STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STACYS FARMS, INC., )

)

)

)

Petitioner, )

)

vs. ) CASE NO. 88-6474A

)

D & S PRODUCE, INC., and )

FIDELITY & DEPOSIT COMPANY )

OF MARYLAND, )

)

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled case on September 29, 1989 and October 12, 1989, in LaBelle, Florida.

APPEARANCES

For Petitioner: Marilyn G. Sears, Qualified Representative Stacys Farms, Inc.

1201 Riverbend Drive

LaBelle, Florida 33935

For Respondent Philip L. Burnett, Esquire D & S Produce: PHILIP L. BURNETT, P.A.

Post Office Box 2258

Fort Myers, Florida 33902

For Respondent

Fidelity: No appearance STATEMENT OF THE ISSUES

Whether the Respondent, D & S Produce, Inc., is indebted to Petitioner for agricultural products and, if so, what amount.

Whether the agricultural bond provided by Fidelity & Deposit Company as surety for D & S Produce, Inc., can be enforced to recover the debt, if the debt exists.

PRELIMINARY STATEMENT

The Petitioner, Stacys Farms, Inc. (Stacys Farms), filed a complaint with the Department of Agriculture against Respondent, D & S Produce, Inc. (D & S), and Respondent, Fidelity & Deposit Company of Maryland (Fidelity), to enforce a bond and recover a debt allegedly due under Chapter 604, Florida Statutes, for

$25,222.00. This sum represents the purchase price allegedly owed to Stacys Farms for watermelons delivered to D & S in 1988.

During the hearing, Stacys Farms presented eleven witnesses and five exhibits. D & S called two witnesses and submitted five exhibits. All of the exhibits were admitted into evidence. As per the Hearing Officer's request at hearing, the Department of Agriculture and Consumer Services provided the Hearing Officer with a copy of the bond on January 2, 1990.

The Respondent D & S did not provide complete copies of the checks moved into evidence which were drawn upon the Respondent's checking account. The Respondent was given an additional twenty days to provide the Hearing Officer and the Petitioner with complete copies of these checks posthearing. As the copies were not received, greater weight will be given to testimony and other documents involving the same transactions.

A transcript of the hearing was not ordered. The parties were given until November 13, 1989 to file proposed findings of fact. The Respondent D & S' proposed findings were filed on November 14, 1989 under the wrong case number. The document was misfiled, and eventually rerouted to the Hearing Officer on December 6, 1989. Rulings on the proposed findings of fact are in the Appendix to the Recommended Order.

FINDINGS OF FACT

1. On April 22, 1988, an indemnity bond was executed between D & S as principal and Fidelity as surety. The effective dates of the bond were from April 22, 1988 to April 21, 1989.

   
   

2. The bond was required under Sections 604.15-604.30, Florida Statutes, in order for D & S to become licensed as a dealer in agricultural products. The purpose of the bond is to secure the faithful accounting for and payment to producers of all agricultural products handled or purchased by D & S.

   
   

3. In September 1987, Junior Martin met with Cliff Price and Buddy Session regarding the Spring 1988 watermelon crop in LaBelle, Florida. Junior Martin was the grower. Cliff Price was the harvester, and Buddy Session planned to become a dealer before harvest.

   
   

4. During the meeting, Junior Martin and Buddy Session entered into a verbal agreement which contained the following terms: a) Junior Martin would sell Buddy Session all of the shippable melons in his fields on a per pound basis at market price on the day of shipment; b) Junior Martin would harvest and load the melons on trucks furnished by Buddy Session; c) settlement was to be made within a reasonable time after shipment; and d) settlement would include any adjustment for failure of the melons to meet the quality or grade contracted for by Buddy Session. Such adjustments could be made by Junior Martin taking less cash or giving Buddy Session replacement melons.

   
   

5. In the interim period between the planting and the harvesting of the crop, the farms run by Junior Martin were incorporated and became Stacys Farms,

   Inc. Buddy Session formed D & S Product, Inc. during the same time frame. The verbal agreement between the two individuals was accepted by both the corporations who continued to transact business under its terms.

