Case Name: STAPLE COTTON COOPERATIVE ASSN., Plaintiff-Appellee, v. J. A. PICKETT, Sr., Defendant-Appellant
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1975-04-21
Citations: 313 So. 2d 612
Docket Number: No. 4888
Parties: STAPLE COTTON COOPERATIVE ASSN., Plaintiff-Appellee, v. J. A. PICKETT, Sr., Defendant-Appellant.
Judges: Before FRUGÉ, HOOD, MILLER, DO-MENGEAUX, and WATSON, JJ.
Reporter: Southern Reporter, Second Series
Volume: 313
Pages: 612–621

Head Matter:
STAPLE COTTON COOPERATIVE ASSN., Plaintiff-Appellee, v. J. A. PICKETT, Sr., Defendant-Appellant.
No. 4888.
Court of Appeal of Louisiana, Third Circuit.
April 21, 1975.
Rehearing Denied June 18, 1975.
Writ Granted Sept. 25, 1975.
Felix A. Dejean, III, and Patrick C. Morrow, Opelousas, for defendant-appellant.
Voelker, Ragland & Brackin by Frank Voelker, Jr., Lake Providence, for plaintiff-appellee.
Before FRUGÉ, HOOD, MILLER, DO-MENGEAUX, and WATSON, JJ.

Opinion:
WATSON, Judge.
This is an appeal from a judgment ordering delivery of cotton as specific performance of a set of contracts entered into by Staple Cotton Cooperative Association, plaintiff and defendant-in-reconvention, and J. A. Pickett, Sr., defendant and plaintiff-in-reconvention. Staple Cotton is a cooperative which usually acts as agent in selling cotton on behalf of its members at an advantageous price, but which here claims it was the purchaser of defendant's 1973 crop; and Pickett is a farmer who contends that his contracts with Staple Cotton are void or, in the alternative, that his liability is limited to liquidated damages of 5‡ per pound.
We find the decisive issues to be whether the contract between the parties was ambiguous, and if so, what are the result-in§' rights of the parties ?
The facts are not overly complicated. Pickett has twelve relatively small farms in St. Landry Parish on which at least part of his crop consists of cotton. Staple Cotton Cooperative Association is a cooperative based in Greenwood, Mississippi which is principally engaged in the business of acting as agent for its farmer-members in selling their cotton to cotton buyers, both in this country and abroad. According to the witnesses for Staple Cotton, they are able to obtain a better price for their members by joint selling in some form or other than could the individual farmers selling cotton on their own behalf.
In 1972 Pickett was a member of Staple Cotton, and he entered a marketing agreement with Staple Cotton. He had agreed to a "forward sales contract" with a buyer obtained by Staple Cotton, the buyer being W. B. Dunavant & Company, who is not a party to this proceeding. In the 1972 transaction, Staple Cotton acted as agent on behalf of Pickett. The 1972 forms are very similar to the 1973 forms, but Duna-vant was clearly indicated as buyer; Pickett as seller; and Staple Cotton as agent.
In 1973, in the month of March, Staple Cotton sent two sets of documents to Pickett. These were forms prepared and printed by Staple Cotton. Because Pickett had 12 farms, these documents were executed in several copies, there being 12 of the membership and marketing agreements and two of the sale and purchase agreements. Although the two sets of instruments bore different dates, the record re- fleets that they were executed at the same time, as part of one transaction.
Since the documents were executed between the same parties, (Pickett and Staple Cotton) on the same date, and concerned the same object (Pickett's 1973 cotton crop) we hold that they are one contract and must be construed together.
We will not reproduce the instruments in their entirety, but we will summarize them, referring to them in the singular even though there were two of the sale and purchase agreements and 12 of the other instruments. In the preamble the sale and purchase agreement states that it is entered into by Pickett "as producer and seller" and Staple Cotton Cooperative Association "as buyer". The instrument states that seller agrees to sell to buyer his cotton produced in 1973 from the certain identified farms. Various other terms of the sale are included as well as certain prices, the high being 300 per pound, depending on grade and delivery date. In paragraph 3, Staple Cotton Cooperative Association is referred to as "agent". Two other paragraphs make reference to Staple Cotton's capacity. These are as follows:
"6. Seller and Buyer expressly agree that all cotton covered by this contract shall be marketed through Staple Cotton Cooperative Association of Greenwood, Mississippi, under its usual marketing agreement where applicable, with all records to be maintained by them for both Producer and Seller's and Buyer's accounts in the usual manner.
