Pinnacle Packing Co., Inc. v. Herbert

• Decision Date: 13 July 1937
• Citation: 70 P.2d 31,157 Or. 96
• Parties: PINNACLE PACKING CO., Inc., v. HERBERT et al.
• Court: Oregon Supreme Court

70 P.2d 31

157 Or. 96

PINNACLE PACKING CO., Inc., v. HERBERT et al.

Supreme Court of Oregon

July 13, 1937

Department No. 2.

Appeal from Circuit Court, Jackson County; H. D. Norton, Judge.

Action by the Pinnacle Packing Company, Inc., against S. Milanie Herbert and another. Judgment for plaintiff, and named defendant appeals.

Affirmed.

Porter J. Neff, of Medford (Neff & Frohnmayer, of Medford, on the brief), for appellant.

W. M McAllister, of Medford (G. M. Roberts, of Medford, on the brief), for respondent.

BAILEY Justice.

The plaintiff, Pinnacle Packing Company, Inc., an Oregon corporation, brought this action to recover from the defendants, Mrs. S. Milanie Herbert and William Kantor, the sum of $1,319.31 with interest at the rate of 6 per cent. per annum from May 31, 1935. From a judgment in favor of the plaintiff and against both defendants for the amount prayed for, Mrs. Herbert appeals.

In 1934 and for several years prior thereto Mrs. Herbert was the owner of a tract of land comprising approximately 102 acres in Jackson county, Ore., known as Soulard orchard planted to deciduous fruits. Prior to the 1934 crop year, Mrs. Herbert managed and operated the orchard. In November, 1933, she leased the orchard to Joe Kantor for a period of five years with the expectation that he would procure from the Regional Agricultural Credit Corporation funds with which to care for and harvest the crops. That corporation, however, refused to make any loan to him, for the reason that he had another loan with it and was unable to give the security required. His lease was canceled about February 24, 1934.

On March 22 of that year the defendant William Kantor, a son of Joe Kantor, entered into a written lease with Mrs. Herbert by the terms of which the lessee agreed to "furnish all labor, materials, equipment, and to pay for all expenses incurred in the production and harvesting of crops," and to care for the orchard properly and do other work necessary to be done to maintain the orchard in good condition. The lessee was to have two-thirds of all crops grown on the premises, and Mrs. Herbert, the owner, was to have one-third. The lease commenced March 22, 1934, and was to terminate November 21, 1938.

The defendants thereafter borrowed from the credit corporation the sum of $4,568, evidenced by their promissory note, which was secured by a mortgage executed by both defendants, acknowledged April 6, 1934, covering all crops grown on said tract of land owned by Mrs. Herbert, and covering all harvesting and farm machinery, tools, equipment, and live stock on the property, also owned by Mrs. Herbert.

In this mortgage in printed form the makers thereof are referred to, regardless of number, as "the mortgagor." The said mortgage contains among others the following provisions:

"The mortgagor further covenants and agrees that they will well and carefully plow, till, cultivate and seed and otherwise operate said property and tend, care for and protect said crops while growing, and that when they have reached maturity they will take all steps necessary to harvest the same and deliver the same into the possession of the mortgagee stored in proper containers in the usual manner."

On the same day that this mortgage was acknowledged, a contract was entered into between the plaintiff, the defendants, and Medford National Bank, which was as follows:

"This agreement made this 6th day of April, 1934, between S. Milanie Herbert, first party, William Kantor, second party, Pinnacle Packing Co. Inc., third party, and Medford National Bank, fourth party, witnesseth:

"The first party is the owner of Soulard orchard; second party has a lease upon the same for the current year; first and second parties have made application to the Regional Agricultural Credit Corporation, Portland branch, for a loan of $4,568.00 to finance the operation of said orchard during the current year and it will require approximately $1,500.00 additional money to produce the crop and deliver the same in the packing house.

