STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOMESTEAD TOMATO PACKING )

COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 82-3396A

)

EMERSON H. ELLIOT, d/b/a )

EMERSON ELLIOT PRODUCE, ) AND PEERLESS INSURANCE COMPANY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Arnold H. Pollock, Hearing Officer with the Division of Administrative Hearings, in Orlando, Florida, on May 16, 1983. The issue for determination was whether Petitioner was entitled to recovery from Respondent Emerson H. Elliott, doing business as Emerson Elliott Produce ("Respondent" hereafter), of unpaid portions of invoices submitted for produce purchased by Respondent from Petitioner.

APPEARANCES

For Petitioner: Rosario Strano, pro se

President

Homestead Tomato Packing Company, Inc. Post Office Box 3064

Florida City, Florida 33034

For Respondent: Kenneth M. Clayton, Esquire

Michael T. Hand, Esquire

220 North Palmetto Avenue Orlando, Florida 32801

BACKGROUND INFORMATION

On August 5, 1982, Petitioner filed a claim with the Florida Department of Agriculture against Respondent in the amount of $13,623.70, arising out of the sale by Petitioner of tomatoes to Respondent in January, February, and March, 1982, for which only partial payment was received. Respondent filed his answer on October 28, 1982, denying liability to Petitioner and requesting a hearing.

Petitioner presented the testimony of Thomas Banks, Phyllis Ernst, and Rosario Strano, and Petitioner's Exhibits 1 through 4. Respondent testified in his own behalf and presented the testimony of Lester Faulhaver, as well as Respondent's Exhibits A through J.

FINDINGS OF FACT

1. During January, February, and early March, 1982, Respondent entered into several oral contracts for the purchase of tomatoes from Petitioner. Specifically, orders were placed by Respondent on January 28, February 3 and 5, and March 3, 1982, for US. No.3 grade tomatoes to be shipped f.o.b. origin to receivers in Puerto Rico and Alabama.

   
   

2. The first three orders were shipped by boat to Puerto Rico and the fourth by truck to Alabama.

   
   

3. The shipment of January 28, 1982 (Shipment #1), consisted of 1,296 boxes, and the invoice cost was 9,288.90. Payment was due on or before February 17, 1982, per the handwritten note placed on the invoice by Ms. Ernst before it was mailed out. A similar notice as to payment due date was placed on each of the other invoices before they were mailed out.

   
   

4. The shipment of February 3, 1982 (Shipment #2), consisted of 1,368 boxes; the invoice cost was $9,188.10; and "payment was due on or before February 22, 1982.

   
   

5. The shipment of February 5, 1982 (Shipment #3), also consisted of 1,368 boxes; was priced at $9,188.10; and payment was due on or before February 24, 1982.

   
   

6. The shipment to Alabama of March 3, 1982 (Shipment #4), consisted of 1,178 boxes; the invoice cost was $7,748.70; and payment was due on or before March 23, 1982.

   
   

7. Shipment #1 was inspected by a United States Department of Agriculture (USDA) inspector in the receiver's cool room in Puerto Rico on February 5, 1982, eight days after it was shipped. At that time, the inspector noted that the condition of the tomatoes was "approximately 40 percent green and breakers, 45 percent turning pink, 10 percent light red and red. Decay ranges from 2 to 6 percent, average 3 percent, Bacterial soft rot in early stages." The grade was noted: "Fails to grade US. No. 3, account of grade defects." Quality was noted as: "Mature fairly clean to clean, well developed, generally fairly smooth to slightly rough. Grade defects ranges 40 to 56 percent, average 47 percent, mostly scars, catfaces, cuts and rough texture."

   
   

8. Shipment #2 was inspected by a USDA inspector in the receiver's cool room on February 16, 1982, 13 days after shipment. At that time, the inspector noted as to condition: "Average approximately 95 percent red. From 2 to 8 percent, average 4 percent decay; Bacterial soft rot and Gray Mold rot in various stages." Quality was listed as: . . . grade defects ranges 12 to 28 percent, average 19 percent, mostly growth [sic] crack, catfaces, cuts and scars. Grade was noted: "Fails to grade US. No. 3 account of grade defects."

   
   

9. Shipment #3 was inspected by a USDA inspector in the receiver's cool room on February 17, 1982, 12 days after shipment. On the inspection report, condition was noted: "Average approximately 85 percent red. Decay ranges 5 to

   24 percent, average 14 percent. Gray Mold rot and Bacterial soft rot in various stages." Quality was listed as: . . . From 12 to 32 percent, average 18 percent grade defects, mostly scars, catfaces, mechanical damage and rough texture." Grade was listed as: "Fails to grade US. No. 3 account of grade defects."

10. Shipment #4 was inspected by a USDA inspector in the receiver's warehouse in Alabama on March 5, 1982, two days after shipment. Upon inspection, condition was noted as: "Strano's Pride lot: Average approximately

    30 percent green, 5 percent breakers, 20 percent turning, 20 percent pink, 15 percent light red, 10 percent red." As to Select Lot: "Average approximately

    20 percent green, 20 percent breakers, 15 percent turning, 20 percent pink, 10 percent light red, and 15 percent red." Each lot was average 1 percent decay. Grade was not quoted, nor was quality.

