Standard Rice Company, Inc. v. Dilday

On April 27, 1933, H. D. Dilday, and his son, H. H. Dilday, and his son-in-law, W. W. Crandall, were the holders and owners of a portion of the rice crop which they had grown during the year 1932. There were three lots of the rice, one being owned by H. D. Dilday individually, a second being owned by H. D. Dilday and his son, H. H. Dilday, and the third by Mr. Dilday and his son-in-law, W. W. Crandall. At that time J. K. Carr was the purchasing agent of the Standard Rice Company, Inc. It was his business to buy rough rice from rice farmers. Carr purchased the rice referred to for his employer, which has been sued for an alleged balance of purchase money due the sellers, and from a judgment in their favor is this appeal.

Carr and H. D. Dilday had several conferences in regard to the purchase of this rice. Dilday was unwilling to sell because there was pending legislation in the Federal Congress, which Dilday thought would be enacted and would operate to enhance the price of rice. No one appeared to know the provisions of the proposed legislation.

All of the preliminary negotiations for the sale of the rice were conducted by H. D. Dilday alone, as he acted not only for himself, but for his son and his son-in-law as well. They testified that he had this authority. The three "Rough Rice Purchase Contracts" which were finally executed were all signed by H. D. Dilday, and no one else, although each contract recites the names of the owners of the rice sold. H. D. Dilday signed for himself and the other two owners. Carr signed for the rice company, the purchaser.

H. D. Dilday relates the negotiations leading up to the sale as follows: "On the evening of April 26 Carr asked me again if I was ready to sell, and I told him that I wasn't, so he asked me why not. I told him that if the bill before Congress would pass we will get more for it. Mr. Carr says: ``We will guarantee you any loss against that, if you will sell the rice now.' I says: ``If we can agree upon the amount, I could deliver it.' We discussed the price, and he made an offer which my son didn't want to take for his rice. ``We agreed on the price, and what the rise would be, if there was any.' Mr. Carr said he would have to see the manager (of the rice company), and he, called me at my home and told me that the trade was agreeable with them. I told Carr my son and son-in-law had an interest in some of the rice, and to come out the next morning for us all to get together on it. All the parties met on the morning of the 27th, and Carr related the conversation he and I had the evening before ``about guaranteeing the price if it advanced and guarantee any loss.' My son-in-law told him that that's what we are holding the rice for. I signed up as one of the members, and Mr. Carr signed, so he says ``We will have to fix a time — some definite time when this guarantee will end.' He suggested that we fix the time at May 31. That was agreed upon, and he told us that we were to get the benefits of any rise between that time and May the 31st, but it had to be done by that time, that is, the bill had to pass by May 31, and the price of rice had to go up. When this agreement was reached, the purchase slips were written up on the morning of April 27 in the presence of Mr. Crandall, myself and my son."

These Rough Rice Purchase Contracts, three in number, are identical except as to their numbers, the names of the sellers and the quantity of the rice sold. No. 498, covering the rice of H. D. Dilday and his son-in-law, W. W. Crandall, reads as follows:

"Rough Rice Purchase Contract. "Standard Rice Co., Inc. "Stuttgart, Ark., 4/27/1933.

"No agreements other than those in this contract will be recognized by us.

"Purchased from H. D. Dilday W. W. Crandall. "P. O. address, Stuttgart, Ark. "In accordance with the terms printed below. "Shipping point, rice mill. "To be graded at mill. "To be delivered on or before 10 days.

"Rough Rice as Below Cup weight " .... Bus. Edith No. .......... ... @ ... per bus. 45 lbs. " .... Bus. Fortuna No. .......... ... @ ... " " " " " .... Bus. L. W. No. .......... ... @ ... " " " " " .... Bus. Japan No. .......... ... @ ... " " " " " ... Bus. Blue Rose No. .......... ... @ ... " " " " "500 Bus. E. P. No. 1 39 @ 45c " " " " "Terms of sale, as per sample or samples .................

"Conditions of Sale

"The rice listed hereon shall be delivered within the time stated. All rice to be threshed dry. In the event of rains or other unavoidable contingencies preventing the delivery of this rice in the time specified, the purchaser shall have the opinion of taking, but shall not be obliged to take said rice when same is ready for delivery. Delivery to be made to purchaser at its mill in Stuttgart, Arkansas, unless otherwise directed by purchaser before shipping; purchaser to pay transportation charges from point of shipment and to direct routing unless otherwise stated.

"Seller warrants good, clear, unencumbered title to said rice, free of all claims and liens, and will defend buyer against all claims.

"The above is correct.

"(Signed) H. D. Dilday, Owner.

"B498

"(Signed) J. K. Carr, For Standard Rice Co., Inc.

