S. CHANDLER, JR., )
vs. ) CASE NO. 83-1514A
Respondents. )
Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on August 30, 1983 in Live Oak, Florida.
For Petitioner: Paul N. Hendrick, Esquire
For Respondent: Terry R. McDavid, Esquire
This matter was initiated when petitioner, E. S. Chandler, Jr., filed a complaint dated April 13, 1983, with the Department of Agriculture and Consumer Services alleging that respondent, Grainex, Inc., owed petitioner $12,057.68 for 2,324 bushels of soybeans sold to respondent on January 6 and 7, 1983.
Respondent filed its answer to the complaint on May 11, 1983, admitting in part petitioner's claim, but contending it had a set-off to the amount in dispute.
The matter was referred to the Division of Administrative Hearings by the Department of Agriculture and Consumer Services on May 19, 1983 with a request that a Hearing Officer be assigned to conduct a hearing. By notice of hearing dated June 13, 1983, the final hearing was set for August 30, 1983 in Live Oak, Florida.
At the final hearing petitioner testified on his own behalf and presented the testimony of his foreman, Norman G. McCall, Jr. and offered petitioner's exhibits 1-5; all were received in evidence. Respondent presented the testimony of its field representative, Donald Rogers, its office manager, Irma Williams, and its president, Mattox Ward, and offered respondent's exhibits 1 and 2; both were received in evidence. The transcript of hearing was filed on September 16, 1983. The parties waived their right to file proposed findings of fact and conclusions of law.
As clarified during the hearing, the issue is whether respondent is liable to petitioner for $12,057.68, as petitioner claims, or $10,189.58 ($12,057.68 less a $1,868.10 set-off) as respondent asserts.
Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT
Petitioner, E. S. Chandler, Jr., is the owner of a farming operation in Hamilton County, Florida. Among other things, he grows tobacco, corn, soybeans and wheat, and raises cattle.
Respondent, Grainex, Inc., has its principal offices in Lake City, Florida. It is in the business of buying corn, wheat and soybeans from farmers, country elevators and terminal elevators and reselling the same to large livestock and poultry producers and feed manufacturers.
Between May, 1980, and June, 1981, Chandler sold Grainex corn and wheat on four occasions. The sales were completed to each party's satisfaction. A memorandum of purchase was prepared by respondent on each occasion, and was signed by a representative of Grainex. It was then forwarded to Chandler for his signature. However, Chandler never signed the agreements. He did deliver the commodities as agreed upon by the parties. Although the evidence is conflicting, it is found that Chandler generally paid by Grainex within three to five days after Grainex picked up the commodities from Chandler's farm.
In late 1982, Chandler contacted a Grainex field representative concerning the sale of his entire soybean crop. They agreed to meet when the crop had been harvested and was ready for sale. Both parties later met on December 30, 1982, in Jasper, Florida. At that meeting Chandler estimated he had 6,000 to 8,000 bushels available for sale. Because Chandler was unsure if he had as many as 8,000 bushels, he agreed to sell approximately 7,000 bushels. In any event, Chandler intended to sell his entire crop. The representative then inspected the crop, which was stored in two bins on Chandler's farm, and estimated there were 7,000 bushels on hand. The parties ultimately agreed on a price of $5.40 per bushel. This was confirmed in a conversation between Chandler and Grainex's office manager. However, the agreement was never reduced to writing in a formal contract.
Because of rainy weather during the harvest, the soybeans were "exceptionally wet" and had a high moisture content. In an effort to dry the beans, they were placed in the two bins on Chandler's farm where hot air was blown into the bins by gas operated heaters.
Grainex sent its trucks to pick up the crop on Thursday and Friday, January 6 and 7, 1983. Only three loads totaling approximately 2,324 bushels were available due to the high moisture content in the remaining beans. The parties have agreed that the value of the three loads was $12,057.68. Chandler advised respondent on January 7 that he would continue the drying process and let respondent know when the remainder of the shipment would be available. This was agreeable to respondent. On Monday, January 10, the field representative telephoned Chandler to inquire if the beans were dry. He was advised they were not. No further contact between the parties concerning the remaining soybeans occurred after that date. In any event, the drying process should have been completed within a matter of a few days or a week at the longest. After the
beans were dried, Chandler sold the remainder of the crop at an undisclosed date to another buyer.
On January 6 or 7, 1983, respondent prepared a memorandum of purchase to confirm its agreement with Chandler. The memorandum stated that petitioner would sell 7,000 bushels of soybeans to respondent for $5.40 per bushel. The memorandum was signed by Donald Rogers, sales representative for Grainex. The memorandum was mailed to Chandler on January 7 or 8, 1983. It was received around January 10. Although the form contained instructions for Chandler to sign the memorandum, he did not do so and Grainex never followed up on the matter.
When Chandler had received no check from Grainex by Wednesday, January 12, 1983, he telephoned Irma Williams, who was office manager of Grainex, to request his money. She said she would ask the president, Mattox Ward, to issue a check. Having received no check a week later, Chandler again called Irma Williams who advised him Ward was out of town and he was the only individual who had authority to issue a check. At a later date Chandler met Ward and requested his money. Ward told Chandler he was experiencing cash flow problems, that he was attempting to secure long-term financing, and would pay him within a week. To date, Chandler has never been paid. At no time did Ward or Williams advise Chandler that payment was being withheld until Chandler completed delivery of the entire 7,000 bushels. Chandler contended that, because of his inability to receive payment for his crop, and fears that Grainex might be insolvent, he sold the remaining soybeans to another buyer.
