STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GREEN CAY CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 83-1463A

) SANCO DISTRIBUTORS, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

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 September 19, 1983, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Mr. Harold J. Rabin

700 Northwest 12th Terrace Pompano Beach, Florida 33060

For Respondent: Michael J. Cohen, Esquire

2715 East Oakland Park Boulevard, Suite 101 Fort Lauderdale, Florida 33306

PRELIMINARY STATEMENT

On February 28, 1983, petitioner, Green Cay Corporation, filed a complaint with the Department of Agriculture and Consumer Services seeking recovery of

$14,685.50 from respondent, Sanco Distributors, Inc. The complaint generally stemmed from respondent's alleged failure to pay petitioner for a truckload of peppers, cucumbers and squash sold to respondent and subsequently transported from Pompano Beach, Florida, to Cleveland, Ohio, in February, 1983. Respondent filed an answer on April 11, 1983, denying the claim and asserting that the peppers were damaged when picked up and were accordingly sold at discount. It also contended the invoice was erroneous in certain respects and that other adjustments were required. In all, respondent asserted that the total amount owed was only $8,732.50, and that amount has already been paid.

The matter was referred by the Department to the Division of Administrative Hearings on May 13, 1983, with a request that a Hearing Officer be assigned to conduct a hearing. By notice of hearing dated June 15, 1983, the final hearing was scheduled for August 15, 1983, in Fort Lauderdale, Florida. At the request of respondent, the formal hearing was rescheduled to September 19, 1983, at the same location.

At the formal hearing, petitioner presented the testimony of its general manager, Harold J. Rabin. Respondent presented the testimony of its president,

Sandy Geraci, and petitioner's president, Edwin Kodish, and offered respondent's exhibit 1 which was received in evidence.

The transcript of hearing was filed on September 28, 1983. The parties waived their right to file proposed findings of fact and conclusions of law.

As agreed upon by the parties during the course of the hearing, the issue is whether petitioner is entitled to $4,425 for produce sold by petitioner to respondent.

Based upon all of the evidence, the following findings of fact are determined.

FINDINGS OF FACT

1. Petitioner, Green Cay Corporation, acts as a sales agent in selling vegetables primarily for producers in Dade and Broward Counties. Its principal offices are at 700 Northwest Twelfth Terrace, Pompano Beach, Florida.

   Respondent Sanco Distributors, Inc., acts as a broker for supermarket chains and consequently purchases produce from agents such as Green Cay for further resale to wholesalers and distributors.

   
   

2. On the morning of February 7, 1983, Sandy Geraci, president of respondent, telephone petitioner's general manager, Harold Rabin, to inquire about the availability of peppers and other produce. After agreeing on the price and amount, Geraci sent a truck to petitioner's warehouse that same evening which picked up the following produce: 300 boxes of peppers at $28.25 per box, 14 boxes of cucumbers at $13.25 per box, 20 boxes of "Fcy Zucs" at

   $8.25 per box, 40 boxes of "Med Zucs" at $5.25 per box, and 300 boxes of extra- large peppers at $28.25 per box. The total charge on the invoice was

   $14,685.50. Before accepting the shipment, Gareci made a cursory inspection of the produce and found it to be acceptable. The shipment was picked up F.O.B. Pompano Beach, which meant Sanco took title to the produce once it was loaded on the truck.

   
   

3. Two hundred boxes of peppers were initially delivered to Califf Company in Columbus, Ohio, on February 9 or 10. At around 4:00 a.m. on February 10, Sanco's truck arrived at the loading dock of Walter Gailey and Sons in Cleveland, Ohio, to deliver the remaining 300 boxes of peppers. After the truck was unloaded, it departed the city to make further deliveries. There was no inspection of the peppers by Gailey before they were unloaded or when they were first placed in his warehouse. Sometime later that morning, a United States Department of Agriculture inspector examined a load of peppers on Gailey's dock and noted that "[d]amage by bruising occurring throughout pack ranges from 12 percent to 16 percent, average 14 percent. No decay." However, it was not conclusively shown that the peppers inspected were those delivered by Sanco.

   The report also noted that "[g]rade defects average 4 percent, consisting of mechanical damage and pulled calix." A pulled calix means the pepper has no stem. The report concluded in part that the boxes met "quality requirements but fail[ed] to grade U.S. No. 1. account of condition."

   
   

4. Gailey contacted Geraci by telephone on the morning of February 10 to complain about the peppers. Geraci then telephone Rabin. After being read the results of the inspection report, Rabin asked Geraci to try to make a settlement with Gailey and to offer a $3.00 per box allowance on the peppers. When Gailey was told of this offer by Geraci, he apparently refused. Geraci then offered to move the peppers to Chicago, but Rabin declined this offer since they had

   already been unloaded and placed in refrigeration. He feared that if they were reloaded and the refrigeration changed again, the perishable items might spoil by the time they reached Chicago.

