STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BASS FARMS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-5579A

)

THE HEIDRICH CORPORATION, AND )

AETNA CASUALTY AND SURETY, )

)

Respondent. )

)

RECOMMENDED ORDER

A formal hearing was held pursuant to notice by Stephen F. Dean, Administrative Law Judge of the Division of Administrative Hearings, in Leesburg, Florida on March 27, 1997.

APPEARANCES

For Petitioner: Bo Bass, President

Bass Farms, Inc. 2829 Southwest SR 45

Newberry Florida 32669

For Respondent: H. Joseph Heidrich

260 Maitland Avenue, Number 1000 Altamont Springs, Florida 32701

STATEMENT OF THE ISSUE

Whether the Respondent owes the Petitioner money for watermelons purchased from Petitioner. The factual issues are whether the contract between the parties limited the warrantee of merchantability, and whether melons were of good quality on arrival, and, if not, who was responsible for the failure to meet quality standards.

PRELIMINARY STATEMENT

During the summer of 1996, the Petitioner entered into an agreement with the Respondent regarding the purchase of Petitioner’s watermelons. There is no dispute regarding the terms which were four cents a pound for Petitioner’s watermelons, FOB trucks supplied by the ultimate purchaser to be paid by Respondent, who was the wholesaler. Two shipments of melons were refused by the intended purchaser because of alleged poor quality and failure to meet ordered size. The Respondent, after consultation with Petitioner, sold the melons at the best price it could obtain. The purchaser had the melons inspected, and 57 percent of the melons were not of good quality. The Respondent deducted the costs of transportation and handling, and remitted the remainder to Petitioner. The Petitioner filed a claim with the Department of Agriculture, which referred the case to the Division of Administrative Hearings. The case was set for hearing, and heard as noticed. The parties were afforded the opportunity to file late filed exhibits and proposed findings, and the Respondent elected to do so.

FINDINGS OF FACT

1. During the 1996 season, the Petitioner contracted with Respondent to sell several loads of watermelons. The claim identified the various loads of melons by date and weight as follows:

   DATE	POUNDS	PRICE	CLAIM
   6/23	44,010	$.04	$1760
   6/25	40,300	$.04	$1612
   6/25	40,260	$.04	$1610
   6/25	41,640	$.04	$1666
   6/26	15,750	$.04	$ 600

   
   

2. The Respondent used file numbers to identify the loads which were purchased from Petitioner. These were co-related with the Petitioner’s information by date. The Respondent reduced the amount remitted to the Petitioner on the following loads due to shrinkage (loss of weight during transit) and loss of decayed melons on file number 96057. The Petitioner stated at hearing that, while he had added them to the claim, the differences between his claims and Respondent’s accounting were within the shrinkage and loss limits. The Respondent owed the Petitioner

   $4,832 on the following:

   
   

   DATE	FILE NO.	WEIGHT	PAID
   6/23	96055	43,659	$1746
   6/25	96056	39,240	$1570
   6/25	96057	38,080	$1516

   
   

3. The controversy between the parties centered upon file numbers 96058 and 96065. Both parties agree regarding the weight of the melons shipped and the price per pound.

4. File number 96058 consisted of 41,640 pounds of melons sold at $.04 per pound. The shipment was sold to Provigo Distribution, Inc. on June 25, and the melons were to be Peewee sized melons (melons weighing 14-17 pounds). The Petitioner

   loaded the melons on a truck provided by Provigo, and Respondent did not have a person present to inspect the load when it was loaded.

5. The Petitioner asserts that title to the melons transferred when they were loaded on the truck, and that Respondent was liable for the product thereafter. The Respondent acknowledges that it accepted title for the melons when loaded on the truck at the field, but that terms also provided that the melons would be of a specified size and would be of good quality upon delivery. There was no written contract limiting the warrantee of merchantability.

6. Provigo refused acceptance of the melons because they were too big. The melons were around 21 pounds or small mediums (18-24 pounds). When the Respondent sought to sell the melons to another buyer, the buyer had the melons inspected, and 57 percent of the melons were rejected: 15 percent for sunburn, 7 percent for bruising, 10 percent for whitish pink flesh, and 25 percent as overripe.

7. The Respondent introduced a copy of the documents showing the original sale price to Provigo, rejection, inspection and accounting upon resale.

8. The Respondent had sold the melons related to file number 96058 to Provigo for $.06 a pound with Provigo paying the freight. The Respondent would have made $2498.40 on the sale to Provigo. Upon rejection, the Respondent was responsible to

   Provigo for the transportation costs ($.05 per pound) for the entire load or $2082. The Respondent obtained $613.84 from the sale of the melons after their rejection.

9. File number 96065 related to a partial load which Petitioner had sold on June 26th to Respondent in response to Respondent’s request for Peewee size melons. Petitioner was only able to supply a partial load of 15,750 pounds. These were moved on June 26th from Florida to Georgia, where on June 27th, the truck was finished off with large melons from another farmer.

