Oregon Growers' Co-op. Ass'n v. Lentz

• Decision Date: 13 February 1923
• Citation: 212 P. 811,107 Or. 561
• Parties: OREGON GROWERS' CO-OP. ASS'N v. LENTZ ET AL. [*]
• Court: Oregon Supreme Court

212 P. 811

107 Or. 561

OREGON GROWERS' CO-OP. ASS'N v. LENTZ ET AL. ^[*]

Supreme Court of Oregon

February 13, 1923

In Banc.

Appeal from Circuit Court, Marion County; George G. Bingham, Judge.

Suit by the Oregon Growers' Co-operative Association against August Lentz and another. From a decree granting injunction both parties appeal. Affirmed.

The plaintiff brought suit against the defendant August Lentz for the specific performance of a contract entered into between the plaintiff and defendant on April 22, 1920, and for an injunction enjoining him from selling any of the loganberries mentioned and described in the contract, to any one other than the plaintiff, as provided by said contract.

The plaintiff is a co-operative, marketing association, organized pursuant to chapter 6 of title 39 of the Code, comprising sections 6954 to 6981, inclusive, Or. L. The association is composed exclusively of persons who are actual producers of agricultural or horticultural products, and is not conducted for profit. The purpose for which it was instituted was for the mutual benefit of its members, all of whom have executed contracts with the plaintiff similar to defendant's contract.

The contract itself is an agency contract and appoints plaintiff as agent of the defendant August Lentz to market his product for his benefit, and without profit to the association. The period covered by the contract includes the years 1920 to 1924, both inclusive. The subject-matter of the contract is the sale and disposal of loganberries grown by or for the defendant.

The complaint alleges the corporate existence of the plaintiff the objects and purposes for which it was formed; that the defendant is a grower of loganberries and is a stockholder in the association; that he entered into a contract with the plaintiff and performed it upon his part during the years 1920 and 1921, but had failed and refused to perform during the year 1922, prior to the commencement of the suit; and that all of the stockholders, as well as the plaintiff, are growers of like or similar products and have entered into like contracts with the plaintiff. It sets forth in verbatim a copy of the contract, and alleges that the plaintiff has no plain, speedy, or adequate remedy at law. The complaint prays that the defendant be compelled to specifically perform the contract, and that he be enjoined from selling the loganberries contracted for to any one other than the plaintiff.

By their answer the defendants admitted the execution of the contract by August Lentz, but denied the other allegations of the complaint, and affirmatively alleged that the defendant on or about January 1, 1922, leased his premises to his codefendant, Benjamin Lentz, who was not a party to the contract, and that Benjamin Lentz, and not August Lentz, had complete charge and control of the production and disposal of the loganberries produced during the year 1922, and had harvested and disposed of the same, and that the defendant August Lentz had no power to control the sale or disposal thereof.

The reply denied all of the averments contained in the answer. The contract attached to and made a part of the complaint reads as follows:

"This agreement between the Oregon Growers' Co-Operative Association, a nonprofit, noncapital stock Oregon corporation, with its principal office at Salem, Oregon hereinafter called the association, first party, and the undersigned grower or growers in said state, hereinafter called the grower, second party, witnesseth:

"In consideration of the mutual obligations herein and of the admission of the grower to membership in the association and in pursuance of the articles of incorporation and by-laws thereof and of the express aims of the association for co-operative marketing, for eliminating speculation and waste and for stabilizing the food markets and in accordance with similar obligations undertaken by other growers:

"First. The association agrees to buy and the grower agrees to sell and deliver to the association all of the agricultural or horticultural products, of the varieties specified below, grown by or for him, or acquired by or for him at any place in Oregon, during the years 1920-1921-1922-1923-1924, that he intends to sell or market or consign or deliver directly or indirectly for sale or marketing or consignment to any person or corporation whatsoever.

"Second. The gr The grower expressly warrants that he has not heretofore contracted to sell, market, consign or deliver any of his said products to any person, firm or corporation, except as noted at the end of this agreement. Any products covered by such existing contract shall be excluded from the terms hereof for the period and to the extent noted.

"Third. The association agrees to resell such products, in their original form, or dried or canned or preserved, or as by-products or otherwise, together with similar products or by-products, delivered by other growers under similar contracts, at the best prices obtainable under market conditions, all in the association's discretion, and to pay over the net amounts received thereby as payment in full, to the grower and growers named in contracts generally similar to this contract, according to the resale value of the products delivered by each of the growers, after deducting therefrom the costs of maintaining the association and of transporting, handling, processing, manufacturing, selling, storing, marketing products or by-products and other activities, and also reserves for advertising and other general commercial purposes, said reserves not to exceed 2 per cent. of the gross resale price, all within the sole and conclusive discretion of the association.

"Fourth. The association may contract in advance for the sale of the products of the grower, or any part thereof; sell the same to canners, packers, commission houses, brokers or others at wholesale or retail, at auction or otherwise, before or after canning or processing, within or without this state; contract for the marketing of such products or their by-products through such commission houses or brokers or agents, as the association may select, upon consignment or otherwise; to fix a fair and reasonable price or prices at which such products or by-products may be sold and below which none shall be sold, and to fix all such terms and conditions as the association may deem advisable.

"Fifth. The association may establish selling agencies or auction places in any city and all products consigned or delivered to the markets of that city are subject to the terms and conditions herein provided and to such other equitable conditions as the association may establish for each local selling agency or auction.

"Sixth. (a) The grower agrees that all products delivered hereunder shall be free from damage of any kind and in good marketable and merchantable condition and shall be delivered to the association as, when and where directed.

"(b) The association may make rules and regulations and provide inspectors to standardize the quahty, method and manner of harvesting, handling, packing and shipping of such products for direct sale or for any particular purpose; and the grower agrees to observe and perform any such rules and regulations prescribed by the association.

"(c) All products delivered to or at the order of the association hereunder shall be of the standard and conform to the regulations as to quality and otherwise that may be prescribed by the state and federal authorities and by the association.

"(d) Any deduction or allowance or loss that the association may make or suffer on account of inferior quality or standard, or condition at delivery, shall be charged against the grower and be deducted from his net returns hereunder.

"Seventh. The grower agrees to ship and return all boxes, delivered to him for his use and convenience, as and when directed by the association, and in the event of his failure so to do, to pay to the association therefor the value of each box not shipped or returned as and when ordered, as conclusively determined by the association; and the grower herewith authorizes the association to deduct any such charge from his net returns hereunder.

Eighth. The grower shall have the right to plant any crop at any time in his free discretion; but if the grower produces any agricultural or horticultural products which come within the scope of the association's activities as established by contracts or by notice, or acquires or owns an interest in any thereof, during the term hereof, they shall all be included under the terms of this agreement and must be sold only to the association.

"Ninth. The association is expressly empowered to contract with a cannery or canneries whereby all products which, in its judgment, should be offered for packing, manufacturing into by-products, canning or preserving, shall be sold or used for such purposes under fair and reasonable conditions; or to contract with a broker or commission house for the sale of products; or itself to can or process or pack or otherwise dispose of such products.

"Tenth. The grower agrees to ship directly to any packing house drier, cannery, factory, auction or commission house or broker or other person, such percentage of his daily shipments as the association may direct, packed as the association may instruct.

"Eleventh. The association may, for any purposes herein, pool or mingle products of the grower with products of a like grade and variety from similar districts, all as determined by the association, delivered by other growers named in contracts generally similar to this contract; and the grower agrees that his products may be so mingled, and that the returns therefrom, less all costs, advances and charges, as set forth...