Ralston Purina Co. v. Hobson

• Decision Date: 23 June 1977
• Docket Number: No. 75-4246,75-4246
• Citation: 554 F.2d 725
• Parties: 22 UCC Rep.Serv. 59 RALSTON PURINA COMPANY, Plaintiff-Appellee, v. Joe B. HOBSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 725

554 F.2d 725

22 UCC Rep.Serv. 59

RALSTON PURINA COMPANY, Plaintiff-Appellee, v. Joe B. HOBSON, Defendant-Appellant.

No. 75-4246.

United States Court of Appeals, Fifth Circuit.

June 23, 1977.

Billy L. Church, Pell City, Ala., James M. Fullan, Jr., Birmingham, Ala., for defendant-appellant.

Richard F. Ogle, Birmingham, Ala., for plaintiff-appellee.

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

Before WISDOM and GEE, Circuit Judges, and BOOTLE, ^* District Judge.

GEE, Circuit Judge:

In September 1973, the Ralston Purina Company agreed to furnish Joe Hobson sufficient feed to raise 40,000 chickens for 26 weeks. Hobson agreed to pay for this feed upon sale of the chickens but no later than March 26, 1974. On October 31, 1973, the parties signed two written statements confirming the earlier oral agreement, but the two documents contained contradictory terms. Purina's Pullet Finance Contract limited Hobson's credit to $1.65 per bird, or a total of $66,000 for 40,000 chickens. Attached to the contract was a cover letter addressed to Hobson:

This letter will confirm to you that the following lines of credit have been established for your use out of the Guntersville, Alabama mill:

Terms Line

Pullet Feeder Finance $34,000.

The letter closed with this instruction: "to signify your understanding of the above terms, please sign your name on the line provided and return the original to us." Joe Hobson signed.

On January 29, 1974, Purina terminated the contract because Hobson had run up a debt of $46,391.28, exceeding his $34,000 line of credit. Hobson protested that the contract granted him a $66,000 limit on credit. Eight days later, Hobson secured a new source of feed for his chickens but claimed to have lost 18,000 birds in the interim owing to starvation-related causes. Hobson refused to pay anything, causing Purina to sue for the $46,391.28 past due. Hobson counterclaimed for damages resulting from Purina's breach of the contract and for fraud, alleging that Purina never intended to extend credit in the amount of $1.65 per bird despite its Pullet Finance Contract containing those terms. The trial court directed a verdict in favor of Purina for the $46,391.28 and directed a verdict against Hobson on the fraud count. The counterclaim for damages resulting from Purina's breach was sent to the jury, which awarded Hobson $27,455 in damages. The trial court then granted Purina's motion for judgment n.o.v., finding that Hobson had failed to sustain his burden of proof that Purina's failure to supply feed was the proximate cause of the deaths of the chickens. Hobson's motion for a new trial on damages alone was denied. On appeal Hobson complains that under the Boeing Co. v. Shipman ¹ test there was sufficient evidence to create a jury question that lack of feed caused his high rate of chicken mortality making it error to reverse the jury's award of damages. He also complains that it was error to direct a verdict in favor of Purina for $46,391.28 because the jury found that Purina breached the contract and the defaulting party ought not be allowed to recover on the contract. Finally, Hobson complains that there was sufficient evidence of fraud in the inception on Purina's part to send that claim to the jury.

Appellant strenuously argues that under Alabama law he is excused from paying the $46,391.28 due for feed previously delivered because Purina, by terminating the delivery of feed early, breached the contract. To agree with appellant this court would have to ignore § 2-607(1) of the Uniform Commercial Code as enacted in Alabama: "The buyer must pay at the contract rate for any goods accepted." Ala. Code tit. 7A § 2-607(1). In United States v. Crawford,443 F.2d 611 (5th Cir. 1971), we interpreted this section of the UCC to require the granting of a judgment notwithstanding the verdict where there was no conflict in the evidence as to the amount due on the contract for goods accepted. The trial court properly granted Purina's motion for a directed verdict as to the $46,391.28 owed by Hobson for feed accepted under the contract.

We also sustain the directed verdict against Hobson on his fraud counterclaim. At all times Purina insisted that the contract figure extending credit of $1.65 per bird was a typographical error, and the record does not contradict this claim of clerical mistake. There is simply no evidence that Purina entered into the Pullet Finance Contract intending to deceive Hobson as to the amount of credit that would be extended. Moreover, it seems plain that a party seeking deceptively to limit credit to less than $1.65 per bird would not have set forth the $34,000 line of credit explicitly, as did Purina in the cover letter accompanying the contract.

To determine the final issue on appeal, whether it was error to grant the judgment n.o.v., we must enter the murky waters of measuring what is "substantial evidence" sufficient to create a jury question. In diversity cases the test to be applied is the federal standard expounded in Boeing Co. v. Shipman: "evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions". Supra at 374. The court must consider all the evidence before declaring it substantial or insubstantial. We are here concerned with whether or not there is any substantial evidence that Purina's withdrawal of feed caused Hobson's chickens to suffer a high mortality rate in the eight-day period before new feed was obtained.

On January 29, 1974, Purina delivered 16,000 pounds of chicken feed to Hobson. Experts testified that this would feed Hobson's 40,000 birds for three or three-and-one-half days, so that February 2 should have been the first full day that the chickens were without food. Hobson testified that on February 6 he began to lose large numbers of chickens daily, his overall loss totalling 18,000 birds before new feed was procured on February 8. Hobson theorized that his chickens died from three starvation-related causes: (1) Starvation incited cannibalism by pecking; (2) starvation lowered the birds' body temperatures and induced "piling" to keep warm, a phenomenon which resulted in death by smothering to large numbers of his flock; and (3) the stampede to get to the new feed when it was finally reintroduced killed hundreds of birds. Hobson introduced no evidence to support his assertions except his own mortality charts. Purina introduced two poultry nutritionists as expert witnesses. ² Both experts testified that chickens of this age could easily live for two weeks without food as long as they had access to water, which Hobson's chickens did. They further testified that it was common practice in the poultry industry to withdraw feed from chickens of this size for five to ten days to induce molting. They concluded that it was "out of the question" that six days without feed would produce 18,000 deaths in a flock of 40,000 birds.

Next, the expert witnesses discussed the pecking problem described by Hobson as one cause of his high mortality rate. The self-employed nutritionist testified that a pecking problem cannot be correlated with hunger and that introducing feed will not stop pecking. The only solution to a pecking problem is to debeak the birds. Hobson had incurred a pecking problem earlier when his chickens had ample feed; he solved the problem by debeaking his birds. Beaks grow back and, according to the nutritionist, the solution to Hobson's pecking problem in early February would have been to debeak his birds a second time.

The two nutritionists undermined Hobson's theory that piling was a significant cause of death among his...