Turkeys, Oral Contracts and Mr. Gouge

George R. Whaley had been a poultry farmer for some 35years. For 20 of those years, under oralcontract, Whaley supplied turkeys to H&H Poultry Co., a poultry processor. Whaley would pay for the poults, feed andlabor, and would provide the necessary housing and equipment. In return, H&H compensated Whaley on aper pound live weight basis on the date of pickup, at a price determined by aday to day variable market value in the turkey growing Shenandoah Valley areaof Virginia and North Carolina.  (Image source: Wikipedia).

Whaley would routinely call H&H in the spring todetermine how many turkeys H&H wanted and, without more details, would buythe poults and raise them. For the sixyears before the dispute arose, for the Thanksgiving market, Whaley grew 24,000turkeys for H&H.

One year in the late 1970’s, Whaley made his spring telephone callto H&H. H&H had a newcontrolling stockholder and chairman of the board, Mr. Gouge (yes, that was hisname). Whaley testified that Mr. Gouge put inan order for 24,000 turkeys. After theconversation, Whaley purchased 24,000 poults, built 40 new rain shelters at$2000 each, purchased 60 feeders for $6000 each, and installed an undergroundpipe which he otherwise would not have needed. Come November, Whaley called Mr. Gouge to remind him it was time toweigh a cross section of the turkeys to see what size they were. Mr. Gouge denied making the order.

Mr. Gouge died before he could be deposed. The president of H&H denied emphaticallythat H&H told Whatley to grow turkeys that year. The president testified that “Whaley was toldthat if he put turkeys in, he was on his own.” H&H claimed that it had completely changed its processing equipmentand building, and could no longer process turkeys.

From the bench, the trial court issued a ruling concerningwhether an enforceable contract existed:

Gentlemen, I have determined that I could not get any betterof a feeling for a close case, where I believe people may sincerely feel theyare telling the story as it is, than I have now, and there is no need todeliberate on the matter. I am convinced that judgment must be and shall beentered in favor of the plaintiff in this case.

The trial court awarded Whaley damages (the difference betweenwhat Whaley would have received under the oral contract with H&H the dayafter the breach and the amounts he received from another poultry processor,plus loading costs usually borne by H&H).

The Delaware Supreme Court affirmed the determination thatan enforceable contract existed and affirmed the damages award.

Likewise, the Delaware Supreme Court affirmed the trialcourt’s denial of H&H’s motion to amend its answer to include the statuteof frauds as an affirmative defense. H&H had waited three years to move to amend, and this inexcusableneglect would prejudice Whaley – especially because of Mr. Gouge’s death before his deposition.

H&H Poultry Co. v. Whaley, 408 A.2d 289 (Del. 1979).

[Meredith R. Miller]