10. The Respondent had an agent who was in Georgia where the melons were shipped immediately in order to add additional melons to the load. This agent had the authority to purchase melons and cull melons for Respondent, and was in contact with Respondent during the period the truck carrying Petitioner’s melons was waiting. The agent also knew the load was to be shipped to Canada for sale. Respondent’s agent in Georgia saw that the Peewees loaded from Petitioner were spotted, leaking, and decayed prior to loading the large melons.

11. These melons were shipped to Canada at a cost of $.05 a pound for a total of $1138 where the Peewees from Respondent were rejected because of decay. Their condition was such that they could not be given away, and a disposal charge of $350 was charged to Respondent.

12. The Respondent in rendering an accounting of the transaction to Petitioner charged Petitioner $1138 for the

    transportation of the 15,750 pounds of melons to Canada and $350 for their disposal.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter presented herein, pursuant to Section 120.57(1), Florida Statutes (Supp. 1996).

14. The burden of proof in this case is on the Petitioner. The issue in this case is who bore the financial risk of the melons being refused, and did the Respondent behave in a commercially reasonable fashion.

15. Petitioner was aware Respondent was purchasing them for resale, and had an obligation to provide melons which were of such quality that they could be shipped and resold within a reasonable period of time. In sum, the Petitioner has a burden to provide melons of a quality suitable for the purpose for which they were purchased. See Section 672.314, F.S.A. This extends to food products for resale. If Petitioner failed to provide a suitable product, he is liable to the Respondent for his lost profit and expense.

16. The Respondent has an obligation when produce is rejected to protect the greatest extent possible the farmer. The Respondent did so with regard to File Number 96058. He found another buyer, and was able to limit the loss. On this transaction, the Respondent owes Petitioner $1666 for the melons

    (.04 x 41,640), and the Petitioner owes the Respondent $2082 for transportation (.05 x 41,640) and for Respondent’s lost profits

    $1884 ($2,498 - $614).

    
    

17. With regard to File Number 96065, the Respondent’s employee, who was his agent for purchasing melons in Georgia, saw that the Peewees obtained from Petitioner were bad prior to completing the load with large watermelons in Georgia. He commented on this to his employer, albeit after the truck left; nevertheless, Respondent’s agent was aware of the condition of the melons. This agent had the authority to purchase and to cull melons, and reported to Respondent’s chief operating officer several times during the day as they attempted to obtain additional Peewees to ship.

18. In this instance, Respondent did not behave in a commercially reasonable fashion, and dump the bad melons, but incurred added expense transporting the Peewees to Canada. This was apparently done in an effort to meet the demand for melons of this size there. Although the melons would have had to be disposed of in Georgia, the transportation cost could have been saved. The Respondent was warranted in not paying Petitioner for the bad melons, but not in charging him for the costs of transportation and disposal. There is no evidence that Respondent had a buyer for these melons and suffered lost profits by failing to deliver the melons. On this transaction Respondent

    did not owe Petitioner $600 for the melons, but Petitioner did not owe Respondent $788 for transportation and $350 disposal.

19. Therefore, the Respondent owes the Petitioner $1746 for File Number 96055, $1570 for File Number 96056, $1516 for File Number 96057, and $1657 for File Number 96058 or a total of

$6489. The Petitioner owes the Respondent $1884 lost profits and

$2082 for transportation on File Number 96058, or a total of

$3,966. On File Number 96065, the Respondent does not owe Petitioner for the unmarketable melons, and the Petitioner does not owe Respondent for the transportation of the melons to Canada and their disposal. In sum, Respondent owes Petitioner $6489 less $3966 or $2523 on the whole of the five transactions.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is,

RECOMMENDED:

That the Department enter a final order finding that the Respondent owes the Petitioner a total of $2523 and providing Respondent a reasonable amount of time to produce proof of payment of this amount to Petitioner.

DONE and ENTERED this 15th day of May, 1997, in Tallahassee, Florida.

STEPHEN F. DEAN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 15th day of May, 1997.

COPIES FURNISHED:

Bo Bass, President Bass Farms, Inc.

2829 Southwest SR 45

Newberry, FL 32669

H. Joseph Heidrich

260 Maitland Avenue, Number 1000 Atlamont Springs, FL 32701

Brenda Hyatt, Chief Department of Agriculture

and Consumer Services

508 Mayo Building Tallahassee, FL 32399-0800

Richard Tritschler, Esquire Department of Agriculture

and Consumer Services

The Capitol, Plaza Level 10 Tallahassee, FL 32399-0810

Bob Crawford, Commissioner Department of Agriculture

and Consumer Services The Capitol, PL-10

Tallahassee, FL 32399-0810

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 96-005579

Orders for Case No: 96-005579