There was written on the face of each of these sales contracts before they were signed these phrases: "To be milled on toll — These prices guaranteed."

Now all the parties agree that the signing of the sales contracts, one of which is set out above, was not the last thing to be done to evidence the complete and entire contract. A letter was to be written which would evidence the time during and for which the guaranty was effective.

Mr. Dilday testified that he received this letter the day after it was written, but that he did not read it until May 1. It reads as follows:

"Standard Rice Company, Inc. "Stuttgart, Ark., April 27, 1933.

"Messrs. H. D. Dilday, Homer Dilday and W. W. Crandall, "Stuttgart, Ark.

"Gentlemen:

"In consideration of your executing contracts on this date with the undersigned for rice as set forth, in rough rice contracts numbers 496, 497 and 498, respectively, copies of which you have, we hereby agree that in the event the farm bill now before Congress shall become a law on or before May 31, 1933, and in the event that by virtue of the terms of any such law there will be due and accruing to growers under terms of said law any tax or benefit that would be due you, or either of you, if you had held your rice until the passage of said law and sold the same immediately thereafter, that we will pay the amount thereof to you as soon as it can be ascertained of authoritative sources the amount due.

"Yours very truly, "Standard Rice Co., Inc., "G. B. Cummings."

The three written sales contracts and the letter last mentioned and quoted constitute the entire contract between the parties.

Appellant seeks to avoid a recovery by appellees upon the theory that the contracts are plain and unambiguous, and, when properly construed, mean that there was a completed sale of the rough rice upon delivery, and that no recovery can be sustained because no direct benefits accrued to appellees by reason of the Federal legislation which was in the minds of the parties at the time. Appellees contend in support of the recovery that the contracts are ambiguous as held by the trial court, but. if not ambiguous, they evidence only a conditional sales contract not to become fully executed until the Federal legislation was passed which occurred on May 12, 1934, and, in addition thereto, any benefits or gratuities which might be accorded to producers by reason of such legislation. The recovery in the trial court was measured by the enhancement of the market value of the rough rice from the date of the sales contracts up to May 12, 1934, the date on which the Federal legislation was enacted. The sustaining of appellant's theory will result in reversing and dismissing the case and the sustaining of either theory advanced by appellees will result in an affirmance.

It is elementary that all preliminary negotiations leading up to a written contract are merged into it when executed. 6 R.C.L., p. 839, 228, and cases there cited.

A fair interpretation of the three written contracts and the letter in connection therewith creates no ambiguity.

The written-in portion of the contracts, namely, "to be milled on toll — prices guaranteed," if in conflict with other provisions must prevail and control. Planters' Cotton Oil Co. v. Columbia Cotton Oil Company,126 Ark. 19, 189 S.W. 166. When the written-in provision of these contracts is accorded their rightful importance and interpretation and construed together with the letter and all other provisions of the written contracts, they mean that the sellers of the rough rice retained title thereto until May 31, 1934, or until the Federal legislation in the minds of the parties was enacted or defeated, and that, in the event a gratuity or benefit was legislated in favor of the producers of such rice prior to May 31, 1934, the seller would be entitled thereto in addition to the rise in the price of rough rice upon the market. Any other interpretation of this letter would be in direct contradiction of the plain terms of the written contracts, and moreover would permit an ex parte letter of one of the parties to override and destroy the manifest intention of the contracting parties as expressed in their written contracts of sale.

The conclusion heretofore stated is irresistible when we accord the phrase, "to be milled on toll — prices guaranteed," its usual and ordinary acceptation. The word, "toll," is defined by Webster's New International Dictionary as, "the portion of grain taken by a miller as his fee." 62 C.J. 1078, defines "toll" as follows: "``Toll' may be employed to designate a compensation or payments in markets or fairs for goods, cattle, etc., bought and sold. A reasonable sum of money due to the owner of the fair or market upon the sale of things tollable within the fair or market, or, for stallage, piccage or the like."

Moreover, it was conceded by both appellant and appellees in oral argument before us that the phrase, "to be milled on toll — prices guaranteed," standing alone, meant that the title to the rice remained in the sellers until it was milled and the product otherwise disposed of. This admission seems to coincide with all legal definitions of the language employed.

Under the views stated it was the duty of the trial court and he should have, as a matter of law, instructed the jury to return a verdict in favor of appellees for the enhancement of the market price of rough rice from the date of the contracts of April 27, 1934, up to and until May 12, 1934. Therefore there was no prejudicial error in submitting this question to the jury.

The motion for rehearing most be sustained, and the foregoing opinion is adopted as the opinion of the court.

SMITH, MEHAFFY and BAKER, JJ., dissent.