719 N.E.2d 980 | Ohio Ct. App. | 1998
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *161 Defendant-Appellant, Charles Frederick Burks, is appealing from the March 2, 1998 judgment of the Wyandot County Court of Common Pleas granting summary judgment to Plaintiff-Appellee, Farmers Commission Company ("Farmers Commission"). After a review of this matter, the Court hereby removes this *162 appeal from the accelerated calendar and issues an opinion in accordance with App. R. 12.
In April and May of 1995, Mr. Burks allegedly entered into four Hedge to Arrive (HTA) contracts with the U.S. Commission Company1 through its agent, John Stoneburner, to sell 20,000 bushels of corn with the futures delivery month of December 1995. Farmers Commission claims to have sent Mr. Burks a purchase confirmation letter for each contract; Mr. Burks, however, contends that he did not see the confirmation letters until May 1996 when he requested to see the alleged contracts. Mr. Burks elected to roll his contracts forward until July 1996 and he sold his 1995 harvested corn on the open market.
On June 6, 1996, Mr. Burks's attorney sent a letter to Farmers Commission stating that he was advising Mr. Burks not to honor any of the proposals concerning HTA situations unless Farmers Commission had proof of service of the contracts upon Mr. Burks. On receipt of the letter, Farmers Commission suggested a meeting to resolve the dispute. No meeting occurred and on July 2, 1996, Farmers Commission demanded payment for damages stating that it had cancelled the contracts.
Farmers Commission filed suit against Mr. Burks and both parties filed motions for summary judgment. The trial court granted Farmers Commission's motion for summary judgment and awarded damages in the amount of $50,250.00.
It is from this judgment that Mr. Burks is appealing the following assignment of error:
The trial court erred in grating [sic] summary judgment in favorof the plaintiff-appellee Farmers Commission Co. and against thedefendant-appellant, Charles Frederick Burks.
From a thorough review of the record, it appears Mr. Burks contends that having the evidence construed most strongly and favorably in his favor, there are genuine issues of material fact as to the following nine items: (1) whether there was the requisite meeting of the minds to form contracts between Farmers Commission and Mr. Burks; (2) whether the defense of Statute of Frauds is valid; (3) whether the written contract terms and conditions were valid or if they needed to be explained; (4) whether Farmers Commission had a duty to inform Mr. Burks of the risks involved in a HTA contract and whether Farmers Commission breached that duty by misrepresentation; (5) whether the oral agreements violate the regulations established by the Commodity Futures Trading Commission; (6) whether Mr. Burks had the ability to deliver on the contracts in July 1996; (7) whether Farmers Commission improperly cancelled the agreements; (8) whether *163 Farmers Commission could have mitigated its damages by letting Mr. Burks buy out the contracts while his damages were less; and (9) whether the amount of damages are correct.
Summary judgment is appropriate when (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made. State exrel. Howard v. Ferreri (1994),
When reviewing a summary judgment motion, we must independently review the record to determine if summary judgment was appropriate. Morehead v. Conley (1991),
It is well settled that the party seeking summary judgment bears the initial burden of showing that no genuine issue of material fact exists for trial. Dresher v. Burt (1996),
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty. Episcopal Retirement Homes,Inc. v. Ohio Dept. of Indus. Relations (1991),
In a basic HTA contract, farmers promise to deliver grain at a specific date in the future and purchasers promise to pay an agreed futures price set by reference to the Chicago Board of Trade (CBOT), plus or minus a basis, which accounts for local fluctuation in price.Eby v. Producers Co-op (W.D. Mich. 1997),
"HTA contracts may benefit farmers by permitting them to lock in a favorable price per bushel of grain well before harvest, avoiding the normal market downturn at harvest time. Id. The risk, however, is that grain prices could rise, as they did in the Fall of 1995, and a farmer could be forced to comply with the agreed price per bushel, well below current market value. Id." Countrymark Cooperative,Inc. v. Smith, (Dec. 8, 1997), Hancock App. No. 5-97-21, unreported.
Mr. Burks is a merchant under the definition section of the sales provisions of Ohio's Uniform Commercial Code, R.C.
"Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction * * *.