   
   

6. The harvesting of the crop began in May 1988. The market price began at ten cents per pound but quickly dropped to nine cents. From May 15, 1988 through May 20, 1988, the producer and the dealer in these proceedings acted under the terms of the verbal agreement without controversy.

   
   

7. During harvest, load tickets were prepared on site by Junior Martin's harvester, Cliff Price. Each load ticket reflected the number of pounds of melons loaded, the size and variety of melon, the date, market price, the driver's name and the trailer license number.

   
   

8. Due to a mistake in loading as to the size of melons shipped from the loading dock on May 19, 1988, D & S assigned one of its own employees to the loading dock. The employee's job was to oversee the loading process and to make sure that the correct size of melons were loaded on the proper trucks.

   
   

9. D & S owned the melons at the time they were placed on the trucks on May 21, 1988. D & S was not acting as Stacys Farms agent in the sale of melons.

   
   

10. On May 21, 1988, a number of loads were purchased by D & S at the market rate of nine cents per pound. The loads in dispute which were loaded on this date are:

    
    

    1. 46,060 lbs. of medium Crimson watermelons loaded onto Trailer P78 Ohio, and shipped May 21, 1988.

    2. 40,020 lbs. of medium Crimson watermelons loaded onto Trailer 92102 S/T ILL, and shipped May 21, 1988.

    3. 53,800 lbs. of large Greys loaded onto Trailer BG133M Fla, and shipped May 21, 1988.

    4. 48,000 lbs. of medium Crimsons loaded onto Trailer T03286KY, and shipped May 21, 1988.

    5. 49,120 lbs. of medium Greys loaded onto Trailer TH50695 PA, and shipped May 21, 1988.

    6. 42,840 lbs. of large Crimsons loaded onto trailer C5XZ2676310, and shipped May 21, 1988.

       
       

11. The total amount in dispute for these loads is $23,200.60.

    
    

12. D & S contends that the melons shipped in the loads in dispute were below the quality or size for which it contracted. As a result, D & S contends it suffered a loss of $21,987.56.

    
    

13. A review of D & S' business records show that Trailer P78 Ohio was also referred to upon occasion as 8878 Ohio. The load number was 88135. It appears from office notes made by D & S by a person who is ill with cancer (Petitioner's Exhibit #5) that the trouble with these melons was that the customer wanted large melons, not medium ones. (The notation states, "trouble NL".) Nevertheless, the load was accepted by the customer, Tom Lange. The purchase price paid by Lange was more than the price paid by D & S. The one hundred and fifty dollars less than the amount billed by D & S was a result of the sizing difference. Stacys Farms was accurate in its billing regarding the size of melons loaded, and D & S' on site employee accepted them and allowed the medium melons to be shipped. D & S owes Stacys Farms $4,145.40 for this load.

14. D & S' business records show that the melons loaded on Trailer 92102 S/T ILL. were referred to as load number 88129. The load was received and paid for by D & S customer E.W. Kean. D & S' business record has two numbers transposed in the weight entry on the computer printout. The bill of lading and the load ticket reflect the correct weight. Again, Petitioner's Exhibit #5 shows a notation of "trouble NL". Medium melons were shipped as reflected on the load ticket. A reasonable inference exists that D & S' customer wanted large melons as opposed to medium melons. The load was accepted by E.W. Kean, and the price billed of $3,800.00 was paid in full. D & S' on site employee accepted the load and allowed the medium melons to be shipped. Stacys Farms believed the medium melons were ordered and did not misrepresent the size purchased from them. D & S owes $1,616.80 to Stacys Farms for this load.

    
    

15. The large Greys on Trailer BG133M Fla, were received by D & S' customer, Winn-Dixie in Jacksonville. Thirteen of the melons were cut open at the delivery site for inspection purposes prior to acceptance. The customer determined that the quality was not as good as represented at the time the shipment was ordered. The customer agreed to pay D & S $800.00 for the load. As the quality of these melons was below the quality contracted for, D & S does not have to pay the price placed on the loading ticket for these melons. In settlement under the oral agreement, D & S is entitled to an offset of $391.50, the remaining portion of the freight bill once the $800.00 paid is deducted.

