Title: FARMERS ELEVATOR CO v ANDERSON

State: montana

Issuer: Montana Supreme Court

Document:

No. 13189 I N T H E SUPREME C O U R T O F THE STATE O F M O N T A N A 1976 F A R M E R S ELEVATOR C O M P A N Y O F RESERVE, a corporation, P l a i n t i f f and Respondent, -vs - D A L E ANDERSON, Defendant and Appellant. Appeal from: D i s t r i c t Court of t h e Fifteenth J u d i c i a l D i s t r i c t , Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellant : Loren J. O'Toole argued, Plentywood, Montana For Respondent : Graybill, Ostrem, Warner and Crotty, Great F a l l s , Montana Harrison, Loendorf and Poston, Helena, Montana Jerome T. Loendorf argued, Helena, Montana Submitted: May 24, 1976 T Decided: d U ! - -2 197f. --- JFEL -.z ; : j ~ - ; . Filed : M r . J u s t i c e John Conway Harrison delivered the Opinion of t h e Court. This appeal i s taken from a judgment entered August 25, 1975, in the d i s t r i c t court, Sheridan County. Farmers Elevator Co. of Iieserve, a cooperative enterprise, successfully sought damass for breach of a contract made with Dale Anderson, a l o c a l farmer i n the Dagmar area. Anderson had been a patron of Farmers Elevator Co. f o r several years, and during the year 1972 he made numerous contracts with it f o r the s a l e and purchase of h i s durum wheat. A t the time r h i s action was commenced, Anderson had been farming f o r about ten years. H e was thus generally familiar with the nature of grain trading i n h i s area, and with the customs and procedures u t i l i z e d by p l a i n t i f f i n the conduct of its operations. On October 28, 1972, Anderson contracted with the Farmers Elevator Co. f o r the s a l e of 18,000 bushels of durum wheat a t a price stipulated i n the record t o be $1.80 per bushel. Farmers Elevator Co. resold the wheat three days l a t e r for $2.44 per bushel to the Farmers Union Grain Terminal Association o u t l e t i n Great F a l l s , Montana. The contract was s t r i c t l y o r a l , the only written evidence of the agreement being an unsigned notation i n a small "book" used by Farmers Elevator Co. t o record i t s purchases i n the ordinary course of i t s business. Testimony and a confirmatory mem- orandum establish t h a t the approximate delivery date contemplated by the p a r t i e s was February 1973. Although the contract was o r a l i n nature, we note Anderson has a t no time denied the existence of the contract, the quantity contracted f o r , or the stipulated price. Farmers Elevator Co. normally contracts o r a l l y with i t s patrons and pays by check upon delivery, whether i n f u l l o r p a r t i a l sacisfaction df i t s purchase contracts. Pursuant t o h i s contract, Anderson delivered 8,802 bushels of durum wheat i n approximately 36 truckloads between March 27, 1973, and May 30, 1973. H e was paid f o r the delivered grain by customary check, except f o r the sum of $2,575.33. Although a check for t h i s amount w a s issued by Farmers Elevator Co., it has not been delivered and i s s t i l l due and owing t o Anderson. The reason f o r the variance between the proposed delivery date and the d a k s t h a t delivery actually took place, i s c r i t i c a l to the resolution of the issues presented. The record establishes, and the d i s t r i c t court i n f a c t found, t h a t Farmers Elevator Co. ' s a b i l i t y t o accept deliveries from i t s patrons is wholly dependent upon the a v a i l a b i l i t y of elevator space. In turn, the a v a i l a b i l i t y of elevator space depends d i r e c t l y on the a v a i l a b i l i t y of trans- oortation for outgoing shipments. When s u f f i c i e n t r a i l c a r s o r trucks cannot be found t o transport the grain, the elevator becomes backlogged f o r space. The delivery dates of established contracts must often be extended u n t i l transportation i s secured, and the elevator i s again capable of handling incoming deliveries. During the f a l l 1972 and e a r l y 1973, a serious regional boxcar shortage existed and consequently delivery dates on a l l purchase contracts were moved ahead. Because of the resultant shortage of elevator space, Anderson was allowed t o deliver l e s s than