   
   

5. Geraci interpreted Rabin's refusal to move the produce to another destination to mean that he should sell the peppers at the best price available. He thereafter sent Rabin a telegram on February 11, 1983, stating in pertinent part as follows:

   
   

   USDA Inspection ordered at 7 AM February 10, 1983 shows "damage by bruising ranges from 12-16 percent average 14 percent failed to grade US#1" and regards to invoice #009950

   dated February 7, 1983 500 large peppers your offer of $3.00 is not acceptable. You have the option to take pepper elsewhere but refused. Peppers will be sold for your account and will forward government inspection account sales plus 25 cents brokerage account will be charged.

   
   

6. After receiving the above telegram, Rabin sent a reply telegram to Geraci the same date stating as follows:

   
   

   Reference your Western Union wire of February 11, terms not acceptable. We are turning this matter over to USDA for their consideration. We also intend turning this matter over to the Florida Department of Agriculture reference your bond.

   
   

7. On February 11, 1983, the Califf Company in Columbus, Ohio, contacted Geraci concerning the 20 boxes of peppers he had delivered the previous day. Califf claimed its shipment was also bruised and wanted the $3.00 allowance offered to Gailey. Sanco agreed to this discount.

   
   

8. After taking the 300 boxes of peppers on a consignment basis, Walter Gailey and Sons eventually sold the peppers for $10.50 per box on the average. Gailey then rebated $3,150 to Sanco, who in turn remitted that amount to Green Cay.

   
   

9. The "account sale" given by Gailey to Sanco to evidence the above sale was not in accordance with normal trade procedures. The invoice reflected only the gross amount received for all 300 boxes ($3,150) at an average cost of

   $10.50 per box. It did not identify the sales price for each individual box, the freight charges, commission, or handling charges, if any. Such itemization is normally shown on the document.

   
   

10. Some 2,000 boxes of peppers were sold by petitioner on February 7 and shipped to various buyers. There were no other complaints of bruised peppers received by Green Cay other than those that were delivered to Gailey and Califf.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

12. Neither party submitted written argument to support their positions. However, by way of closing argument, petitioner contends that respondent inspected the produce before it was loaded, was satisfied, and cannot now claim it was bruised. It also points out that the account sale given by Walter Gailey and Sons was illegal and is therefore not binding on the parties. It contends that because of Gailey's failure to give a proper accounting, Sanco may recover from Gailey the difference between the amount allegedly received per box ($10.50) and that which should have been received per box ($25.25) and will accordingly suffer no loss.

    
    

13. Respondent counters by arguing that under the Fruit and Vegetable Marketing Service Blue Book (which was not made a part of this record), a buyer does not have to accept goods of lesser quality than he bought. That is to say, there is an implied warranty that goes with the produce that warrants the produce to be in good condition. It claims that this warranty was breached, as evidenced by the U.S.D.A. inspection report.

    
    

14. The present law does indeed provide that a warranty that goods shall be merchantable is implied in a contract for their sale if the seller is a merchant of goods of that kind. Subsection 672.314(1), Florida Statutes. Although a formal contract was never executed, there were sufficient writings to indicate that a contract for sale had been made between the parties. Subsection 672.316(3)(b), Florida Statutes, is dispositive and provides in pertinent part:

    
    

    When the buyer before entering into the contract has examined the goods . . . as fully as he desires . . . there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him.

    
    

    Here, the buyer (Sanco) was given an opportunity to inspect the produce prior to it being loaded. Sanco made such an inspection of the produce and found it satisfactory. If 500 out of the 2,000 boxes had been bruised as Gailey and Califf claimed, a prudent inspection should have discovered the same. After being given an opportunity to inspect, Sanco cannot now assert an implied warranty of quality. Richards Manufacturing Co. v. Gamel, 5 Wash.App. 549, 489 P.2d 366 (1971). Accord: Hall Truck Sales v. Wilder Mobile Homes, Inc., 402 So.2d 1299 (Fla. 2nd DCA 1981). Therefore, the defect (if any) should have been revealed by examination, and Sanco's failure to adequately examine the goods negates the implied warranty of merchantability. Hall Truck Sales, 402 So.2d at 1301.

    
    

15. It is concluded that petitioner is entitled to recover $4,425 from respondent for goods sold by petitioner to respondent on February 7, 1983.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent repay $4,425 to petitioner for goods sold by

petitioner to respondent on February 7, 1983.

DONE AND ENTERED this 28th day of October 1983 in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of October 1983.

COPIES FURNISHED:

Mr. Harold Rabin, General Manager Green Cay Corporation

700 Northwest 12th Terrace Pompano Beach, Florida 33060

Michael J. Cohen, Esquire

2715 East Oakland Park Boulevard Suite 101

Fort Lauderdale, Florida 33306

Glenn A. Bissett, Chief Bureau of License and Bond Division of Marketing Department of Agriculture and

Consumer Services

Room 418, Mayo Building Tallahassee, Florida 32301

Doyle Conner, Commissioner Department of Agriculture and

Consumer Services Mayo Building

Tallahassee, Florida 32301

Docket for Case No: 83-001463

Orders for Case No: 83-001463