Panhandle Agri-Service, Inc. v. Becker
| Decision Date | 08 May 1982 |
| Docket Number | No. 53134,AGRI-SERVIC,INC,53134 |
| Citation | 644 P.2d 413,231 Kan. 291 |
| Parties | , 33 UCC Rep.Serv. 1320 PANHANDLE, a Texas Corporation, Appellee/Cross-Appellant, v. Norman BECKER, Appellant/Cross-Appellee. |
| Court | Kansas Supreme Court |
Syllabus by the Court
1. A foreign corporation is required to comply with the provisions of K.S.A. 17-7301 and 17-7302 before doing business in this state and if it fails to comply and has done business in this state without authority it may not maintain any action in this state.
2. The phrase "doing business in this state" so as to require registration before maintaining an action is defined by K.S.A. 17-7303 and requires the establishment of an office or place of business within this state, or a distributing point herein, or delivery of its wares or products to resident agents in this state for sale, delivery or distribution.
3. Summary judgment is proper only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
4. The meaning of the word "cover" as used in the Uniform Commercial Code relating to sales is explained in K.S.A. 84-2-712 and refers roughly to the buyer's procurement of substitute goods when the seller nondelivers or repudiates.
5. Subject to the provisions of K.S.A. 84-2-713 with respect to proof of market price (section 84-2-723), the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price, together with any incidental and consequential damages provided in this article (section 84-2-715), but less expenses saved in consequence of the seller's breach.
6. Consequential damages resulting from the seller's breach include any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise. K.S.A. 84-2-715(2)(a).
7. A buyer does not have to cover under K.S.A. 84-2-712(3); however, on failure to attempt cover, consequential damages, including loss of profits, cannot be recovered.
8. In an action brought to recover damages for nondelivery and repudiation of a contract for the sale of 912 tons and 256 pounds of hay, where no evidence was offered of any attempt to cover, the correct measure of damages was the difference between the market price at the time the buyer learned of the breach and the contract price.
John M. Lindner, of John M. Lindner, Chartered, Garden City, argued the cause and was on the brief for the appellant and cross-appellee.
Lelyn J. Braun, of Lelyn J. Braun, Chartered, Garden City, argued the cause and was on the brief for the appellee and cross-appellant.
Panhandle Agri-Service, Inc., is a Texas corporation engaged in the purchase and sale of hay, feed yard chemicals, conditioners, and preservatives. It entered into a contract with Norman Becker, a farmer at Garden City, Kansas, to purchase 10,000 tons of alfalfa at $45.00 a ton to be delivered at the Becker farm near Garden City during the 1978 hay season. Becker was short of hay at the end of the 1978 season. The president of Panhandle, Jake Holster, and Becker then agreed that the balance of the hay due under the contract, 912 tons and 256 pounds, would be supplied from the 1979 hay crop.
Difficulties arose in 1979. It was alleged that Becker failed or refused to supply the balance of hay, and Panhandle brought suit to recover damages for breach of the contract.
Some of the difficulties which brought about the breach included certain financial difficulties of Panhandle. Although Panhandle had paid Becker for all hay delivered in 1978, it had incurred considerable outside indebtedness. In attempting to satisfy its creditors it sold its fleet of trucks which had been used to haul the hay from Kansas to Texas. Panhandle also had become involved in a lawsuit with LeRoy Nichols, a resident of Kansas, over payment of commissions. Nichols obtained a $3,000.00 judgment against Panhandle. The president of Panhandle, Jake Holster, quit the company and a Walter Nelson moved into the presidency.
In May, 1979, Nelson called Becker by telephone to verify that they still had a contract. Becker later called Nelson and told him he could pick up the hay. However, because of Panhandle's financial troubles, of which Becker was aware, it was stipulated that the hay must be paid for before loading. Panhandle agreed. Panhandle arranged with a Gale McCoy to haul the hay and he was given a check for the first load. Then McCoy learned of the judgment which Nichols held against Panhandle. Nichols threatened to attach the trucks by legal process if the hay was picked up. McCoy refused to get involved and returned the check for hay to Panhandle sometime later.
By this time in 1979, the market price of hay at Garden City had risen to $62.00 per ton. Nelson then contacted Becker. Nelson testified at trial that Becker told him he would not deliver anymore hay. No reason was given. Suit was filed and the trial court awarded Panhandle damages for breach of contract in the sum of $12,698.63. There was testimony by Nelson that he had contracted to sell the hay in Texas for $67.00 per ton or at a profit of $22.00 per ton, and the cost of hauling the hay from Kansas to the Texas market was figured at $7,371.00. The trial court arrived at the $12,698.63 by multiplying 912.256 tons by $22.00 per ton to arrive at a figure of $20,069.63; then it subtracted the $7,371.00 cost of hauling to arrive at the amount of judgment.
Both parties have appealed. At the outset it must be pointed out the trial court improperly used 912.256 tons instead of 912 tons 256 pounds.
The plaintiff/cross-appellant argues that the cost of hauling should not have been deducted from the lost profits and that judgment should have been for $20,069.63. Defendant/appellant argues the plaintiff had no standing to bring the action because it was a foreign corporation not registered to do business within the state, but in any event, if this court determines otherwise, the proper damages should not exceed $4,560.64. He arrives at this figure by deducting McCoy's trucking rate, $17.00 per ton, from the anticipated profit claimed by Panhandle of $22.00 per ton to arrive at a net figure of $5.00 per ton on 912 tons and 256 pounds or $4,560.64.
We will first examine the appellant's contention that Panhandle was a foreign corporation, not authorized to do business within the state, and therefore, without authority to maintain this action.
K.S.A. 17-7307(a) provides:
K.S.A. 17-7303 states:
"Every foreign corporation that has an office or place of business within this state, or a distributing point herein, or that delivers its wares or products to resident agents in this state for sale, delivery or distribution, shall be held to be doing business in this state within the meaning of this act." Emphasis supplied.
K.S.A. 17-7301 and 17-7302 require all foreign corporations, before doing business in this state, to file an application in the office of the Secretary of State for authority to engage in business in this state as a foreign corporation. Annually, after registration, each foreign corporation doing business within the state must file a certificate of good standing.
A foreign corporation is required to comply with the provisions of K.S.A. 17-7301 and 17-7302 before doing business in this state, and if it fails to comply and has done business in this state without authority it may not maintain any action in this state. K.S.A. 17-7307(a).
Plaintiff argues it was not doing business in Kansas. This brings up the question of what constitutes doing business in this state so as to require registration. The phrase "doing business in this state" so as to require registration before maintaining an action is defined by K.S.A. 17-7303 and requires the establishment of an office or place of business within this state, or a distributing point herein, or delivery of its wares or products to resident agents in this state for sale, delivery or distribution. In the present case plaintiff had none of these. It merely sent its agents and trucks into this state to purchase and pick up the hay which was to be sold in Texas. It had no office, place of business or distributing point in Kansas. It did not deliver any wares or products to resident agents in this state for sale, delivery, or distribution. Panhandle was not doing business as that term is defined by K.S.A. 17-7303, was not required to register as a foreign corporation, and was not prohibited by K.S.A. 17-7307(a) from bringing the present action.
Defendant Becker next contends the trial court erred in failing to enter summary judgment in his favor based on K.S.A. 84-2-309, which provides:
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