half of the durum wheat which he had sold, u n t i l transportation was obtained i n e a r l y June 1973. By e a r l y summer the elevator was again i n a position t o receive wheat from Anderson. Anderson was well aware of t h i s , a s the record reveals he was contacted by phone, a s well as by l e t t e r s dated July 31, August 13, and September 18, 1973. During August 1973 Anderson was personally v i s i t e d by p l a i n t i f f ' s Board of Directors. O n September 27, 1973, the Board Chairman learned by telephone of Anderson's r e f u s a l t o deliver further on h i s contract. The next day p l a i n t i f f was forced t o cover f o r the undelivered wheat, and purchased 9,198 bushels a t the then current market price, which by t h a t time had r i s e n t o $6.50 per bushel. It was estab- lished a t t r i a l t h a t Anderson sold h i s wheat t o another elevator in North Dakota f o r $5.35 per bushel. Anderson raised and harvested more wheat i n August and September 1973, but he never tendered any of t h i s t o p l a i n t i f f o r made any further e f f o r t t o honor h i s contract with it. Two basic issues are raised on appeal: (1) I s enforcement of the o r a l agreement and the alleged modification as t o the date of delivery barred by the Statute of Frauds, section 87A-2-201, R.C.M. 1947? (2) Were the delivery terms of the agreement i n f a c t modified by a course of performance within t h e meaning of section 87A-2-208, R.C.M. 1947? In a commercial s e t t i n g such as here, Montana law provides t h a t no contract f o r the s a l e of goods, f o r the price of $500 o r more, i s enforceable unless some writing e x i s t s s u f f i c i e n t t o e s t a b l i s h t h a t an agreement between the p a r t i e s was reached. Section 87A-2-201, R.C.M. 1947. However, several exceptions a r e l i s t e d i n the s t a t u t e , one i s : "(3) A contract which does not s a t i s f y the require- ments of subsection (1) but which i s v a l i d i n other respects is enforceable "(b) if the party againsr whom enforcement i s sought admits i n h i s pleading, testimony or otherwise i n court t h a t a contract f o r s a l e was made, but the contract i s not enforceable under t h i s provision beyond the quantity of goods ad- mitted * * *." That the agreement, but f o r the lack of writing, is "valid in other respects" is not contested by the p a r t i e s . There can h e no doubt of Anderson's admissions, i n h i s deposition and a t t r i a l , as t o the existence of the contract. A t t r i a l he t e s t i - f ied : "Q. So your testimony is t h a t there was an agreement f o r you t o s e l l eighteen thousand bushels of durum? A . Yes. "Q. And t h a t agreement was made i n October, October 28th, of 1972, is t h a t correct? A . Yes. I I The so-called " j u d i c i a l admission" exception t o the S t a t u t e of Frauds as s e t f o r t h by section 87A-2-201(3)(b) prevents a liti- gant from simultaneously admitting the existence of a contract and claiming the benefits of the s t a t u t e . 2 Williston on Sales, (4th Ed.), 514-9, p. 303. The basic r a t i o n a l e behind t h i s excep- tion r e l a t e s d i r e c t l y t o the very purpose of the r u l e i t s e l f , as enunciated i n Gravelin v. Porier, 77 Mont. 260, 281, 282, 250 P. " ' A s the primary object i s t o prevent mistakes, frauds, and perjuries, by substituting written f o r o r a l evidence i n the most important classes of contracts, the courts of equity have established the principle * * * t h a t i t s h a l l not be used as an instrument f o r the accomplishment of fraudulent pur- poses; designed t o prevent fraud, it s h a l l not be permitted t o work fraud. "I In t h a t the o r i g i n a l o r a l contract is not rendered unenforce- able by the Statute of Frauds, we next examine the e f f e c t of the alleged modification as t o the date of delivery. Section 87A-2- 209 (3), provides : "The requirements of the s t a t u t e of frauds section of t h i s chapter * * * must be s a t i s f i e d i f the con- t r a c t as modified i s within i t s provisions ." While the record i s c l e a r a s t o Anderson's "admissions" regarding the original contract, no