Source: http://cisgw3.law.pace.edu/cases/050523u1.html
Timestamp: 2017-04-29 23:27:35
Document Index: 252446172

Matched Legal Cases: ['§ 23', 'Art. 35', 'Art. 67', 'Art. 36', 'Art. 66', 'Art. 7']

United States 23 May 2005 Federal Appellate Court [7th Circuit] (Chicago Prime Packers, Inc. v. Northam Food Trading Co.) Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography CISG CASE PRESENTATION
United States 23 May 2005 Federal Appellate Court [7th Circuit] (Chicago Prime Packers, Inc. v. Northam Food Trading Co.)
[Cite as: http://cisgw3.law.pace.edu/cases/050523u1.html] Primary source(s) of information for case presentation: Case text
DATE OF DECISION: 20050523 (23 May 2005) JURISDICTION: United States [federal court] TRIBUNAL: U.S. Court of Appeals (7th Circuit) [federal appellate court] JUDGE(S): Flaum (Chief Judge), Evans and Williams (Circuit Judges) CASE NUMBER/DOCKET NUMBER: 04-2551
CASE NAME: Chicago Prime Packers, Inc. v. Northam Food Trading Co. CASE HISTORY: 1st instance U.S. District Court 29 May 2003; 2d instance U.S. District Court 21 May 2004 [affirmed]
APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issue: Article: 35 [Also cited: Articles 7(2) ; 36(1) ; 66 ; 67(1) ] Classification of issues using UNCITRAL classification code
35B [Conformity of goods to contract (requirements imposed by law): burden of proof]
(b) Other abstracts English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1032&step=Abstract>
CITATIONS TO TEXT OF DECISION Original language (English): Text presented below; see also 408 F.3d 894; 2005 WL 1243344 (7th Cir. (Ill.)); 2005 U.S. App. LEXIS 9355
Translation: Unavailable CITATIONS TO COMMENTS ON DECISION English: Keith A. Rowley, "The Convention on the International Sale of Goods", in: Hunter ed., Modern Law of Contracts, Thomson/West (03/2007) §§ 23:25, 23:32, 23:45
French: Claude Witz, Recueil Dalloz (22 February 2007) 535 Go to Case Table of Contents Case text
Chicago Prime Packers, Inc. v.
Northam Food Trading Co.
No. 04-2551
Before Flaum, Chief Judge, and Evans and
Flaum, Chief J.
A.	Burden of Proof
B.	Conformity of the Ribs at the Time of Transfer
Defendant-appellant Northam Food Trading
Company ("Northam") contracted with plaintiff-appellee Chicago Prime Packers, Inc. ("Chicago
Prime") for the purchase of 40,500 pounds of
pork back ribs. Following delivery, Northam
refused to pay Chicago Prime the contract price,
claiming that the ribs arrived in an "off condition."
Chicago Prime filed this diversity action for
breach of contract against Northam. Following a
bench trial, the district court awarded Chicago
Prime $178,200.00, the contract price, plus
prejudgment interest of $27,242.63. Northam
appeals the award. For the reasons stated herein,
The district court found the following facts based
on the stipulations of the parties and the evidence
presented at trial. Because neither party contends
that any of the findings of fact in this section are
"clearly erroneous," we accept them as
established for purposes of this appeal. See
Chicago Prime, a Colorado corporation, and
Northam, a partnership formed under the laws of
Ontario, Canada, are both wholesalers of meat
products. On March 30, 2001, Chicago Prime
contracted to sell Northam 1,350 boxes (40,500
pounds) of pork back ribs. Northam agreed to
pay $178,200.00 for the ribs, with payment due
within seven days of receipt of the shipment. The
contract also set forth a description of the ribs,
the price, and the date and location for pick-up.
Chicago Prime purchased the ribs specified in the
contract from meat processor Brookfield Farms
("Brookfield"). When a pork loin is processed at
Brookfield, it is broken into various segments,
one of which is the back rib. After processing,
Brookfield packages back ribs "flat"
(horizontally), layer by layer, in 30-pound boxes.
The ribs are placed first in a blast freezer and
then transferred to an outside freezer where they
remain until shipped.
In addition to its own freezers, Brookfield stored
the ribs at issue in this case in as many as two
independent cold storage facilities: B & B
Pullman Cold Storage ("B & B"), and Fulton
Market Cold Storage ("Fulton"). According to
Brookfield's temperature logs and quality control
records for its own facilities, the ribs were
maintained at acceptable temperatures and were
processed and maintained in accordance with
Brookfield's procedures. Records presented at
trial also indicate that the ribs were stored at or
below acceptable temperatures during the entire
time they were in B & B's possession. The
parties offered no evidence regarding storage of
the ribs at Fulton.
