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November 27, 1957


The opinion of the court was delivered by: John E. Miller, District Judge.

This is an action by the plaintiff, Albers Milling Company, to recover the sum of $8,761.10 allegedly due it by defendants for poultry feed purchased by defendants at various times from April 17, 1956, through January 31, 1957.

In their answer defendants deny being indebted to plaintiff, and by way of counterclaim allege that they are entitled to recover the sum of $6,868.56 from plaintiff. Defendants' counterclaim is based upon two contentions:

First, defendants allege that one of the flocks of turkeys involved in this action was, in fact, owned by the plaintiff, and the plaintiff was obligated to pay for the turkey poults, feed, and medication, and in addition to pay 20 cents per poult to defendants for furnishing the brooder house, feeders, waterers, and labor necessary to brood the poults ready for range. Defendants allege that the plaintiff did not comply with its agreement.

Second, defendants allege that the plaintiff financed a second flock of turkeys and furnished defendants moldy feed, which caused the turkeys to be sick and inferior and prevented plaintiff from making a profit on the sale of said turkeys.

The plaintiff filed a reply to defendants' counterclaim denying the allegations contained therein, and upon the issues as made by the pleadings the case was tried to the Court without a jury on September 12, 1957. At the conclusion of the trial the Court took the case under advisement pending receipt of briefs from the parties in support of their respective contentions. The briefs have been received and the Court, having considered the pleadings, evidence, and briefs of the parties, now makes and files herein its Findings of Fact and Conclusions of Law, separately stated.

Findings of Fact


The plaintiff is a Delaware corporation authorized to do, and doing, business in the State of Arkansas. The defendants are husband and wife, and are citizens and residents of Green Forest, Carroll County, Arkansas. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.


Prior to 1956 the defendant, J.P. Donaldson, had been engaged in the poultry business and more particularly in the raising of turkeys. In early January, 1956, Donaldson was contacted by Everett Farney, a field representative and salesman for plaintiff, and by Clyde Johnson, an authorized feed dealer of plaintiff in Green Forest, Arkansas. As a result of this meeting, Donaldson and his wife, Gwen Donaldson, on January 12, 1956, executed an "Application for Turkey Financing to Albers Milling Company". This application contained detailed information about Donaldson, including a financial statement. The application indicated that Donaldson contemplated purchasing 8,000 "large whites" on March 15, 1956, and 8,000 "B.B. bronze" on May 12, 1956. Among other things the application provided:

"It Is Understood That:

    "As security for his account the grower will give
  Albers Milling Company a First Lien Chattel Mortgage
  covering all turkeys owned.
    "All monies received from sale of turkeys will be
  paid to Albers Milling Company immediately until
  account is paid in full. Checks received from sale of
  turkeys to be made out jointly by buyer to Albers
  Milling Company and grower.
    "The relationship between applicant and Albers
  Milling Company shall be that of debtor and creditor.
  Applicant to have the sole responsibility for the
  raising and sale of birds. Albers Milling Company not
  to have any interest in profits of applicant and is
  not to share any losses sustained.
    "This application when accepted by Albers Milling
  Company and Chattel Mortgage executed by applicant,
  shall constitute the entire agreement of the parties
  hereto, and no agent of either party hereto has
  authority to alter or change the terms hereof and
  neither party is or shall be bound by any statement
  or representation not in conformity herewith.
    "This financial information and application for
  Turkey Feed Financing is given for the purpose of
  obtaining merchandise from Albers Milling Company on
  credit, it being intended that the seller shall be
  entitled to rely on said financial statement in
  extending credit to the buyer."

On February 13, 1956, Robert A. Nichols, plaintiff's credit manager, wrote defendants as follows:

"Dear Mr. & Mrs. Donaldson:

    "We are very happy to advise that we have today
  approved your application for turkey financing for
  the 1956 season.
    "Our acceptance is based on the putting in of 8,000
  Broad Whites to be sold as broilers at 14 to 16
  weeks. A second group of 8,000 Bronze will be grown
  to maturity. We would appreciate from you for our
  files a written confirmation from the processor
  stipulating that he will take the Broad Whites by the
  14th to 16th weeks.
    "In the event you are unable to get a guaranteed
  market for the early Whites, it is our understanding
  that you propose to feed one flock of 10,000 Bronze
    "We appreciate the opportunity of working with you
  in '56 and sincerely trust that this season will be
  very successful for you."

On March 30, 1956, defendants executed a chattel mortgage to plaintiff upon "7,000 Thompson Broad White turkeys" which had been hatched on the previous day. The chattel mortgage covered the 7,000 white turkeys and "all future replacements, increase, products, and proceeds thereof". The mortgage further provides that it is security for any and all future advances made by the mortgagee to the mortgagor before June 30, 1957.


The above-mentioned 7,000 white poults were purchased by Donaldson from the Shelter Ridge Turkey Hatchery when the poults were one day old. Donaldson brooded the white turkeys until they were ready for the range, and at that time Donaldson requested Farney to remove the turkeys from the brooder house. It was Donaldson's understanding, based on conversations with Farney, that plaintiff was obligated to dispose of the turkeys and that he (Donaldson) was to receive 20 cents per head for brooding the turkeys. Farney attempted to find a buyer for the turkeys, but it is not clear from the evidence whether he was doing this as a result of an oral agreement between Donaldson and him or whether he was merely doing it as an accommodation to Donaldson.

In any event, a buyer was not found for the white turkeys at that time, and subsequently the white turkeys were sold on September 10 and September 12, 1956, for the total sum of $19,715.40. This money was paid to plaintiff and credited on defendants' account.


On June 15, 1956, Donaldson purchased 8,000 bronze poults. In raising these bronze turkeys Donaldson encountered considerable difficulty with disease at various stages of growth of the turkeys. He sent some of the turkeys to a veterinarian in Springfield, Missouri, for posting (autopsy) and diagnosis. On July 12, 1956, the veterinarian was of the opinion that the turkeys had mycosis and enteritis. On August 10 he was of the opinion that some mold infection was still present. On September 2, 1956, he found no mold infection in the turkeys but was of the opinion that they were not uniform in size and that some were stunted. Enteritis can be a primary disease and the cause of enteritis is not known. Mycosis is a type of disease which can be caused by mold, stagnant water, litter, etc. The most common cause of mycosis is litter around the water troughs. The type of mold found by the veterinarian was the type that grows on the ground, in water, or the air. The mold may be present in the turkeys' feed.

During the time Donaldson was raising the bronze turkeys some of the feed purchased by Donaldson from plaintiff's dealer, Clyde Johnson, was found to be caked and appeared to be moldy. It was not clear from the evidence how much of the feed was affected in that manner. The fact that feed is caked does not mean that mold is present.

There was evidence that some of the feed handled by Johnson was stored on a moist concrete floor, and it is possible that ...

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