Parker Bros. Farms, Inc. v. Burgess

No. 81-295
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981

PARKER BROTHERS FARMS, INC.,
a Montana Corporation,
Plaintiff and Respondent,
vs .
ED BURGESS,
Defendant and Appellant.

Appeal from: District Court of the Eleventh Judicial District,
In and for the County of Flathead
Honorable Robert Sykes, Judge presiding.
Counsel of Record:
For Appellant:
Murphy, Robinson, Heckathorn and Phillips, Kalispell,
Montana
For Respondent:
Murray, Kaufman, Vidal & Gordon, Kalispell, Montana

Submitted on briefs: December 17, 1981
Decided: March 25, 1982

~iled:MAR 2 5 1982
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.

Plaintiff brought this action in Flathead County
District Court to recover the price of potatoes sold and
delivered to defendant, alleging that the defendant had
breached a contract for the sale of approximately 811,500
pourlds of potatoes grown by the plaintiff on its Flathead
Valley farm. Personal service was made upon the defendant
in Jerome County, Idaho, where he resides. Pursuant to Rule
4B(1), M.R.Civ.P., the defendant moved for dismissal on the
ground that the court lacked jurisdiction over him, but the
motion was denied. Defendant then answered, alleging that
the parties had contracted only for the sale of approximately
50,000 pounds (one truckload) of potatoes, and that this
contract had been fully performed. The defendant further
alleged that after this contract had been performed, the
plaintiff requested that the defendant purchase the remainder
of its 1977 potato crop. The defendant alleged that he
declined this offer, but agreed to help "move" some of the
plaintiff's potatoes into the market, thereby creating the
customary merchant and grower commission relationship. The
defendant also counterclaimed for his costs and expenses.
Trial without jury was held on January 15, 1981, and
thereafter the court entered judgment for the plaintiff,
finding that the parties had entered into a verbal agreement
on May 8 and 10, 1978, for the sale of 550,000 pounds of
potatoes, and then, on May 17, 1978, entered into a new
agreement whereby 250,000 pounds of potatoes were shipped to
the defendant on a consignment basis. The court subsequently
amended its findings and conclusions to correct two mathematical
errors, and entered judgment in favor of the plaintiff in
the amount of $12,864.28, plus interest and costs. The
defendant appeals, raising two issues:
1. Whether the District Court's exercise of personal
jurisdiction over the defendant violated Rule 4B(1), M.R.Civ.P.
and the due process requirements of the federal constitution?
2. Whether the evidence supports the District Court's
findings and judgment?
The plaintiff began independently marketing its potatoes
in 1978 when the potato market was depressed and its broker,
Small Farms, Inc., was having difficulty finding buyers for
the plaintiff's potatoes. The plaintiff, through Hugh
Parker, contacted a friend in Idaho to spread word of the
availability of the plaintiff's potatoes. On May 8, 1978,
the defendant, a potato grower and packer in Idaho, telephoned
the plaintiff in Montana to negotiate for the purchase of
plaintiff's potatoes. On May 9, 1978, the plaintiff shipped
to the defendant one truckload (approx. 53,810 pounds) of
potatoes. On May 10, 1978, the parties discussed this
shipment by telephone, with the defendant seemingly pleased
with the quality of the potatoes. That load of potatoes is
not in dispute.
The plaintiff contends that during the May 10, 1978
telephone conversation, the defendant purchased approximately
757,690 more pounds (about 6,000 sacks) of the plaintiff's
potatoes. The plaintiff then shipped 11 more truckloads to
the defendant. The defendant contends that he did not contract
with the plaintiff to purchase these potatoes, but rather,
that he only agreed to help market the potatoes for the
plaintiff.
On May 17, defendant telephoned the plaintiff, thinking
that he had already received as many potatoes as he had
expected. Plaintiff informed him that he still had a "couple
thousand" sacks to go. Defendant said to hold off after

that in order to see how marketable the potatoes would be.
He had just begun receiving rejections of plaintiff's potatoes
from his customers. As to these potatoes, yet to be sent,
defendant said "send them down we will see what we can do
with them. " (Tr. at 118. )
The defendant then apparently sold and shipped some of

the plaintiff's potatoes to wholesale and retail buyers
throughout Idaho, Utah, and Pennsylvania. The defendant,

however, began receiving more complaints from buyers that
the potatoes were not acceptable. The defendant then retrieved
the plaintiff's defective potatoes and replaced them with
his own nondefective potatoes. During this time, the plaintiff
had sent the defendant invoices for the potatoes, but did
not receive payment.
On June 5, 1978, the defendant telephoned the plaintiff
and informed it that its potatoes were not merchantable in
the "fresh-pack" (potatoes which are graded, washed, packed,
and ready for consumption) market. The plaintiff informed

the defendant that the defendant owned the potatoes and had
to pay for them. The defendant then sold some of the plaintiff's
potatoes to a potato processor and received $16,041.70 for
them. The defendant received no other money from any sources
for the plaintiff's potatoes.
The defendant has never paid the plaintiff for these
potatoes and contends that these potatoes were to be sold
byconsignment, and that he incurred expenses of $20,934.48
in handling the potatoes, and therefore suffered a net loss
of $4,893-41. The plaintiff then filed this suit.
 On appeal, the defendant claims that the District
Court's exercise of personal jurisdiction over him violated
Rule 4B(l)(a), 3l.R.Civ.P. and the due process requirements of the
Fourteenth Amendment to the United States constitution.
Rule 4B (1)(a) reads:

"(1) Subject to jurisdiction. All persons found
within the state of Montana are subject to the
jurisdiction of the courts of this state. In
addition, any person is subject to the jurisdiction
of the courts of this state as to any claim for
relief arising from the doing personally, through
an employee, or through an agent, of any of the
following acts:

(a) the transaction of any business within this
state;"
This Court uses a two-step approach in its interpretation
of this statute. First, it must be determined whether the

statute provides for the exercise of jurisdiction under the
particular facts of the case, and second, whether the assertion

of jurisdiction would offend due process requirements.
,
State of N.D. v. Newberger (1980), - Mont. - 613 P. 2d
1002, 1004, 37 St-Rep. 1119, 1121; May v. Figgins (1980),

- ,
Mont. - 607 P.2d 1132, 1134, 37 St.Rep. 493, 495.
It is not contended very seriously that the "long arm
statute" does not confer jurisdiction under the facts of
this case. In fact, it requires no discussion to conclude

that the defendant transacted business within this state.

