San Miguel Produce, Inc. v. L.G. Herndon Jr. Farms, Inc

San Miguel Produce, a California company, and L. G. Herndon Jr. Farms, a Georgia company, entered into a 'Grower-Shipper Agreement' under which Herndon Farms would grow and deliver produce for San Miguel to sell, while San Miguel also sometimes shipped its own California-grown produce to the same Georgia packing facility. San Miguel never obtained a Georgia agricultural products dealer license. When the business relationship fell apart, the companies sued each other in federal court, and the case turned on Georgia's Dealers in Agricultural Products Act, a law the state's appellate courts had never interpreted before. The federal district court asked the Supreme Court of Georgia three questions: whether a company like San Miguel counts as a licensed 'dealer' under the Act, whether the Act's licensing rule exists to protect the public or just to raise money, and whether an unlicensed dealer can still enforce its contracts. The court answered that San Miguel is a dealer except for its own self-grown sales, that the licensing rule protects the public (especially farmers), and that an unlicensed dealer generally cannot enforce contracts covering the business the Act regulates.

A company that buys, processes, and sells produce grown by others is a 'dealer in agricultural products' required to be licensed, except for the specific transactions involving produce it grew itself; the Act's licensing scheme is regulatory in the public interest, not a revenue measure; and a dealer that skips licensing cannot recover on a contract covering business the Act regulates.

The ruling tells produce buyers, shippers, and brokers doing business with Georgia growers that skipping the state's dealer license can cost them the ability to sue over unpaid invoices or broken contracts, giving Georgia farmers stronger practical leverage in disputes with unlicensed dealers.

Certified questions answered

1. The court read the Act's definition of 'dealer in agricultural products' (OCGA § 2-9-1(2)) alongside its exemption for 'farmers... in the sale of agricultural products grown by themselves' (OCGA § 2-9-15(a)(1)) and concluded the exemption covers only specific self-grown sales, not a dealer's whole operation, because the statute distinguishes the general business of dealing from particular sales of one's own crop.
2. Comparing Georgia's law to the similar federal Perishable Agricultural Commodities Act (PACA), the court found the federal approach, which treats growers who also market others' produce as dealers, persuasive support for limiting the exemption narrowly, so dealers cannot avoid licensing simply by also growing some of their own product.
3. Applying the long-standing Georgia test from Paulsen Street Investors, which asks whether a licensing law is meant mainly to raise revenue or to regulate a business in the public interest, the court looked at the Act's bonding, investigation, record-keeping, and enforcement provisions and found they show a genuine regulatory purpose rather than a revenue scheme, especially since the license fee is capped at a modest amount.
4. The court traced this regulatory-versus-revenue test back through over a century of Georgia cases involving fertilizer sellers, employment agencies, and physicians, and held that protecting Georgia farmers in their dealings with produce buyers fits squarely within that same public-interest tradition.
5. Relying on the well-established rule that a person who must be licensed to engage in a regulated business cannot enforce a contract for that business without proving he held the required license, the court held that San Miguel's lack of a dealer license barred it from recovering on the parts of its contract with Herndon Farms that fell within the Act's coverage.

• agricultural dealer licensing
• produce contract dispute
• Georgia Dealers in Agricultural Products Act
• certified question
• unlicensed business contracts