Preston v. U.S., 84-1408

Citation776 F.2d 754
Decision Date08 November 1985
Docket NumberNo. 84-1408,84-1408
PartiesRobert L. PRESTON, et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

James E. Betke, McDermott, Will, Emery Chicago, Ill., for plaintiffs-appellants.

Sheree L. Gowey, Asst. U.S. Atty., Madison, Wis., for defendant-appellee.

Before COFFEY and FLAUM, Circuit Judges, and GIBSON, Senior Circuit Judge. *

FLAUM, Circuit Judge.

This case involves a claim by numerous farmers against the United States for common law conversion pursuant to the Federal Tort Claims Act, 28 U.S.C. Sec. 2674 (1982). The main issue presented on appeal is whether the district court abused its discretion in calculating the damages due the farmers. We find no abuse of discretion, and accordingly affirm the district court's judgment.

I.

The plaintiffs Robert L. Preston and others are farmers (and the estates of deceased farmers) who deposited grain subject to either warehouse receipts or "price later contracts" in a grain warehouse operated by Grain Finance Company ("Grain Finance") and by Farmers Grain Exchange, Inc. ("FGX") in Evansville, Wisconsin. In addition to storing grain subject to warehouse receipts and price later contracts, the warehouse was an authorized depository for grain owned by or pledged to the Commodity Credit Corporation ("CCC") of the United States Department of Agriculture. 1

On November 13, 1972, following a periodic audit, the CCC discovered that there was a substantial shortage of grain at Grain Finance. The CCC issued two loading orders for the grain on November 21 and 22, 1972, directing that all of the grain in storage at the warehouse be delivered to the CCC. The CCC received a total of 293,466.12 bushels of grain pursuant to these loading orders. This amount exceeded the pro rata share to which the CCC was entitled in November 1972. Following this delivery, the storage facilities filed for bankruptcy.

In 1977, the plaintiffs filed an action against the United States for misrepresentation and conversion under the Federal Tort Claims Act. The district court dismissed the plaintiffs' complaint on the ground that the claims of misrepresentation or deceit were barred by the exception for such claims in the Federal Tort Claims Act, 28 U.S.C. Sec. 2680(h) (1982). The district court did not discuss the CCC's alleged conversion in its opinion. This court affirmed the district court's decision as to misrepresentation, but reversed and remanded for the lower court to address the conversion claim. Preston v. United States, 596 F.2d 232 (7th Cir.), cert. denied, 444 U.S. 915, 100 S.Ct. 228, 62 L.Ed.2d 169 (1979) ("Preston I "). We concluded that if the district court found that the CCC had converted grain belonging to the farmers, then the farmers would be entitled to damages under the Federal Tort Claims Act. Id. at 240.

The plaintiffs filed an amended complaint in the district court, and at the conclusion of the plaintiffs' evidence, the court directed a verdict for the United States. The district court held that the plaintiffs' action was barred by the discretionary function exception to the Federal Tort Claims Act, 28 U.S.C. Sec. 2680(a) (1982), and that the plaintiffs had not stated a claim for conversion. On appeal to this court, we held that the plaintiffs had stated a claim for conversion that was not barred by the discretionary function exception. Preston v. United States, 696 F.2d 528 (7th Cir.1982) ("Preston II ") rehearing en banc denied, 709 F.2d 488 (7th Cir.1983). We remanded the case to the district court to permit the United States to present evidence on the issue of liability since the district court had directed the verdict at the conclusion of the plaintiffs' case. In an opinion accompanying the denial of the petition for rehearing in that case, we outlined some guidelines for the district court to use in computing the plaintiffs' damages should the United States be held liable for conversion. Preston v. United States, 709 F.2d 488 (7th Cir.1983).

On remand, the United States agreed not to contest liability. On the issue of damages, the plaintiffs presented evidence that the United States had converted 186,479.14 bushels of grain in excess of its pro rata share according to this court's guidelines based on figures as of the close of business on November 20, 1972. The plaintiffs sought as damages the value of the converted grain and an amount to cover the plaintiffs for their loss of the use of the converted grain. Using figures as of the close of business on November 30, 1972 the United States conceded that it had received 131,153 bushels of grain in excess of its pro rata share, but claimed that this amount would result in a windfall to the plaintiffs. The United States thus argued that the plaintiffs should only receive the amount of damages representing their proportionate share of the grain that was held by all depositors, or 69,797.15 bushels. In an opinion issued on February 10, 1984, the district court established its own damages formula and concluded that the United States had converted only 22,380.72 bushels in excess of its pro rata share. The court valued each bushel at $3.56 and entered judgment against the United States in the amount of $79,675.36.

On appeal, the plaintiffs claim that the district court abused its discretion in calculating damages by failing to follow this court's guidelines as to how damages should be computed. The plaintiffs also claim that they are entitled to recover as additional compensatory damages the value of the loss of use of the converted grain for the years that the United States has had the use of that grain.

II.

