STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEE A. MALTBY & SONS, INC., ) d/b/a POA-BOY FARMS, )

)

Petitioner, )

)

vs. ) CASE NO. 78-2076A

) KENNETH ROSE COMPANY, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Delphene C. Strickland, Hearing Officer of the Division of Administrative Hearings, at the City Commission Hearing Room in City Hall, Palatka, Florida, on February 15, 1979.

APPEARANCES

For Petitioner: Ronald E. Clark, Esquire

Post Office Drawer V Palatka, Florida 32077

For Respondent: Alan B. Fields, Jr., Esquire

Post Office Drawer F Palatka, Florida 32077

STATEMENT OF THE ISSUES

The issues are as follows:

1. Is the Respondent liable to the Petitioner for $140.00 for 3,500 pounds of unacceptable potatoes on Load number 15?

   
   

2. Is the Respondent liable to the Petitioner for $1,792.00 for Load number 16?

   
   

3. Does the contractual agreement provide for FOB payment or payment based upon delivered weight?

   
   

4. Can the Respondent "back charge" the Petitioner for $964.06 freight charges, $60.00 for dumping charges, and $33.40 for U.S. Department of Agriculture inspection costs?

PRELIMINARY STATEMENT

On or about August 17, 1978, the Petitioner executed a complaint and filed it with the Florida Department of Agriculture and Consumer Services alleging that the Respondent failed to adequately compensate it for potatoes on three

loads, designated number 15, number 16 and number 22, sold by the Petitioner to the Respondent. Respondent filed an answer on October 11, 1978, in which it denied indebtedness, explained the disposition of Load number 16, waived a hearing, and requested the Department to make a determination based upon presentations in the file. The Petitioner requested a hearing, and the matter was subsequently forwarded to the Division of Administrative Hearings. Both parties submitted Proposed Recommended Orders, which were considered in the writing of this Recommended Order. To the extent the proposed findings of fact have not been adopted in, or are consistent with, factual findings in this Recommended Order, they have been specifically rejected as being irrelevant or not having been supported by the evidence.

FINDINGS OF FACT

1. The Petitioner, Lee A. Maltby and Sons, Inc., doing business as Poa-Boy Farms, is a producer of agricultural products in Florida. The Respondent, Kenneth Rose Company, Inc., is a licensed dealer in agricultural products, pursuant to Chapter 604, Florida Statutes. The Respondent was bonded, pursuant to Chapter 604, Florida Statutes, as such a Florida dealer during the period of time between January 24, 1978 and May 23, 1978.

   
   

2. On or about January 24, 1978, the Petitioner, as seller, and the Respondent, as buyer, entered into an executory contract for the Petitioner to deliver "10,000 CWT of chipping potatoes, 85 percent or better US. number 1," at

   $4.00 FOB. As to terms, the contract designated "usual." As to special terms, the contract stated "Potatoes will be paid on the basis of delivered weight as evidenced by a certified weight ticket prepared at the time and place of delivery." Shipment was "May, 1978 (Last week of April if possible)."

   
   

3. On or about the same day, the Respondent entered into an executory contract with Cloud Produce, Inc. for the same shipment, excluding the "special terms." Undisputed testimony was that the price was at a rate of $.10 CWTFOB. Cloud Produce, Inc. was a corporation authorized to do business in the State of Florida as a dealer in agricultural products under Chapter 604, Florida Statutes. Cloud Produce, Inc. agreed to deliver the chipping potatoes to Frito- Lay, Inc., a corporation with a potato chip manufacturing plant in Louisville, Kentucky.

   
   

4. The Respondent also contracted with Montgomery and Rose, Inc., a Florida corporation authorized to do business under the laws of the State of Florida as a truck broker, to transport the potatoes to Louisville, Kentucky. The broker contracted with an independent trucking firm known as "R & L" to transport and deliver the potatoes to Frito-Lay in Louisville, Kentucky.

   
   

5. The potatoes designated as Load number 15 were delivered to Frito-Lay in Louisville, Kentucky, on May 18, 1978. There was no report to Petitioner that there was a problem with said load, and there was no USDA inspection made. Evidence submitted showed that 3,500 of the 43,620 pounds of potatoes contracted to be delivered were dumped.

   
   

6. The potatoes designated as Load number 16 were loaded on an R & L truck late Friday, May 19, 1978. The R & L truck was weighed in Hastings, Florida, on May 19, 1978, passed a Florida inspection station on May 20, 1978, and arrived at the Frito-Lay plant in Louisville, Kentucky, at approximately 7:00 a.m. on May 23, 1978.

7. The load of potatoes was rejected by Frito-Lay "due to wet breakdown." The report of Frito-Lay stated that the potatoes were in a very poor condition with rot from 30 to 80 percent. Frito-Lay ordered the R & L trucking company to remove the load from the Frito-Lay property due to its offensive odor.

   
   

8. The Petitioner and the Respondent discussed the problem on May 23, 1978. The Petitioner requested that the Respondent re-route the potatoes to Muncie, Indiana. The Respondent was not able to get this instruction through to the trucking company before the load was dumped, and within hours, it informed the Petitioner that the potatoes were no good, that the expense was prohibitive, and that the potatoes had already been dumped. Part of the problem was the demand by Frito-Lay that the load be removed quickly because of the odor and leakage at the plant in Louisville, Kentucky, which adjoined a baseball field.

   
   

9. The USDA Inspection Office was closed when called on May 23, 1978, but it inspected the load on May 24, 1978 and reported "Condition: Soft rot 90 percent, slimy soft rot, mostly in advanced, some in early stages. Remainder stock: Firm."

