Cite as 24 A.D. 884 on July 2, 1963, and $1.45 per bag for four other loads shipped on July 9, 1963 (see Finding of Fact No. 4). Moreover, the market news reports quote prices higher than those invoiced as current shipping prices for the area on July 2 and July 9, 1963. It is concluded that respondent's contention here is without merit. Respondent also contends that complainant guaranteed that all the potatoes shipped would be suitable for chipping purposes. There is no written contract, and the parties are in direct conflict as to such guarantee. We conclude that respondent has failed to sustain the burden of proving such contention. Respondent next alleges that it did not order the potatoes covered by invoice number 3394. Respondent contends that, pursuant to an agreement with complainant, it accepted only that portion of this shipment which was suitable for chipping purposes, and sent the remainder of the load elsewhere. All of this is disputed by complainant. It is significant that in the investigative stage respondent made no such claims. From the evidence we conclude that respondent bought the potatoes, without any warranty of suitability for chipping, and that respondent accepted the potatoes in this shipment upon arrival. As indicated earlier the jurisdiction of the Secretary does not extend to a contract for bags separate from the contracts for potatoes. However, the evidence indicates that three loads of potatoes, totaling 1,175 bags were shipped by complainant in bags received from respondent and that the reasonable value was 10¢ per bag, or $117.50. Respondent is entitled to credit for these bags. The failure of respondent to pay to complainant $758.19, less $117.50 for the bags used, or $640.69, is in violation of section 2 of the act. Reparation should be awarded complainant in that amount with interest. ORDER Within 30 days from the date of this order, respondent shall pay to complainant, as reparation, $640.69, with interest thereon at the rate of 5 percent per annum from August 1, 1963, until paid. Copies of this order shall be served upon the parties. Cite as 24 A.D. 888 (No. 9924) LACONADO PRODUCE, INC. v. NEM-AR-CO DISTRIBUTING, INC. PACA Docket No. 9539. Decided June 11, 1965. Contract term-"Terminal quality" of lettuce-Good delivery- Where respondent accepted shipment of lettuce by diversion and failed to prove that "terminal quality" of lettuce is same as or equal to U.S. No. 1 grade lettuce or has established meaning and where complainant made good delivery pursuant to good delivery standards, respondent liable for purchase price. Golbus & Golbus, Chicago, Ill., for complainant. Respondent pro se. Decision by Thomas J. Flavin, Judicial Officer PRELIMINARY STATEMENT This is a reparation proceeding under the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. 499a et seq.). A timely complaint was filed in which complainant seeks reparation against respondent in connection with a transaction in interstate commerce involving a carload of lettuce. A copy of the formal complaint and a copy of the Department's report of investigation were served on respondent and respondent filed an answer and counterclaim thereto. Since the amount of damages claimed, either in the formal complaint or in the counterclaim, does not exceed $1,500, the evidence is submitted under the shortened procedure provided in the rules of practice (7 CFR 47.20). Pursuant to this procedure, complainant filed an opening statement and respondent filed an answering statement. Complainant also filed a brief. FINDINGS OF FACT 1. Complainant, Laconado Produce, Inc., is a corporation whose address is P.O. Box 405, Alamosa, Colorado. At the time of the transaction involved herein, complainant was licensed under the act. 2. Respondent, Nem-Ar-Co Distributing Inc., is a corporation whose address is 410 West Maryland Avenue, Phoenix, Arizona. At the time of the transaction involved herein, respondent was licensed under the act. Cite as 24 A.D. 888 3. On August 5, 1963, in the course of interstate commerce, complainant, acting through its sales manager, Leonard O'Day, sold to respondent, through its (respondent's) employee, Barney Reilly, 703 cartons of Colorado lettuce, 2-dozen size, Orbit brand, at an agreed price of $1.25 per carton, f.o.b. Alamosa, Colorado, plus 16¢ per carton cooling charges, or a total of $991.23 for the lot. 4. The 703 cartons of lettuce which are the subject of this proceeding were loaded into car ART 52312 at Alamosa, Colorado, on August 5 and respondent was advised of such action. Thereafter, on the same day, respondent issued a sales confirmation reflecting the details of the transaction, including the notation that the contract destination of the car was Chicago, Illinois, and that the brand of lettuce contained in the car was "Orbit." 5. Complainant, on August 6, 1963, at 4:35 a.m., billed car ART 52312 out of Alamosa, Colorado, to respondent at Chicago, Illinois. The car never arrived at Chicago, however, but was diverted on August 8, 1963, at Decatur, Illinois by respondent to Fort Pitt Tomato & Produce Co. (hereinafter referred to as Fort Pitt) at Pittsburgh, Pennsylvania, on consignment. 