On April 24, 2001, Brown Brother's Trucking
Company ("Brown"), acting on behalf of
Northam, picked up 40,500 pounds of ribs from
B & B. Chicago Prime, the seller, never
possessed the ribs. When Brown accepted the
shipment, it signed a bill of lading, thereby
acknowledging that the goods were "in apparent
good order." The bill of lading also indicated,
however, that the "contents and condition of
contents of packages [were] unknown." The next
day, Brown delivered the shipment to Northam's
customer, Beacon Premium Meats ("Beacon").
Like Chicago Prime, Northam, the buyer, never
possessed the ribs. Upon delivery, Beacon
signed a second bill of lading acknowledging that
it had received the shipment "in apparent good
order," except for some problems not at issue in
Under the terms of the contract, Northam was
obligated to pay Chicago Prime by May 1, 2001.
Sandra Burdon, who negotiated the contract on
behalf of Northam, testified that, on that date,
Northam had no basis for withholding payment.
In fact, she thought that a check had been sent to
Chicago Prime prior to May 1, 2001, but
subsequently discovered that the check had not
been mailed. On May 2, 2001, Chicago Prime,
not having heard from Northam, demanded
On May 4, 2001, Beacon began "processing" a
shipment of ribs and noticed that the product
appeared to be in an "off condition." Beacon
asked Inspector Ken Ward of the United States
Department of Agriculture ("USDA") to examine
the product. Ward inspected the ribs at the
Beacon facility, found that the meat "did not look
good," and ordered Beacon to stop processing it.
Ward then placed a "U.S. Retained" tag on the
shipment, noting "yellow, green, temp[erature],
abused, spoiled," and had the ribs placed in
Beacon's freezer. The same day, Northam and
Chicago Prime learned of a potential problem
Inspector Ward returned to Beacon on May 7
and 8, 2001 and examined both frozen and
thawed samples of the product. On May 23,
2001, Dr. John Maltby, Ward's supervisor, also
conducted an on-site inspection of the ribs. When
Dr. Maltby arrived, Beacon employees were
"reworking" the ribs, trying to salvage any good
portions. Dr. Maltby reviewed Beacon's shipping
records and temperature logs from the relevant
time period and found no "anomalies" or "gaps."
In addition, he examined approximately 20 cases
of ribs and prepared a written report. According
to this report, Beacon gave Dr. Maltby two
pallets of frozen ribs untouched by Beacon, as
well as some of the product that Beacon had
reworked. Looking inside the intact pallets, Dr.
Maltby found ribs stacked both horizontally and
vertically, with some frozen individually and
others frozen together in larger units. The
individually frozen ribs were "putrid," while the
ribs frozen in larger units were "good."
Examining samples of the thawed, reworked
product, Dr. Maltby found putrid, green, slimy
ribs, but no sign of temperature abuse. He
concluded in his report that the inspected product
was rotten, that it arrived at Beacon in a rotten
condition, and that it appeared to have been
"assembled from various sources." Dr. Maltby
also concluded that there was no opportunity for
salvage and that all of the product should be
condemned. The same day, the USDA issued a
Notice of Receipt of Adulterated or Misbranded
Product and the entire shipment of 1,350 boxes
of ribs was condemned. After Northam informed
it of the results of Dr. Malby's inspection,
Chicago Prime continued to demand payment
and eventually filed suit.
At trial, it was undisputed that the parties entered
into a valid and enforceable contract for the sale
and purchase of ribs, that Chicago Prime
transferred a shipment of ribs to a trucking
company hired by Northam, and that Northam
had not paid Chicago Prime for the ribs.
Northam argued that it was relieved of its
contractual payment obligation because the ribs
were spoiled when its agent, Brown, received
them. The district court concluded that it was
Northam's burden to prove non-conformity, and
held that Northam had failed to prove that the
ribs from Chicago Prime were spoiled at the time
of transfer to Brown. The court went on to state
alternative holdings in favor of Chicago Prime
based on its finding that, "even if the ribs were
spoiled at the time of transfer, Northam ... failed
to prove that it examined the ribs, or caused them
to be examined, within as short a period as is
practicable under the circumstances, or that it
rejected or revoked its acceptance of the ribs
within a reasonable time after it discovered or
should have discovered the alleged non-conformity." Chi. Prime Packers, Inc. v.
Northam Food Trading Co., 320 F.Supp.2d
702, 711 (N.D.Ill.2004). The court awarded
Chicago Prime the contract price of
$178,200.00, plus prejudgment interest of
The district court held, and the parties do not
dispute, that the contract at issue is governed by
the United Nations Convention on Contracts for
the International Sale of Goods ("CISG"),
reprinted at 15 U.S.C.A. Appendix (West
1997), a self-executing agreement between the
United States and other signatories, including
Canada. Under the CISG, "[t]he seller must
deliver goods which are of the quantity, quality
and description required by the contract," and
"the goods do not conform with the contract
unless they ... [a]re fit for the purposes for which
goods of the same description would ordinarily
be used." CISG Art. 35(1)-(2). The risk of loss
passes from the seller to the buyer when the
goods are transferred to the buyer's carrier.
