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BAKER v. RATZLAFF

April 29, 1977.

BERNARD BAKER, d/b/a BAKER POPCORN COMPANY, Appellee and Cross-appellant,
v.
JAMES W. RATZLAFF, Appellant and Cross-appellee.



This is an action for breach of contract. The case was tried to the court and judgment was entered for the plaintiff. Both parties appeal. The defendant asserts that the trial court erred in its finding that he breached the contract. Plaintiff contests the amount of the judgment.

Plaintiff is a buyer and distributor of popcorn. His business office is in Garden City. He operates a plant at Stratford, Texas. Defendant is engaged in farming and it appears that he is the operator of land in Thomas County. The written contract that is the subject of this lawsuit was entered into by the parties in 1973.

It was agreed by the parties that in 1973 defendant would raise 380 acres of popcorn and the plaintiff would buy the crop. Plaintiff was to provide seed popcorn at a stated price. Plaintiff was to purchase the popcorn crop, shelled and delivered by defendant to plaintiff's plant at Stratford, Texas, at a price of $4.75 per hundredweight. The popcorn was to be delivered by defendant upon plaintiff's order. Plaintiff was to order delivery of one-third of the crop by March 30, 1974, one-third by June 30, 1974, and the balance by September 30, 1974. The contract included other terms that dealt with the quality of the popcorn to be delivered, payments to be made by plaintiff to defendant for

[1 Kan. App. 2d 286]

      storage and transportation, interest to be paid by plaintiff on the popcorn held in storage by defendant from the time of harvest to the time of delivery, and other matters. The particular provisions of the contract that give rise to this litigation are as follows:
"12. Baker agrees to pay Grower for the above corn when delivered and in addition thereto, agrees to pay storage fees, in and out charges, transportation charges, and the accrued interest on each bushel or cwt. of corn as delivered.
"13. It is further understood and agreed that if Baker, for any reason, fails, neglects, or refuses to pay Grower for said popcorn along with the heretofore specified charges at the time of delivery, then, and in that event, the remaining undelivered popcorn in Grower's possession shall, at Grower's option, be released by Baker for Grower to retain or dispose of as he sees fit."
The requirement for payment on delivery was made a part of the contract at defendant's request.

  Some time in January, 1974, plaintiff telephoned defendant and asked that he begin delivery to the Stratford plant. The first truckload was delivered at about 5:00 P.M. on Saturday, February 2, by defendant and his employee, Boucher. Plaintiff's plant manager, Martin, gave a weight ticket to defendant. A second truckload was delivered on Monday, February 4, by Boucher. Martin gave a weight ticket to Boucher. On neither occasion did defendant or Boucher ask Martin for payment for the popcorn delivered and Martin did not offer to pay.

  During the week of February 4, Martin telephoned defendant and asked when further deliveries would be made. Later that same week, plaintiff telephoned defendant and asked about the delay. Defendant told Martin and plaintiff that he was having equipment problems and that Boucher had been ill. In neither of the telephone conversations was there any discussion of payment. On Monday, February 11, defendant sent a written notice of termination of the contract claiming that plaintiff had breached the contract by failing to pay on delivery as required by paragraphs 12 and 13. Upon receipt of the notice of termination on or within a few days following February 12, plaintiff sent checks to defendant in payment for the two loads that had been delivered. After sending the notice of termination, defendant entered into a contract with a third party for the sale of the balance of the 1973 popcorn at a price of $8.00 per hundredweight. This contract was performed by defendant's delivery of 1,600,000 pounds of popcorn.

  Martin testified that he made no payments for popcorn at

[1 Kan. App. 2d 287]

      Stratford. The practice was that copies of weight tickets were sent to plaintiff's Garden City office where checks were written and mailed. At the time of defendant's two deliveries, Martin would accumulate weight tickets and send them to Garden City so that they would arrive on Monday mornings. He did not know when he had sent the weight tickets for the February 2 and 4 deliveries.

  Defendant testified that at the time he made his contract to sell the balance of his 1973 crop to the third party, popcorn was selling for $8.00 and the commodity market price was between $7.00 and $7.25. He further testified that after the 1974 harvest popcorn was selling for around $14.00. Plaintiff testified that he had to pay $10.30 for some replacement popcorn. The trial court awarded damages of $52,000. This amount represents the value of 1,600,000 pounds at $3.25 per hundredweight, the difference between the parties' contract price of $4.75 and an $8.00 price.

  The trial court's findings were in part as follows:
"2. That the defendant knew or should have known that the plaintiff's business office was located in Garden City, Kansas, and that in the normal course of events payment would be made from that office. That Garden City, Kansas, is on a direct route from the plaintiff's grain receiving facilities in Stratford, Texas, to the defendant's farm and that nothing prevented the defendant or his agents, servants and employees from stopping off on their way back from delivering the grain and requesting payment or obtaining payment from plaintiff's business office in Garden City, Kansas. That the evidence discolses [sic] that any request for payment would have been promptly handled and that the plaintiff had ample funds with which to make the payment and the only reason payment was not made was the failure of the defendant to request it.
"3. That between the time that the contract for the production of the popcorn was entered into and the time for delivery the price of popcorn had risen sharply and that it was greatly to the defendant's financial advantage if he could in some way get out of his contract for the sale of popcorn.
. . . .
"The Court concludes that the parties are under a duty to deal fairly with each other in good faith and that the defendant breached this duty by declaring a termination of the contract upon a technical pretense and that therefore as a matter of law the plaintiff is entitled to recover the damages suffered.
"The Court further concludes that to interpret the contract to require immediate payment ...

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