ready on the following Saturday, April 1, 1972. Hinojosa unequivocally told him that he was not going to sell him anymore hides, and further advised that it was useless for him to send a truck for the hides, since at 4:30 p.m., Tuesday, March 21st, he had made up his mind to terminate the contract.

Laredo Hides, on March 3, 1972, had contracted with a Mexican tannery for the sale of all the hides which it expected to purchase from H & H under the February 29, 1972, contract. Following the cancellation by H & H of the contract, Laredo Hides, in order to meet the requirements of its contract with the tannery, was forced to purchase hides on the open market in substitution for the hides which were to have been delivered to it under the contract with H & H.

H & H's total production during the months April through December, 1972, was 17,218 hides. Under the contract with H & H, the price was $9.75 per hide for bull, steer and heifer hides, and $9.75 per hide for cow hides if the shipment was under 5% Cow hides. In the event the shipment was more than 5% Cow hides, the price on the excess of cow hides over 5% Was reduced to $7.50 per cow hide. The market price for hides steadily increased following the execution of the contract in question. By December 31, 1972, the average cost of bull hides was about $33.00 each and the average cost of cow, heifer and steer hides was about $22.00 each. The...

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