Slone v. Purina Mills, Inc., s. WD

• Decision Date: 04 June 1996
• Docket Number: Nos. WD,s. WD
• Citation: 927 S.W.2d 358
• Parties: Danny and Edwina SLONE, Appellants-Respondents, v. PURINA MILLS, INC., Respondent-Appellant. 51597, WD 51650.
• Court: Missouri Court of Appeals

Page 358

927 S.W.2d 358

Danny and Edwina SLONE, Appellants-Respondents, v. PURINA MILLS, INC., Respondent-Appellant.

Nos. WD 51597, WD 51650.

Missouri Court of Appeals Western District.

June 4, 1996.

As Modified July 25, 1996.

Motion for Rehearing and/or Transfer to

Supreme Court Denied July 30, 1996.

Application to Transfer Denied

Sept. 17, 1996.

John Alan Ruth, Jefferson City, for Appellants/Respondents.

Hallie H. Gibbs, Jefferson City, for Respondent/Appellant.

Before FENNER, C.J., P.J., and ELLIS and EDWIN H. SMITH, JJ.

FENNER, Chief Judge.

Danny and Edwina Slone appeal from the trial court's entry of partial summary judgment in favor of Purina Mills, Inc. ("Purina"), in the Slones' action for damages incurred as a result of Purina's alleged breach of a Sales and Distribution agreement between the parties, tortious interference with business expectancies, and fraudulent misrepresentation. The Circuit Court of Cole County certified the entry of partial summary judgment as final and appealable. Purina also cross-appeals the partial denial of its motion for summary judgment.

A significant factual background is necessary to properly assess this appeal. The facts are presented in the light most favorable to appellants. State ex rel. Conway v. Villa, 847 S.W.2d 881, 886 (Mo.App.1993). Appellants' relationship with Purina dates back to 1971, when Danny Slone worked for his father's Purina feed dealership. In 1975, the Slones took over operation of the dealership, named Slone Feed, from their family farm. At the encouragement of Purina, the Slones expanded their dealership by purchasing a feed mill in Tuscumbia, Missouri, and moving the dealership from their family farm. ¹ The newly formed dealership at the mill was named GHS Farm Services ("GHS"). Part of the impetus for the expansion of the Slone's dealership was Purina's desire to tap the turkey-producing market in Miller County, Missouri. Danny Slone stated that one of the main reasons he decided to purchase the mill was the representation from Walt Reece, a Purina Territory Manager, that "[Purina] need[s] to get in the turkey business. We are going to support you. We are going to get you in the turkey business." Prior to this time, the Slones primarily sold cattle, hog, and dairy feed products to the local farmers.

In 1984, a representative from Purina's St. Louis office approached Danny and asked how Purina and GHS could increase their turkey feed sales to the farmers in Miller County. At the time, GHS was operating as a Purina dealership through an oral agreement between the Slones and Purina; no written franchise agreement or any other written contract existed at the time between the Slones and Purina. GHS was not selling much turkey feed at the time because most of the turkey farmers in Miller County operated as "contract growers." Under a "contract grower" relationship, the farmer raises turkeys for the turkey producer, but the turkey producer owns the birds and supplies all the feed for the turkeys. The producer purchased the poults (baby turkeys) and guaranteed each farmer a certain price for each turkey raised, with the farmers only providing labor and utilities for raising the turkeys. To expand their business in Miller County, Purina and the Slones agreed that they would have to find more advantageous growing contracts for farmers in the area.

In the summer of 1984, Purina reached an agreement with the Iowa Turkey Producers ("ITP"), a turkey processor, by which ITP would sign independent contracts with Missouri farmers to raise turkeys. Albert Bray, Purina's Turkey Chow Sales and Procurement Manager, contacted Danny Slone to inquire as to whether Danny could persuade some Miller County farmers to travel with he and Danny to Iowa to meet with ITP representatives. Danny knew some of the farmers were not satisfied with the way their current producer company had been treating them, and agreed to identify and solicit those who might be interested in the ITP contract.

One Miller County farmer agreed to travel with Danny and Bray to meet the ITP representatives. During this meeting, appellants claim that Danny participated in actual negotiations regarding the terms for placement of turkeys by ITP in Miller County. A copy of the contract was eventually brought into the Slones' dealership, and Danny answered questions and helped negotiate some terms in the contract between the farmers and ITP.

