Nephi Processing Plant v. Western Coop. Hatcheries

• Decision Date: 30 April 1957
• Docket Number: No. 5352.,5352.
• Citation: 242 F.2d 567
• Parties: NEPHI PROCESSING PLANT, Inc., a corporation, Appellant, v. WESTERN COOPERATIVE HATCHERIES, a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

242 F.2d 567 (1957)

NEPHI PROCESSING PLANT, Inc., a corporation, Appellant, v. WESTERN COOPERATIVE HATCHERIES, a corporation, Appellee.

No. 5352.

United States Court of Appeals Tenth Circuit.

March 4, 1957.

Rehearing Denied April 30, 1957.

John S. Boyden, Salt Lake City, Utah (Bryant H. Croft, Salt Lake City, Utah, was with him on the brief), for appellant.

Arthur H. Nielsen, Salt Lake City, Utah (Dean E. Conder, Salt Lake City, Utah, was with him on the brief), for appellee.

Before BRATTON, Chief Judge, and HUXMAN and PICKETT, Circuit Judges.

BRATTON, Chief Judge.

This was an action instituted in the United States Court for Utah by Western Cooperative Hatcheries against Nephi Processing Plant, Inc.; and for convenience, reference will be made to the parties as Hatcheries and Processing, respectively. Hatcheries was a corporation organized under the laws of Washington; Processing was a corporation organized under the laws of Utah; and jurisdiction was predicated upon diversity of citizenship with the requisite amount in controversy.

The complaint was in three counts. The first count was upon a promissory note. The second count was to recover for turkey poults delivered to Processing pursuant to the terms of a written agreement. It was alleged among other things that by the agreement, Processing was obligated to pay one-half of the price of such poults within thirty days after the delivery thereof and was to deliver to Hatcheries notes and mortgages from the growers of the turkeys for the balance; and that Processing failed to comply with such obligation. And the third count was to recover for poults delivered to Processing but not covered by the written agreement. By answer, Processing admitted the execution and nonpayment of the note but alleged that the amount thereof was offset by a greater sum owed to Processing as alleged in the counterclaim subsequently pleaded. Processing admitted the execution of the written agreement and the delivery of the poults but pleaded in substance that when the poults began to arrive it was determined that they were infected with a chronic respiratory disease commonly called infectious sinusitis; that Processing immediately directed that no further poults infected with such disease be shipped; that notwithstanding such direction, Hatcheries continued to ship infected poults; that due to the diseased condition of the poults, Processing was unable to collect from growers who received them one-half of the purchase price or to obtain from such growers notes and mortgages for the remaining one-half of the purchase price; that the parties entered into an oral modification of the written agreement; and that Processing performed its obligations under the agreement as modified. Processing admitted the delivery of poults not covered by the agreement but alleged that the amount due therefor was offset by a greater sum owed to Processing as charged in the counterclaim subsequently pleaded. And Processing pleaded three counterclaims. In the first counterclaim, it sought to recover reimbursement for expenditures made for medicines used in combatting the disease among the poults, sought to recover for commissions, and sought to recover for loss of profits. The second and third counterclaims were subsequently abandoned. The cause was tried to a jury. The court directed a verdict for Hatcheries on the several counts in the complaint in specified amounts, respectively; and the court further directed a separate verdict against Processing on the several counterclaims. Judgment was entered upon the verdicts, and Processing appealed.

Entertaining the view that the written agreement into which the parties entered was within the statute of frauds either as a contract of sale or an obligation to guarantee the debt of another and therefore could not be modified by a subsequent oral agreement, the court excluded all of the tendered evidence tending to show that after discovery of the infectious disease among the poults, the parties by oral agreement entered into a different arrangement and that Processing performed its obligations under such new arrangement. Section 60-1-1, Utah Code Annotated 1953, provides that a contract to sell goods is a contract whereby the seller agrees to transfer the property to the buyer for a consideration called the price. And section 60-1-4 provides that a contract to sell or a sale of any goods or choses in action of the value of $500 or more shall not be enforceable by action unless the buyer shall accept part of the goods or choses in action so contracted to be sold or sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract or sale is signed by the party to be charged or his agent in that behalf. Hatcheries was a co-operative located at Bellevue, Washington, engaged in the business of supplying large quantities of turkey poults from its hatcheries located in the Northwest. Processing owned and operated a turkey processing plant at Nephi, Utah, at which it processed turkeys for various growers. The processing consisted of killing, eviscerating, freezing, and shipping the turkeys. The agreement provided among other things that Hatcheries would deliver 450,000 poults to Processing, f.o.b. Salt Lake City, Utah, "for sale to producers". It provided that Processing agreed "to cause the same to be purchased by producers". It provided that Processing agreed "to cause to be paid over to" Hatcheries one-half of the sale price of the poults within thirty days after their arrival in Utah. It provided that Processing should deliver to Hatcheries notes and mortgages regularly executed by producers "who purchase the poults for the balance of the purchase price, said balance to be payable within sixty days after the processing of said turkeys." It provided that Processing should "place all of said turkeys with other growers who have been approved by General Mills, Inc., or other acceptable feed suppliers, as to credit risk; and for those so placed Cooperative will assume the risk and responsibility of payment of such notes and mortgages." It provided that Processing should "cause all turkeys subject to the notes and mortgages executed pursuant to Paragraph 1 hereof to be marketed or sold to or through the Processor, and further agrees to hold the funds from the sale of said turkeys which come into its hands for application upon the mortgages and obligations against said turkeys, brooding supplies, processing and marketing and other encumbrances, and the obligation to the Cooperative." And it provided that in consideration of Processing selling the number of turkeys specified therein, for the services rendered in placing such turkeys, and for the services rendered in aiding Hatcheries in the collecting of the balance of the purchase price, Hatcheries should upon full payment of each lot of turkeys, or within fifteen days thereafter, pay to Processing ten per cent of the purchase price of such turkeys paid to it. Processing contacted growers or producers and obtained from them orders to purchase various quantities of the poults; obtained promissory notes for part of the purchase price of the poults; and obtained chattel mortgages upon the poults as security for the notes. The orders were placed upon an order form which Hatcheries furnished to Processing and they were signed by Richard L. Harmon as "Cooperative representative" and the growers, respectively. Harmon was employed by Processing, and he bore no relationship to Hatcheries except in placing the poults and obtaining the orders, the notes, and the chattel mortgages. After an order was executed in that manner, it was forwarded to Hatcheries. Hatcheries then prepared an "Acceptance of Order Form". The original was sent to the grower, and a so-called "Salesman's Copy" was mailed to Processing. That general pattern of practice was followed by the parties acting under a similar agreement during the preceding year and again in carrying out this agreement.

The sale of personal property in the usual sense ordinarily means the passing of title and possession for money or other consideration which the buyer pays or promises to pay. Five Per Cent. Cases (State of Iowa v. McFarland), 110 U.S. 471, 478, 4 S.Ct. 210, 28 L.Ed. 198; Pender v. Commissioner, 4 Cir., 110 F.2d 477, certiorari denied, 310 U.S. 650, 60 S.Ct. 1103, 84 L.Ed. 1416; Hawaiian Gas Products v. Commissioner, 9 Cir., 126 F.2d...