    
    

11. Ordinary shipping time by ship from the Port of Miami to Puerto Rico is four to five days. Inspections under the USDA Perishable Agricultural Commodities Act rules must be conducted within 24 hours after delivery. The USDA inspector is generally accepted as the only nonpartisan means of determining grade, condition, and quality of produce.

    
    

12. While the condition of a shipment may change during transit, the grade of the produce normally will not.

    
    

13. When the delivery inspections on Shipments #1, #2, and #3 were conducted in Puerto Rico and the receivers complained to Respondent about the produce they received, Elliott, who had been in daily telephone contact with his dissatisfied customers and had verified the condition of the shipments in conversations with the inspectors in question, contacted Tom Banks, Sales Manager for Petitioner, who authorized adjustments in payment saying, "Work it out and get back what you can, or words to that effect. Discussion between these two men as to the adjustments included such topics as charges for gassing and freight to the gashouse, along with the fact that the tomatoes failed to grade out at destination as US. No. 3, as ordered. Mr. Banks failed to get the approval of Mr. Strano before authorizing those adjustments, however

    
    

14. Respondent had ordered green tomatoes without gassing so that there would be less chance of spoilage during the several days it took in transit for the tomatoes to get from Miami to Puerto Rico. Gassing, a procedure designed to speed up the ripening of tomatoes, would not have been an appropriate process in a situation such as this.

    
    

15. With regard to Shipment #4, Respondent wanted vine-ripened tomatoes for quick delivery to a close-by market. He described his order as for 40 to 50 percent color in the shipment. The tomatoes delivered contained color well below the desired level; and as a result, the Respondent's customer, who had to hold them for an extended period before sale to allow them time to ripen, was dissatisfied with the shipment.

    
    

16. The tomatoes in Shipments #1, #2, and #3 were graded as US. No. 3 by a USDA inspector at Petitioner's plant outside Miami prior to shipment. The procedure followed is for the inspector to inspect batch lots containing amounts far greater than that in any one of the shipments in question here. The inspector puts his stamp of grade on a master inspection certificate. Thereafter, whenever any tomatoes are drawn from that batch for sale and shipment, the Petitioner's employees are authorized to mark the appropriate grade for that shipment onto the documentation relating to it. There is no additional inspection by the USDA at origin. However, Petitioner could provide a document trail for only two shipments. One, of 1,368 boxes to Puerto Rico on February 3, 1982, was Shipment #2. Certificate No. B 135642, referring to Gas Lot 306, reflecting a grading of US. No. 3 on February 2, 1982, can be traced

    to that shipment. Certificate No. B 135588, which was offered in support of Shipment #3, on February 5, 1982, affords reasonable connection to that shipment.

    
    

17. There is no documentation, other than Petitioner's own shipping memorandum, which relates to the preshipment grading of the tomatoes in Shipment #1. No credible evidence was introduced to establish the grade of produce in this shipment which failed to grade out as US. No. 3 upon delivery. I therefore find that the grade assigned by the inspector at the delivery point is controlling and that the shipment of 1,296 boxes on January 28, 1982, was not US. Grade No. 3.

    
    

18. Respondent deducted $3.25 per box on Shipment #1 ($4,212), $1.50 per box on Shipment #2 ($2,050), $2.50 per box on Shipment #3 ($3,420), and $2 per box on Shipment #4 ($2,356), plus $752.40 each on Shipments #2 and #3 for gassing and freight to the gashouse.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding.

    
    

20. Since it has been found that Shipment #1 was not proven to consist of US. No. 3 grade tomatoes at the time of shipment, Petitioner cannot recover full price for a product less than that ordered by the Respondent.

    
    

21. The same rationale would apply to Shipment #4, to Alabama. Here, Respondent had ordered vine-ripened tomatoes which are predominately red. The inspection report by the USDA at the point of delivery reflects that by far the greater amount of the tomatoes in this shipment were not red, but in various stages of ripeness before becoming red. Therefore, Respondent need not pay for something he did not get.

1. With regard to Shipments #2 and #3, the tomatoes were established to be Grade No. 3 at origin. Risk of loss or damage lies with the purchaser.

   Also, since grade normally does not change, only condition, the grade analysis by the delivery inspector of average 19 percent and 18 percent respectively must be considered as liberal and over-critical. Respondent did not order gassing and should, therefore, not pay for either gassing of these shipments or the freight to the gashouse. He is, therefore, entitled to deduct the sum of

   $752.40 from the invoice for each shipment, but should pay the adjustment on price deducted on those two shipments, a total of $5,470.

   
   

2. The parties have submitted post-hearing legal memoranda which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.

RECOMMENDATION

Based on the foregoing, it is hereby RECOMMENDED:

That the Department of Agriculture and Consumer Services enter an order finding that Respondent is indebted to Petitioner in the amount of $5,470.

RECOMMENDED this 7th day of June, 1983, in Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of June, 1983.

COPIES FURNISHED:

Robert A. Chastain, Esquire General Counsel

Department of Agriculture and Consumer Services Mayo Building

Tallahassee, Florida 32301

Kenneth M. Clayton, Esquire Michael T. Hand, Esquire

220 North Palmetto Avenue Orlando, Florida 32801

Homestead Tomato Packing Company, Inc.

c/o Mr. Rosario Strano Post Office Box 3064

Florida City, Florida 33034

Peerless Insurance Company

62 Maple Avenue

Keene, New Hampshire 0343

Docket for Case No: 82-003396

Orders for Case No: 82-003396