Case Title: Tongish v. Thomas

Citation: 251 Kan. 728, 840 P.2d 471

Docket Number: 66,771

State: kansas

Court: Kansas Supreme Court

Date: 1992-10-30T00:00:00Z

Document:
251 Kan. 728 (1992)
840 P.2d 471
DENIS V. TONGISH, Appellee,
v.
DANNY THOMAS, d/b/a NORTHWEST SEED, Defendant, and DECATUR COOP ASSOCIATION, Third-Party Intervenor/Appellant.
No. 66,771

Supreme Court of Kansas.
Opinion filed October 30, 1992.
Charles A. Peckham, of Brown, Creighton & Peckham, of Atwood, argued the cause and was on the briefs for third-party intervenor/appellant.
H. Scott Beims, of Lewis & Beims, of Atwood, argued the cause and was on the briefs for appellee.
H. David Starkey, of Lowe, Starkey & Gatz, of Colby, was on the brief for amicus curiae Kansas Grain and Feed Association.
The opinion of the court was delivered by
McFARLAND, J.:
This case presents the narrow issue of whether damages arising from the nondelivery of contracted-for sunflower seeds should be computed on the basis of K.S.A. 84-1-106 or *729 K.S.A. 84-2-713. That is, whether the buyer is entitled to its actual loss of profit or the difference between the market price and the contract price. The trial court awarded damages on the basis of the buyer's actual loss of profit. The Court of Appeals reversed the judgment, holding that the difference between the market price and the contract price was the proper measure of damages (Tongish v. Thomas, 16 Kan. App.2d 809, 829 P.2d 916 [1992]). The matter is before us on petition for review.
The pertinent facts are as follows. Denis Tongish entered into a contract on April 28, 1988, with the Decatur Coop Association (Coop) where Tongish agreed to grow 160 acres of sunflower seeds, said crop to be purchased by Coop at $13 per hundredweight for large seeds and $8 per hundredweight for small seeds. By agreement, the acreage was subsequently reduced to 116.8 acres. The crop was to be delivered in increments of one-third by December 31, 1988, March 31, 1989, and May 31, 1989.
Coop had a contract to deliver the seeds purchased to Bambino Bean & Seed, Inc. Coop was to be paid the same price it paid the farmers less a 55 cent per hundredweight handling fee. Coop's only anticipated profit was the handling fee.
In October and November 1988, Tongish delivered sunflower seeds to Coop. In January, a dispute arose over the amount of dockage charged against Tongish's seeds. Tongish's seeds were of higher quality than those of many other farmers selling to Coop, and Coop's practice of commingling seeds prior to sampling was disadvantageous to Tongish. This was resolved by Coop issuing an additional check to Tongish reflecting a lower dockage charge.
Due to a short crop, bad weather, and other factors, the market price of sunflower seeds in January 1989 was double that set forth in the Tongish/Coop contract. On January 13, Tongish notified Coop he would not deliver any more sunflower seeds.
In May 1989, Tongish sold and delivered 82,820 pounds of sunflower seeds to Danny Thomas for approximately $20 per hundredweight. Tongish was to receive $14,714.89, which was $5,153.13 more than the Coop contract price. Thomas paid for approximately one-half of the seeds. Tongish brought this action to collect the balance due. Thomas paid the balance of $7,359.61 into court and was ultimately dismissed from the action.
*730 Meanwhile, Coop intervened in the action, seeking damages for Tongish's breach of their contract. Following a bench trial, the district court held that Tongish had breached the contract with no basis therefor. Damages were allowed in the amount of $455.51, which was the computed loss of handling charges. Coop appealed from said damage award. The Court of Appeals reversed the district court and remanded the case to the district court to determine and award damages pursuant to K.S.A. 84-2-713 (the difference between the market price and the contract price).
The analyses and rationale of the Court of Appeals utilized in resolving the issue are sound and we adopt the following portion thereof:
At first blush, the result reached herein appears unfair. However, closer scrutiny dissipates this impression. By the terms of the contract Coop was obligated to buy Tongish's large sunflower seeds at $13 per hundredweight whether or not it had a market for them. Had the price of sunflower seeds plummeted by delivery time, Coop's obligation to purchase at the agreed price was fixed. If loss of actual profit pursuant to K.S.A. 84-1-106(1) would be the measure of damages to be applied herein, it would enable Tongish to consider the Coop contract price of $13 per *735 hundredweight plus 55 cents per hundredweight handling fee as the "floor" price for his seeds, take advantage of rapidly escalating prices, ignore his contractual obligation, and profitably sell to the highest bidder. Damages computed under K.S.A. 84-2-713 encourage the honoring of contracts and market stability.
As an additional argument, Tongish contends that the application of K.S.A. 84-2-713 would result in the unjust enrichment of Coop. This argument was not presented to the trial court.
Even if properly before us, the argument lacks merit. We discussed the doctrine of unjust enrichment in J.W. Thompson Co. v. Welles Products Corp., 243 Kan. 503, 758 P.2d 738 (1988), stating:
Before us is which statutory measure of damages applies. This is not a matter of one party conferring a benefit upon another.
The judgment of the Court of Appeals reversing the district court and remanding the case for the determination and award of damages pursuant to the provisions of K.S.A. 84-2-713 is affirmed. The judgment of the district court is reversed.