United States v. United Marketing Association
| Decision Date | 05 August 1963 |
| Docket Number | Civ. No. 594. |
| Citation | 220 F. Supp. 299 |
| Parties | UNITED STATES of America, Plaintiff, v. UNITED MARKETING ASSOCIATION, a partnership, H. W. Helgevold, and Izola M. Boyd, Executrix of the Estate of G. C. Boyd, Deceased, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
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Donald E. O'Brien, U. S. Atty., Sioux City, Iowa, for plaintiff.
Alan Loth, Fort Dodge, Iowa, Lyman Lundy, Eldora, Iowa, for defendants.
The action here is one for conversion of grain. The plaintiff contends that the defendants purchased from a warehouseman converted corn. The Complaint in substance states that from January 1, 1950 to September 30, 1952, defendants converted 151,514.35 bushels of plaintiff's corn by purchasing it from Burt Grain Company which held it in storage. The answer of the defendants as amended denies this and claims protection under Title 15, United States Code, Section 714p.
After the institution of the action and long prior to this submission and on July 25, 1960, the District Court in and for the Northern District of the State of Iowa entered a summary judgment for the defendants, and under the rulings in United States v. United Marketing Association, et al., 8 Cir., 291 F.2d 851, a portion of which reads as follows, to-wit:
it now appears that the judgment involving the last 12 cars of corn purchased on and after September 4, 1952, has been set aside pursuant to the Mandate of the Court of Appeals and that judgment as to all prior purchases remains intact and undisturbed. This position is further sustained pursuant to a Pretrial Order made and entered by this Court on October 25, 1962, same being acquiesced in by all parties to the action.
The entire case is thus limited to a controversy as it pertains to 12 carloads of corn shipped and purchased by the defendants in this cause of action.
The issues of the case are simple and clear. One issue involves the plaintiff's proof of ownership of the converted corn. The second issue is whether or not the defendants are purchasers within and as defined by the statute indicated as Title 15, United States Code, Section 714p.
1. United Marketing Association, the defendant herein, is a partnership composed of G. C. Boyd, now deceased, and Howard Helgevold. It appears that the partners conducted the transactions involved in this controversy. The business of the defendants was located at Fort Dodge, Iowa, and consisted of buying grain in carload lots from country elevators and reselling these purchases in the terminal markets. The regular and usual course of the transactions here involved was as follows:
The elevator would load its corn on railroad cars and obtain bills of lading from the carrier. It then offered the car to the defendants. A price per bushel would be agreed upon. The elevator would draw a draft on defendants for its estimate of such price and present it, with the bill of lading, to the defendants. The defendants would pay the draft and take the bill of lading. The car would then move to defendant's customer at the market. Its weights and grades were determined there and the final price computed accordingly. So the drafts were always either more or less than the actual price. Defendant kept an account with the elevator, debiting it with each draft paid, and later crediting it with the ultimate price of each car, as the proceeds were received. This interval would be several weeks; sometimes months. Balances computed from this account would overstate the elevator's debt to defendant since it would not include credit for corn or proceeds in transit. Defendant's purchases were usually by telephone. This was the usual customary method of handling such transactions by the defendant, and others in this business, and the country elevators with which they dealt. All purchases involved here were made in this same way.
2. Burt Grain Company of Clarion, Iowa, was a partnership of Clyde L. Burt and his father. It operated an elevator there, with which defendant did business as above described. It merchandised grain with others than defendant, in similar fashion. It also operated licensed grain storage facilities, until its license was revoked April 2, 1952. That revocation was not intended to, and did not, forbid its buying corn from farmers, and selling it, as before. It did continue such merchandising without interruption.
3. At least since 1948 plaintiff had stored its corn in Burt's warehouses, under various storage agreements, the last of which was made in 1950 (Exhibit 55). This mentions another warehouse at Galt, Iowa; but there is no evidence that any of the disputed 12 cars originated there. It provided that Burt should receive, store, insure and condition plaintiff's corn; and ultimately load it out; issue warehouse receipts representing the corn as received; store it "in the warehouse"; and "at all times maintain in the warehouse a stock of grain of the class, grade and quality" described in the receipts, equal to the quantity they called for. It allowed Burt to commingle plaintiff's corn with that of others, and also with his own.
4. Burt issued warehouse receipts to plaintiff which are in evidence. Each called for a specific quantity of No. 2 corn. The last receipt is dated October 15, 1951.
5. Before its license was revoked, Burt had disposed of substantially 151,000 bushels of plaintiff's corn, for which plaintiff has not been reimbursed. During the summer and fall of 1952, Burt never had enough corn in its warehouses to equal the amount called for by plaintiff's receipts. This defalcation was apparently the reason for revoking the licenses. Clyde Burt was also indicted for it.
6. In January and February of 1952, plaintiff surrendered its warehouse receipts to Burt and demanded the corn they called for. Its shipment to plaintiff began. The evidence discloses that all of the plaintiff's corn actually in the warehouse facilities had been shipped prior to September 4, 1952. However, there is some proof that some small amount of corn was subsequently discovered in some facility which was later taken by the Government on or about September 17, 1952. In any event, the proof indicates that practically all of the corn available under the storage agreements and warehouse receipts was gone before September 4, 1952.
7. The evidence does establish that the elevator at Clarion through which grain was merchandised was separate from the tanks and bins which comprised the storage or warehouse facilities. It further appears that they were served by movable spouts so that grain to be stored was put in the storage bins and grain to be merchandised was run through other portions of the elevators into cars. The evidence does not establish that corn moving into the elevator after September 4, 1952, ever went into the warehouse tanks or bins or was actually commingled with the plaintiff's corn. This is also substantiated by the lack of corn of any nature or kind of the plaintiff with which to commingle the grain being delivered. The evidence establishes that Burt did owe the plaintiff much corn at this time but there is no proof which could sustain the position that he had replaced plaintiff's corn with the corn now claimed by plaintiff. On the contrary, the evidence clearly shows that the corn which was being merchandised by Burt through the elevator was not intended for storage or warehousing, and neither was it stored or warehoused. In fact, the evidence discloses that the plaintiff's representatives were even present and knew how the grain was coming in and how it was going out.
8. Before and after September 4, 1952, Burt was a dealer regularly engaged in buying and selling corn and other fungible grains. For some years before that date, defendant had purchased corn and grain from Burt, physically sold and delivered in the ordinary course of business, in good faith, for full value paid. Defendant did not know or have reason to know of any defect in Burt's authority to sell the corn it bought. These transactions all followed the pattern described above. Plaintiff emphasizes that in March 1952 Burt's drafts had been twice the value of his shipments, resulting in his owing defendant a large overdraft. Plaintiff claims that defendant's further dealings with Burt were motivated by bad faith, or a desire to collect this debt. There is evidence that at one time this overdraft was slightly over $18,000.00. Burt paid the larger portion of this quite promptly, with cash and soy beans. Before September 4, 1952, this debt was reduced to about $4,300.00. The court finds that defendant was not concerned about this debt, nor motivated thereby to deal with Burt otherwise than regularly and in good faith. The judgment heretofore entered means, and the court finds as a fact, that all of defendant's purchases before September 4, 1952, were in good faith as described herein, protected by said Section 714p of Title 15.
9. Plaintiff's claim as now made arises because after the close of business on September 4, 1952, Helgevold read the following article in the Fort Dodge evening Messenger:
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