Rennicke v. United States, 14868.
| Decision Date | 29 October 1953 |
| Docket Number | No. 14868.,14868. |
| Citation | 207 F.2d 429 |
| Parties | RENNICKE et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Charles Frierson, G. D. Walker, and Frank Snellgrove, Jr., Jonesboro, Ark., for appellants.
James T. Gooch, U. S. Atty., Gerland P. Patten, Asst. U. S. Atty., Little Rock, Ark., Neil Brooks, Associate Sol., U. S. Department of Agriculture, Washington, D. C., Dan P. Chisholm, Regional Atty., and Sidney D. Williams, Atty., U. S. Department of Agriculture, Little Rock, Ark., for appellee.
Before SANBORN, THOMAS, and JOHNSEN, Circuit Judges.
This is an appeal from a judgment for $4,309.43 in favor of the United States in an action brought by it to recover a balance alleged to be due upon a Commodity Credit Corporation note for $13,921.78 signed by the defendants (appellants) on November 10, 1949, and due April 30, 1950, with 3% interest. As security for the note, the defendants had executed a commodity chattel mortgage and mortgage supplement covering 3,299 cwt. of rice produced by the defendants and graded, for the purposes of the loan, as Zenith No. 2 Grade, and stored in bins on the defendants' farm.
By the terms of the chattel mortgage and mortgage supplement, the defendants represented and warranted that the rice was of the quality stated in the chattel mortgage. The amount of the loan was based upon a "Federal Rice Inspection Certificate" issued at Jonesboro, Arkansas, November 5, 1949, by Raymond A. Selig, a Federal Rice Inspector of the Department of Agriculture. He certified that he had inspected a "Sample of Rice" identified as having been taken from Rennicke Brothers. He graded the sample as "U.S. Zenith No. 2 Rough rice Medium-A-milling quality." The certificate contained in large print the words: "This Inspection Applies Only To The Sample Described."
The mortgage supplement provided, in substance, that, upon maturity of the note, it should be satisfied by payment or by delivery of the mortgaged commodity; that if the quantity, grade, or quality of the commodity when delivered was different from that on which the loan was computed as shown in the chattel mortgage, or if, through mistake or error, the amount loaned to the producers was different from the amount authorized under the loan program bulletin, the settlement value of the quantity of the commodity delivered should be determined at the applicable settlement rate, according to grade and/or quality, as set forth in the program bulletin applicable to the commodity; that if the commodity delivered was of a grade or quality lower than the lowest grade or quality for which settlement rates were established, the settlement value should be the market price of the commodity, "but in no event more than the settlement value of the lowest grade or quality of such commodity for which settlement rates are established"; that "If the settlement value of the commodity when delivered exceeds the amount due on the principal of the loan, the amount of such excess shall be paid to the Producer by the Corporation"; and that "If the settlement value of the commodity is less than the amount due on the principal of the loan, the amount of such deficiency plus interest thereon at the rate of 3% per annum from the date of disbursement of the loan shall * * * be paid by the Producer to the Corporation * * *."1
The note in suit was not paid at maturity, and the defendants on May 15, 1950, were notified to deliver the stored rice to the Roberts Rice Mill, Inc., an approved warehouse at Weiner, Arkansas. The defendants delivered 3,430 cwt., pursuant to the notice. As the rice was delivered to the mill, samples of each truck load were taken by a licensed sampler, and the samples were delivered to Selig, the Federal Rice Inspector at Jonesboro, Arkansas, for grading. He issued a certificate dated May 30, 1950, stating that he had on that date inspected the "Lot of Rice"; that it was "Sample Grade Zenith Rough Rice, Weevily, Medium-A Milling Quality"; and that the shippers were "Rennick Bros.", Weiner, Arkansas, and the consignee was "Commodity Credit Corp."
"Sample Grade" was lower than the lowest grade or quality for which settlement rates were established and loans were authorized, and was a different grade or quality than that on which the loan was computed. The rice was advertised for sale by the Commodity Credit Corporation and sold at public auction to the highest bidder for $10,015.60 net. This amount was credited upon the note, leaving a deficiency, which the defendants refused to pay.
The Government brought this action for the deficiency, asserting in its...
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