STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNBELT TOMATO COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-1585A

) TERRIFIC TOMATO COMPANY and ) FIDELITY AND DEPOSIT COMPANY ) OF MARYLAND, )

)

Respondents. )

)

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 June 27, 1986, in Orlando, Florida.

APPEARANCES

For Petitioner: Branch Mahaffey, President

Sunbelt Tomato Company Post Office Box 201 Quincy, Florida 32351

For Respondent: Broderick Bolton, President Terrific Tomato Co. Terrific Tomato Company

Post Office Box 2145

Pompano Beach, Florida 33061

For Respondent: No appearance. Fidelity and Deposit

Company of Maryland

BACKGROUND

This matter began on October 4, 1985, when petitioner, Sunbelt Tomato Company, Inc., filed a sworn complaint under Section 604.21, Florida Statutes (1985), with the Department of Agriculture and Consumer Services (agency) alleging that respondent, Terrific Tomato Company, was indebted to petitioner in the amount of $11,780.80 for a load of tomatoes sold by petitioner to respondent on July 7, 1985. Also named a respondent in this matter was Fidelity and Deposit Company of Maryland, the surety company which has posted a surety bond with the agency on behalf of Terrific Tomato Company.

Thereafter, the agency entered proposed agency action on April 7, 1986, finding that petitioner's claim was valid, and that unless respondents requested a hearing, its order would become final. By letter dated April 11, 1986, respondent Terrific Tomato Company requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes (1985). The matter was transmitted by

the agency to the Division of Administrative Hearings on May 6, 1986 with a request that a Hearing Officer be assigned to conduct a formal hearing.

By notice of hearing dated June 4, 1986, a final hearing was scheduled for June 27, 1986, in Orlando, Florida. At final hearing petitioner's president, Branch Mahaffey, testified on behalf of petitioner and offered petitioner's exhibits 1-6. All were received in evidence. Respondent Terrific Tomato Company presented the testimony of its president, Broderick Bolton, and bookkeeper, Cheryl Bolton, and offered respondent's exhibits 1 and 2 which were received in evidence. There was no appearance by the surety company.

The transcript of hearing was filed on July 16, 1986. Neither party filed proposed findings of fact and conclusions of law.

The issues are whether respondents are indebted to petitioner as alleged in the complaint, and if so, in what amount.

Based on all of the pleadings and evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Sunbelt Tomato Company (STC), is a tomato producer located in Quincy, Florida. Respondent, Terrific Tomato Company (TTC), is an agricultural dealer in Pompano Beach, Florida, subject to the licensing requirements of the Department of Agriculture and Consumer Services (agency). As such, TTC is obligated to obtain a dealer's license from the agency, and to post a surety bond executed by a surety corporation to ensure that payment is made to producers for agricultural products purchased by the dealer. To meet the latter requirement, TTC has obtained surety bond number 987-78-50 in the amount of $25,000 from respondent, Fidelity and Deposit Company of Maryland.

   
   

2. On or about July 5, 1985, STC's president, Branch Mahaffey, accepted a telephone order from Emerson Elliott, whose wife Teresa owned Orlando Tomato Company (OTC). Elliott wished to purchase two loads of tomatoes on behalf of TTC. They agreed upon a price of $12,909.60 and $11,780.80, respectively, for the two loads. It was further understood that TTC was to receive the invoices, and that they were to be shipped to TTC in care of Quality Tomato and Produce (QTP) in Kansas City, Missouri, which was the ultimate buyer. In addition, both loads were to be U.S. combination grade (1 and 2 grades), which means that 75 percent of the tomatoes in each lot must meet U.S number 1 grade standards and the remaining 25 percent must meet U.S. number 2 grade standards. However, this was an erroneous instruction by OTC, because TTC had actually instructed Elliott to arrange for the purchase of two loads having at least 85 percent of the tomatoes meeting U.S. grade number 1 standards. The latter standard is more stringent than the combination grade erroneously ordered by OTC. It was also understood that TCC would arrange to send two trucks to Quincy to pick up the loads on July 8.

   
   

3. Shortly after talking with Elliott, Mahaffey had a second telephone call concerning the order from TTC's president, Broderick Bolton. Bolton asked Mahaffey if Elliott had made arrangements on behalf of TTC to buy two loads of tomatoes at the agreed upon prices. Mahaffey responded that he had, and Bolton then told him he would have two trucks sent to Quincy on July 8 to pick up the shipments.

4. The first load was picked up as scheduled on July 8 by a QTP vehicle which carried the tomatoes to its warehouse in Kansas City. After the second truck failed to arrive on the same day, Mahaffey telephoned Bolton on July 9 and asked where was the truck for the second load. Bolton told Mahaffey to arrange the transportation since QTP evidently did not have a truck available. Mahaffey then hired Steve Miller Produce Company in Thomasville, Georgia to pick up the second load. By this time, however, the tomatoes had been picked and had sat in the summertime heat for 24 hours because of TTC's failure to provide transportation.

   
   

5. The second load, consisting of three lots, left Quincy on July 9 and arrived in Kansas City where it was stored in QTP's warehouse facilities. QTP was apparently dissatisfied with the quality of tomatoes and arranged for an inspection of the produce on July 11 by an inspector of the United States Department of Agriculture. The inspection report has been received in evidence as petitioner's exhibit 1. It reflected that there was "no decay" and that the load met "quality requirements." However, the inspector found 8 percent of lot

   1 to have damage by bruising, 5 percent to have damage by sunken discolor, and

   20 percent to have damage by skin checks. Lot 2 was found to have 4 percent damage by sunken discolored areas and 21 percent to have damage by skin checks. The final lot was found to have 6 percent damage by sunken discolored areas and

   18 percent damage by skin checks.