CISG Art. 67(1). While the seller is liable "for
any lack of conformity which exists at the time
when risk passes to the buyer," CISG Art. 36(1),
the buyer bears the risk of "[l]oss of or damage
to the goods after the risk has passed to the
buyer ... unless the damage is due to an act or
omission of the seller." CISG Art. 66. In other
words, Chicago Prime is responsible for the loss
if the ribs were spoiled (nonconforming) at the
time Northam's agent, Brown, received them
from Chicago Prime's agent, Brookfield, while
Northam is responsible if they did not become
spoiled until after the transfer.
The parties agree that the main factual issue
before the district court was whether the ribs
were spoiled at the time of transfer. On appeal,
Northam makes two arguments: (1) that the
district court erred in placing upon Northam the
burden of proving that the ribs were spoiled at
the time of transfer, and (2) that the evidence
presented at trial does not support the district
court's finding that the ribs became spoiled after
Brown received them from Brookfield.
Northam asserts that Chicago Prime should bear
the burden of proving that the ribs were not
spoiled at the time of transfer because the quality
of the goods is an essential element of Chicago
Prime's breach of contract claim. Chicago Prime
counters that nonconformity is an affirmative
defense for which Northam, as the defendant-buyer, has the burden of proof. Proper
assignment of the burden of proof is a question of
law that we review de novo. Estate of Kanter v.
Comm'r of Internal Revenue, 337 F.3d 833,
851 (7th Cir.2003), rev'd on other grounds,
Ballard v. Comm'r of Internal Revenue,
___U.S. ___, 125 S.Ct. 1270, 161 L.Ed.2d 227
(Mar. 7, 2005).
The CISG does not state expressly whether the
seller or buyer bears the burden of proof as to
the product's conformity with the contract.
Because there is little case law under the CISG,
we interpret its provisions by looking to its
language and to "the general principles" upon
which it is based. See CISG Art. 7(2); see also
1024, 1027- 28 (2d Cir.1995). The CISG is the
international analogue to Article 2 of the Uniform
Commercial Code ("UCC"). Many provisions of
the UCC and the CISG are the same or similar,
and "[c]aselaw interpreting analogous provisions
of Article 2 of the [UCC], may ... inform a court
where the language of the relevant CISG
provision tracks that of the UCC." Delchi
Carrier SpA, 71 F.3d at 1028. "However, UCC
caselaw 'is not per se applicable." ' Id. (quoting
Orbisphere Corp. v. United States, 726
F.Supp. 1344, 1355 (Ct. Int'l Trade 1989)).
A comparison with the UCC reveals that the
buyer bears the burden of proving non-conformity under the CISG. Under the UCC, the
buyer may plead breach of the implied warranty
of fitness for ordinary purpose as an affirmative
defense to a contract action by the seller for the
purchase price. See Comark Merch., Inc. v.
Highland Group, Inc., 932 F.2d 1196, 1203
(7th Cir.1991); Alberts Bonnie Brae, Inc. v.
Ferral, 188 Ill.App.3d 711, 135 Ill.Dec. 926,
544 N.E.2d 422, 423 (Ill.App.1989); see also
77A CORPUS JURIS SECUNDUM SALES �
287 (2004) ("[T]he buyer, when sued for the
purchase price, may set up a breach of warranty
as a defense to the seller's action."). In such an
action it is the defendant-buyer's burden to prove
the breach of the warranty. See Comark Merch.,
932 F.2d at 1203; Alberts Bonnie Brae, 135
Ill.Dec. 926, 544 N.E.2d at 424-25.
Section 2-314 of the UCC provides that a
warranty that goods are "fit for the ordinary
purpose for which such goods are used" is
implied unless the contract states otherwise.
Mirroring the structure and content of this
section, Article 35(2) of the CISG provides that
unless the contract states otherwise, "goods do
not conform with the contract unless they ... [a]re
fit for the purposes for which goods of the same
description would ordinarily be used." See
RALPH H. FOLSOM, 1 INTERNATIONAL
BUSINESS TRANSACTIONS � 1.15, at 39
(2d ed. 2002) (the CISG's approach "produces
results which are comparable to the 'warranty'
structure of the UCC."). Accordingly, just as a
buyer-defendant bears the burden of proving
breach of the implied warranty of fitness for
ordinary purpose under the UCC, under the
CISG, the buyer-defendant bears the burden of
proving non-conformity at the time of transfer.
