Gossner v. Dairymen Associates, Inc.

611 P.2d 713, 1980 Utah LEXIS 946
CourtUtah Supreme Court
DecidedMay 6, 1980
Docket15679
StatusPublished
Cited by6 cases

This text of 611 P.2d 713 (Gossner v. Dairymen Associates, Inc.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gossner v. Dairymen Associates, Inc., 611 P.2d 713, 1980 Utah LEXIS 946 (Utah 1980).

Opinions

MAUGHAN, Justice:

Plaintiff Edwin 0. Gossner filed an inter-pleader action to determine whether respondents, E. Odell Summers and Orval E. Petersen, or appellant Berkeley Bank for Cooperatives was entitled to $31,635.29, which Gossner admittedly owed to one or the other of them. Upon a trial to a jury and the jury’s answers to interrogatories, the court entered a judgment in favor of respondents Summers and Petersen, for $12,000 plus each and the balance to Berkeley Bank. The judgment is affirmed. Costs to Summers and Petersen.1

As a matter of convenience this opinion will refer to plaintiff Edwin 0. Gossner, an individual, as Gossner; the Gossner Cheese Company, a corporation, as the Cheese Company; Dairymen Associates, Inc., as Dairymen; E. Odell Summers and Orval E. Petersen, as the Farmers; and Berkeley Bank For Cooperatives, as the Bank.

The Farmers, who are engaged in dairy farming in Box Elder County, entered into a marketing agreement with a dairy cooperative, Dairymen, in March 1974. It provided, Dairymen would market all milk delivered to them by the Farmers, and in turn would pay them monthly for the milk so delivered. Gossner, the president of the Cheese Company, purchased milk from Dairymen, which was posted on the latter’s books as an “account receivable.”

In January, 1975, Dairymen began to experience financial difficulties. This fact became known to the Farmers, who told Dairymen of their desire to terminate the contract. Dairymen objected and stated it would not agree to a termination of the agreement because respondents had not given written notice, as required by the terms of the contract, viz., notice of termination could not be given before “any subsequent anniversary date following the first anniversary date of the agreement”, which would be in March 1976.

In March 1975, Dairymen executed large promissory notes to the Bank. As security, Dairymen granted the Bank a security interest (Chattel Mortgage) in its personal property, including its accounts receivable, which was duly filed in accordance with the Commercial Code.2

On April 9, 1975, the Farmers’ counsel sent a letter to Dairymen announcing their intention to terminate their relationship with Dairymen. The milk hauler, George Thornley, continued to go to the Farmers’ dairies until July of 1975 to pick up milk, take it to Dairymen facilities and then deliver it to Gossner. In July 1975, Summers and Petersen instructed the trucker, George Thornley, to cease delivering their milk to Dairymen, and to deliver their milk thereafter directly to Gossner. At that time both Gossner and Dairymen were so notified. And thereafter Thornley followed that direction, delivering the Farmers’ milk directly to Gossner until November 1975. From July to November 1975, Thornley followed that plan. Notwithstanding the foregoing, Dairymen continued to send checks to the Farmers through the summer and until November 1975. The checks sent to them for September failed to clear the bank; and this again occurred for the checks sent in October and November. Meanwhile, Gossner withheld payment after September 1975, which is the fund here in dispute.

In November 1975, the Farmers filed actions in Weber County against both Gossner Cheese Co. and Dairymen for the $24,000 plus owed them for milk delivered in September, October, and November of 1975. Dairymen failed to answer the complaint and default judgments were entered [715]*715against it. The Cheese Company, which denied any indebtedness was dismissed. Gossner, who was not a party to the Weber County action, filed this interpleader action.

Upon the trial to the jury the court submitted interrogatories as to the disputed issues of fact; and the jury answered them favorably to the contentions of the Farmers. These included a question concerning whether the Farmers had terminated their agreement with Dairymen before delivering the milk to Gossner, the source of the fund before the court, to which the jury answered, “yes.” And as to the amount owed each of them, as to Summers, the jury found $12,127.67, as to Petersen, $12,467.13.

This Court assumes the jury believed those aspects of the evidence which sustain the findings and the judgment, and therefore makes its analysis of the case and draws its conclusions on the basis of the facts so found.3

One of the arguments made by Berkeley is the not unusual one, viz., the claims of the Farmers to receive payment from their milk directly from Gossner is not supported by the evidence. The response made to this seems adequate: the testimony of both Farmers as to the facts recited herein, the letters written, their directions to the trucker, George Thornley, and his corroborating testimony, and the records of their milk so delivered during September, October and November 1975; and the fact Gossner, acting upon such directions withheld any further payments to Dairymen.

The Farmers’ obligation to Dairymen was not unconditional. Their contract to deliver milk to that company was conditioned upon its monthly payments therefor. After the Farmers knew that Dairymen was insolvent, and especially after its checks proved worthless, it was their right and privilege to send their milk directly to Gossner, or to anyone else they might have desired. The jury was neither obliged to believe, nor are we required to accept, that their obligation compelled them to keep sending milk to Dairymen when they knew the latter was insolvent, and would not pay for it.

There is no legal concept, which would compel the conclusion that under such circumstances, the milk thereafter delivered directly to Gossner must be deemed to belong to Dairymen. The incongruity and the unfairness of such a conclusion is clearly revealed by examination of the converse: What would have been the result if Dairymen had sued the Farmers to compel them to continue delivering milk it could not pay for, and incidentally, for which the checks actually issued were dishonored? Since the Bank’s position is derivative, it could have no better right than Dairymen. Accordingly, we hold there is ample credible and competent evidence to justify the trial court’s submission of the interrogatories to the jury and to support the jury’s findings, as to the $12,000 plus, that each of the defendants was entitled to of the funds held by Gossner. The trial court’s approval thereof should be regarded by this Court as adding credence to the correctness of that conclusion.4

On appeal, the Bank, which has a security interest in the accounts receivable of Dairymen, contends the judgment in this action cannot be sustained on the ground the Farmers were precluded from litigating issues which had been or could have been determined in a prior action in Weber County. In this first action the Farmers alleged Dairymen was indebted to them for milk purchased and delivered from the Farmers to Dairymen during September, October, and November 1975. The Cheese Company was joined in this action, the Farmers alleged the Cheese Company had received the milk the Farmers had delivered to Dairymen. The Farmers pleaded for a restraining order to prevent the Cheese Company from delivering monies, in the amount owed to them, for the milk delivered through Dairymen.

Dairymen defaulted and the Farmers took a default judgment. On the same day, [716]*716a writ of garnishment was issued, directed to the Cheese Company. In response thereto, the Cheese Company denied it was indebted to Dairymen.

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Gossner v. Dairymen Associates, Inc.
611 P.2d 713 (Utah Supreme Court, 1980)

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Bluebook (online)
611 P.2d 713, 1980 Utah LEXIS 946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gossner-v-dairymen-associates-inc-utah-1980.