Reparation Report: Conclusion and effect

Doug Nelson

The following summary of a reparation decision issued under the Perishable Agricultural Commodities Act (PACA) is intended to help companies understand their rights and responsibilities under PACA. The key facts and core reasoning used to decide the case are presented.

Topic: Proof of consignment agreement, duty owed by consignee

Takeaway: consignees are obligated to promptly and properly handle the consignor’s product

Collins Brothers Produce Company
(Forest Park, GA)
v.
Dixieland Produce, Inc.
(Birmingham, AL)
38 Agric. Dec. 1031 (USDA 1979)

Complainant, Collins Brothers Produce Company (Collins Brothers), sold Respondent, Dixieland Produce, Inc. (Dixieland), 679 cartons of ponkans (citrus) at a price of $3.60 per carton FOB (free on board). Upon arrival at Dixieland’s facility in Birmingham, AL, the ponkans were inspected by the U.S. Department of Agriculture (USDA) and found to be affected with 5% decay.

Collins Brothers sought its full invoice price for the ponkans, while Dixieland paid only $347.60 (or $.51 per carton). Dixieland claimed that after the USDA inspection of the ponkans, Neal Angrisano of Dixieland spoke with Roy Collins of Collins Brothers about the condition of the fruit, and Roy Collins verbally agreed to allow Dixieland to handle the product on consignment.

Dixieland supported this assertion with an affidavit from Angrisano. Collins Brothers denied agreeing to allow Dixieland to handle the product on consignment and supported its assertion with an affidavit of its own from Charles Collins.

However, PACA noted that there was no showing that Charles Collins had personal knowledge of what was agreed to between Roy Collins and Neal Angrisano; and, on this basis, found that the parties had entered into an agreement whereby the fruit would be handled on consignment.

In the next breath, however, PACA explained “it is clear that as an implied condition of an agreement to handle fruit on consignment, the consignee has a duty to promptly and properly resell the fruit.”

Because Dixieland failed to begin selling the product until eight days after it arrived (with sales extending an additional three weeks), PACA found that Dixieland’s sales did not qualify as a “prompt resale of a perishable fruit such as ponkans.”

Accordingly, PACA found Dixieland liable to Collins Brothers for the reasonable value of the fruit it received, which PACA determined to be $2,096.80, plus interest.

Doug Nelson is vice president of the Trading Assistance department at Blue Book Services. Doug previously worked as an investigator for the U.S. Department of Agriculture and as an attorney specializing in commercial litigation.