See Larry A. DiMatteo et al., The Interpretive
Turn in International Sales Law: An Analysis
of Fifteen Years of CISG Jurisprudence, 24
NW. J. INT'L L. & BUS. 299, 400 (2004)
(Under the CISG, "[t]he buyer is allocated the
burden of proving that the goods were defective
prior to the expiration of the seller's obligation
point."); see also FOLSOM, 1
INTERNATIONAL BUSINESS TRANSACTIONS � 1.15, at 41. The district
court was correct to conclude that Northam
bears the burden of proving that the ribs were
spoiled at the time of transfer.
B. Conformity of the Ribs at the Time of
The district court held that Northam failed to
prove that the ribs were spoiled, or
nonconforming, at the time of transfer. First, the
court found that other evidence undermined Dr.
Maltby's testimony that the ribs were rotten when
they arrived at Beacon: "Chicago Prime points out several problems
with Northam's reliance on Dr. Maltby's
conclusion. Most significantly, neither Dr.
Maltby nor anyone else could confirm that the
meat Dr. Maltby inspected was in fact the
product that was sold to Northam by Chicago
Prime, and evidence was produced at trial to
suggest that they were not the same ribs. Even
though the rib boxes were labeled with
Brookfield establishment numbers, the
evidence showed that Beacon had purchased
and received other loads of ribs originating
from Brookfield prior to April 25, 2001.
Furthermore, some of the ribs examined by Dr.
Maltby (from one of the Intact Pallets) were
stacked both horizontally and vertically.
Brookfield packages its loin back ribs only
horizontally. Dr. Maltby had no personal
knowledge of how or where the meat was
stored from April 25, 2001 to May 23, 2001,
and the first time any government inspector
viewed the meat was on May 4, 2001.
According to Dr. Maltby, loin back ribs, if kept
at room temperature, could spoil in five to
seven days. Surprisingly, Northam did not
present any witness affiliated with Beacon to
address those issues." Chi. Prime Packers,
320 F.Supp.2d at 710 (citations omitted). Next, the district court found that three witnesses
had credibly testified that "the ribs delivered by
Brookfield were processed and stored in
acceptable conditions and temperatures from the
time they were processed until they were
transferred to Northam on April 24, 2001." Id.
Despite Northam's attempts to discredit the
testimony of these witnesses by pointing to
deficiencies in Brookfield's record-keeping during
the relevant period, the district court found
"nothing in the evidence demonstrating that
Brookfield, B & B or Fulton did anything
improper with respect to the ribs or that the ribs
were spoiled prior to being transferred to
Northam." Id. Based on these factual findings, the
district court concluded that Northam had not
met its burden of demonstrating that the ribs were
spoiled at the time of transfer. Id. at 711.
By highlighting Dr. Maltby's testimony and
potential gaps in Chicago Prime's evidence,
Northam suggests that the opposite holding is
also supportable. This, however, is not the
correct inquiry. On appeal from a bench trial, we
will not set aside the factual conclusions of the
district court "unless clearly erroneous."
Fed.R.Civ.P. 52(a). "Under this standard, one
who contends that a finding is clearly erroneous
has an exceptionally heavy burden to carry on
appeal." Spurgin-Dienst v. United States, 359
F.3d 451, 453 (7th Cir.2004). This is especially
true when the appellant argues that the district
court erred in crediting or discrediting a witness's
testimony. See id.
Northam argues that the district court erred in
discrediting Dr. Maltby's testimony, and contends
that Dr. Maltby's conclusion that the ribs were
rotten before the transfer should be
determinative. Even if the district court could
have given Dr. Maltby's conclusion more weight,
however, Northam has not shown that the court
clearly erred in finding the evidence undermining
his conclusion to be more persuasive.
The evidence supporting Northam's position was
not so overwhelming that it was clear error to find
in favor of Chicago Prime. Northam offered no
credited evidence showing that the ribs were
spoiled at the time of transfer or excluding the
possibility that the ribs became spoiled after the
transfer. In addition, it presented no evidence that
Brookfield stored the ribs in unacceptable
conditions that could have caused them to
become spoiled before the transfer. Finally,
Northam did not present a witness from Beacon
to respond to the evidence suggesting that the
ribs examined by Dr. Maltby were not those sold
to Northam by Chicago Prime. Upon this record,
the district court did not clearly err in finding that
Northam did not meet its burden of proof as to
its affirmative defense of nonconformity.
Because we hold that the district court correctly
assigned to Northam the burden of proving
nonconformity and did not clearly err in finding
that Northam had not met this burden, we need
not reach the district court's alternative holdings.
We AFFIRM the district court's award to
Chicago Prime.