In Preston II, this court held that the plaintiffs had demonstrated that the CCC had wrongfully taken property owned by the plaintiffs and that an action in conversion was appropriate. 696 F.2d at 540. We concluded that a proper guideline for measuring damages would be to hold the CCC liable for the value of all grain taken in excess of its pro rata share as of November 21, 1972, the day that the first loading order was issued by the CCC. Id. at 543. Since there was a severe shortage at the grain warehouse and since it was undisputed that the CCC had obtained virtually 100% of the grain represented by its warehouse receipts, we concluded that it was clear that the CCC had taken more than its pro rata share. Id. at 536.

In denying the petition for rehearing in Preston II, we noted that we could not compute with precision the actual monetary damages that the plaintiffs should receive under the above guidelines and that the district court would thus have discretion to deviate from these guidelines if their application would result in an inequity. Preston v. United States, 709 F.2d at 491. We concluded that the district court was to be given great latitude in resolving the numerous issues involved in computing a proper amount of damages, since appellate review is extremely limited in such cases, and that the district court's findings were to be affirmed unless they were "beyond the pale of sane judgment." Id. (quoting Trabert & Hoeffer, Inc. v. Piaget Watch Corp., 633 F.2d 477, 484 (7th Cir.1980) ). Thus, in reviewing the district court's present award of damages, we will only reverse that award if it is clearly erroneous or if we are left with the definite and firm conviction, after reviewing all of the evidence, that a mistake has been committed. United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948); Ferrero v. United States, 603 F.2d 510, 512 (5th Cir.1979).

In the present case, the district court devised a formula for measuring the amount of grain that the CCC converted in excess of its pro rata share as of November 30, 1972. The district court took the number of bushels of grain that the CCC had deposited at the warehouse (293,466.12) and divided that figure by the total number of bushels of grain that should have been stored at the warehouse by the plaintiff farmers, the nonplaintiff farmers, and the CCC (69,797.50 + 111,337.86 + 293,466.12 = 474,601.48). The result represents the CCC's percentage share of the total number of bushels of grain at the warehouse. The district court then multiplied this percentage figure by the number of bushels of grain that were actually in storage in November 1972 when the warehouse was experiencing financial difficulties (438,406.84), in order to determine the CCC's pro rata share of the grain that was present in the warehouse before the CCC issued its loading orders. If the variable "y" represents the CCC's pro rata share, then the formula would be as follows:

                y1=   Number of CCC's          x  total number of bushels
                      -----------------------
                      bushels                     in storage in November
                      -----------------------
                      total warehouse grain       1972
                      obligations (number of
                      CCC's bushels k
                      number of plaintiff
                      farmers' bushels k
                      number of nonplaintiff
                      farmers' bushels)
                @1=   293,466.12 X 438,406.84
                      ----------
                      474,610.48
                @1=   271,085.40
                

Using this formula, the plaintiffs and the nonplaintiff farmers, owning 69,797.50 and 111,337.86 bushels of grain, respectively, would be entitled to the following pro rata share of the total number of bushels in storage as of November 1972:

                Plaintiffs'  =  number of plaintiffs'       total number
                Pro Rata            bushels              X  of bushels in
                                -----------------------
                Share           total warehouse grain       storage in
                                obligations                 November 1972
                             =   69,797.50 X 438,406.84
                                ------------
                                474,601.48
                             =   64,474.477
                Non-         =  number of nonplaintiff      total number
                Plaintiff         farmers' bushels       X  of bushels in
                                -----------------------
                Farmers'
...

To continue reading

Request your trial
5 cases
  • McMichael v. U.S., s. 87-1634
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • August 25, 1988
    ...district court, although labeling the award "inflation," actually allowed recovery for prejudgment interest. See Preston v. United States, 776 F.2d 754, 760 (7th Cir.1985). The FTCA bars an award of prejudgment interest. 28 U.S.C. Sec. 2674. The government relies on the employees' expert ec......
  • Marchese v. US, 91 Civ. 1300 (CSH).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • December 23, 1991
    ...FTCA is a partial waiver of sovereign immunity, Congress clearly carved out an exception for awards of interest. In Preston v. United States, 776 F.2d 754 (7th Cir.1985), a group of farmers brought suit under the FTCA to recover the value of grain converted by the Commodity Credit Corporati......
  • Oppenheimer Industries, Inc. v. Johnson Cattle Co., Inc., 16214
    • United States
    • United States State Supreme Court of Idaho
    • November 19, 1986
    ...Preston v. United States, 596 F.2d 232 (7th Cir.1979) (cert. den. 444 U.S. 915, 100 S.Ct. 228, 62 L.Ed.2d 169 (1979), later app. 776 F.2d 754) (claim of reliance on government approval of a grain storage warehouse barred by the misrepresentation Here, the State Brand Board made no misrepres......
  • Eaton v. U.S., 98-3999
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • May 21, 1999
    ...the terms of his sentence that the deduction was not an exercise of discretion by the Bureau, but a simple theft. Preston v. United States, 776 F.2d 754, 756 (7th Cir.1985); Love v. United States, 60 F.3d 642 (9th Cir.1995). No such showing has been made; and he would still have to exhaust ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT