Tiger, Inc. v. Fisher Agro, Inc.
| Decision Date | 18 April 1989 |
| Docket Number | No. 23041,23041 |
| Citation | 301 S.C. 229,391 S.E.2d 538 |
| Court | South Carolina Supreme Court |
| Parties | TIGER, INC., and Green Apple Land, Inc., as general partners of Green Apple Partnership, a South Carolina Limited Partnership, and Green Apple Partnership, A South Carolina Limited Partnership, in its sole capacity and as co-venturer of Granny Peach Associates, a Joint Venture, Appellants, v. FISHER AGRO, INC., in its individual capacity and as co-venturer of Granny Peach Associates, a Joint Venture; FBI Foods, Ltd., a Canadian Corporation; Fisher Bros. Sales, Inc.; et al. Of Whom Fisher Agro, Inc., FBI Foods, Ltd. and Fisher Bros. Sales, Inc. are Respondents, and TIGER, INC., and Green Apple Land, Inc., as general partners of Green Apple Partnership, a South Carolina Limited Partnership, and Green Apple Partnership, A South Carolina Limited Partnership, in its sole capacity and as co-venturer of Granny Apple Associates, a Joint Venture, Appellants, v. FISHER AGRO, INC., in its individual capacity and as co-venturer of Granny Apple Associates, a Joint Venture; FBI Foods, Ltd., a Canadian Corporation; Fisher Bros. Sales, Inc.; et al. Of Whom Fisher Agro, Inc., FBI Foods, Ltd. and Fisher Bros. Sales, Inc. are Respondents. . Heard |
Charles Porter, E. Russell Jeter, Jr., and T. Parkin Hunter, all of McNair Law Firm, Columbia, for appellants.
R. Frank Plaxco and Jack H. Tedards, Jr., both of Leatherwood, Walker, Todd & Mann, Greenville; and Horace C. Smith, of Whiteside, Smith, Jones & Duncan, Spartanburg, for respondents.
This case involves a complaint for judicial dissolution of a joint venture and for resolution of additional matters related to the venture. We affirm.
In 1980, Arthur Fisher 1 of Canada began to investigate the feasibility of growing the increasingly popular "Granny Smith" apple in the United States. Toward that end, he entered into discussions with Pierre LaCharlotte of France, who is also in the fruit business. The parties hired an expert on green apples, along with a topsoil expert, who together determined that the climate and soil conditions of the South Carolina upstate would provide an excellent environment for growing the apples. LaCharlotte then approached a friend, Muhammed Abu Gazaleh, of Lebanon, who agreed to invest in the project.
In 1982 the joint venture, "Granny Apple Associates", was formed. There were two partners to the venture: 1) "FBI Foods, Ltd.", formed solely to operate as Arthur Fisher's venturer; and 2) "Green Apple Partnership." Green Apple Partnership was originally composed of Ahmed Abu Gazaleh and Sons Co. Ltd. (Abu Ghazaleh), as a limited partner, and "Green Apple Land," as the general partner. Green Apple Land is a South Carolina corporation whose stock is owned indirectly through holding companies represented by a Swiss attorney on behalf of undisclosed European investors. The president of Green Apple Land is Stephen Brown, a Tennessee attorney.
Granny Apple Associates purchased land and planted the first apple trees in late 1982. Sometime in 1983, a decision was made to expand the business and a peach farm, already in operation was purchased. A portion of the peach farm was to be used for growing apples. At this time, the partners formed a second venture, "Granny Peach Associates." They also re-stated the Granny Apple Associates venture agreement. 2 Abu Ghazaleh, the limited partner, decided to become a general partner in the ventures, and formed Tiger, Inc., for this purpose. A new limited partner, Falcon, Inc., also invested during the 1983 expansion.
According to the joint venture agreements, the operations were to be handled as follows: Green Apple Partnership was to supervise the day to day administrative activities of the ventures; LaCharlotte was to provide technical assistance on the farms; 3 and FBI, Foods Ltd. (FBI), owned by Fisher, was exclusively responsible for marketing the fruit in accordance with a In 1983, there was no peach crop because of a freeze. In 1983 and 1984, there was no apple crop because the trees were too young to yield fruit. There was, however, a 1984 peach crop to market. Subsequent to the completion of the peach crop marketing by FBI the parties expressed some dissatisfaction with the results of the season. The minutes of the management committee meeting of November 18, 1984 indicated, however, that the average price received was "comparable to those of other growers in [the] area."
