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Washington State Hop Producers, Inc. Liquidation Trust v. Goschie Farms, Inc. | 773 P.2d 70 (1989)

Regulatory changes brewed a perfect case for a court to explain the doctrine of supervening frustration in Washington State Hop Producers Liquidation Trust versus Goschie Farms.

For twenty years, the United States Department of Agriculture required producers of hops to obtain allotments in order to market their hops. The allotments were called hop base. Without an allotment, a grower couldn’t enter the market.

Washington State Hop Producers acquired, leased, and sold hop base to growers. It petitioned for liquidation in February of nineteen eighty-five, which produced the Washington State Hop Producers Trust.

In May, the Trust mailed invitations to growers to bid on hop base for sale. The Trust controlled the bid’s terms, leaving only blanks for growers to fill in basic information. On June twenty-first, the Trust mailed notices to the highest bidders.

The Department of Agriculture terminated the allotment requirement on June twenty-seventh. The termination order was published in the Federal Register on July first. The termination would be effective on December thirty-first.

In effect, the termination made hop allotments unnecessary beginning in nineteen eighty-six. Consequently, the value of the hop base the Trust was selling decreased by over ninety percent.

Some winning bidders still paid the Trust for the allotments they had purchased, but others, including Goschie Farms, didn’t.

The Trust sued Goschie and other nonpaying growers for breach of contract in Washington court. The trial court found for the growers. The Trust appealed. The Washington Court of Appeals affirmed, reasoning that the growers’ performance was discharged under the doctrine of supervening frustration. The Trust appealed further to the Washington Supreme Court.

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