STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WESNOFSKE FARMS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 79-483A

)

RICHARD WELLER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Jaries E. Bradwell, held a public hearing in this case on May 4; 1979, in Palatka, Florida.

APPEARANCES

For Petitioner: Remi Wesnofske, President

Wesnofske Farms, Inc.

Farms, Inc., Post Office Box 631 Crescent City, Florida 32012

and

William B. Morgan, President Morgan Produce, Inc.

For Respondent: John Adams

Post Office Box 808 East Palatka, Florida

and

Robert A. Chastain, Esquire General Counsel

State of Florida

Department of Agriculture and Consumer Services

Mayo Building

Tallahassee, Florida 32301 ISSUE

At issue herein is whether or not the Petitioner, Wesnofske Farms, Inc., is entitled to the payment of $32,202.41 as proceeds due it for potatoes delivered to Respondent, Richard Weller, based on a contractual agreement which will be hereinafter set forth in detail.

FINDINGS OF FACT

1. On March 14, 1973, Wesnofske Farms, Inc., of Crescent City, Florida, entered into an agreement with Richard Weller of Warehouse Point, Connecticut, as receiver and Morgan Produce, Inc., of Lincoln, Delaware, as agent/Broker for

   the receiver. Wesnofske agreed to deliver 10,000 hundredweight of potatoes at an agreed price of $4.10 per hundredweight f.o.b. Wesnofske Farms in Crescent City, Florida. The contract provided, inter alia, that the deliveries were to be prorated over or about seven week harvest period which began at the time of digging or about April 15, 1978, subject, of course, to weather, digging conditions and crop maturity. The contract also provided that in the event of crop failure due to drought, etc., or any act of God, the contract was to be probated in accordance with acreage yield, etc. (See Exhibit A).

   
   

2. William B. Morgan, President of Morgan Produce, Inc. served as the broker for the parties. Mr. Morgan testified that due to the extended cold weather season, digging commenced on or about May 3, 1978. On that date, May 3, 1978, Morgan telephoned Respondent, Richard Weller, and advised him that the first deliveries were ready and inquired of Weller when his first trucks would be arriving to accept delivery. Weller indicated that marketing conditions extant at the time forced him to decline delivery of potatoes and instructed Morgan to contact Mr. Jack Rubin and offer his deliveries to him. Morgan contacted Rubin and offered the potatoes for $6.80 per hundredweight, whereupon Rubin advised that he had at that time more contracts at lower price that he could handle. Weller was advised of Rubin's response and instructed Morgan to sell his deliveries to the best of his ability on the open market.

   
   

3. Beginning on May 6, 1978, Morgan began selling potatoes from the Weller contract to various co-ops and distributors at a profit through approximately May 16, 1978, when there existed a glut in the potato market. Weller was advised by Morgan that he would not be able to continue showing him a profit on his contract if the then present market conditions continued. Weller was advised by Morgan that the potatoes were presently bringing approximately $3.75 per hundredweight to the open market, which, of course, would represent a loss to him of 35 cents per hundred pounds. At that time, it appeared that the depressed market conditions would continue throughout the digging season and, this being the first contract that Petitioner had entered with Respondent, Morgan contacted Petitioner's farm manager, Joseph Froehlich. Morgan and Froehlich discussed the matter and decided that it would be advantageous to release Respondent from his contractual obligations with no loss to him and to credit Respondent's account for all profits accrued as of that date. According to Morgan, Weller agreed and was pleased with this proposal of being rid of the contractual obligations due to the depressed market conditions. From the period May 6, 1978, through June 1, 1978, when Weller was released from his, contract, Weller had earned a net profit of approximately $1,900 (See Exhibit B). During the period of May 16 through May 26, 1978, Morgan sold approximately 921,960 hundredweights at $3.75 per hundredweight, which had been grown for Richard Weller and Orlowski Produce Company, another contracting entity (See Exhibit C).