    
    

16. The medium Crimsons loaded onto Trailer T03286KY were accepted by

    D & S customer Maddox Brothers Produce, Inc. A government inspection of melons in warehouse bins of Taylor Produce three days later which purportedly came from the same trailer from Maddox Brothers were rejected by the second receiver. A drop in market price had also occurred in the interim. The customer paid

    $1,400.00 to D & S for the load. As there is no reliable evidence that the inspected melons were the same melons as those originally accepted three days before by Maddox Brothers, D & S owes Stacys Farms $4,320.00 for the melons. All of the other medium Crimsons loaded on May 21, 1988 appeared to be of acceptable quality. The uncorroborated hearsay regarding the origin of the inspected melons in Kentucky, especially after a market drop, is insufficient proof that Stacys Farms did not meet the terms of its verbal agreement with

    D & S regarding quality of shipped melons. D & S owes $4,320.00 for the melons.

    
    

17. The computer records at D & S do not show the 49,120 lbs. of medium Greys loaded on Trailer TH50695PA pursuant to instructions from Tom Killmon. At the time the melons were loaded, Tom Killmon was a licensed buyer for D & S, but he also ran an independent melon business. Tom Killmon's business records reflect that he purchased the melons from D & S at nine and one-half cents per pound. The office memo referred to as Petitioner's Exhibit #5 acknowledges the load and that it received a government inspection. Tom Killmon's records reflect that he was paid for the melons but that he had not paid D & S. D & S owes $4,420.80 to Stacys Farms for the melons.

    
    

18. Large Crimsons were loaded onto Trailer CSXZ676130 and shipped to Quebec as load number 88124. According to Petitioner's Exhibit #5, some trouble existed concerning the purchase by D & S' customer and the price of the melons was reduced by approximately $876.00. This later turned out to be $869.35. The business records show that the number of melons actually shipped to Montreal by D & S was less than the number of pounds represented on the bill of lading. At the point of destination only 38,443 lbs. of melons arrived. The quantity of melons and the freight flat rates were adjusted accordingly by the customer.

    For some reason, the purchase rate of $.123 per pound was reduced to $.11 per pound. There was no proof provided to establish whether the reduction in price

    had anything to do with the quality of the melons. Because a seal was placed upon the load at Stacys Farms prior to the shipment of the product by rail, a reasonable inference exists that the loading ticket accurately reflects the amount of melons purchased by D & S from Stacys Farms. The sum of $3,855.60 should be paid to Stacys Farms for this load.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Sections 120.57(1) and 604.21, Florida Statutes.

    
    

20. D & S was a "dealer in agricultural products" as defined in Section 604.15(1), Florida Statutes. The corporation was licensed and bonded as required under Sections 604.17-604.20, Florida Statutes. Fidelity provided the bond as surety as required in Section 604.21, Florida Statutes, and Rule 5H- 1.01, Florida Administrative Code.

    
    

21. Stacys Farms, a "producer" of agricultural products as defined by Section 604.15(5), Florida Statutes, timely filed a complaint against the Defendants in accordance with Section 604.21, Florida Statutes. The complaint alleged that D & S refused to pay for "agricultural products", as defined in Section 604.15(3), Florida Statutes, which were sold and delivered to D & S on May 21, 1988.

    
    

22. In agricultural product bond enforcement proceedings, a petitioner has the burden of proving, by a preponderance of the evidence, that the dealer defaulted on its agreement and is indebted to the petitioner. Ernest Leclercq, d/b/a Suncoast Farms v. Orin H. Cope Produce, Inc., d/b/a South Dade Produce, 9

    F.A.L.R. 852 (1986). In this case, Stacys Farms proved that under the terms of the verbal agreement between the parties, Stacys Farms is owed a total of

    $17,967.10. It is established that D & S took delivery and acceptance of all of the loads except load number 88132 to Winn-Dixie in Jacksonville. The quality of melons represented by Stacys Farms was incorrect as to this load.