separately stated marketing agreement referenced in the venture agreements. The profits from the ventures were to be split 79% to Green Apple Partnership and 21% to Fisher-Agro
In 1985, just prior to the harvesting of the first apple crop, a dispute arose between Abu Ghazaleh and Fisher over an unrelated business deal. Because this dispute was not related to the ventures, the Master refused to consider its merits, although he did allow introduction of evidence that the dispute existed. The evidence showed that sometime after the formation of Granny Apple Associates, FBI entered into an agreement with United Trading Company (UTC), owned by Muhammed Abu Ghazaleh, related to the distribution of Chilean fruit. UTC, an exporter of Chilean fruit, was to provide FBI with fruit to market. A disagreement over FBI's marketing techniques arose between Abu Ghazaleh and FBI. FBI alleges that UTC refused to abide by its agreement, resulting in Fisher, through FBI, filing a lawsuit against UTC in New York. As of the filing of this appeal, that litigation was still pending.
In September of 1985, Abu Ghazaleh attempted to completely sever relationships with Fisher related to the South Carolina ventures. Buy-Sell negotiations were entered into, but were unsuccessful.
The first apple crop yield, in the fall of 1985, was only approximately 1,500-1,600 boxes (two truck loads) and was shipped to wholesalers in Atlanta and Birmingham for sale on consignment. There was no 1985 peach crop because of a freeze.
Appellants expressed dissatisfaction with FBI's marketing of this 1985 apple crop, specifically claiming that it contravened the marketing agreement by delivering to wholesalers for sale "on consignment", and failing to remit timely the sales proceeds. Allegations of impropriety were also raised at this time concerning the previous 1984 peach crop marketing. On January 13, 1986, Green Apple Partnership sent notice to FBI that the Granny Apple marketing agreement was being terminated for material breach. FBI responded, denying the breach.
The 1986 apple crop was ready for packing. FBI advised the farm of the packing standard to be followed. Boxes packed pursuit to this standard were sold to chain stores, the most desirable market for fruit, for approximately $14.94 per box. After these initial sales, the farm personnel, without consulting FBI, lowered the packing standard because the higher standard had resulted in a large number of culls. 4 Fruit packed under the lower standard was rejected by the chain stores. Thereafter, the apples packed under the lower standard were sold on consignment at prices ranging from $3.00 to $8.25 per box. Appellants allege these marketing techniques, particularly the consignment sales, constituted a further breach of the marketing agreement.
In June of 1986, the current litigation was commenced. By this time, FBI had assigned its rights under the marketing agreement to Fisher-Agro. Thereafter, Appellants refused to allow Fisher-Agro to market the 1986 peach crop. The peach crop was marketed by "Cal-Fruit Suma," a company partly owned by Tiger, Inc. Fisher-Agro sought and was granted a temporary injunction preventing appellants from interfering with marketing the 1986 crop.
Tiger, Inc., Green Apple Land, and Green Apple Partnership instituted two separate actions for dissolution of the ventures and for resolution of related matters. The two actions were consolidated for trial before the Master-in-Equity with stipulation that appeal would be directly to this Court.
Prior to trial, the parties voluntarily agreed to discontinue and liquidate the peach operations of Granny Peach Associates. The only issues remaining in the Granny Peach Associates litigation were (1) a claim for damages related to an alleged breach of the marketing contract at the beginning of the 1986 season; and (2) issues relating to the apple operations of Granny Peach Associates, substantially the same as those relating to the operations of Granny Apple Associates. The Master refused to dissolve the ventures and found that Fisher had not violated the marketing agreements. This appeal follows.
Appellants argue that the Master erred in finding that FBI had not breached the marketing agreement. Appellants' two main areas of contention with regard to the marketing agreement center around the use of the consignment method of sales and the sale of fruit to a division of FBI known as the "Terminal Division."
Both joint venture agreements provide the following with regard to FBI's marketing responsibilities:
The Joint Venture shall exclusively market the produce from the Farm through a distribution agreement with FBI of [sic] any of its affiliates in the form of schedule "C" 5 hereto. FBI's commission for the sale of produce from the farm will be seven and one-half (7 1/2%) percent of FBI's gross sales price to its customers for the produce from the farm. If FBI defaults under this Joint Venture Agreement, the distribution will no longer be exclusive and may be terminated by Green Apple.
The distribution agreement (schedule "C") provides, with regard to the manner of sales, that "FBI will use its best efforts to distribute and sell ..." There are no provisions in the agreement which prohibit sales on consignment or sales to FBI Terminal Division.
Appellants contend that FBI's use of the consignment method violated the marketing agreement and the...
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