Grand State Marketing v. Eastern Poultry Distributors, Inc.

975 S.W.2d 439, 63 Ark. App. 123, 1998 Ark. App. LEXIS 621
CourtCourt of Appeals of Arkansas
DecidedSeptember 30, 1998
DocketCA 97-1569
StatusPublished
Cited by1 cases

This text of 975 S.W.2d 439 (Grand State Marketing v. Eastern Poultry Distributors, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Grand State Marketing v. Eastern Poultry Distributors, Inc., 975 S.W.2d 439, 63 Ark. App. 123, 1998 Ark. App. LEXIS 621 (Ark. Ct. App. 1998).

Opinion

Terry Crabtree, Judge.

This case concerns a contract for the sale of 858 cases of frozen chicken. The seller, appellant Grand State Marketing, filed suit to recover $11,668.80 due on the contract. The buyer, appellee Eastern Poultry Distributors, Inc., answered that it had revoked acceptance of appellant’s product because some of the cases contained a cut of chicken inferior to that which was specified in the contract. The trial judge agreed that the goods were nonconforming and entered an order allowing appellee to deduct lost profits, transportation and storage charges, and attorney’s fees from the amount owed on the contract. We affirm.

On February 26, 1996, appellee purchased 34,320 pounds of frozen chicken from appellant. The chicken was packaged in 858 forty-pound cartons and priced at $.34 per pound. According to two of appellee’s traders, Joe Reed and Joe Rogers, they were assured by appellant that the poultry was split fryer breasts and no more than six to eight months old. After the sale, appellee in turn sold the chicken to Western Box Beef in Portland, Oregon, for $.64 per pound. Approximately two weeks later, Western Box Beef rejected 521 of the 858 cases (20,840 of 34,320 pounds). Appellee stopped payment on its check to appellant and notified appellant that the rejected cases contained pieces rather than split breasts and were dated 1994 rather than 1995. When appellant refused to accept a return of the 521 cases, appellee sold them to a buyer in Chicago for $.42 per pound.

On May 13, 1996, appellant sued appellee for the $11,668.80 contract price. Appellee claimed it was entitled to offset its lost profits on the 521 cases, storage charges incurred in Portland, and freight charges incurred in transporting the 521 cases from Portland to Chicago. After a nonjury trial, the judge found that the goods were nonconforming. He allowed appellee to deduct from the contract price $4,584.80 in lost profits; $328 in storage charges; $1,868.70 in freight charges; and, pursuant to Ark. Code Ann. § 16-22-308 (Repl. 1994), $678.15 in attorney’s fees.

Appellant’s first argument on appeal is that appellee did not properly revoke acceptance of the goods. This argument is based upon the fact that appellee’s representatives did not look at a sample of the chicken before purchasing it. In support of its argument, appellant relies on the following section of the Uniform Commercial Code, contained in Ark. Code Ann. § 4-2-608(l)(b) (Repl. 1991):

(1) The buyer may revoke bis acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it:
(b) Without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.

The above-quoted statute allows a buyer to revoke acceptance of a “lot or commercial unit.” A “commercial unit” is defined in Ark. Code Ann. § 4-2-105(6) (Repl. 1991) as follows:

“Commercial unit” means such a unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in use or in the relevant market as a single whole.

The frozen chicken in this case was packaged in forty-pound cartons and was priced at $.34 per pound. Division of the product into cartons did not materially impair “its character or value on the market or in use,” and a carton is similar to a “bale, gross, or carload” as referred to in the statute. Therefore, each carton constituted a commercial unit and appellee could properly accept some cartons and reject or revoke its acceptance of others. See, e.g., Badger Produce Co., Inc. v. Prelude Foods Int'l, Inc., 130 Wis.2d 230, 387 N.W.2d 98 (1986) (in a sale involving 1,000 boxes of seafood, each box was a commercial unit). Additionally, when goods are sold by the pound, or other unit of weight, that unit of weight may be considered a commercial unit. See Figueroa v. Kit-San Co., 123 Idaho 149, 845 P.2d 567 (1992) (product sold per ton); Askco Eng’g Corp. v. Mobile Chem. Corp., 535 S.W.2d 893 (Tex. Civ. App. 1976) (product sold per pound).

Turning now to the evidence in the case, it is undisputed that, before concluding the sale, Darrell Glen, appellant’s chairman of the board, advised appellee’s representatives that they could view a sample of the chicken. In fact, Glen called the storage facility where the chicken was located and gave the facility authority to release a sample. However, according to Joe Reed, both appellant and appellee wanted to move the chicken quickly, and there was no time to view a sample. Additionally, Reed said, it would have been hard to tell which cartons were conforming and which were not without looking at all 858 of them. Therefore, instead of looking at samples, Reed specifically advised Glen that he would rely on Glen’s assurance that the chicken was 1995 production split fryer breasts. That testimony was confirmed by Joe Rogers.

Section 4-2-608(1)(b) does not always require a buyer to view the product prior to acceptance. It allows revocation if the buyer’s acceptance of goods has been induced by the seller’s assurances. Arkansas case law has recognized a buyer’s right to revoke acceptance under such circumstances. Dopieralla v. Arkansas La. Gas Co., 255 Ark. 150, 499 S.W.2d 610 (1973); Parker v. Johnston, 244 Ark. 355, 426 S.W.2d 155 (1968). Although Glen denies making any assurances with regard to the production date of the chicken, and denies making any quality assurance other than that the chicken was “wholesome,” Reed and Rogers testified unequivocally that Glen assured them the poultry was 1995 production split fryer breasts. We view the evidence and all reasonable inferences therefrom in the light most favorable to the appefiee. Brady v. Bryant, 319 Ark. 712, 894 S.W.2d 144 (1995). Given the testimony of Reed and Rogers regarding their reliance on Glen’s assurances, we find no infirmity in appellee’s revocation of acceptance.

Next, appellant argues that appellee did not provide sufficient proof of the product’s nonconformity. In particular, appellant claims that (1) the record is void of evidence indicating that the 521 rejected cases were anything other than that represented by appellant; (2) that appellee failed to prove its damages; and (3) that appellee did not prove why Western Box Beef rejected the product. Before beginning our analysis of this issue, we note that, when a circuit judge is sitting as fact-finder, we will not reverse his findings unless they are clearly erroneous. Schueck v. Burris, 330 Ark.

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Bluebook (online)
975 S.W.2d 439, 63 Ark. App. 123, 1998 Ark. App. LEXIS 621, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grand-state-marketing-v-eastern-poultry-distributors-inc-arkctapp-1998.