    
    

23. The transactions between the parties were actual sales from Stacys Farms to D & S. The dealer is responsible for the full sales price, less what can reasonably be determined as shortage, or the producer's failure to provide quality and size pursuant to the verbal agreement. No agency existed here and the products were not obtained by D & S on consignment.

    
    

24. After the dealer placed its own employee on the loading dock to assure that the properly sized melons were placed upon the correct trailers, the size of the melons shipped were deemed to be accepted by the dealer. Quality could still be determined at destination under the verbal agreement.

    
    

25. Unfortunately, due to a lack of a prompt investigation and resolution of real or imagined problems between the parties, confusion and faulty communications quickly deteriorated into mistrust of each other and the product. Except for one shipment on May 21, 1988, the quality of product appeared to be acceptable to the receivers. D & S was unable to prove by a preponderance of the evidence that a set-off greater than $391.50 was required under the agreement. Because the parties submitted the case to the Division of Administrative Hearings for resolution of the price dispute, the existence of a valid verbal agreement can be presumed. J.R. Sales, Inc. v. Earl Dicks, 521 So.2d 366 (Fla. 1st DCA 1988).

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

1. That the Department of Agriculture and Consumer Services enter a Final Order requiring D & S to make payment to Stacys Farms in the amount of

   $17,967.10.

   
   

2. In the event D & S does not comply with the Department's order within fifteen days from the date it becomes final, Fidelity should be ordered to provide payment under the conditions and provisions of the agricultural products bond. The bond only provides for payment up to $10,000.00.

DONE and ENTERED this 8th day of January, 1990, in Tallahassee, Leon County, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this

8th day of January, 1990.

APPENDIX TO RECOMMENDED ORDER

Petitioner's proposed findings of fact are addressed as follows:

1. Rejected. Contrary to fact. See HO #4-#5.

2. Rejected. Improper conclusion. See HO #5.

3. Rejected. Improper summary.

4. Rejected. The weight to be given to testimony

   is within the sole discretion of the Hearing Officer.

5. Accepted.

6. Rejected. Irrelevant. See HO #9.

7. Rejected. Irrelevant and immaterial to the

   complaint.

8. Rejected. Irrelevant. See HO #9.

Respondent D & S' proposed findings of fact are addressed as follows:

1. Rejected as to Buddy Session's status. Otherwise accepted. See HO #3 and #5.

2. Rejected as to the term "top quality" in first sentence. Contrary to fact. Rejected as to last two sentences. Contrary to fact. See HO #4.

3. Accepted.

4. Rejected. Irrelevant.

5. Accept the first sentence. The rest is rejected. Contrary to fact. Improper conclusion. See HO #8.

6. Rejected. Outside the terms of the complaint and

   the proceeding. Also, improper conclusion based upon insufficient evidence.

7. Rejected. Irrelevant.

8. Rejected. Irrelevant.

9. Accepted.

10. Rejected. Argumentative. Improper summary. Contrary to fact. See HO #4.

11. Rejected. Contrary to fact. See HO #17.

12. Rejected. Contrary to fact. See HO #17.

13. Rejected. Contrary to fact. See HO #13-#18.

Copies furnished:

Marilyn G. Sears Stacys Farms, Inc. 1201 Riverbend Drive

LaBelle, Florida 33935

Philip L. Burnett, Esquire PHILIP L. BURNETT, P.A.

Post Office Box 2258

Fort Myers, Florida 33902

Fidelity & Deposit Company of Maryland

Post Office Box 1227 Baltimore, Maryland 21203

Fidelity & Deposit Company

of Maryland Honorable Doyle Conner

Post Office Box 25857 Commissioner of Agriculture

Tampa, Florida 33622 The Capitol

Tallahassee, FL 32399-0810

Ben F. Pridgeon, Jr., Chief

Bureau of License and Bond Mallory Horne, Esquire

Department of Agriculture General Counsel

and Consumer Services Department of Agriculture Lab Complex and Consumer Services Tallahassee, Florida 32399-1650 Mayo Building

Tallahassee, FL 32399-0800

Docket for Case No: 88-006474

Orders for Case No: 88-006474