6. The shipment arrived in Pittsburgh at 10:45 p.m. on Saturday, August 10, and was placed at the Fort Pitt siding at 11:45 p.m. that same evening. A Federal inspection for condition only was made of the subject lettuce at 12:20 p.m. on Monday, August 12, at Pittsburgh, while car ART 52312 was in the process of being unloaded. The results of that inspection, in relevant part, are as follows: "* * * "Temperature of Product: Doorway at top 46° F., bottom 44° F. "Condition: Heads or portions of heads not affected by decay or Tipburn are fresh and light to good green color. No decay affecting wrapper leaves only. Head leaves: Damage by external Tipburn ranges from 2 to 4 heads per carton, average 11%. Decay ranges from 2 to 17 heads in most cartons, many none, average 21%, Bacterial Soft Rot, advanced stages." 7. The lettuce in car ART 52312 was sold on consignment by Fort Pitt and an account sales, dated August 21, 1963, was Cite as 24 A.D. 888 rendered by this consignee to respondent. Fort Pitt also remitted $301.13 to respondent as the net proceeds realized from the sale of the subject lettuce, which sum in turn was paid to complainant by respondent, without prejudice to complainant's right to make further claims against respondent in connection with this transaction. 8. An informal complaint was filed on September 23, 1963, which was within 9 months after the cause of action herein accrued. CONCLUSIONS Respondent admits that it accepted the shipment of lettuce involved herein. Having done so, it is liable to complainant for the agreed contract price, less provable damages sustained as the result of any breach of contract by complainant. The burden of proving both breach and damages, by a preponderance of the evidence, rests upon respondent as the party asserting same. O'Donnell Fruit Company of Pittsburgh v. Mathew Mercurio, 18 A.D. 1173. Respondent alleges several breaches of contract on the part of complainant, including the breach of an express warranty, purportedly made by O'Day to Reilly, that the lettuce in car ART 52312 was "terminal quality" on the date of sale. Respondent contends that it is recognized by the trade that "terminal quality” of lettuce is equal to, or the same as, lettuce grading U.S. No. 1; that the parties to this contract knew and understood this; but that the subject lettuce failed to meet this requirement of the contract, in breach thereof. Complainant filed no reply to the answer and counterclaim submitted by respondent. Under the rules of practice, however, 7 CFR 47.9 (c), the failure to file a reply is not deemed an admission of the allegations contained in the answer, but is regarded as a denial of such allegations. Assuming, without deciding, that the lettuce was warranted by complainant to be "terminal quality" on the date of sale, as alleged by respondent, we must next determine whether such expression is synonymous with the term "U.S. No. 1 grade." In Mapes Produce Company v. Thomas J. Holt Co., Inc., 24 A.D. 334, respondent raised this identical defense. We pointed out in that case that "terminal quality" is not one of the trade terms and definitions construed in section 46.41 of the regulations in Cite as 24 A.D. 888 effect at the time of the transaction involved in that case. We also pointed out that respondent had the burden of proving, by a preponderance of the evidence, that "terminal quality" lettuce is equal to, or is the same as U.S. No. 1 lettuce. We concluded in the Holt case that respondent had failed to sustain its burden of proving that there was any correlation between the term "terminal quality" and the United States Standards for lettuce. In reviewing the evidence in this case, we come to the conclusion that respondent here has failed to sustain its burden of proving, as in the Holt case, that there is any correlation between the term "terminal quality" and the United States Standards for lettuce, and has also failed to show that there is any established meaning for this term. Respondent, in its answer, alleges also that the subject lettuce failed to meet the good delivery standards for lettuce set forth in section 46.42 of the applicable regulations, in breach thereof, in that the lettuce was abnormally deteriorated both at contract destination in Chicago and at the ultimate destination, Pittsburgh, Pennsylvania. Respondent points to the results of the Federal inspection made of the lettuce in Pittsburgh on August 12 as proof that the shipment would have been abnormally deteriorated at contract destination, had it gone on to Chicago rather than being diverted to Pittsburgh. This argument by respondent is not persuasive, for the evidence indicates that the lettuce, except for its diversion by respondent, would have arrived at Chicago on August 8. The results of the Federal inspection were thus obtained some four days after the lettuce would have arrived in Chicago. Under these circumstances, we consider that the results obtained from the inspection are too remote in time to establish the condition of the lettuce at Chicago, and to support a decision that the shipment did not meet the good delivery standards for lettuce set forth in the regulations, in breach of the contract between the parties. Respondent, in addition to the foregoing, has alleged several breaches of contract by complainant. We have examined these allegations carefully, together with respondent's proof offered in support thereof, and conclude that they are all without merit. Respondent has filed a counterclaim herein, based upon its various allegations of breach of contract by complainant. Since we conclude that respondent has failed to establish any breach of contract by complainant, we also conclude that the counterclaim has no foundation and therefore should be dismissed. |