STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JIMMIE P. HENDERSON AND PAUL ) RUNNER, D/B/A H & R FARMS AND ) HENRY RICHARDSON, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1357A

) SOUTHERN CUCUMBER CO., INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, in Wauchula, Florida, on November 19, 1981.

APPEARANCES

For Petitioner: Mr. Jimmie P. Henderson

Route Two, Box 1041

and

Mr. Henry Richardson Route One, Box 269-A Wauchula, Florida 33873

For Respondent: Val R. Palarini, Esquire

and

Robert A. Meade, Esquire PATARINI AND MEADE, P.A.

Attorneys at Law Post Office Box 608

Wauchula, Florida 33873

This cause arose out of a request by the Petitioners for an accounting from Southern Cucumber Co., Inc. , the Respondent; regarding an indeterminate amount of money they allege is due and owing to them from the Respondent for its involvement in the processing, sale and shipment of a crop of cucumbers produced by the Petitioners. The Petitioners maintain that Southern Cucumber Co., Inc., acted as their agent in the sale of cucumbers for their account and that they are still entitled to additional money for their crop handled by the Respondent in its alleged agency relationship.

The Respondent, on the other hand, maintains that it was not acting as the agent of the Petitioners; but rather the cucumbers were actually purchased by the Respondent from the Petitioners on a "cash pack-out basis" (purchase) and that the price was determined by the prevailing market price for the week that the products were delivered to the Respondent by the Petitioners. This complaint was filed with the Bureau of License and Bond, Division of Marketing,

of the Department of Agriculture on March 12, 1981. By letter of April 1, 1981, the Respondent denied its responsibility for an additional payment to the Petitioners and maintained that it was not the agent of the Petitioners during the subject transaction. The Petitioners requested hearings respectively on April 30 and May 4, 1981, and by letter of May 12, 1981, the cause was transferred to the Division of Administrative Hearings for hearing pursuant to Chapter 120, Florida Statutes. Pursuant to a stipulation of the parties the cause was held in abeyance until November, 1981, for the convenience of the parties and potential witnesses some of whom were out of the state during the intervening period of time.

At the final hearing in this cause the Petitioners testified on their own behalf. The Respondent called eight witnesses. The Petitioners additionally introduced Composite Exhibit One, which was admitted into evidence. The transcript of the proceedings was received by the undersigned December 28, 1981, and the parties ultimately waived their right to submit proposed findings of fact and conclusions of law.

FINDINGS OF FACT

1. The Petitioners and the Respondent had a business relationship by which the Respondent received cucumbers from the Petitioners for the fall 1980 harvest season. Cucumbers on some occasions are sold on a "cash basis," which means that a buyer purchases the cucumbers for a set price, either at the field or upon arrival at the packing house. On other occasions cucumbers are sold on a "handling basis" or "brokerage basis." Under this latter arrangement the "buyer" takes delivery of the load of cucumbers from the grower, the farmer; sells them at the best obtainable market price, and a portion of the sale price goes to the grower or farmer and a portion is retained by the "handler."

   
   

2. The Petitioners grow cucumbers in Hardee County and are, therefore, producers of agricultural products in the State of Florida.

   
   

3. The Respondent, Southern Cucumber Co., Inc., is a dealer in agricultural products engaged in that business in the State of Florida.

   
   

4. The Petitioners began clearing land for the purpose of putting in a cucumber crop in the summer of 1980. During the course of their land clearing and planting of the crop, they obtained certain monetary advances from the Respondent with the oral agreement that they would deliver the produced cucumbers to the Respondent's packinghouse upon the crop's maturity and harvesting. When the crop became ready for harvesting they also got, in addition to fertilizer advances and other cost advances, advances to cover the costs of labor for picking the cucumbers. In approximately October, 1980, the Petitioners began harvesting and delivering cucumbers to the Respondent's packinghouse.

   
   

5. By oral agreement the Petitioners and the Respondent agreed that the Respondent would "pack-out" their cucumbers for approximately two dollars to two dollars and twenty-five cents per bushel, which charge covered processing the cucumbers through the machine where they were washed and waxed, packing them and preparing them for shipment. When the cucumbers were delivered by the Petitioners to the Respondent's loading dock, the Petitioners were issued a slip showing the quantity delivered by the Respondent. No money changed hands at this time. The Respondent did not pay for cucumbers upon their delivery to his packinghouse. The Petitioners rather had to wait until the cucumbers were shipped and sold to the ultimate purchaser before they were told of the price

