Paull v. Archer-Daniels-Midland Company

• Decision Date: 19 February 1963
• Docket Number: No. 17016.,17016.
• Citation: 313 F.2d 612
• Parties: R. C. PAULL, Virginia Paull and Paull's Hatchery, Inc., Appellants, v. ARCHER-DANIELS-MIDLAND COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

313 F.2d 612 (1963)

R. C. PAULL, Virginia Paull and Paull's Hatchery, Inc., Appellants, v. ARCHER-DANIELS-MIDLAND COMPANY, Appellee.

No. 17016.

United States Court of Appeals Eighth Circuit.

February 19, 1963.

James B. Blair and Courtney C. Crouch, of Crouch, Blair and Cypert, Springdale, Ark., made argument for appellants and J. E. Simpson, Berryville, Ark., was with them on the brief.

Wright W. Brooks, Minneapolis, Minn., made argument for appellee and Fitton & Adams, Harrison, Ark., were with him on the brief.

Before SANBORN and BLACKMUN, Circuit Judges, and REGISTER, District Judge.

REGISTER, District Judge.

This is an appeal from a judgment rendered by the District Court, following a hearing before that Court, which hearing was held subsequent to the issuance and filing of a mandate of this Court. See Archer-Daniels-Midland Company v. Paull, 8 Cir., 293 F.2d 389. In order to understand the present controversy, it is necessary to briefly summarize the factual background from which the same arises.

Archer - Daniels - Midland Company (hereinafter referred to as "ADM"), a corporation, initially brought this action in the spring of 1960 against R. C. Paull, Virginia Paull and Paull's Hatchery, Incorporated, to recover a substantial sum of money allegedly due on promissory notes signed or guaranteed by said appellants in connection with the furnishing by ADM of feed and medicine for turkeys raised by appellants in the year 1958, which business transaction arose from ADM's turkey financing program in northwest Arkansas for that year. In said action the defendants (appellants here) not only, by answer, denied any indebtedness to plaintiff (appellee here), but filed counterclaims for alleged breach of contracts to finance the raising of turkeys in the year 1959. ADM duly filed its answer to said counterclaims whereby it denied the existence of any indebtedness by it in favor of either of the defendants (counterclaimants). The case was tried to the Court which, following trial and the submission of briefs, filed a statement of the issues and detailed findings of fact, conclusions of law, and memorandum opinion. 188 F. Supp. 277. Succinctly stated, the controverted issues before the trial court were whether ADM had entered into complete and binding oral contracts to finish the financing as alleged in the counterclaims, and, if so, whether ADM's failure to perform "* * * entitled the counterclaimants to damages measured by the profits they might or would have made had the contracts been fully performed by ADM". 293 F.2d 392. In this original action, ADM's right to recover on the promissory notes was not disputed; the sole issues therein related to the counterclaims. By its judgment (which was entered on October 26, 1960) the trial court determined that the alleged oral contracts had been entered into and had been breached by ADM and that counterclaimants were entitled to damages measured by the standard referred to. From that judgment ADM appealed to this Court. The basis of its appeal was twofold — (1) "that there was an inadequate evidentiary basis for the finding that it entered into the alleged contracts * * *" and (2) "that, if the finding that ADM entered into the alleged contracts is sustained, there is an insufficient factual and legal basis for the damages awarded R. C. Paull and Paull's Hatchery, Inc., upon their counterclaims." 293 F.2d pp. 392-393.

While this Court affirmed the finding of the trial court as to (1) above, it sustained ADM's challenge of the trial court's award of damages for profits allegedly lost because of the failure of ADM to fulfill its alleged contracts to finance turkey-raising programs of the counterclaimants during 1959, and held that under the evidence and the applicable substantive law of Arkansas, ADM could not be held legally liable in damages for profits which the trial court found the counterclaimants would have earned had ADM carried out its contracts to finance their turkey-raising programs in 1959. This Court, in its discussion concerning the issue of damages, stated in part as follows:

"It is not conceivable to us that at the time the contracts asserted in the counterclaims were entered into the parties could have contemplated that there was any reasonable certainty that the fulfillment of the contracts would result in profits. * * It seems obvious to us from the evidence that the raising of turkeys is not a stable business but a speculative one, and that profits depend upon many factors, including management, market conditions, the health of the flocks, and other contingencies. * * *

"Concededly, the measure of damages for the breach of a contract to loan money is the difference between the agreed interest rate and that which would be required to procure the money elsewhere, not exceeding the highest rate permitted by law. See Columbian Mut. Life Assur. Soc. v. Whitehead, 193 Ark. 598, 101 S.W.2d 455."