R.C.
In accordance, R.C.
"Conduct by both parties that recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such a case, the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplemental terms incorporated under [Chapters 1301-1310, inclusive] of the Revised Code." See AllianceWall Corp. v. Ampat Midwest Corp. (1984),
In April 1995, Mr. Burks went to Farmers Commission and met with John Stoneburner, an agent of Farmers Commission. In his deposition, Mr. Burks stated the following about his conversation with Mr. Stoneburner concerning his discussion in determining whether to enter into a HTA contract or a straight contract:
"A. And there was only a difference of like three to five cents or something. There wasn't much difference between an HTA and what I could have contracted at the time. And I questioned him about the HTA's. I said, How do they work? What would be the advantage?
"And he said, There is a couple of advantages. The first one is if you can't fill the contract, in other words if you contract thirty thousand bushel and you only have twenty thousand, you could roll the other ten thousand next year and get two forty-five or whatever for your corn.
"And I said — at that time, I said, Two forty-five, because we were contracting for two sixty-five.
"Then he said, You've got to set your basis, and that's when I found out what a basis was, and that's the difference between Chicago and what U.S. Commission Company is giving. And at that time, in September, it's suppose to be smaller, and that's the reason why you set it then, not when your bringing the corn in, because it's larger at that time.
"Q. Okay
"A. And he — he says — I said, Well — and he said, Another thing is if corn goes up, wouldn't you rather have $3.00 corn, if it went to $3.00, instead of the two forty-five?
"I said, I sure would. That would help out.
"He said, Then take your two forty-five the next year.
"I said, Well, that sounds pretty good. So I ordered — I did ten thousand bushel at that time.
"* * *
"Q. What other questions did you ask him about, and what was his response?
"A. I asked him — I said, To roll them — the first thing I asked him was what does it cost to roll them? And he said, Three to five cents.
"* * *
"A. Yeah. And I said, I don't want to be involved with Chicago Board of Trade, because I did that one time, and I lost my butt, and I'm not doing it again. *166 He said, it has nothing to do with that. You don't have to worry about that. And I said, Fine. So I even questioned him about it, because it just seemed too good to be true really. But it sounded like you can't go wrong with this, if you get the higher price one year and get the same price the next year what you agreed on this year and it's only going to cost you three to five cents. You know, it sounded like — and I had to do something. I had to sign a contract now anyway. Do you understand? Because Ag Credit wanted me to make sure there was bushels.
"* * *
"Q. Okay. So the figure that he gave you for two sixty-five a bushel, at least in your mind, was a price of corn that you thought you were going to make a profit on?
"A. Right. Correct. I'll go along with that.
"Q. Okay. All right. So you weren't completely — you understood what the farm prices were when you were negotiating that price?
"A. He said two sixty-five and usually you set the basis from eighteen to twenty cents. I was getting two forty-five. He kept bringing the price up to two forty-five. All the time he stressed coming in September and setting your basis. Come in September and set the basis. That's the big thing he stressed."
Mr. Burks then explained that he contracted for another 10,000 bushels at $2.64 3/4 per bushel. The first 10,000 bushels were contracted for $2.65 per bushel2.
As his deposition demonstrates, Mr. Burks was aware the he was entering into the HTA contracts. Mr. Burks knew that he was contracting to deliver 10,000 bushels of corn at $2.65 per bushel and 10,000 bushels of corn at $2.64 3/4 per bushel to Farmers Commission. All 20,000 bushels were scheduled to be delivered in December 1995 and the contracts required Mr. Burks to set a basis. In addition, Mr. Burks knew how the basis was determined as he stated it was the difference between CBOT and what the U.S. Commission Company was giving. Moreover, he knew that the basis was smaller in September and that it was better to set the basis when it was smaller. Thus, Mr. Burks, himself, understood he was entering into the HTA contracts. Mr. Burks admits that the contracts to sell 20,000 bushels of corn that were requested by him in April and May 1996 are accurate as to the above terms. Accordingly, we find that there is no genuine issue of material fact as to whether the contracts exist. *167
Burks does dispute whether he had complete knowledge of the process by which a HTA contract may be rolled. Thus, he argues, there is a genuine issue of material fact as to whether or not he had the sufficient meeting of the minds on this issue as it relates to HTA contracts.
