Jason’s Foods, Inc. v. Peter Eckrich & Sons, Inc.

Jason’s Foods, Inc. (Jason) (plaintiff) contracted to sell 38,000 pounds of pork ribs to Peter Eckrich & Sons, Inc. (Eckrich), with delivery to be effected by a transfer of the ribs from Jason’s account in an independent warehouse to Eckrich’s account in the same warehouse. The ribs would not be physically moved, but change of ownership would be reflected in the warehouse’s accounts. Jason notified Eckrich that the ribs would be transferred between January 10 and January 14. On January 13, Jason phoned the warehouse and requested the transfer. A clerk noted the transfer immediately on the warehouse’s books but did not mail a receipt to Eckrich until January 17 or 18. On January 17, the ribs were destroyed by a fire at the warehouse. On January 24, Eckrich received the transfer receipt, which was the first time Eckrich knew that a transfer had occurred. Jason sued Eckrich, claiming that the risk of loss passed to Eckrich no later than January 14 and thus Eckrich owed the contract price. Eckrich argued that risk of loss did not transfer until January 24, when Eckrich received acknowledgement from the warehouse that Eckrich had the right to possess the ribs. The parties agreed that the transaction was governed by the Uniform Commercial Code (UCC). The trial court ruled that the risk of loss did not transfer before the fire and granted summary judgment to Eckrich. Jason appealed.