   
   

4. However, on or about May 18, 1978, the market conditions turned around due to low acreage yields of area farms which caused a potato shortage with a resultant rise in market prices. At that time, Weller contacted Morgan and demanded a load of potatoes allegedly due on his contract on May 18, 1978. Morgan discussed the matter with farm manager Froehlich, and it was agreed that Petitioner would provide deliveries to Respondent from purchases of other area farms although Petitioner was of the opinion that it was not obligated to do so, inasmuch as Respondent had been released when market conditions were depressed. Deliveries to Weller resumed on May 18, 1978, and continued through June 7, 1978. From the period June 6 through June 8, 1978, Petitioner was unable to provide shipments from its supplies and, therefore, purchased on the open market, three shipments for the Weller contract at a price of $7.85 per hundred pounds. Based on these bulk loads purchased on the open market, the difference

   between the contract price and the open market price resulted in a deficiency of approximately $4,865.25 which was charged to Richard Weller's account when an invoice was forwarded him pursuant to contract. On June 26, 1978, Weller was invoiced for $32,202.41, of which amount Weller paid $27,337.16 on July 15, 1978, pursuant to the $4.18 per hundredweight contracted price for all deliveries (See Exhibit E).

   
   

5. Joseph Froehlich testified that due to the inclement weather conditions, the late acreage yields were down to approximately 40 hundred pounds per acre, which was substantially less than the other acreage had yielded. Froehlich testified that had Respondent accepted deliveries of potatoes when offered during the early digging season, his contractual allotment could have been fulfilled; however, he opted to be released at a time when market conditions were poor. Thus, Froehlich contends, that Petitioner was not obligated to purchase potatoes on the open market for Weller and sustain a loss when market conditions dictated higher prices. This was so Froehlich contends, first of all because Respondent failed to accept delivery of the potatoes when they were available to him pursuant to the terms of the contract and, secondly, inasmuch as Respondent was relieved from the terms and obligations of the contract when market conditions were poor.

   
   

6. During the course of the hearing, Petitioner's representative, Morgan, indicated that the Wesnofskes were not negotiating the partial tender of payment by Respondent in the amount of $27,337.16 until the administrative hearing herein was completed. 1/

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties of this action. Chapter 120.57, Florida Statutes.

   
   

8. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

   
   

9. The authority of the State of Florida, Department of Agriculture and Consumer Services, is derived from Chapter 604, Florida Statutes.

   
   

10. Based upon a full consideration of the facts herein, it is concluded as a matter of law that the Respondent owes Petitioner an amount of $32,202.41 as invoiced by the Petitioner to Respondent on June 26, 1978.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, hereby, RECOMMENDED:

That the State of Florida, Department of Agriculture and Consumer Services uphold the claim of the Petitioner, Wesnofske Farms, Inc., in the amount of

$32,202.41, plus normal interest accruing from July 15, 1978, as provided in the contract, plus a reasonable amount for costs and fees for preparation of this administrative claim. Based upon the testimony offered during the course of the hearing, a reasonable amount appears to be approximately $1,000.

RECOMMENDED this 12th day of June, 1979, in Tallahassee, Florida.

JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

ENDNOTES

1/ By copy of letter received in this Division on June 5, 1979, forwarded by the Department of Agriculture and Consumer Services' General Counsel with copies provided all parties of record, it appears that Respondent has ordered a "stop payment" on its check drawn in the amount of $27,337.16 which amount, according to the conditions set forth on the face of the check, indicate that the payment was intended as "payment in full" for potatoes received by Respondent during the contract period. (See Exhibit E)

COPIES FURNISHED:

Remi Wesnofske, President Wesnofske Farms, Inc.

Post Office Box 641

Crescent City, Florida 32012

John Adams

Post Office, Box 808 East Palatka, Florida A

Robert Chastain, Esquire General Counsel

Department of Agriculture and Consumer Services

Mayo Building

Tallahassee, Florida 32201

Docket for Case No: 79-000483

Orders for Case No: 79-000483