Torix v. Allred
| Decision Date | 20 February 1980 |
| Docket Number | No. 12902,12902 |
| Citation | 100 Idaho 905,606 P.2d 1334 |
| Parties | Joe TORIX, Larry Torix, Steve R. Torix, and Terry Torix, dba Joe Torix & Sons, Plaintiffs-Appellants, v. Chall ALLRED and Feeders Grain Supply, Inc., a corporation, dba Burley Butte Custom Feedlot, Defendants-Respondents. |
| Court | Idaho Supreme Court |
William A. Parsons of Parsons & Smith, Burley, for defendants-respondents.
In this action the appellant cattle owners seek to recover $63,070.61 from the respondent custom feeder for cattle sold to an insolvent meat packer. Appellants appeal from a judgment in favor of respondents entered following a court trial. We affirm.
Joe Torix and his sons, Larry, Steve and Terry, were engaged in a farming and cattle operation known as Joe Torix and Sons. Defendant respondent Chall Allred is the president, general manager and major stockholder of Feeders Grain Supply, Inc. This corporation operates a feed mill and also operates a custom feedlot under the name of Burley Butte Custom Feedlot in which cattle owned both by Allred and by others were fattened for marketing to meat packing plants.
In the spring of 1975 Torix contacted Allred and arranged for Allred to feed the Torix cattle at Allred's custom feedlot until the animals were ready for market. Torix agreed to pay a set fee for the feed and yardage. Allred agreed to finance these feed and yardage costs until the cattle were sold. In April or May of 1975 Torix delivered to the feedlot approximately 500 head of feeder cattle.
There was conflicting testimony by appellant Torix and respondent Allred concerning the role Allred was to take in the eventual marketing of the animals. However, the trial court found that Allred, without any additional consideration, agreed to advise its feedlot customers of available markets for their cattle and that Allred did advise Torix of prospective buyers when the Torix animals became ready for market.
The animals delivered to the Torix feedlot were ready to market in October and November of 1975. Without the assistance of Allred, Torix personally sold some of the cattle to Magic Valley Packing Company and Independent Meat Company. These companies paid Torix with checks payable directly to him. Torix, however, used most of the proceeds from these sales to pay Allred for feeding costs.
Later in October Allred informed Torix that Armour and Co. was willing to purchase approximately 40 head of the Torix animals on a grade and yield basis by which the price would be determined after slaughter when the grade and yield was determined. Torix agreed to sell the animals to Armour on these terms. Allred arranged the sale on Torix's behalf, and Armour paid for the cattle with a check payable to Torix and Burley Butte Custom Feedlot. Armour gave the check to Allred, who then forwarded it to Torix without an endorsement. Torix endorsed the check and returned it to Allred as payment on his feed bill. At this time Torix advised Allred that checks in payment for cattle should be made payable directly to him and that he would then make the payment on his account with Burley Butte. Torix, apparently dissatisfied with the price he had received from Armour, also instructed Allred not to sell any more cattle to Armour.
On November 1, 1975, Allred telephoned Torix, who was in Nevada at the time, and advised him that he was in contact with a buyer willing to purchase cattle on a grade and yield basis with a guaranteed minimum price of 421/2cents per pound. Allred had received the offer from Darrell Peck, a cattle buyer from Burley, Idaho, who was buying for Minch's Wholesale Meats of Red Bluff, California. Because Torix had never dealt with either Peck or Minch's, he requested Allred to arrange the sale of the cattle to Minch's at that price. No other terms of sale were discussed. Allred then arranged sale of 125 head of Torix's cattle to Minch's through Peck. Forty-one steers were shipped to California on November 2, another forty-one on November 3, and forty-three on November 8, 1975. The only documents issued in connection with the sale were receipts from Burley Butte Custom Feedlot for each of the three shipments. The receipts indicated that the cattle sold were from lots "181 and 187 Torix." Under the feedlot's bookkeeping system the lot number indicates the owner of cattle. From the foregoing facts the trial court concluded that the Torix cattle were sold by Torix to Minch's and shipped by Burley Butte.