The opinion of this Court, filed on August 4, 1961, concluded as follows:

"So much of the judgment as is appealed from is reversed, and the case is remanded for the ascertainment of whatever general damages may, under applicable Arkansas law and consistently with this opinion, be due to the defendants R. C. Paull and Paull\'s Hatchery, Inc., upon their counterclaims.

"Reversed and remanded."

Thereafter the defendants (appellants here) filed a petition for rehearing, which was duly denied, and this Court's mandate to the trial court was issued on September 27, 1961, and was filed therein on September 29, 1961.

On November 6, 1961, a hearing was had before the trial court to determine the terms to be incorporated in the judgment that was to be entered upon the opinion and mandate of this Court — a hearing apparently called because of disagreement of counsel as to the effect and extent of the mandate. At that hearing the trial court permitted appellants, over objection of counsel for ADM, to introduce testimony to the effect that turkey raising in the area here involved is a stable and generally profitable business, and to the effect that, at the time ADM agreed to finance the turkey-raising programs of the appellants, the parties contemplated that profits were reasonably certain to result. At that hearing the trial court also permitted appellants, over appellee's objection, to introduce testimony by which they sought to establish the facts which would bring them within the expressed exceptions to the general rule as to the measure of damages for the breach of a contract to loan money, as stated in Whitehead, supra. The trial court permitted all of such testimony to be taken as an "offer of proof". In its opinion (reported at 199 F.Supp. 319) following that hearing the trial court stated, at page 323:

"The testimony that was introduced at the hearing clearly and unmistakably established three facts, viz.: (1) that it was in the contemplation of the plaintiff and the defendants at the time the contracts were entered into that all parties expected to make a profit; (2) that the growing, feeding and marketing of turkeys is not anymore hazardous or uncertain than countless other business enterprises; and (3) that because of the custom and practice of feed companies, as set forth in the trial court\'s first finding of fact, hereinbefore referred to, the defendants were unable to obtain sufficient financing to carry on the business which would have been carried on had the plaintiff not breached the contracts."

At said hearing evidence was also submitted relative to the issue of general damages allegedly suffered by the defendants (appellants) because of the refusal of ADM to perform its contractual obligations. The trial court thereupon filed an Opinion wherein it held, in effect, that the judgment entered by it on October 26, 1960, should be vacated and set aside; that the general damages to which Paull's Hatchery, Inc., was entitled was the sum of $10,000.00 (being the amount that the trial court found that such defendant had expended in preparing to perform its obligations under the contract); and that no general damages were suffered by the defendant R. C. Paull. The trial court subsequently filed its judgment in favor of ADM on the promissory notes originally sued upon, less the sum of $10,000.00 which the court allowed as general damages to Paull's Hatchery, Inc., as aforesaid, and for its costs on appeal.

From that judgment, which was entered on November 17, 1961, this appeal was taken. Appellants' contentions on this appeal are:

1. That the trial court erred in failing to grant Paull's Hatchery, Inc., more than $10,000.00 as general damages for ADM's breach of contract; and

2. That the trial court erred in failing to award damages to appellants, based upon loss of anticipated profits.

These contentions will be discussed and disposed of by us in reverse order to that in which they are submitted.

On the first appeal of this case to this Court, one of the specific issues was whether there was a sufficient factual and legal basis for the damages that the trial court had awarded R. C. Paull and Paull's Hatchery, Inc., upon their counterclaims. Our determination of that issue was adverse to appellants here. In the opinion of this Court, written after a meticulous examination of the record, we gave careful consideration to the trial court's discussion of the problem, and to the applicable general rules of law and also to the law of Arkansas relating thereto. In our discussion certain observations were made, including those expressed in the portions of our opinion hereinbefore quoted. (293 F.2d 397).

In that opinion, at page 397, we expressed our conclusion as follows:

"Our conclusion is that there was not an adequate basis in the evidence for a determination by the trial court that at the time ADM agreed to finance the turkey-raising programs of the defendants-counterclaimants, the parties contemplated that profits were reasonably certain to result or

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