## 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

1. 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.
2. 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.


Smith v. Paoli Popcorn Co., 260 Neb 460, 618 N.W.2d 452 (2000)