Under the HTA contracts in question, Mr. Burks was allowed to extend his delivery obligation from December 1995 to July 1996.Eby,
In his deposition, Mr. Stoneburner claims he explained the risks of a HTA contract roll and spread to Mr. Burks through an example:
"A. Usually what I did was use an example of what you have to be careful of. I usually used the example of wheat. And the reason I use that is because I saw practical experience of that. You have to be very careful when you roll these contracts from one year to the next, because sometimes the spread, or the difference between one future's contract month and another, can go for or against you. And I had seen wheat go against the farmer fifty cents a bushel. I used that because most farmers understand fifty cents is as lot of money to lose. And that way I was trying to make sure they saw the risk involved.
"Q. Okay. Are you sure that you told Fred Burks about the risk involved, such as this word — use of the word "spread"?
"A. To my best recollection, yes, sir, I did that to everyone who did a hedge to arrive contract."
Mr. Burks, however, claims that in April 1995, Mr. Stoneburner told him that it would only cost three to five cents per bushel to roll the contracts when he first entered into the contracts. In September 1995, Mr. Burks went to see Mr. Stoneburner about the contracts. In his deposition, Mr. Burks stated the following about that visit:
"A. We discussed what to do. I went in there. I didn't even know what to do. Like I came in there and I said, John, what should we do, because corn was up to like — I'm guessing again — two eighty-nine or something like that. It was pushing close to $3.00. I said, What should I do? Should I take the money, or should I fill the contracts? And so he said — well, he put it to me this way. Do you want two forty-five for your corn, or do you want two eighty-nine for your corn or whatever it was. I think he said $3.00, but I don't think corn was $3.00 at *168 the time, but I think his words were $3.00. And I said, Well, I'll tell you one thing. $3.00 or the two eight-nine or whatever the price was, I said, looks a lot better than the two forty-five. Well, we'll roll them over and get two forty-five next year. I said, Fine. That sounds good to me. That's what I'll do. At that time, I though this was done.
"* * *
"Q. And you understood that next year you would have to fulfill those contracts at the two forty-five level?
"A. Correct.
"Q. An you also understood that the corn market could even be higher the following year than it was when you were there at the end of '95?
"A. Right."
The contracts apparently were not rolled by Farmers Commission until the end of November 1995 when an employee of Farmers Commission called Mr. Burks to inquire about the contracts. During the conversation, Mr. Burks learned that it would cost seventy cents a bushel to roll the HTA contracts until December 1996. Mr. Burks decided to roll the contracts over to July 1996 because it would not cost anything, but his futures month changed from December 1995 to July 1996. By altering the futures month, Mr. Burks exposed himself to the market risk of a spread.
As discussed, Mr. Burks acknowledges that he contracted to sell 10,000 bushels of corn at $2.65 per bushel and 10,000 bushels of corn at $2.64 3/4 per bushel to Farmers Commission for delivery in December 1995 with the basis to be set prior to delivery. By authorizing Mr. Kilgore to roll the contracts, Mr. Burks authorized the contract modifications to change the delivery date of the contracted corn from December 1995 to July 1996. By rolling over his contracts to July 1996, it did not cost him anything; however, Mr. Burks then became subject to the spread.
Thus, Mr. Burks knowingly entered into the oral HTA contracts for delivery in December 1995 and he made contractual modifications to roll the HTA contract until July 1996. Accordingly, we find that there is no genuine issue of material fact as to a meeting of the minds of Mr. Burks and Farmers Commission.
As the contracts between Mr. Burks and the Farmers Commission are for the sale of goods over five hundred dollars, the oral contracts between himself and Farmers Commission are unenforceable pursuant to R.C.
As discussed, in his deposition, Mr. Burks admits to entering into the contracts to sell Farmers Commission 20,000 bushels of corn for delivery in December 1995 with a basis required to be set before delivery. Thus, the Statute of Frauds defense is not applicable. Accordingly, we find that no genuine issue of material fact exists on this point.
R.C.
"Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
"(A) by course of dealing or usage of trade as provided in section
"(B) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement." (Emphasis added.)
As we have found the existence of only oral agreements, we find that the parol evidence rule is inapplicable. Thus, construing the evidence most strongly in favor of Mr. Burks, we find that a question of fact does not exist as to whether the parol evidence rule is implicated.
Mr. Burks claims that Mr. Stoneburner, an agent of Farmers Commission, misrepresented the risk involved in rolling the HTA contracts. Specifically, Mr. Burks claims that Mr. Stoneburner told him it would only cost three to five cents per bushel to roll the contracts and that the CBOT was not involved in the process of rolling the contracts.
Fraud under the Commodity Exchange Act is substantially the same claim as the law of fraud in Ohio. See ABM Farms, Inc. v.Woods (1998),
The first issue is whether Mr. Stoneburner made knowing, material misrepresentations to Mr. Burks. Id. The second issue is whether he made the misrepresentations to induce Mr. Burks into the HTA contracts. Id. The third issue is whether Mr. Burks can demonstrate that the misrepresentations were the proximate cause of his loss, i.e. Mr. Burks justifiably relied on Mr. Stoneburner's misrepresentations. Id.
We cannot find that a genuine issue of material fact exists as to whether the alleged misrepresentations induced Mr. Burks into the HTA contracts. Mr. Burks, in his deposition, states that he had to enter into a contract at the request of Ag Credit. Mr. Burks asked about the differences of a straight contract and HTA contracts. Mr. Burks then chose to enter into HTA contracts. Mr. Burks knew that his delivery date for the corn was December 1995 and he had to set his basis prior to delivery. Thus, the fact that Mr. Stoneburner may have quoted Mr. Burks a certain price for rolling his contracts is irrelevant. Mr. Burks knew the obligations of the contract when he contracted to sell 20,000 bushels of corn to Farmers Commission. The fact that he chose to roll the contracts was his choice, he was not induced into entering into the contracts based upon the cost of rolling the contracts. Thus, we find that there exists no genuine issue of material fact as to whether Mr. Burks was induced into the contracts by Mr. Stoneburner's alleged quote on what it would cost to roll the contracts. Accordingly, we need not discuss whether Mr. Stoneburner made knowing, material misrepresentations or whether Mr. Burks can demonstrate that the misrepresentations were the proximate cause of his loss. *171
In his answer, Mr. Burks urged that the oral contracts are in violation of the regulations established by the Commodity Futures Trading Commission and constitute illegal trade options. The record is absent of any evidence to support Mr. Burks's contentions. In addition, in his deposition, Mr. Burks claims to have no knowledge of the alleged violations.
The HTA contracts were entered into with Mr. Burks, a farmer, who is a producer of grain. Mr. Burks was able to make delivery of the grain in December 1995, but he chose to roll his contracts over to July 1996 and then it was up to him to get grain to fulfill the contracts, buy out the contracts or roll them over. Farmers Commission was in the business of obtaining grain under contracts for resale and relied upon actual delivery of it to carry on its business. Farmers Commission had the capacity to take delivery of the grain contracted. The HTA contracts were entered into with the expectation of actual, albeit deferred, delivery.
Mr. Burks has failed to identify any set of facts, which if believed, could entitle him to relief. See Countrymark, supra. Applying the standards of Civ. R. 56(C) and construing the evidence most strongly in favor of Mr. Burks, we find that a question of fact does not exist as to whether the HTA contracts were in violation of the regulations established by the Commodity Futures Trading Commission or whether the HTA contracts constituted illegal trade options.
In his deposition, Mr. Burks clearly demonstrated that he had sufficient quantity of corn in the fall of 1995. Mr. Burks, however, chose to sell the corn on the open market. Applying the standards of Civ. R. 56(C) and construing the evidence most strongly in favor of Mr. Burks, we find that a question of fact does not exist as to whether Mr. Burks had the ability to deliver the required corn.