"8. We, the Producer and Seller and the Buyer, with Staple Cotton Cooperative Association acting as agent only, have carefully read and fully understand the terms and provisions of the foregoing contract, which represents the entire agreement between the parties, and understand further that there may be no modification of this agreement except in writing." (Emphasis added)
Significantly, paragraph 6 points out that the cotton shall be marketed through Staple Cotton "under its usual marketing agreement" which we will examine below and in paragraph 8 Staple Cotton is stated to be "acting as agent only" which contradicts the preamble.
The other document is the "application for membership and marketing agreement" which reflects that Pickett applied for membership in the Staple Cotton Cooperative Association, and after reciting the advantages of membership in Staple Cotton, the instrument undertakes to describe the rights and duties of the member. (Staple Cotton is sometimes referred to in the documents as the "Association").
In paragraph 2(a) the Association agrees to buy and the Grower agrees to sell to Staple Cotton, all of his cotton produced during the current year and all subsequent years. However, paragraph 5(a) makes clear that the Association is buying the cotton as agent to sell on behalf of the member with the member to receive the net price. Paragraph 5(a) will be quoted in pertinent part:'
' "The Association agrees to sell such cotton at the best price obtainable by it under prevailing market conditions by one of the methods hereinafter set forth in paragraphs 6(a) and 6(b) to be selected by the grower, and to pay the grower as settlement in full therefor the net amount received therefrom, less freight, insurance, storage and interest, ."
The methods of sale referred to are the "pool option" and the "factor option" which are methods through which the grower's cotton is sold to his advantage.
When these terms of the membership and marketing agreement are considered along with the terms of the sale and purchase agreement where Staple Cotton is identified in both variously as agent and buyer, the contract becomes ambiguous.
The legal relationship between Pickett and Staple Cotton cannot be, as the contract confected by Staple Cotton purported to establish, both vendor-vendee and principal-agent as to Pickett's 1973 crop. The utmost good faith is exacted in all dealings of an agent touching the interest of his principal. Forshay v. Lewis, La. App., 81 So.2d 114. We do not suggest that Staple Cotton was lacking good faith; merely that the "utmost good faith" is not , a quality consistent with the vendor-vendee relationship which Staple Cotton now urges. Staple Cotton could not wear two hats (agent's and buyer's) at the same time or switch them at will.
In other words, Staple Cotton is not clearly identified as an independent buyer of the cotton in these instruments, as now contended in this legal proceeding. The burden of establishing the validity or enforceability of a contract of sale rests upon the party who seeks to establish it. Hebert v. Briley, 295 So.2d 607 (La.App. 3 Cir. 1974), writ refused, La., 300 So.2d 181. Staple Cotton has failed to carry the burden.
The forms were prepared and printed by Staple Cotton and they were sent to Pickett for his signature. The law is settled that a contract containing ambiguities must be construed against the writer of the contract. Monsur v. Thompson, 300 So.2d 655 (La.App. 3 Cir. 1974). Wurzlow v. Placid Oil Company, 279 So.2d 749 (La.App. 1 Cir. 1973); writ refused, La., 282 So.2d 140.
This rule applies to printed form contracts :
"Where there is ambiguity in a printed contract and a court is called upon to interpret their meaning and import, such ambiguity or contradiction is construed against the party who prepared the contract or printed form." Centanni v. A. K. Roy, Inc., 258 So.2d 219 at 222. (La. App. 4 Cir. 1972)
We conclude that Staple Cotton is not entitled to specific performance.
We proceed to consider the resulting rights of the parties.
The membership and marketing agreement sets forth in paragraph 15 the results of the failure on the part of the grower to sell his cotton through Staple Cotton. We will quote sub-paragraph (a):
"Inasmuch as the remedy at law would be inadequate; and inasmuch as it is now and ever will be impracticable and extremely difficult to determine the actual damage resulting to the Association, should the Grower fail so to sell and deliver all of his cotton, the Grower hereby ' agrees to pay to the Association for all cotton delivered, sold, consigned or marketed by or for him other than in accordance with the terms hereof, the sum of five cents per pound as liquidated damages for the breach of this contract; all parties agreeing that this contract is one of a series dependent for its true value upon the adherence of each and all the growers to each and all of the said contracts."
Also, in sub-paragraph (b) the agreement states that the Association shall be entitled to an injunction to prevent breach of the agreement and to a decree of specific performance. Sub-paragraph (c) provides that the grower would be liable for all court costs and for all expenses of travel and other expenses as well as attorney's fees incurred by Staple Cotton.
Of course, the specific performance as contemplated by sub-paragraph 15(b) is the performance described in the membership and marketing agreements as construed in conjunction with the purchase and sales agreement. This specific performance would be the selling of his cotton by Pickett through Staple Cotton (as agent) .to some third party at the best price obtainable with the net proceeds going to Pickett. This is not the specific performance asked by Staple Cotton as plaintiff in this lawsuit.
