April 29, 1977.
BERNARD BAKER, d/b/a BAKER POPCORN COMPANY, Appellee and Cross-appellant,
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
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
[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
"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
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
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 without request
or demand upon delivery of the grain to the
processing facility in Stratford, Texas, would result
in an unconscionable and unenforceable contract and
that the contract should not be so interpreted. . . ."
Defendant raises three issues on appeal.
First, defendant argues the district court erred in considering
evidence extrinsic to the written contract in violation of the
[1 Kan. App. 2d 288]
evidence rule. Our consideration of defendant's argument is
hindered by defendant's failure to specify what evidence was
admitted and considered by the trial court in contravention of
the parol evidence rule. The record before us reveals no
objections by defendant to the admission of any evidence. K.S.A.
60-404 provides as follows:
"A verdict or finding shall not be set aside, nor
shall the judgment or decision based thereon be
reversed, by reason of the erroneous admission of
evidence unless there appears of record objection to
the evidence timely interposed and so stated as to
make clear the specific ground of objection."
Our examination of the district court's journal entry of
judgment does not indicate that the court permitted extrinsic
evidence to contradict the terms of the contract between the
parties. The applicable parol evidence rule is embodied in K.S.A.
84-2-202, which provides that written terms of a sales contract
". . . intended by the parties as a final expression of their
agreement . . . may not be contradicted by evidence of any prior
agreement or of a contemporaneous oral agreement. . ." Defendant
has not brought to our attention any evidence considered by the
court of prior or contemporaneous agreements contradicting the
express terms of the contract.
Defendant next contends that the district court erred in
finding that defendant's termination of the agreement was a
breach of his duty to perform and enforce the contract in good
faith. Defendant argues that he was under no good faith
obligation in terminating the contract and, even if he was, the
termination was made in good faith.
K.S.A. 84-1-203 provides as follows:
"Every contract or duty within this act imposes an
obligation of good faith in its performance or
K.S.A. 84-1-201(19) defines "good faith" as "honesty in fact in
the conduct or transaction concerned."
Defendant maintains the good faith obligation of K.S.A.
84-1-203 is not applicable because termination of a contract is
not "performance" or "enforcement" of a contract. Under the facts
of this case, we disagree. The termination clause in paragraph 13
of the contract does not permit termination at will but only upon
failure of plaintiff to pay on delivery. Defendant's right to
terminate and retain or dispose of undelivered popcorn is an
[1 Kan. App. 2d 289]
incident of enforcement of substantive provisions of the
contract. We believe that only tortured reasoning could exempt
defendant's exercise of the termination clause from the good
faith obligation of K.S.A. 84-1-203, and we decline to do so.
There was substantial competent evidence in the record to
support the district court's finding that defendant had breached
his obligation of good faith. His failure on delivery of either
load of popcorn to the Stratford plant to demand payment, his
failure in the subsequent telephone conversations with plaintiff
and Martin to demand payment, and his hasty resale of the popcorn
to another buyer at a price nearly double the contract price,
provided the trial court with ample evidence upon which to find
an absence of good faith. The finding was one of fact and is not
to be overturned where supported by substantial competent
evidence. McGilbray v. Scholfield Winnebago, Inc.,
221 Kan. 605, 561 P.2d 832.
Defendant's final argument is that the district court erred in
employing the "unconscionability" concept of K.S.A. 84-2-302 as a
device for interpreting the contract. Defendant maintains the
district court misused the unconscionability concept to shape its
view of the content of the contract. We cannot agree. The
findings of the district court indicate only that the court
determined defendant's interpretation of the contract would lead
to an unconscionable result. The contract provision permitting
termination upon failure to pay on delivery was subject to
multiple permissible interpretations. Defendant's interpretation
of the contract was not the one adopted by the court and
therefore the court's statement as to unconscionability was
dictum and we need not belabor the point. Even so, termination
clauses which are exercisable upon minimal notice and are so
one-sided as to lead to absurd results have been held to be
unconscionable. See Ashland Oil, Inc. v. Donahue,
223 S.E.2d 433 (W. Va. 1976).
Plaintiff, as cross-appellant, cites as error the district
court's computation of damages. Plaintiff argues the district
court erred in refusing to permit evidence of a fluctuating
market price for popcorn between $10.50 and $20.00 per
hundredweight for the purpose of establishing plaintiff's
Regardless of what may have been designated by the parties, the
record fails to disclose any proffer of evidence by plaintiff to
establish the $10.50 to $20.00 prices. K.S.A. 60-405 provides:
[1 Kan. App. 2d 290]
"A verdict or finding shall not be set aside, nor
shall the judgment or decision based thereon be
reversed, by reason of the erroneous exclusion of
evidence unless it appears of record that the
proponent of the evidence either made known the
substance of the evidence in a form and by a method
approved by the judge, or indicated the substance of
the expected evidence by questions indicating the
The evidence supporting an $8.00 price was at least as
substantial as any other price shown by the record. The question
of the market price of the popcorn at the time of breach is one
of fact and not to be overturned where supported by substantial
competent evidence. McGilbray v. Scholfield Winnebago, Inc.,
The measure of damages applied by the trial court, the
difference between the contract price and the market price at the
time plaintiff learned of defendant's nondelivery and
repudiation, is a proper measure of damages and is the substance
of K.S.A. 84-2-713.
The parties having failed to show prejudicial error, the
judgment is affirmed.
[1 Kan. App. 2d 291]
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