   received for them and sometimes received no money for the crop until that purchaser had remitted payment for the cucumbers to the Respondent whereupon the Respondent would pay the Petitioners for the cucumbers he had received and sold on their account. The Respondent would deduct from the proceeds of the sale of the cucumbers the amounts representing the costs the Respondent advanced for fertilizer, fuel and picking, and any other items for which the Petitioners owed him. Typically, thirty days or more elapsed before the Petitioners were issued "pack-out slips" for a given lot of their cucumbers which they had delivered to the Respondent. The "pack-out slip" indicated what grade and quantity of cucumbers the Respondent was able to prepare for shipment and sale, out of the cucumbers delivered to him by the Petitioners, as well as price. The Petitioners' oral agreement was negotiated between themselves and Mr. Jack Eason, who was manager or otherwise in charge of the Respondent's packinghouse and shipment business at the time. As acknowledged by witness Connor for the Respondent, a "handler" is one who accepts produce, packs it, sells it, sends it to the ultimate purchaser, gets his remittance back, subtracts his profit from that, and returns the rest to the growers. This is consistent with the Petitioners' arrangement with the Respondent. The Petitioners delivered their cucumbers to the Respondent, had them processed, packed, shipped and sold and received no money for them, typically, until the Respondent received his remittance from the ultimate purchaser where the products were shipped. The Respondent then subtracted the amount of costs advances to the Petitioners, his own profit and then remitted the net over to the Petitioners. The Petitioners were liable for any loss on the sale of the crop. That is the nub of their complaint. They believe that the market price assured to them was less than the true market price on the day their products were sold.

   
   

6. On several occasions when the Petitioners sought money for their crop after delivery of it to the Respondent and the ultimate purchaser and discussed the price with the Respondent, the Respondent in stating a price which the cucumbers would bring or had brought, discussed the fact that there was "room for adjustments" or that "adjustments" would be made. A "handler arrangement" (as Respondent's own witness Alvarez established) is one characteristically involving "adjustments" to be made to the portion of the sale-price due the grower because of any variances in quality of the product when delivered to the ultimate purchaser. This his in addition to charges to the grower for processing, packing, and selling the product (and in this case, growing and harvesting costs advances) , all of which charges to the growers, mostly incurred after delivery to the Respondent, are characteristic of a "handler" or agency arrangement. Witness Parker for the Respondent is a packing-house owner and cash buyer of produce in Wauchula. In his cash-buying operation he never makes growers wait for their money, but will borrow money at seventeen to eighteen percent interest if necessary to pay them either on the day or one to two days after produce is delivered to him. The Respondent established that Wauchula is traditionally a "cash market," but that was not the situation with the Petitioners' and Respondent's business arrangement. The Respondent was functioning as the Petitioners' "handler" or agent in the situation at bar.

   
   

7. The Petitioners have not filed a complaint for a specified amount of money they feel is due and owing them for the crop, but rather ask for an accounting so that pecuniary question can be determined. In that regard the surety on the bond required of the Respondent as a dealer in agricultural commodities, is Continental Insurance Company, specifically bond number BND218 26 21.

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Bearings has jurisdiction of the parties to, and the subject matter of, these proceedings. Section 120.57(1) , Florida Statutes.

   
   

9. Section 604.20, Florida Statutes (1979), provides in pertinent part:

   
   

   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 ment to producers or their agents or representatives of the proceeds of all agricultural products handled or purchased by such dealer. . . . (Emphasis supplied.)

   2. 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 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 sale in instances involving direct sales or from the date on which the agricultural product was received by the dealer in agricultural products, as agent, to be sold for the producer.

      (6) Any party whose material interest is affected by a proceeding pursuant to this section shall be granted a hearing upon request. Such hearing shall be conducted pursuant to Chapter 120.

      
      

10. There is no dispute that the Respondent is a dealer in agricultural products as defined in Section 604.15, Florida Statutes (1979) . Neither is there any dispute that the Petitioners timely filed their complaint pursuant to the above section and are entitled to thus seek an accounting pursuant to the above authority. In short, the sole legal issue, in essence, is whether or not the Respondent, as an agricultural dealer, is a "cash buyer" or an agent or "handler." The Respondent relies on Section 604.16, which provides:

    
    

    604.16 Exceptions to provisions of ss. 604.15-604.30.--The provisions of ss. 604.15-604.30 shall not apply to:

    1. All persons who buy for cash

       and pay at the time of purchase with United States currency.

    2. A dealer in agricultural products who operates as a bonded licensee under the Federal Packers and Stockyards Acts.

    
    

11. The Respondent thus maintains that it consistently was a cash purchaser of the agricultural products involved and that, therefore, the Petitioners are not entitled to an accounting pursuant to the above authority, since the Respondent's agricultural-dealing business comes under the Section

    604.16 exemption. In that connection the Respondent also asserts that the Department has no authority to examine its books and records involving the procurement, purchase or sale of agricultural products.

    
    

12. Section 604.23, Florida Statutes, provides that the Commissioner (Department) shall have power to investigate, upon complaint of any interested person or upon his own initiative, the records of any applicant or licensee for any transaction involving the solicitation, receipt, sale or attempted sale of agricultural products and may examine at the place of business or places of business of the licensee his ledgers, books of account, memoranda and other documents which relate to the transaction involved. 1/

    
    

13. Section 604.22, involving required record-keeping of dealers in agricultural products, provides as follows:

    
    

    Each licensee, while acting as agent for a producer, shall make and preserve for at least 1 year a record of each transaction, specifying the name and address of the producer for whom he acts as agent; the date of receipt; the kind, quality, and quantity of agricultural products received; the name and address of the purchaser of each package of agricultural products;

    the price for which each package was sold; the amount and explanation of any adjustments given; and the net amount due from

    each purchaser. An account of sales shall be furnished each producer within 48 hours

    after the sale of such agricultural products.