On March 22, 1983, petitioner made legal demand on respondent for payment. This demand was unsuccessful. Thereafter, petitioner filed its complaint with the Department of Agriculture and Consumer Affairs on April 13, 1983. That prompted the instant proceeding.
Grainex acknowledged that it owed petitioner for 2,324 bushels of soybeans, but contended that it had a valid contract with Chandler to purchase 7,000 bushels. Because Chandler did not deliver the remaining soybeans, and soybean prices increased dramatically in January, 1983, it contends the breach of contract by Chandler resulted in it losing an opportunity to buy Chandler's soybeans at $5.40 per bushel, and reselling them at a profit. It calculated the lost profit to be $1,868.10, or a total liability to Chandler of $10,189.58.
The price of soybeans increased after January 6, 1983. By January 10 it had risen to 55.52 per bushel and was as high as 55.64 per bushel on January 24.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties there to pursuant to Subsection 120.57(1), Florida Statutes.
Neither party has submitted written argument concerning their respective, positions. However, by way of closing argument petitioner generally contended that no contract between the parties ever existed, and even if one did, Grainex breached its terms by its failure to make timely payment.
Moreover, he asserted that under the provisions of Section 672.702, Florida Statutes, a seller has the right to stop delivery of his goods except for cash when he discovers that the buyer is insolvent.
Respondent in turn relied upon a number of provisions within Chapters 671 and 672, Florida Statutes, to support its position. First, it contended that under Section 672.201, it was only necessary for Grainex to send a memorandum confirming their oral agreement, and absent an objection by Chandler, a valid contract took effect. It next referred to Subsections 671.205(2) and (3), which pertain to the course of dealing and usage of trade by parties in the business, .that the 1983 transaction was consistent with the previous conduct of the parties in four prior transactions. Finally, Grainex contended it was not insolvent within the meaning of Section 672.702, Florida Statutes, and therefore petitioner could not rely upon that ground.
Because the value of the transaction in issue exceeded $500, it is subject to the statute of frauds. Subsection 672.201(1), Florida Statutes. The same subsection requires that agreement must be reduced to writing and signed by the party against whom enforcement is sought in order to be enforceable. In case of merchants, which both parties appear to be, Subsection 672.104(1), Florida Statutes, it is not unusual to send confirmatory memoranda of bargains made verbally and informally. In this regard, Subsection 672.201(2) provides that:
"...if within a reasonable time a writing
in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of Subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received."
The evidence discloses that a written confirmation of the oral agreement was sent by Grainex within a reasonable period of time, that Chandler had reason to know its contents, and failed to give written notice of objection within ten days after its receipt. However, the only effect of this is to take away from Chandler the defense of the statute of frauds, and Grainex still has the burden of proving that an oral contract was made, The evidence reveals that an oral contract was indeed entered into by the parties. In discussions with both the field representative and office manager of Grainex, Chandler agreed and understood that he would sell his entire soybean crop to Grainex for $5.40 per bushel. Although the precise volume could not be ascertained, both parties understood it to be 7,000 bushels more or less.
On January 10; 1983, a valid and enforceable contract existed between the parties and at that point in time Chandler as contractually obligated to deliver the remaining soybeans. But Chandler should nonetheless prevail on two theories. First, a material breach of the terms of the agreement occurred shortly after January 10 when Grainex failed to pay Chandler for the first three loads delivered. Although Grainex contends that payment was not normally made until it had sold the crop and received its funds, this was inconsistent with the previous conduct and curse of dealing between the parties. Indeed, Chandler had normally been paid within three to five days after delivery, and anything longer than this was contrary to the parties' understanding as to when payment would be made. Therefore, Chandler was relieved of the obligation of further performance under the contract by reason of this breach. Second, even if he failure to pay is not construed as a breach, the subsequent conduct of the parties indicates that the contract was abandoned by their mutual consent and Grainex is accordingly not entitled to a set-off for lost profits. In reaching this conclusion it is noted that after the first three loads were delivered on
January 7, it was mutually understood that Chandler would notify the buyer when the beans were dried. But, Chandler failed to do so, and this failure constituted a breach of the contract. However, time was of the essence because of rising market prices, and Grainex obviously waived the breach since it did not promptly advise Chandler that it considered his failure to perform a breach of their contract. Nonetheless, from January 10 until after the complaint was filed, Grainex did not demand specific performance, or even inquire as to the status of the beans. Similarly, Chandler conducted his affairs as if the contract had been abandoned, for he went ahead and sold his beans to another buyer. Accordingly, it is concluded that by reason of the mutual abandonment of the contract after January 10, no obligation to perform rested upon either party.
Because of the material breach of contract by Grainex, it is concluded that as a matter of law that Chandler is entitled to payment of $12,057.68 from Grainex for the sale of 2,324 bushels of soybeans on January 6 and 7, 1983, and that Grainex is not entitled to a set-off.