The capacity of Staple Cotton as agent is pointed out by the testimony of some of the witnesses. H. L. Hodges, assistant general manager and treasurer of Staple Cotton, testified that:
" . . .we act generally as the member's agent in the sale of his cotton." (TR. 80)
But the contention of Staple Cotton in the present litigation is as the witness Hodges testified:
"Q. But in this case it bought the cotton itself?
A. It bought the cotton itself, Staple Cotton is the principal.
Q. So it didn't act as agent ?
A. That's right.
Q. Regardless of what the contract says ?
A. Correct." (TR. 82)
The difficulty of this interpretation by Staple Cotton is emphasized by the testimony of house counsel for Staple Cotton, Mr. Robert E. Dilatush, Jr. when he stated that:
"Actually when we are the buyer parts of this thing I presume would be inapplicable as to certain interpretations." (TR. 110)
However, the writer of a contract is not entitled to consider inapplicable certain portions of the contract as he deems expedient.
Therefore, we conclude that Staple Cotton has no right to require specific performance of the contract by requiring the delivery of the cotton from Pickett to Staple Cotton. There is no showing that Staple Cotton has sold the cotton as agent on behalf of Pickett to anyone at the most advantageous price obtainable for Pickett. On the other hand, the testimony in the record is clear that Pickett realized that by failing to sell the cotton through Staple Cotton he would incur a penalty of 5‡ per pound. As he testified:
"Q. But nobody ever told you that you could avoid the contract for five cents a pound ?
A. Well, they didn't have to tell me, all I could do was read. I went to school a little bit and I learned how to read and I read what was on the contract and I understood what was on the contract.
Q. So it is your testimony that the only thing that you are going by is
A. Is what I read.
Q. —what you read.
A. That's all I can go by. In fact, part of the contract says that's all we could go by is what's written on the contract." (TR. 121)
Although Pickett by his reconven-tional demand asks that the entire transaction be declared void because of the ambiguities in the contract, we find that he clearly understood his penalty obligation if he failed to deliver his cotton to Staple Cotton. As plaintiff-in-reconvention Pickett seeks a declaratory judgment to establish the rights of the parties. LSA-C.C.P. art. 1871 et seq. We have concluded that his obligation should be recognized to pay liquidated damages of 50 per pound as provided in the membership and marketing agreement. We find no merit to Staple Cotton's claim that it is entitled to damages beyond the 50 per pound.
It is therefore ordered, adjudged and decreed that there be judgment dismissing the demands of Staple Cotton Cooperative Association for specific performance and for damages, but that a declaratory judgment be and it is hereby entered interpreting the sales and purchase agreements and the membership and marketing agreement entered into between Staple Cotton Cooperative Association and J. A. Pickett, Sr. to require the payment by J. A. Pickett, Sr. to Staple Cotton Cooperative Association of the sum of 50 per pound as liquidated damages for all cotton grown during the crop year 1973 in St. Landry Parish on the farms cultivated by J. A. Pickett, Sr. and identified as ASC Farm Serial Nos.
G-228
G-7S01
G-193
G-132
G-58
G-61
G-0515
G-140
G-0520
G-272
G-271
G-1504
Costs of these proceedings, both in the trial court and on appeal, will be ordered paid half by J. A. Pickett, Sr. and half by Staple Cotton Cooperative Association.
Reversed and rendered.
HOOD, J., dissents and assigns written reasons.
FRUGÉ, J., respectfully dissents for same reasons assigned by Judge HOOD in his written reasons as a dissent.
. The Sale and Purchase Agreements entered into by the parties in. 19,72 and 1973 were referred to by some of the witnesses as "Forward Sale Contracts," because the entire cotton crop from each farm is sold and the price is agreed upon before the cotton is harvested or produced. The evidence shows that it is a common practice in that business to sell cotton crops before the cotton is produced by means of such "Forward Sale Contracts." Such a practice assures the grower of receiving the agreed price for his cotton after it is harvested, and it assures the purchaser of obtaining the cotton at that price, regardless of market fluctuations in the price of cotton.
. These were forwarded in one envelope under one cover letter, which reads as follows:
"March 13,1973
"J. A. Pickett, Sr.
Box 117
Morrow, Louisiana 71356
"Dear Mr. Pickett:
"We are enclosing the Sales and Purchase Agreement's covering your 1973 cotton crop and ask that you sign all copies. The blue copies are to be retained for your files. Please return the original's and green copies to our office in Winnsboro.
"We are also enclosing Marketing Agreement's and ask that you check these forms for correctness, sign, keep the yellow copies for your records and return along with the above contract.
' "Thank you for the opportunity of handling your cotton again this season.
"Yours truly,
STAPLOOTN
/s/ Mike Kilpatrick
Mike Kilpatrick
Manager"