    Such account of sales shall clearly show the sale price of each lot of agricultural

    products sold; all adjustments to the original price, along with explanation of same; and an itemized showing of all marketing costs deducted by the licensee, along with the net amount due the producer.

    The licensee shall make the payment to the producer within 5 days of the licensee's receipt of payment.

    
    

14. There is no question that the evidence in this record established that the Petitioners were seldom furnished an account of sales of their products within 48 hours after sale as the authority quoted last above requires of agents for producers. Thus, even if there were no dispute that the Respondent is an agent of the Petitioners, or "handler," the required accounting of sales, including the price of the products sold; all adjustments to the original price,

    with explanation; as well as an itemized showing of all marketing costs deducted by the licensee (Respondent) along with the net amount due the producers (Petitioners) was not provided in most cases within 48 hours after the sale of the product; and, thus, Section 604.22 has not been complied with. Further, and more to the point, the Petitioner's unrefuted testimony to the effect that they delivered their cucumbers and had to wait a substantial period of time before being paid for them or being furnished the "pack-out slip" showing prices, and especially the fact that they were clearly not paid in cash at the time of delivery or purchase with United States currency, belies the Respondent's argument for an exemption. There is no question that the Petitioners had to pay for the processing of their cucumbers through the machine at the packinghouse, they had to pay for the packing boxes and the packing and preparation for shipment of their cucumbers and they had to generally wait to receive their money until after the Respondent received his from the ultimate purchaser.

    These facts, in addition to the fact that the Respondent did not pay them (cash or otherwise) upon obtaining custody of the crop, renders the conclusion obvious that the Respondent is a "handler" or agent of the Petitioners and that title to the subject crop did not pass upon its delivery to the Respondent's loading dock by the Petitioners. Thus, it is clear that the Respondent is not exempt from the provisions of Chapter 604, nor from scrutiny of its books and records by the Department.

    
    

15. The evidence propounded by the Petitioners also clearly establishes that even after being asked repeatedly, the Respondent did not give a full and detailed explanation to the Petitioners of the price their crop brought on the market nor any adjustments made, nor a clear explanation of the net amount due them after any packing, processing, growing or harvesting costs were subtracted from the gross sales price. There is, thus, no question that, for purposes of the above authority, that an account of these sales to the ultimate purchasers of the cucumbers, with a detailed explanation of all adjustments, marketing costs and net amounts due was not furnished the Petitioners within 48 hours (or later) after those sales were made in most cases.

    
    

16. It being established that the Respondent was acting as an agent for the producer Petitioners and did not voluntarily make the accounting mandated by the above authority, and requested by Petitioners so they could ascertain the price received as compared to the prevailing market price for the sale dates involved and the net proceeds due them; it is concluded that the Petitioners are entitled to that accounting. The Respondent should be required to provide it in order for the parties to accurately determine any financial obligations which may exist between them.

RECOMMENDATION

Having considered the foregoing findings of fact, conclusions of law, the candor and demeanor of the witnesses and arguments of the parties; it is, therefore,

RECOMMENDED:

That a final order be entered requiring the Southern Cucumber Co., Inc., to furnish to the Petitioners an accounting of all quantities of cucumbers received by them for the Petitioners; the parties to whom those cucumbers were ultimately sold; the sales price obtained; the prevailing market price for cucumbers with that quality and grade on the date the sales were effected; all adjustments to the gross sales price along with an explanation of the same; an itemized showing of all marketing costs, if any, deducted by the Respondents from that gross

sales price; together with all production and harvesting costs deducted by the Respondent representing money advanced to the Petitioners for the growing and harvesting of the crop along with the net amount due the Petitioners. This accounting should be furnished the Petitioners within thirty (30) days of the final order herein.

DONE AND ENTERED this 19th day of March, 1982, in Tallahassee, Florida.

P. MICHAEL RUFF 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 19th day of March, 1982.

ENDNOTE

1/ Laws 1981, c. 81-318, rewrote statutes providing for legislative review of laws regulating the professions, occupations, businesses and industry and other endeavors in Florida as originally provided for under the regulatory Reform Act of 1976, Laws 1976, c. 76-168, as amended. Hence, as a result of Laws 1981, c. 81-318, Fla. St. 1981, Subsections 604.15--604.30, are repealed effective October 1, 1990, and shall be reviewed by the legislature pursuant to the "Sunset Act" contained in Section 11.61, Florida Statutes.

COPIES FURNISHED:

Mr. Jimmie P. Henderson Val R. Patarini, Esquire and Mr. Paul Runner Post Office Box 608

d/b/a H&R Farms Wauchula, Florida 33873 Route Two, Box 1041

Wauchula, Florida 33873 Mr. L. Earl Peterson, Chief

Bureau of License and Bond

Mr. Henry Richardson Division of Marketing

Route One, Box 269-A Department of Agriculture Wauchula, Florida 33873 and Consumer Services

Mayo Building

Tallahassee, Florida 32301

Docket for Case No: 81-001357

Orders for Case No: 81-001357