Seminole Peanut Co. v. Goodson

• Court: Georgia Court of Appeals
• Writing for the Court: BANKE; McMURRAY, P.J., and BENHAM
• Citation: Seminole Peanut Co. v. Goodson, 335 S.E.2d 157, 176 Ga.App. 42 (Ga. App. 1985)
• Decision Date: 16 September 1985
• Docket Number: 70666,Nos. 70665,s. 70665
• Parties: , 42 UCC Rep.Serv. 74 SEMINOLE PEANUT COMPANY v. GOODSON (Two Cases).

Page 157

335 S.E.2d 157

176 Ga.App. 42, 42 UCC Rep.Serv. 74

SEMINOLE PEANUT COMPANY v. GOODSON (Two Cases).

Nos. 70665, 70666.

Court of Appeals of Georgia.

Sept. 16, 1985.

Bruce W. Kirbo, Bainbridge, Kenneth L. Hornsby, Donaldsonville, for appellant.

Ben Kirbo, Bainbridge, for appellees.

BANKE, Chief Judge.

The appellant, Seminole Peanut Company, is in the business of purchasing peanuts from farmers and other sources and shelling them for resale to commercial users. The appellees, L.R. and Ronnie L. Goodson, are peanut farmers. They filed separate suits against Seminole to recover actual and punitive damages and attorney fees for breach of contract and fraud, based on allegations that Seminole's president, Lee Jones, had induced them to sell Seminole a portion of their 1983 crop by misrepresenting the amount of money they would ultimately receive as consideration for the sale. The two cases were consolidated for trial. The jury found for Seminole on the breach of contract claim but awarded damages and attorney fees to the appellees on the fraud claim. On appeal, Seminole contends that the trial court erred in denying its motions for directed verdict and for judgment notwithstanding the verdict.

Under federal regulations, part of the appellees' crop was categorized as "quota" peanuts and the remainder as "additional" peanuts. For the year 1983, the appellees were entitled to receive no less than $550 per ton base grade for their quota peanuts and no less than $185 per ton base grade for their "additional" peanuts.

The federal price support program for peanuts is administered in Georgia by an organization known as the Georgia, Florida, Alabama Peanut Association, or "GFA." For the year 1983, the appellees were entitled under federal regulations to deliver to GFA as many "additional" peanuts as they could produce and to receive from GFA an immediate "loan" in the amount of the support price, i.e., $185 per ton base grade. All such "additional" peanuts delivered to GFA were placed in a "pool" and, after the harvest season was over, were sold on a competitive bid basis. After this selling activity was completed, the profits were then divided among the participating farmers on a pro rata basis.

Federal regulations required the appellees either to place their 1983 "additional" peanuts with the GFA for disposition in the above manner or else contract in writing to sell them to an approved handler prior to April 14, 1983. Seminole is an approved handler; and on February 22 and April 13, 1983, the appellees entered into several contracts with it for the sale of their entire 1983 peanut crop. In each case, the price contracted to be paid for the appellees' "additional" peanuts was approximately $250 per ton base grade. However, each contract gave the appellee the additional options at harvest time to "negotiate with the handler [Seminole] a price higher than specified above ... or place such peanuts [with the GFA] under loan at the additional price support level." Under the option to "negotiate with the handler a price higher than specified above," Seminole offered its own "pool" for additional peanuts. Under this pool arrangement, the farmer received $250 per ton base grade upon delivery and later received a pro rata share of any profit which might be generated upon resale of the peanuts in the pool.

On October 4, 1983, the appellees began harvesting their peanuts and reached the point of having to elect which of the three options to exercise, i.e., deliver their additional peanuts to Seminole at $250 per ton base grade, participate in Seminole's additional peanut pool, or participate in GFA's additional peanut pool. Under both pool arrangements, of course, the crucial factor in determining how much the appellees would ultimately receive was the price ultimately obtained upon the resale of the peanuts in the pool.

It appears without dispute from the evidence introduced at trial that GFA's policy was not to engage in any pre-selling activities for the disposition of its pool peanuts until after the harvest season was completed, whereas the appellees had heard, and it was in fact the case, that prior to the 1983 harvest season Seminole had already entered into contracts for the sale of a substantial portion of its anticipated inventory. Moreover, there was evidence that as of October 4, 1983, when the appellees were beginning their harvest, a market shortage was anticipated in the industry, with the result that the market price was in the $475 to $500 per ton range and rising. With these factors in mind, the appellees made an initial determination to participate in the GFA's pool rather than Seminole's pool; and on that date, appellee Ronnie L. Goodson, acting for himself and his father, appellee L.R. Goodson, telephoned Seminole's president, Lee Jones, to inform him of their decision.

According to Goodson, Jones sought during this telephone conversation to persuade him to change his mind and go with Seminole's pool, telling him "that with the overhead the GFA had and all the paperwork, the regulations and all they had to go through, that he could beat their prices, that he could tear their prices out of the frame, and that he would guarantee me that he would sell my peanuts for equal to or greater than GFA prices." Goodson further testified that, in response to a direct inquiry on the subject, Jones denied that Seminole had already contracted for the resale of a substantial portion of its pool peanuts, telling him, "[a] few peanuts had been presold, but that it would not be enough to make any difference in the outcome of the price." Goodson maintained that as a result of this conversation, he and his father decided to place all of their "additional" peanuts in Seminole's pool, rather than GFA's pool. Between October 6, 1983, and December 5, 1983, the appellees in fact delivered their entire "additional" peanut crop to Seminole for placement in its pool.

It is undisputed that all of the "additional" peanuts ultimately placed in Seminole's pool were in fact re-sold to other purchasers pursuant to sale contracts which had already been executed prior to October 4, 1983, at an average sale price of $449 per ton base...