Three Miller County farmers signed ITP contracts. Unlike previous contracts, this independent contract allowed the farmers to purchase their own feed for the turkeys. ² Consequently, the ITP contract was beneficial to both Purina and the Slones, as the growers purchased feed from the Slones dealership out of a sense of loyalty to those who brought them the contract. One of the farmers, Larry Albertson, stated that "but for the association of Danny Slone's honesty and integrity with the turkey growing contracts I entered into, I would not have signed the contracts with total strangers." The growers placed feed orders with the Slones, who purchased feed from Purina and transported it to Miller County from Purina's plant in Montgomery City. When it was apparent that the three farmers were going to sign the ITP contracts, the Slones purchased a new delivery truck to accommodate the deliveries to the turkey farms. The three farms each grew approximately 70,000 turkeys a year, operations considered small in the turkey industry.

During the ITP contracts, the farmers would call Edwina Slone when they were nearly out of feed. Edwina calculated the types and amounts of feed the farmers required, depending on what stage each flock of birds was in at the time. Edwina would call in the order and it would be delivered to the farms. Purina did not pay for these services; instead, the Slones profited by marking up the price of feed to offset the expenses of transporting and selling the feed. Bray informed the Slones that they could not mark up the turkey feed more than $21.00 per ton at first, then reduced that amount to $17.00 per ton. Dick Jones, Purina's Manager of Financial Services, acknowledged that he may have participated in a meeting with Bray and Danny at which time Danny was told how much he could mark up the feed.

Bray remained in personal contact with the farmers, visiting them once every ten to fourteen days. The Slones, as Purina's local dealer, provided services on a daily basis to the farmers to assist them in their turkey growing operations, including repairing feed lines, taking fat samples, making sure medication was available for sick birds, transporting sick turkeys to Columbia, preparing the loader for use when the birds went to market, repairing the loader, advising farmers regarding production schedule dates, keeping growth and feed charts for each flock, and maintaining books on the various levels of feed required for each flock.

About half-way through the term of the ITP contract, Bray approached the Slones with a document entitled "Purina Mills, Inc. Sales and Distribution Policy," claiming that Purina was requiring all dealers to sign the agreement. The Slones were initially reluctant to sign the agreement because of language in the next-to-last paragraph that states:

Purina prefers that feeding operations buy from a local Purina dealer. Some very large operations may not need any of the services provided by a Dealer and will not pay for services not used. Purina intends to help Dealers sell those large accounts where it seems reasonable. In cases where the large feeding operation will not buy from the dealer, Purina reserves the right to sell to those operations. When dealer services are needed by these large operations, the dealer will be encouraged and invited to negotiate for providing these services.

The Slones were concerned that this language would allow Purina to start selling feed directly to the Slones' customers, taking away their business. Bray assured the Slones on a number of occasions that Purina would never sell feed directly to the turkey farmers. As a result, the Slones executed the document on July 23, 1985.

The ITP contracts lasted through the fall of 1985 and were not renewed thereafter. No dispute exists as to the relationship between Purina and the Slones under the ITP contracts.

Danny Slone and Albert Bray contacted Land-O-Lakes and Bilmar in an attempt to find a new contract for the Miller County farmers after the ITP contract ended, but were unsuccessful. Carl Nethers, Purina's Director of the Meat Bird Group, discovered the availability of a Beatrice Foods ("Beatrice") turkey growing contract about this time and passed word of its availability to the Montgomery City office. The Beatrice contract, like that executed with ITP, was an independent contract.

Additional farmers in Miller County had come to the dealership asking about the ITP contracts because the farmers who grew turkeys under them had apparently made a considerable amount of money. When the Beatrice contract became available, Danny was asked by Bray if he knew of any more growers who would be willing to sign on as the Beatrice contract called for more birds than the ITP contract. Danny met with Dick Wolfe, Beatrice's Flock Supervisor, at the Slones' dealership to discuss the specifics of the contract, how many turkeys Beatrice wanted to place in Miller County, and how many farmers were needed under the contract. Danny then began contacting potential growers and setting up meetings between the growers, himself, Bray, and Wolfe. Nobody at Purina, including Bray, knew three of the four additional turkey farmers that Danny solicited for the Beatrice contract. Bray marketed the contract with the provision that the Slones would be providing the feed for the farmers.

The Slones ordered, delivered, and billed the feed for the Beatrice farmers as they had for the ITP farmers. Again, they were instructed by Bray that they could not mark up the feed...