such admission was shown concerning the alleged modification of the delivery date. Ander- son argues t h a t i f the o r i g i n a l contract i s enforceable t h a t the exception which brought the o r i g i n a l o r a l contract out of the Statute of Frauds, cannot be applied t o the alleged o r a l modification and enforcement of the contract a s modified under section 87A-2-209(3) i s barred. However, t h i s does not complete the analysis under the facts here. Anderson's deliveries a f t e r the s e t date must be considered. Section 878-2-209(4) provides t h a t an attempt a t modifica- t i o n which i s void under the s t a t u t e of frauds may s t i l l operate a s a waiver t o a s s e r t the defense through the course of performance engaged i n by the p a r t i e s under section 878-2-208, R.C.M. 1947. 2 Williston on Sales (4th Ed.), 5 12-6, p. 23. While the t r i a l court did not make a specific finding holding there was a waiver, i t s findings when read a s a whole, do find there was a waiver and consent by Anderson. Under section 87A-1-103, the Uniform Commercial Code can be supplemented, f o r purposes of interpretation, by the general principles of law and equity, unless s p e c i f i c a l l y displaced by the Code. The f a c t s presented i n the i n s t a n t case, require t h a t we find t h a t a waiver such as i s contemplated by section 87A-2-209(4) occurred and we agree. The term "waiver" i s generally defined as a voluntary and intentional relinquishment of a known r i g h t , claim o r privilege. Mundt v. Mallon, 106 Mont. 242, 76 P.2d 326; S t a t e ex r e l . Bingham v. District Court, 80 Mont. 97, 257 P. 1014. In Northwestern Fire & Marine Insurance Co. v. Pollard, 74 Mont. 142, 149, 238 P. 594, it is stated: " I * * * waiver is a voluntary relinquishment or re- nunciation of some right, a foregoing or giving up of some benefit or advantage, which, but for such waiver, a party would have enjoyed. It may be proved by express declarations * * * or by a course of acts and conduct * * * as to induce the belief that it was his intention and purpose to waive."' (Emphasis supplied.) By delivering, pursuant to contract, approximately 36 truckloads of wheat to the elevator between March 27 and May 30, 1973, Anderson established a course of conduct sufficient to con- stitute a waiver of his right to assert a defense under the statute of frauds. Anderson began to deliver on a date well after the delivery date originally contemplated, and his actions certainly induced plaintiff's apparent belief the contract would be honored. The enforcement of the oral contract, as modified, is not barred under section 87A-2-201, R.C.M. 1947. The remaining issue is whether the actions of Anderson between March 27 and May 30, 1973, constituted a "course of per- formance" and whether these acts were, in fact, sufficient to modify the original oral contract as to the date of delivery. Section 87A-1-205(1), R.C.M. 1947, defines a course of performance as: It* * a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for inter- preting their expressions and other conduct." Under section 87A-2-208(1) "any course of performance accepted or acquiesced in without objection" is relevant to determine the meaning of the agreement .under scrutiny. It is clear the delivery of 36 truckloads of wheat by Anderson is a course of performance within the ambit of section 878-1-205(1), and these repeated acts of delivery were sufficient for the district court to imply a finding of acceptance or acquies- cense in the elevator's need to extend the delivery date. Ander- son's failure to make timely objection to the elevator's temporary refusal to accept delivery is of particular significance here. For although section 87A-2-208 would not specifically require a timely objection under these circumstances, such a condition must be implied if the law is to be construed with any meaning in the commercial setting. Oskey Gasoline and Oil Co., Inc. v. OKC Refining, Inc., 364 F.Supp. 1137; Flood v. M.P. Clark, Inc., 319 F.Supp. 1043. The judgment is affirmed. We Concur: / , y < /$ \ * , . J # Justices I I Hon. Gordon R. Be Judge, sitting for Mr. Chief Justice James T. Harrison.