C.R. Daniels, Inc. v. Yazoo Manufacturing Co.

C.R. Daniels, Inc. (Daniels) (plaintiff) manufactured grass-catcher bags to be used with lawn mowers manufactured by Yazoo Manufacturing Company, Inc. (Yazoo) (defendant). On October 23, 1981, Yazoo contracted with Daniels for 20,000 bags. In June 1982, Yazoo’s president, James Kerr, saw evidence of a problem with cracked chutes on the bags. After viewing a damaged bag, Daniels determined the damage to be the result of abuse. Daniels continued to manufacture the bags. On October 14, 1982, Kerr sent Daniels a copy of a purchase order from July 5, 1982, with “canceled” written on the order. No explanation was given as to the cancellation, and no other orders were canceled. Subsequently, Daniels’s attorney demanded payment, at which point Yazoo’s counsel notified Daniels for the first time of specific complaints regarding a substantial number of bags. Daniels’s attorney was invited to view the bags in Yazoo’s inventory, and the inspection revealed that 92 percent of the bags had cracked chutes. Prior to this inspection, Daniels had not known the extent of the problem. Yazoo had continued to try to sell the bags, continued to indicate to Daniels that Yazoo would sell the bags and expected future deliveries of the bags, and destroyed the defective bags. Daniels brought suit to recover the price of the goods pursuant to Mississippi statute, which allowed unpaid sellers to recover the price of accepted goods, even if the goods were damaged, from buyers. Yazoo argued that it had never accepted the bags, and counterclaimed for breach of warranties.