Facts
- In March 1994, Paoli Popcorn Co. agreed to buy Stan Smith’s 1994 popcorn crop for $0.10 per pound.
- Smith harvested the crop in late September/early October 1994 and stored it in grain bins.
- During harvest, moisture and field conditions led to quality problems; portions of the popcorn were contaminated (described in the record as dirt, fungus, or smut).
- Paoli’s agent, Tom Harmon, inspected the popcorn and stated it would be difficult to market due to its quality.
- From September 1994 through April 1995, Harmon and Smith discussed whether the popcorn was marketable; in April 1995, Paoli formally rejected the popcorn.
- After rejection, Smith sought to resell by contacting potential buyers, sending samples, and requesting bids; he included samples from the contaminated portion so bidders would see the worst condition of the crop.
- Three companies initially bid $0.05 per pound. Smith negotiated for a higher price, including negotiations with Paoli.
- Colorado Cereal, Inc. bid $0.06 per pound; Paoli countered at $0.0625 per pound, but negotiations with Paoli failed. Smith sold to Colorado Cereal for $0.06 per pound.
- Smith sued Paoli for damages based on the difference between the contract price and the resale price.
- This appeal followed a remand from an earlier Nebraska Supreme Court decision in the same dispute; on remand, a jury returned a verdict for Smith for $31,175.19, and Paoli appealed again, focusing on damages-related jury instructions.
Issues
- Whether the trial court committed reversible error in instructing the jury on the measure of damages and market price in a seller’s UCC action after a buyer’s wrongful rejection.
- Whether the court’s refusal to give Paoli’s requested instructions on damages/market price/resale concepts required reversal because it prejudiced Paoli.
Decision
- The Nebraska Supreme Court affirmed the judgment for Smith and left the $31,175.19 jury verdict intact.
- Reading the instructions as a whole, the court concluded they correctly stated the governing law, were not misleading, and covered the issues supported by the pleadings and evidence.
- Paoli did not carry its burden to show prejudicial error from the instructions given or from the refusal to give Paoli’s tendered instructions.
Legal Principles
- A seller may recover UCC damages following a buyer’s wrongful rejection, including damages measured by the contract price minus a qualifying resale price, together with allowable incidental damages, subject to statutory limits and proof.
- A resale used to measure damages must be made in good faith and in a commercially reasonable manner; evidence of trade practice, efforts to obtain bids, and the resulting price may support commercial reasonableness and market value.
- Jury instructions are reviewed together; no reversal is warranted if, taken as a whole, they correctly state the law, are not misleading, and adequately submit the supported issues to the jury.
- To obtain reversal based on refusal to give a requested instruction, the appellant must show prejudice, that the requested instruction correctly states the law, and that it is supported by the evidence.
- On questions of law involving jury instructions, the appellate court reaches an independent conclusion.
Conclusion
Because the trial court’s instructions, considered as a set, properly informed the jury how to determine damages and market price in a wrongful-rejection case and Paoli failed to show that any refused instruction caused prejudice, the Nebraska Supreme Court affirmed the judgment for Smith.