   
   

10. The following transpired:

    
    

    1. The United States Department of Agriculture charged an inspection fee of $33.40 for its inspection of the potatoes on May 24, 1978. The USDA billed Frito-Lay, Frito-Lay billed Cloud Produce, Inc., and Cloud Produce, Inc. billed the Respondent for the inspection fee.

       
       

    2. R & L trucking company paid $60.00 for unloading the potatoes, Montgomery and Rose, Inc. paid R & L $60.00 for such unloading, plus $964.06 for hauling the potatoes to Louisville, Kentucky, and the Respondent paid this amount to Montgomery and Rose, Inc.

       
       

    3. The Respondent then "back charged" the Petitioner for the following: $140.00 for the load designated number 15; $1,792.00 for the value of the potatoes on Load number 16; $964.06 for freight charges; $60.00 dumping charges; and $33.40 inspection. These charges totaled $2,989.46, and this amount of money was retained by the Respondent as a set-off from the entire contract between the parties, which included Loan number 22, with which there was no problem.

       
       

11. By letter to the Respondent dated July 25, 1978, the Petitioner demanded the money that is the subject of this hearing. The Petitioner stated that he did not believe that Load number 16 was his produce inasmuch as he had had no other complaints as to his produce from other receivers before or after said load. No evidence was introduced to substantiate the position of the Petitioner, and substantial evidence was introduced that Load number 16 was, in fact, the load that was ultimately dumped.

    
    

12. The Petitioner presented a witness who testified that Montgomery and Rose, Inc. had salvaged a portion of Load number 16 after it was dumped. The Petitioner felt that it was unfair that one firm had made a profit from the Petitioner's loss. Montgomery and Rose, Inc. was not joined as a party.

    
    

13. The Respondent presented undisputed testimony that it is customary to "charge back" a broker and a producer where the produce does not meet specifications. There was no evidence presented that the Petitioner was not familiar with the custom of the trade or the laws and regulations of the Perishable Agricultural Commodities Act, or that the Petitioner had reason to

    believe that it would not be liable for freight and brokerage charges if the potatoes were not sold. The contract between the parties merely stated that terms were "usual."

    
    

14. The usual charges on such a transaction include USDA inspection fees, if needed, and freight and brokerages charges.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and over the parties, pursuant to Section 120.57(1), Florida Statutes.

    
    

16. Section 604.20, Florida Statutes, Bond prerequisite; amount; form, provides as follows:

    
    

    (1) Before any license shall be issued the applicant therefor shall make and deliver

    to the department a surety bond in the amount of at least $1,000 or in such greater amount as the department may determine, not exceeding the maximum amount of business done or estimated to be done in any month by the applicant, executed by a surety corporation authorized to transact business in the state.

    Such bond shall be upon a form prescribed or approved by the department and shall be conditioned to secure the faithful accounting for and payment to producers, their agents or representatives,

    of the proceeds of all agricultural products handled or sold by such dealer.

    
    

17. The Respondent has complied with the foregoing subsection of the statutes.

    
    

18. Section 604.21, Florida Statutes, Complaint; investigation; hearing, provides as follows:

    
    

    (1) Any person claiming himself to be damaged by any breach of the conditions of a bond given by a licensed dealer in agricultural products as hereinbefore provided may enter a complaint thereof to the department, which complaint shall be a written statement of the facts constituting said complaint. Said complaint shall be filed within 9 months from the date of the last transaction between the complaining producer and the dealer complained against.

    
    

19. The Petitioner has complied with the foregoing subsection of the statutes.

    
    

20. Section 604.21, Florida Statutes, further provides that should the Department conclude that the producer is entitled to compensation from the Respondent, the Respondent has fifteen (15) days within which to satisfy the Department's order. If a producer is not satisfied, a civil action can be maintained against the Respondent and the surety.

21. The uncontroverted evidence in this case establishes that the Respondent was a dealer in agricultural products during the period of time in question and handled the Petitioner's potatoes under the terms of a contract signed by both parties. The USDA regulations require that a brokerage agreement be reduced to writing.

    
    

22. The contract between the parties provided that the potatoes were to be sold on an 85 percent or better condition. Load number 15 met that requirement and was sold. No report was made to the Petitioner about problems with Load number 15, and there was no evidence of an inspection by the United States Department of Agriculture. The Respondent had no right to withhold $140.00 from the proceeds of Load number 15 and should pay the Petitioner that amount.

    
    

23. No potatoes were sold from Load number 16 and, therefore, no compensation was due the Petitioner. The uncontroverted evidence establishes that Load number 16 was unacceptable at the time of the delivery and that the dumping of the potatoes was reasonable and necessary.

    
    

24. The Respondent and Cloud Produce, Inc. acted as dealer-broker and were obligated under the contract to collect the price of the potatoes upon delivery to the buyer and remit the proceeds after costs to the Petitioner. No potatoes from Load number 16 were delivered, so the loss was the responsibility of the Petitioner. C. H. Robinson Co. v. L & M Brokerage Co., 344 So.2d 894.

RECOMMENDATION

Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the State of Florida, Department of Agriculture and

Consumer Services, uphold the claim of the Petitioner against Respondent in the amount of $140.00 deducted for the price of potatoes delivered designated as Load number 15. It is further

RECOMMENDED that a Final Order be entered discharging the Respondent and its surety from any further liability.

DONE and ENTERED this 8th day of June, 1979, in Tallahassee, Florida.

DELPHENE C. STRICKLAND

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 8th day of June, 1979.

COPIES FURNISHED:

Ronald E. Clark, Esquire

P.O. Drawer V Palatka, FL 32077

Alan B. Fields, Jr., Esquire

P.O. Drawer F Palatka, FL 32077

Robert A. Chastain, Esquire Department of Agriculture and

Consumer Services

Room 530, Carlton Building Tallahassee, FL 32301

Docket for Case No: 78-002076

Orders for Case No: 78-002076