   
   

6. This information was relayed to Bolton who telephoned Elliott and told him there were problems with the load, and that less than 85 percent of the tomatoes met U.S. grade number 1 standards. The two agreed that Bolton should simply try to get the highest price possible for the second load.

   
   

7. Bolton telephoned Mahaffey around July 12 and told him there was a problem with the second load. However, Mahaffey felt no price adjustment was necessary because of the buyer's delay in picking up the shipment. Even so, in an effort to resolve the matter quickly, Mahaffey told Bolton he would settle for $6.00 per box instead of the previously agreed upon prices which ranged from

   $6.50 to $8.00 per box. Mahaffey also asked for a copy of the inspection report. Bolton was noncommittal as to the $6.00 offer and said that he would be back in touch with Mahaffey at a later date. Mahaffey did not hear from Bolton again. Sometime later, Bolton telephoned QTP and relayed Mahaffey's offer to settle for $6.00 per box. The offer was apparently refused.

   
   

8. In the last half of August, Mahaffey received the original inspection report dated July 11 and a second report dated July 17. The latter report contained the results of a second inspection of the second load conducted by the same federal inspector. Surprisingly, on the second inspection the inspector found the tomatoes to be of better quality than when he had first inspected them a week earlier. No explanation for this variance was given. The inspector noted on the second report that 1 percent of the tomatoes were now decaying, and that only 4 percent of the tomatoes were damaged by bruising while 24 percent had sunken discolored ranges.

   
   

9. On an undisclosed day in late August Mahaffey received a check drawn on TTC's account on August 19 made payable to OTC in the amount of $3,680. The check was originally sent by Bolton to OTC which then forwarded the unendorsed check to Mahaffey. The $3,680 represented the amount which QTP paid TTC after disposing of the second load. Mahaffey did not cash the check, and immediately filed the complaint herein with the agency. In October, he received full payment from OTC for the first load, but the second load remains in controversy.

10. Bolton stated he was forced to accept whatever price QTP was willing to pay for the second load of tomatoes since the goods were damaged and did not meet the specifications that the buyer requested. He acknowledged that leaving the tomatoes in the field for an extra day could affect the quality and color of the tomatoes. Bolton took no brokerage fee on the shipment, and turned over to STC all of the proceeds ($3,680) received from QTP. It is TTC's position that if STC has a claim, it should be against OTC rather than his company.

    
    

    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 (1985).

    
    

12. This complaint arises under the provisions of Section 604.21, Florida Statutes (1985). Subsection (1) thereof provides that:

    
    

    Any person claiming himself to be damaged by any breach of the conditions of a bond or certificate of deposit assignment or agreement given by a licensed dealer in agricultural products as herein before provided may

    enter complaint thereof against the dealer

    and against the surety, if any, to the department, which complaint shall be a written

    statement of the facts constituting the complaint. Such complaint shall be filed within nine 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.

    
    

    An agricultural dealer is defined by Subsection 604.15(1), Florida Statutes (1985), to be:

    
    

    any person . . . engaged within this

    state in the business of purchasing, receiving, or soliciting agricultural products from

    the producer or his agent or representative for resale or processing for sale; acting as an agent for such producer in the sale of agricultural products for the account of the producer on a net return basis; or acting as a negotiating broker between the producer or his agent or representative and the buyer.

    
    

13. In the case at bar, TTC, an agricultural dealer, was acting as a broker between the producer (STC) and the ultimate buyer, QTP. OTC's role in this controversy was that of an far agent acting on behalf of its principal, TTC. Through a lack of communication, misunderstanding or just plain error, and with no fault attributable to STC, OTC gave incorrect instructions to the producer as to the quality and grade of the tomatoes needed. TTC then compounded the error by not having a truck available on July 8 as promised. The erroneous instructions and lack of timely transportation were the direct cause of QTP not receiving the type of shipment that it desired. Under these circumstances, STC is entitled to receive full payment from TTC for the second

load of tomatoes since it fully complied with all terms of the agreement. Whether TTC has recourse against its agent for giving erroneous instructions, or against QTP for not providing transportation for the second load, are not at issue in this proceeding and accordingly need not be addressed.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Terrific Tomato Company be directed to pay Sunbelt Tomato

Company, Inc. $11,780.80 as full payment for a shipment of tomatoes sold by STC to TTC on July 9, 1985. In the event TTC does not comply with this directive, the surety for said dealer shall pay the amount due to the agency for the benefit of the producer.

DONE and ORDERED this 25th day of July, 1986, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 25th day of July, 1986.

COPIES FURNISHED:

Branch Mahaffey, President Sunbelt Tomato Co.

Post Office Box 201 Quincy, Florida 32351

Broderick Bolton, President Terrific Tomato Co.

Post Office Box 2145

Pompano Beach, Florida 33061

Mr. Joe Kight

Bureau of License & Bond Room 418, Mayo Bldg.

Tallahassee, Florida 32301

Fidelity and Deposit Co. of Maryland 909 Brickell Plaza, Suite 501

Miami, Florida 33131

Docket for Case No: 86-001585

Orders for Case No: 86-001585