Ralli-Coney, Inc. v. Gates

• Decision Date: 12 March 1976
• Docket Number: RALLI-CONE,INC,No. 75--2688,75--2688
• Citation: 528 F.2d 572
• Parties: 18 UCC Rep.Serv. 1140 , et al., Plaintiffs-Appellees, v. Derryal GATES et al., Defendants-Appellants. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 572

528 F.2d 572

18 UCC Rep.Serv. 1140

RALLI-CONEY, INC., et al., Plaintiffs-Appellees, v. Derryal GATES et al., Defendants-Appellants.

No. 75--2688 Summary Calendar. ^*

United States Court of Appeals Fifth Circuit.

March 12, 1976.

R. L. Holladay, P. J. Townsend, Jr., Drew, Miss., for defendants-appellants.

Jerry H. Blount, Jackson, Miss., for D. Gates.

Jack F. Dunbar, William Dean Stark, Clarksdale, Miss., for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Mississippi.

Before BROWN, Chief Judge, GODBOLD and GEE, Circuit Judges.

JOHN R. BROWN, Chief Judge:

This is a diversity case and once again the Fifth Circuit has been compelled to ride on the winding and often perilous tracks of the Erie Railroad. Fortunately, our engineer, the trial court, with an eye to the rather sparse Mississippi precedent and to the Uniform Commercial Code as adopted by Mississippi and a firm hand on the ever present throttle of generally accepted principles of contract law has made our trip a safe one and accordingly we affirm.

This case involves a standard 'forward' contract for the sale of cotton not yet grown. Typically, three parties are involved in the transaction, the farmer, a broker, and one or more cotton merchants. Usually the farmer enters into a contract with the broker for the sale of cotton grown on a specified acreage and the broker in turn locates a cotton merchant interested in purchasing the cotton and thereafter negotiates a sale of the cotton which is usually formalized by an agreement between the farmer and the merchant. However, in this scenario we are confronted with another player to fill out our cast of characters, a lessor of the farm land who claims an interest in the crop.

Gates (farmer-lessee) entered into an oral contract to lease the subject property from Dr. Rotenberry (lessor) and the rent was to be one-fourth of his cotton crop in kind. ¹ Thereafter, on a date no earlier than November 13, 1970 ² Gates entered into a marketing agreement with Staple Cotton Cooperative Association, a broker, whose business it was to effectuate sales between farmers and cotton merchants of cotton to be produced in the future. On or about March 7, 1973, Gates entered into a contract with Ralli-Coney, Inc., a cotton merchant, through its agent Staple, for the sale of 300 acres of cotton to be grown on the land which he leased from Dr. Rotenberry. Similarly, on May 4, 1973 Gates entered into another contract to sell the cotton produced on 500 acres of the same land to Dunavant Enterprises, Inc., another cotton merchant.

Due to heavy rains causing flood conditions in the area where Gates' leased land was located he was only able to plant 717 acres rather than the expected 1,066 acres. As a result he was unable to fulfill the obligations described above and accordingly made an equitable distribution of the cotton produced among the two cotton merchants and the lessor, pursuant to § 75--2--617 of the Mississippi Code of 1972. Thus, this law suit is brought by the cotton merchants against Gates and Dr. Rotenberry's estate to recover the whole crop on the premise that the 800 acres for which they contracted exceeded the 717 acres which were productive and because of this they were entitled to all the cotton which was produced.

On this appeal the defendants challenge the trial court's order granting a partial summary judgment on the issue of liability in favor of the plaintiffs, cotton merchants. ³ Three issues are presented: (i) Was partial summary judgment inappropriate because there existed a factual dispute taking the form of parol evidence as to the meaning of the contracts between Gates and the cotton merchants, (ii) Did the trial court err in overruling defendant's motion for J.N.O.V. or new trial because Dunavant Enterprises, Inc., had an operation which was localized in Mississippi and did not qualify to do business in Mississippi as required by Mississippi law and thus could not enforce this contract in Mississippi, (iii) Was Staple Cotton Cooperative Association, a Mississippi corporation, an indispensable party to this law suit whose presence therein destroyed diversity jurisdiction?

With respect to the first issue we are under the satrapy of F.R.C.P. 56(c) which specifies that a summary judgment is appropriate only if the trial court determines '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'. (Emphasis supplied). See also Shahid v. Gulf Power Company, 5 Cir., 1961, 291 F.2d 422, 423; 6 Moore's Federal Practice P56.01(1) et seq. (2d ed. 1975).

We believe the trial judge acted properly in finding that there was no material factual dispute. The language of the contracts was clear and under Mississippi law parol evidence is inadmissible to contradict, vary, alter, add to, or detract from, the written instrument when it is clear on its face. See, e.g., Allen v. Allen, Miss.Sup.Ct., 1936, 175 Miss. 735, 168 So. 658; accord, Paoli v. Anderson, Miss.Sup.Ct., 1968, 208 So.2d 167; Fuqua v. Mills, 1954, 221 Miss. 436, 73 So.2d 113.

The defendants rely on Dunavant Enterprises, Inc. v. Ford, Miss.Sup.Ct., 1974, 294 So.2d 788, wherein the Court allowed parol evidence to explain which acreage was to be covered under a similar forward contract. However, in the case at hand there is no ambiguity as there was in Ford because the language of both contracts clearly provides that the contracts were for the sale of all cotton produced on the accurately described acreage. If Gates had wished to exempt that one-fourth of the cotton which was already committed to Dr. Rotenberry he should have put that limitation in the contracts, but parol evidence which establishes this limitation is plainly contradictory to the terms of the written contracts and barred from admission into evidence by the Mississippi parol evidence rule. In this posture, the trial court correctly held that this factual dispute was immaterial to the determination of the legal rights and obligations under the contracts.

Moreover, we affirm the trial court's decision that the plaintiffs, cotton merchants, were entitled to judgment as a matter of law. When read together §§ 75--2--102, 105, 107 of the Mississippi Code of 1972 indicate that forward contracts for the sale of yet to be grown cotton fall within the Mississippi codification of the Uniform Commercial Code. Section 75--2--402(1) of the Code subordinates the rights of the seller's unsecured creditors in the subject matter to those of the buyer. ⁴ Thus, we hold that the cotton merchants are entitled to the whole crop and the lessor's remedies, if any, are against the lessee, but...