Masson Cheese Corp. v. Valley Lea Dairies, Inc.

• Decision Date: 29 October 1980
• Docket Number: No. 3-679A166,3-679A166
• Citation: 411 N.E.2d 716
• Parties: 30 UCC Rep.Serv. 525 MASSON CHEESE CORP., Plaintiff-Appellant, v. VALLEY LEA DAIRIES, INC., Defendant-Appellee.
• Court: Indiana Appellate Court

Page 716

411 N.E.2d 716

30 UCC Rep.Serv. 525

MASSON CHEESE CORP., Plaintiff-Appellant, v. VALLEY LEA DAIRIES, INC., Defendant-Appellee.

No. 3-679A166.

Court of Appeals of Indiana, Third District.

Oct. 29, 1980.

Richard D. Bonewitz, Hammerschmidt, Bonewitz & Miller, South Bend, for plaintiff-appellant.

Arthur A. May, May, Searer, Oberfell & Helling, South Bend, for defendant-appellee.

HOFFMAN, Judge.

Appellant Masson Cheese Corp. appeals a negative judgment on its complaint against appellee Valley Lea Dairies, Inc. Certain findings of fact and conclusions, along with the admission of two of defendant's exhibits, are challenged in the appeal.

Masson Cheese Corp. is a California based corporation operating as a manufacturer and distributor of cheese products. Valley Lea Dairies, Inc. is an Indiana corporation which acts as a marketing agent for the sale of dairy products as well as a billing and collecting agent for such sales. Swan Lake Enterprises, Inc., d/b/a Blue Valley Cheese, is a Nebraska based corporation engaged in the manufacture and distribution of cheese.

Prior to April 1975, Blue Valley sold products through Valley Lea and became indebted to it for $42,580.15. In April 1975, John Masson and Morris Forenella, the only shareholders of Masson Cheese Corp., each purchased 25% of the shares of stock of Blue Valley. Thereafter Masson Cheese Corp. advanced funds to Blue Valley, which in turn sold cheese to Masson Cheese Corp. to offset the advances. There was an understanding that Masson Cheese Corp. would purchase the entire product of Blue Valley. The cheese would be shipped from Blue Valley's plant in Nebraska to various outlets throughout the country. The billing was done through Masson Cheese Corp. which credited the account of Blue Valley for the value of the cheese shipped.

Sometime after Masson and Forenella acquired their interests in Blue Valley, but before June 1975, Roy Mitchell, president of Blue Valley, entered into an agreement with Valley Lea whereby the past debt would be repaid. According to the agreement Blue Valley was to sell cheese through Valley Lea. Valley Lea would then keep the proceeds equal to the price of 1,000 pounds of cheese and apply it to Blue Valley's account. John Masson had knowledge of this agreement.

In November and December 1976, Blue Valley had a surplus of cheese which it, with Masson's approval, sought to sell through Valley Lea. Valley Lea sold two loads of cheese to Lucille Farms Products and, pursuant to instructions from Blue Valley, remitted the proceeds, less the price of 1,000 pounds of cheese per load, to Masson Cheese Corp. A third load, however, was rejected by Lucille Farms. Roy Mitchell and John Masson decided to sell this cheese through Valley Lea.

The third load was sold to Campagna Brothers of Brooklyn, New York. Before the cheese was paid for, however, a dispute arose between Masson, Forenella and Blue Valley. Masson and Forenella relinquished their stock in Blue Valley and withdrew all other financial support.

Blue Valley informed Valley Lea of the split and suggested that it take some action to settle the past indebtedness. A plan was developed whereby Valley Lea applied the proceeds from the sale of the third load to Blue Valley's account and remitted to Blue Valley the amount in excess of the debt.

Masson Cheese Corp. brought suit against Valley Lea claiming that the cheese had been sold to Masson Cheese Corp. and it was entitled to the proceeds from the sale. The trial court found that title to the cheese had not passed to Masson Cheese Corp. and entered judgment for Valley Lea.

Masson Cheese Corp. contends that the following two findings of fact are not supported by the evidence, are contrary to the evidence and are in error:

Finding No. 4: "In April, 1975 John Masson and Morris Forenella each purchased 25% of the stock of Blue Valley which company was experiencing financial difficulties. As part of the arrangement in buying 50% of Blue Valley stock, Masson took control of the entire product of Blue Valley. (Alleged error emphasized).

Finding No. 6: "After Masson took control of Blue Valley, before June, 1975, Roy Mitchell, the president of Blue Valley, talked to Valley Lea concerning the indebtedness of Blue Valley to Valley Lea. As a result of the conversations, an agreement was entered into for the repayment of the past due indebtedness from Blue Valley to Valley Lea, which agreement was acknowledged by Roy Mitchell of Blue Valley and agreed to by John Masson." (Alleged error emphasized).

The scope of review for this Court is well settled. Where appellants have suffered a negative judgment in a bench trial in which the trial court has made specific findings of fact and conclusions of law, this Court is governed by Ind.Rules of Procedure, Trial Rule 52(A) setting forth the "clearly erroneous" standard. A finding is clearly erroneous and will be set aside only if the evidence is uncontradicted and will support no reasonable inference in favor of the finding. Alfaro v. Stauffer Chemical Co. (1977), Ind.App., 362 N.E.2d 500.

With respect to Finding No. 4, the evidence is uncontradicted that as part of the arrangement in which Masson Cheese Corp. advanced money to Blue Valley, Masson Cheese Corp. would purchase the entire product of Blue Valley. The trial court indicated in its findings that the name "Masson" referred to Masson Cheese Corp. and not to John Masson personally. When the finding in question is read in its entirety it is clear that the trial judge found that Masson Cheese Corp. took control of the entire product of Blue Valley and not that John Masson or Masson Cheese Corp. took control of the Blue Valley Corporation. The finding is therefore not clearly erroneous.

In interpreting Finding No. 6, it is a recognized principle of law that findings will be construed together, and construed liberally, in favor of the judgment. In re Marriage of Miles (1977), Ind.App., 362 N.E.2d 171. It is clear that when this finding is read together with Finding No. 4, that by "control" the trial judge is referring to control of the product by Masson Cheese Corp. As stated above, such finding is not clearly erroneous.

There is evidence that John Masson was included in the conversations concerning the repayment of Blue Valley's debt to Valley Lea and agreed to the repayment. Contrary to the interpretation Masson Cheese Corp. gives to Finding No. 6, the trial court did not find that John Masson entered into a written agreement to repay the debt of Blue Valley. The finding merely states that John Masson agreed to the plan of repayment entered into between Blue Valley and Valley Lea. There is nothing in the finding to indicate that either John Masson or Masson Cheese Corp. agreed to pay the debt of Blue Valley. Although there is conflicting evidence as to John Masson's participation in, and agreement to the repayment plan, the finding will not be set aside as being clearly erroneous.

Masson Cheese Corp. next argues that Valley Lea's Exhibits A and B are irrelevant and should not have been admitted into evidence. These exhibits are copies of a letter in which the repayment agreement is set out. Exhibit B contains the signature of Roy Mitchell, president of Blue Valley, acknowledging the letter.

The law assumes any inappropriate evidence received during the course of a trial to the court is excluded by the court unless it is shown that the objecting party was prejudiced by its admission. Glover v. Ottinger (1980), Ind.App., 400 N.E.2d 1212. Masson Cheese Corp. makes no argument, nor does it allege that it was harmed by the admission of the exhibits. Additionally, relevancy is the logical tendency of evidence to prove a material fact and is a question for the discretion of the trial judge. Indiana Nat. Corp. v. Faco, Inc. (1980), Ind.App., 400...