Farmer v. Processing Unlimited, Inc.

441 F. Supp. 271, 1977 U.S. Dist. LEXIS 12671
CourtDistrict Court, E.D. Oklahoma
DecidedNovember 30, 1977
DocketNo. 76-117-C
StatusPublished

This text of 441 F. Supp. 271 (Farmer v. Processing Unlimited, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmer v. Processing Unlimited, Inc., 441 F. Supp. 271, 1977 U.S. Dist. LEXIS 12671 (E.D. Okla. 1977).

Opinion

MEMORANDUM OPINION

MORRIS, Chief Judge.

This case came on for trial before the court sitting without a jury on October 25, 1977, in Muskogee, Oklahoma. Plaintiff in this civil action seeks a declaratory judgment determining that he has a lien in the amount of $26,622.55 on defendant Processing Unlimited, Inc.’s assets which lien has priority over defendant Peoples Bank of Westville’s security interests in any assets of Processing Unlimited. As plaintiff recognized during his opening statement, the crucial fact issue to be resolved by the court in this case is whether or not plaintiff qualifies as a producer of agricultural products under 42 Okla.Stat. § 40 (1971). It is agreed that if he does not so qualify he cannot prevail in this action.

Plaintiff resides at his home in Grave’tte, Arkansas. He is an Arkansas citizen. Defendant Peoples Bank of Westville is an Oklahoma banking corporation having its principal place of business in Westville, Adair County, Oklahoma. Defendant Processing Unlimited, Inc. is an Oklahoma corporation with its principal place of business in Adair County, Oklahoma.1

[272]*272Albert Farmer dealt in cattle until 1977. His principal business was the buying and selling of cattle. Whenever he bought cattle he ordinarily already had a buyer to whom he planned or was committed to sell. He owns eight acres of real estate near Gravette, Arkansas, and from November, 1975 until February 1976 he leased an additional forty acres. On April 29, 1975, plaintiff and James M. Morris entered into a contract with Processing Unlimited to furnish cattle to Processing for slaughter.2 Plaintiff and James M. Morris were not partners and were not connected with each other in any way other than that they both supplied cattle for slaughter to Processing.

Pursuant to his contract with Processing plaintiff bought cattle fit for butchering. He bought and paid for them in his own name. While there was some intimation by plaintiff that he sold a few cattle to Processing which he had raised himself, testimony as a whole demonstrates, and the court finds, that the cattle which plaintiff delivered to Processing for slaughter were bought by him for that express purpose pursuant to his contract. If he bought more cattle than Processing needed at a given time or if Processing was not ready to slaughter, plaintiff took the cattle not needed by Processing home to Arkansas where he kept them partly on his eight acres and partly on the forty acres he leased until Processing advised him to deliver them. He fed and cared for the cattle at his place until he delivered them for slaughter. On the average, two weeks elapsed between the time he bought the cattle and the time they were slaughtered. However, on at least one occasion plaintiff kept cattle he had bought for five or six weeks. It was not unusual, however, for him to deliver cattle to Processing’s plant immediately after he purchased them.

Typically, the cattle delivered to Processing were slaughtered within two or three days after delivery. Processing had facilities to hold cattle prior to slaughtering, and sometimes plaintiff’s cattle would be so held when, for instance, the plant was inoperative due to equipment failure. When this occurred, plaintiff fed the cattle kept in Processing’s lots and paid for the feed.

On or about August 31, 1975, plaintiff was furnished financial information regarding Processing which then was doing business under the name of Stilwell Packing Company.3 During that time plaintiff was paid on the basis of carcass weight as soon as Processing loaded the beef onto trucks for shipment to its customers as contemplated under the contract.4 However, during November 1975 Processing began to fall behind on its payments to plaintiff and he would not be paid until Processing was paid by its customers. Plaintiff nevertheless continued to deliver cattle to Processing until February 1976.5

During the period between November 1975 and February 1976 Processing was not able to pay its bills as they became due and was never current on bills payable. From the latter part of February 1976 until the latter part of March 1976, J. C. Morris6 managed Processing’s plant at the request of Mr. Mowery, who was a shareholder of and attorney for Processing. There were no express restrictions imposed upon J. C. Morris’ management of the plant by Mowery. Mowery did not tell J. C. Morris that he had to consult him but told him to call him anytime he needed him. J. C. Morris communicated with Peoples Bank once or twice but the bank never gave him any instructions. Any instructions he did receive came from Mowery or another representative of Processing.

Since the freezer had been leased to Catel Foods, J. C. Morris only operated the kill floor. He maintained a trust account in the [273]*273name of Stilwell Packing Company at Peoples Bank of Westville.7 J. C. Morris was authorized to issue checks on that account.8 Rental payments received from Catel Foods and earnings derived from the slaughter of cattle and the sale of offal were deposited into the bank account.

After consultation with Mowery, J. C. Morris decided which of Processing’s bills should be paid. He paid the utility bills first to ensure that the plant could continue to operate. The bank account was also used to pay for supplies and labor. He knew that the books showed that Processing owed plaintiff approximately $26,000 but he paid him nothing. He had no money to pay anyone except for current operating expenses. He never used any of the money in the account to make payments on Processing’s debt obligations to Peoples Bank. During J. C. Morris’ management of the plant Processing could not have paid all of its debts as they became due. Nor could it have done so before J. C. Morris took over management of the plant.

When J. C. Morris arrived, there were approximately ten to twelve beef carcasses in the cooler with name tags thereon identifying the owners. Processing only owned three or four carcasses. After selling the carcasses, J. C. Morris paid the respective owners thereof. Upon retaining a different attorney, Processing terminated the services of J. C. Morris in late March of 1976. When J. C. Morris left the trust account was overdrawn by $12.00. He operated the kill floor for five weeks.

Plaintiff requests the court to determine that he has a lien in the amount of $26,-622.55 on Processing’s assets, which lien is entitled to priority over any security interests defendant Peoples Bank may have in Processing’s assets. In this regard plaintiff contends that he is a producer of agricultural products within the meaning of 42 Okla. Stat. § 40 (1971), and that he therefore acquired a preferred lien under that section on account of the beef carcasses which he sold to Processing within the statutory four months’ period prior to an adjudication of insolvency. Plaintiff does not seek a money judgment against defendant bank and he has abandoned his previous request for the appointment of a receiver.9

Defendant Peoples Bank contends that plaintiff is not a producer of agricultural products so as to come within the provisions of section 40, because he did not raise cattle but merely purchased and delivered them to Processing for slaughter and sale of the carcasses pursuant to the contract between plaintiff and Processing.

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173 U.S. 389 (Supreme Court, 1899)
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1951 OK 337 (Supreme Court of Oklahoma, 1951)

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Bluebook (online)
441 F. Supp. 271, 1977 U.S. Dist. LEXIS 12671, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmer-v-processing-unlimited-inc-oked-1977.