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06/24/88 H. C. SCHMIEDING PRODUCE COMPANY v. ALVIN

June 24, 1988

H. C. SCHMIEDING PRODUCE COMPANY, INC.
v.
ALVIN CAGLE



Appeal from Jackson Circuit Court, Robert L. Hodges, Judge

Houston, Justice. Torbert, C. J., Maddox, Almon, and Beatty, JJ., concur.

The opinion of the court was delivered by: Houston

HOUSTON, JUSTICE.

This is a contract case. Alvin Cagle, a potato farmer, entered into a written agreement to purchase seed potatoes from H. C. Schmieding Produce Company, Inc. ("Schmieding"). According to the terms of this contract, Cagle was to immediately pay a portion of the purchase price of the seed potatoes to Schmieding; the balance was to be paid when the crop of potatoes to be raised from the seed potatoes was harvested. According to the record, this contract was entered into on March 6, 1985. Although Cagle paid the pre-harvest portion of the price for the seed potatoes and proceeded to cultivate them, he failed to harvest most of the resulting crop or to pay most of the post-harvest portion of the purchase price. Consequently, Schmieding sued Cagle for the breach of this contract.

Cagle initially responded to this suit by filing an answer and a counterclaim alleging fraud and misrepresentation on the part of Schmieding. The essence of these claims was that Schmieding had misrepresented an intention to enter into a second contract that was to have obligated Schmieding to purchase the crop resulting from the seed potatoes. Cagle also alleged that Schmieding misrepresented an intention to execute a second written contract document reciting the terms of this additional agreement. Cagle later amended this counterclaim to include the additional claim that the contract to purchase his potato crop had in fact been entered into and had been breached by Schmieding, notwithstanding the fact that no formal memorandum of this second contract was actually executed by either party.

According to Cagle, this second contract arose in part from at least two telephone conversations with Schmieding's employees, one of which occurred at the end of February 1985, and one of which took place in May 1985. Cagle introduced evidence at trial to the effect that Schmieding had agreed in these conversations to pay Cagle $5.50 per bag for approximately 10,000 bags of white potatoes and to pay him the market price at harvest time for all of his red potatoes grown on 30 acres of land. In support of this contract, Cagle also introduced a letter addressed to him from Schmieding containing, in pertinent part, the following language:

"Your potato harvest season is just around the corner. We are looking forward to working with you on the shipment of your crop.

". . . .

"Please give us a week notice before you are ready to ship, in order for us to prepare our sales orders. I have enclosed our business card for your reference. Give us a call, if you have any questions.

"Sincerely,

"L. H. Schmieding /s/

"L. H. Schmieding"

This letter was dated May 26, 1985.

Schmieding denied the existence of this alleged contract and refused to pay Cagle for his potato crop at harvest time. As a consequence, Cagle claimed, he could not pay the balance due on his seed contract with Schmieding. In short, Cagle essentially claimed at trial that his failure to harvest the potatoes and to pay Schmieding resulted not from a unilateral breach of the seed contract on his part, but primarily from Schmieding's breach of the alleged second or collateral contract with Cagle in which Schmieding had agreed to purchase Cagle's resulting potato crop.

The case was tried before a jury. At the close of the evidence, the trial court directed a verdict in favor of Schmieding and against Cagle as to Schmieding's claim regarding the contract for the seed potatoes. Likewise, the trial court also directed a verdict in favor of Schmieding and against Cagle as to Cagle's claims of fraud and misrepresentation. The trial court, however, submitted to the jury Cagle's contract claim regarding the purchase of the ...


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