However, the defendant does argue strenuously that,
under the second step of our test, the assertion of juris-

diction would offend due process and fundamental fairness.
He grounds his argument on factors set out in three prominent
cases and their progeny. Hanson v. Denkla (1958), 357 U.S.
235, 78 S.Ct. 1228, 2 L.Ed.2d 1283; McGee v. International
Life Ins. Co. (1957), 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d
223; Internat. Shoe Co. v. Washington (1945), 326 U.S. 310,
 Generally, these cases require only that certain
"minimum contacts" be established so as not to make the
assertion of jurisdiction offensive to "traditional notions
of fair play and substantial justice." Of more particular
significance to the case at bar is the following discussion
of the "minimum contacts" rule from Hanson v. Denkla, supra,
357 U.S. at 253:
". . , The application of that rule will vary with
the quality and nature of the defendant's activity,
but it is essential in each case that there be some
act by which the defendant purposefully avails itself
of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections
of its laws . . ."
(Emphasis added.)
In support of this rule, defendant relies on Friberg v.
Schlenske (D. Mont. 1975), 396 F.Supp. 124. There, a Utah

artist delivered four of his paintings to a Montana art
dealer on consignment. Without authority, this art dealer
pledged them to secure personal loans from Montana banks,
which eventually foreclosed on the pledges and took possession
of the paintings. The Montana art dealer then contacted a
Texas art dealer, and offered to sell him these four paintings.
After several Montana-Texas telephone calls, the Montana
banks shipped the paintings to a Texas bank, and the sale
was consummated. The Texas art dealer secured the paintings,
which were ultimately delivered to another Texan. These two
were the Texas defendants in a subsequent action brought by
the Utah artist.
In that case, Senior United States District Judge

Russell E. Smith stated:
"The Texas defendants had no general relationship
with Montana. In this one instance they did not
seek to do business in Montana. They were sought
out. They had no dealings of any kind with the
plaintiff. The Texas defendants did nothing which
 resulted in the accrual of a tort action in Montana.
Having paid the purchase price for the paintings,
the Texas defendants did nothing which would lead
them as reasonably prudent persons to foresee a
lawsuit against them in Montana. Unless it can be
said that the Texas defendants did something which
would lead them as reasonable persons to foresee that
they might be defendants in a lawsuit in Montana, it
is simply unfair to bring them to this distant forum."
396 F.Supp. at 125.
This case is clearly distinguishable. The defendant
here did seek to do business in Montana. He accepted several
shipments from the plaintiff, establishing a course of
dealing. Also, he has yet to pay for a good number of potatoes
and didn't pay for the first undisputed load until 6 months
later. That, regardless of the merits of his position
otherwise, is a critical factor in favor of exercising
jurisdiction over him. Friberg, supra, 396 F.Supp. at 125,
in a footnote, states:
"Had they failed to make the payments required,
then they might very well have contemplated that
they would be sued in Montana, and perhaps the
telephone conversations would be sufficient to
bring the transaction within M0nt.R.Civ.P. 4
subd. B. See - - - - - Goff v. District
State ex rel.
Court, 157 Mont. 495, 487 P.2d 292 (1971);
Co. G.
renti ice Lumber - - Spahn, 156 ~ d n t .6 8 , 474
P.2d 141 (1970). In such a case it would not be
unfair to 'require them to defend here. "
This is such a case. The District Court did not err in
exercising jurisdiction.
Defendant also appeals from finding of fact no. 17 and
conclusion of law no. 4, claiming that they are unsupported
by the evidence. Reduced to their essentials, those findings
state that, on May 17, defendant and plaintiff agreed that

all potatoes from any further deliveries would be handled by
defendant on a consignment basis. In short, the first
550,000 pounds were delivered pursuant to an oral contract
for sale, and the remaining 250,000 pounds were delivered
pursuant to a commission merchant and grower agreement.
 There is a vast difference of opinion on this point.
The plaintiff contends that all 811,500 pounds were "sold."
The defendant claims that, except for the first 50,000 pound
shipment, the entire transaction was a commission agreement.
The record reflects that an oral agreement was reached
which was misunderstood because of the unspoken assumptions
of both parties. Plaintiff, with summer on the way, needed to
unload his produce, and assumed he had found a buyer.
Defendant agreed to accept plaintiff's potatoes, partly out
of gratitude for the first load, but assumed that he was
just helping to "move" them on a commission basis.
The controversy arose because of the difficulty in
marketing the potatoes. That controversy became manifest
about May 17, the day the defendant called the plaintiff and
told him to postpone further deliveries.
There is substantial credible evidence to uphold a
finding that there was a sale of the first 550,000 pounds.
The record also supports a finding that a consignment
agreement developed on May 17.
When the record furnishes reasonable grounds for
different conclusions, we will not disturb the findings of
the District Court. Bostwick v. Butte Motor Company (1965),
145 Mont. 570, 589, 403 P.2d 614, 624. They are not clearly
erroneous. Rule 52(a), M.R.Civ.P.
Af firmed.
We Concur:

C h i e f Justice
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