In his motion for summary judgment, Mr. Burks argues that Farmers Commission improperly cancelled the HTA contracts on June 28, 1996. Prior to their cancellation, the agreements called for July delivery or July roll-over of the 20,000 bushels of corn by Mr. Burks. Farmers Commission claimed it properly cancelled the contracts based upon a notice it received from Mr. Burks's attorney. The letter dated June 6, 1996 stated: "* * * unless you have proof of service of the document upon Mr. Burks I am advising him at this time not to honor any of the proposals concerning HTA situations." On June 14, 1996, Farmers Commission replied suggesting a meeting to resolve the dispute.
On July 2, 1996, without a meeting occurring, Farmers Commission advised Mr. Burks through a letter that it was closing the Mr. Burks's account because "* * * the departure of Mr. Burks for the North Woods at this critical time, left The U.S. Commission Co. with no alternative course of action * * *" and based upon the June 6, 1996 letter from Mr. Burks's attorney. Farmers Commission cancelled the contracts on June 28, 1996 and in order to mitigate its damages, Farmers Commission purchased 20,000 bushels of corn at July futures price of $5.1625 per bushel for a loss of $2.5125 per bushel.
Under R.C.
"An anticipatory breach of contract by a promisor is a repudiation of the promisor's contractual duty before the time fixed for performance has arrived." McDonald v. Bedford Datsun
(1989),
"However, mere expression of doubt as to willingness or ability to perform is insufficient to constitute repudiation. Whether a party has repudiated a contract or merely expressed doubt as to willingness to perform is a question of fact. Once one party to a contract repudiates, the other party is entitled to a judgment without the necessity of tendering performance." (Citations omitted) Peebles Elderly Hous. Ltd.Partnership v. Titan Indemn. Co. (Sept. 15, 1997), Adams App. No. 96CA631, unreported (citations omitted). *173
Once there has been a breach, a plaintiff has a duty to minimize damages. Huggins Farms, Inc. v. Bucyrus Plaza Ltd. (May 9, 1989), Crawford App. No. 3-86-4, unreported.
In the instant case, reasonable minds could only conclude that Mr. Burks anticipatorily repudiated the HTA contracts. The June 6, 1996 letter stated that Mr. Burks's attorney advised his client not to act unless Farmers Commission had proof of service of the contracts upon Mr. Burks. In addition, Mr. Burks's left town to go to North Woods. At that point, Farmers Commission justifiably concluded that Mr. Burks was not going to fulfill his contractual obligations and mitigated its damages.
Applying the standards of Civ. R. 56(C) and construing the evidence most strongly in favor of Mr. Burks, we find that a question of fact does not exist as to whether Farmers Commission improperly cancelled the HTA contracts.
In his deposition, Mr. Burks stated he inquired about buying out the contracts in late January or early February 1996. At that time, Farmers Commission told Mr. Burks that he could buy the contracts for $23,400.00. Farmers Commission informed Mr. Burks that he should see his accountant before proceeding. When Mr. Burks attempted approximately five weeks later to buy out the contracts, Farmers Commission informed him that it would now cost $37,700.00. Mr. Burks became upset at the increase in price and left without buying out his contracts. Sometime after that, Mr. Burks spoke to Farmers Commission again about buying out his contracts and found out it was now going to cost $46,000.00. After each quote, Mr. Burks did not tender payment to buy out the contracts and there is no indication that Farmers Commission would have refused tendered payment from Mr. Burks.
Applying the standards of Civ. R. 56(C) and construing the evidence most strongly in favor of Mr. Burks, we find that a question of fact does not exist as to whether Farmers Commission would have allowed Mr. Burks to buy out his contracts to mitigate his damages.
Here, at the time of the anticipatory repudiation by Mr. Burks, the price per bushel of corn was $5.1625 per bushel. This caused a loss of $2.5125 per bushel for a total loss of $50,250.00. The trial court ordered the appropriate damages in the amount of $50,250.00. Accordingly, we find that a question of fact does not exist as to whether the damages given were accurate.
Upon consideration of all the evidence, in a light most favorable to Mr. Burks, the trial court did not err when granting summary judgment in favor of Farmers Commission and Mr. Burks's sole assignment of error is overruled. Accordingly, the judgment of the trial court is affirmed.
Judgment affirmed. SHAW, P.J., and BRYANT, J., concur.
