Fischer

Can a commission merchant convert the proceeds of the sale of farm products he sells as an agent for the farmer? The trial court held that neither state nor federal law precludes a common law action in conversion against a commission merchant who commingled such proceeds with its general accounts and then went out of business. Following a trial without a jury, the court entered judgment for the farmers for conversion. We affirm.

Facts

Plaintiffs Joseph A. and Joan Fischer own a farm and a small fruit packing company, Cottonwood Packing Co. Defendants Craig and Marcia Machado owned North State Distributors, Inc., a company which acted as a sales agent for farmers. Craig Machado was the president and chief financial officer and Marcia was the corporation’s vice-president and secretary. In April 1992 Fischer and Machado executed a written contract providing that North State would act as Cottonwood’s sales agent for the 1992 crop for a 6 percent commission.

North State received a total of $108,174.78 for the sales of Cottonwood fruit and placed these proceeds into its operating account. The funds were used to pay payroll, to pay an overdraft of the corporate checking…