Since the cattle were sold on a grade and yield basis with a guaranteed minimum price, payment could not be made at the time the cattle were shipped but was to be made following their slaughter by Minch's when the grade and yield could be determined. Allred later received from Minch's four bill of sale drafts, each payable to "Burley Butte Feed Lot." 1 In total the drafts represented payment of $63,070.61 for the Torix cattle. Allred endorsed each of the drafts with the endorsement "Burley Butte Feedlot by Chall Allred" on a line designated for the seller's signature and deposited the drafts in a bank account maintained in the name of Burley Butte Custom Feedlot. This account was a general operating account for the feedlot business. All four drafts were later returned by Minch's bank for non-payment. 2 Allred then informed Peck that he had been unable to get payment from Minch's. Peck replied that he had contacted Minch's and assured Allred that he would be paid. Allred then deposited the four drafts in Burley Butte's bank account a second time. 3 However, the drafts were again dishonored and shortly thereafter Minch's filed a voluntary petition of bankruptcy in California.
Allred had sold one other cattle shipment to Minch's in August of 1975 and had received payment by draft following the sale. No problems were encountered in that sale. Neither Allred nor Peck were aware of Minch's financial problems at the time of the sale of the Torix animals. However, Allred had not made any inquiries concerning Minch's financial condition prior to the sale of the Torix cattle to Minch's. Allred's testimony was that since Minch's had been in business for several years and had not exhibited any financial difficulties in the past, he did not feel compelled to inquire about the company's solvency. Likewise, Torix had not expressed any concern about selling the animals in exchange for Minch's drafts prior to the sale.
After Allred had shipped the cattle to Minch's but before its drafts had been returned for non-payment, Torix authorized Allred to arrange sale of the remainder of his cattle to John Clay & Co. Allred received payment for the cattle with a draft payable to Burley Butte Custom Feedlot. Burley Butte negotiated the draft and deposited the proceeds in its bank account and the proceeds were applied as a credit on Torix's feed bill.
After the drafts from Minch's had been returned for the second time, Allred notified Torix of the problems in obtaining payment. In the latter part of November Torix, Allred and other cattlemen who had sold cattle to Minch's and had been unable to collect on Minch's drafts or checks met in California with representatives of Minch's. They were unsuccessful in obtaining any payment. Allred later filed a proof of claim with the bankruptcy court in California on his own behalf and on behalf of Torix. The record indicates that neither party was able to recover any payment for the cattle from the trustee in bankruptcy at the time of trial.
In February, 1976, Torix filed suit against Allred seeking recovery of $63,070.61, alleging that Allred had breached an agency contract with Torix by arranging a credit sale of the Torix cattle without Torix's express approval and that Allred had negligently failed to use due care in arranging the sale to Minch's. Allred answered, denying the allegations, and also filed a counterclaim for $15,073.40, which he claimed Torix owed for feed and services. Torix's sons, Larry, Steve and Terry, were later added as plaintiffs and Feeders Grain Supply, Inc., was made a defendant. Torix admitted that he owed Allred $15,073.40, but claimed that sum as an offset against his claim for damages. Following a court trial, the district court entered judgment in favor of Allred and against Torix for $17,513.40 for principal and interest, plus costs and attorney fees of $3,317.95. Torix brings this appeal from that judgment.
The trial court found that Allred, through Burley Butte, was principally engaged in a cattle feeding operation and that Burley Butte, in addition, The trial court found that Allred sought and received Torix's approval for the terms and conditions of the sale to Minch's before arranging shipment from the feedlot and that Allred "did not allow any cattle to be shipped from its lot, that were owned by Torix, without the consent of Torix." The court stated that the evidence before it showed that Torix approved the price in the sales to Minch's and that "Torix did not demand or prescribe any terms and conditions of sale except as to grade and yield and a minimum guaranteed price on the 125 head of cattle shipped to Minch."
The trial court further found that payment by draft was customarily used in 1975 as a method of payment in the livestock industry, particularly in payment for cattle sold on a grade and yield basis, that Torix had not instructed Allred to demand payment in legal tender when he authorized the sale to Minch's, and that Allred had no reason to know that Minch's was insolvent in November, 1975, when the sales were made. The court also held that Minch's made the payment drafts out to Burley Butte, as payee, on its own accord and not at Allred's instruction, and that Allred negotiated these drafts in Burley Butte's name in a good faith effort to effect collection of the proceeds,...
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