"The parties agree as follows: It is agreed that said loan when obtained shall be disbursed under the supervision of third party and that the second party shall receive $50.00 per month during the growing season for his services up to and including the month of October, 1934, and beginning April 1, 1934. It is further agreed that when the loan is received, that the actual labor claims for work already performed and furnished by second party shall be paid. It is further agreed that the fruit be handled and sold by the third party under its usual contract, and that when the fruit is delivered at the warehouse of the third party he will finance the packing, shipping and selling of the same, said charges to be a first claim on the proceeds of the fruit. It is further agreed that the additional moneys needed to make the crop up to $1,500.00 are to be furnished in equal shares by the party of the third part and the party of the fourth part, and that all moneys received from the crops shall be applied first, to the payment of the packing and selling charges, including storage, freight, etc., second, to the payment of the loan to the Regional Agricultural Credit Corporation; third, to repay the advances made by third and fourth parties as aforesaid, and that the balance shall belong to the parties of the first and second part in accordance with the terms of their lease.

"In witness whereof, the parties have hereunto set their hands and seals this the day and year first hereinabove written.

"S. Milanie Herbert, First Party.

"Wm. Kantor, Second Party.

"Pinnacle Packing Co., Inc.

"By R. R. Reter, Mgr., Third Party.

"Medford National Bank,

"By J. A. Perry, Pres., Fourth Party."

The contract above set forth, it will be noted, provides that, "It is further agreed that the fruit be handled and sold by the third party under its usual contract, and that when the fruit is delivered at the warehouse of the third party he will finance the packing, shipping and selling of the same, said charges to be a first claim on the proceeds of the fruit."

A copy of the form of the "usual contract" mentioned was admitted in evidence without objection. It purports to be an agreement between the "grower" and the "marketing or selling agent," which latter, as the record shows, was the packing company. The contract form states that it "is intended as a marketing contract and a real and chattel mortgage to secure unto the selling agent the payment of any and all sums of money and any and all other advances and indebtedness of every kind, nature and description, whether heretofore or which may be hereafter made, either upon and evidenced by an open account or by a promissory note, or otherwise, made to said grower *** by said selling agent, and any and all materials of every kind, nature and description heretofore or which may be hereafter sold to said grower *** by said selling agent, the full purchase price of which has not been or which may not be fully paid at said time." This agreement also provides for the advancing of money not exceeding a definite sum, by the marketing or selling agent, and provides for the repayment of any money advanced to or on behalf of the grower or paid by the marketing agent for materials supplied for the use of said grower. No such marketing agreement as contained in the form of contract here described was made out or executed by the parties to the above-quoted contract or any of them, although the record discloses that the fruit grown on the defendant Mrs. Herbert's land was delivered to the packing company and by it handled and sold, without objection, in the manner provided by its "usual contract."

After Mrs. Herbert discovered that the credit corporation would not loan any money to Joe Kantor, she consulted the officers of the bank and those of the packing company, and requested that they assist her in obtaining the necessary financing to grow and harvest her 1934 crop. After some delay, the defendant William Kantor was obtained, through the assistance of the bank and the packing company, as a tenant of Mrs. Herbert to operate the orchard.

In negotiating the loan with the credit corporation it was estimated that there would be required approximately $6,000 to produce and harvest the crop, and the credit corporation agreed to loan in the neighborhood of $4,568, if the difference between the amount loaned by it and the necessary $6,000 could be procured. Mrs. Herbert thereupon sought the advice and assistance of the packing company and the bank, and finally the two agreed to advance up to $1,500, if necessary to meet operating costs up to the time of delivery of the fruit to the warehouse. When this assurance was obtained by Mrs. Herbert, the credit corporation made advances totaling $4,568, secured by the mortgage above mentioned. At the same time, as above stated, the contract between the plaintiff, the two defendants, and the bank was executed. Under the agreement between the parties, the money advanced by the credit corporation was turned over to the packing company and by it disbursed in cultivating and harvesting the fruit crop.

The defendant William Kantor was not at all active in procuring the loan from the credit corporation or in obtaining the assurance of further financing or the contract with the bank and the packing company.

There was expended on the Soulard orchard, under the supervision of the packing company, the sum of $9,388.06, which included the $4,568 loaned by the credit corporation; and there has been paid or credited on the amount so expended the sum of $8,068.75, including the amount repaid to the credit corporation, leaving unpaid and owing to the plaintiff the sum of $1,319.31. All of this latter sum...