Title: Century Ready-Mix Co. v. Lower & Co.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Century Ready-Mix Co. v. Lower & Co.1989 WY 63770 P.2d 692Case Number: 88-54Decided: 03/08/1989Supreme Court of Wyoming
CENTURY 
READY-MIX COMPANY; CHARLES NESS AND GLORIA NESS, APPELLANTS (PLAINTIFFS),

 
 
v.

 
 
LOWER & 
COMPANY, APPELLEE (DEFENDANT), CAMPBELLCOUNTYSCHOOL 
DISTRICT; TOM BARKER, D/B/A COOPER ENGINEERING & 
MATERIAL TESTING; RUNDQUIST & HARD, P.C.; AND CHRIS HARD, INDIVIDUALLY, 
(DEFENDANTS).

 
 
Appeal from 
the District Court, CampbellCounty, Timothy J. Judson, 
J.

 
 
H.W. 
Rasmussen, Badley & Rasmussen, Sheridan, for appellants.

 
 
Harold E. 
Meier, Lonabaugh & Riggs, Sheridan, 
for appellee.

 
 
Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

 
 

THOMAS, 
Justice.

 
 

[¶1.]     The issue to be 
resolved in this case can be captured by stating the positions of the parties. 
Lower & Company (Lower) prevailed in the trial court on its position that 
the statute of frauds incorporated in the Uniform Commercial Code, § 
34-21-208(a), W.S. 1977, prevents Century Ready-Mix Company and its principals, 
Charles and Gloria Ness, (Century) from pursuing claims based upon an alleged 
contract because, as a matter of law, the contract is not enforceable. Century's 
contention is that the law justifies supplementation of the purchase order 
issued by Lower in order to establish all of the terms of an enforceable 
contract. We hold that this controversy cannot be settled by applying only § 
34-21-208(a). Century is entitled to rely upon information apart from the 
purchase order to establish the contract. It is apparent that there are genuine 
issues of material fact and that the summary judgment entered by the district 
court cannot be sustained. We reverse the summary 
judgment.

 
 

[¶2.]     Century states the 
issue in this way:

 
 
"The 
district court erred by invalidating a `requirements contract' contrary to 
sections 21-223 and 21-209 of the Wyoming Commercial 
Code."

 
 
Lower adds 
a pleading question and states the issues in this way:

 
 
"I. Did the 
District Court err in applying the Statute of Frauds to the dealings between 
Lower and Appellant?

 
 
"II. Is the 
defense of the Statute of Frauds waived by failure to plead specifically in the 
Answer when it is raised on a Motion for Summary 
Judgment?"

 
 

[¶3.]     In 1986, the CampbellCountySchool 
District decided to expand the high school building 
at Gillette. Competitive bids were obtained by the school board who then 
selected Lower as general contractor for the project. Lower had premised its 
successful bid upon bids received from various potential subcontractors, 
including Century, and it relied upon those bids in preparing its bid for the 
project. Lower chose Century to furnish the concrete needed to accomplish the 
job on the basis of Century's low subcontract bid. Century assumed, in 
submitting its bid, that it would deliver about 5,500 cubic yards of concrete. 
This quantity was approximately the quantity of concrete anticipated as being 
required for the expansion of the high school building.

 
 

[¶4.]     After receiving advice 
that its bid had been accepted, Lower issued this purchase order to Century. 

 
 
This is the 
only document which existed relating to the concrete for the job. It is critical 
to note that Lower did not include any specific quantity of concrete, measured 
in cubic yards or any other unit, that it would be purchasing. The only specific 
contract terms were the prices to be paid for the concrete and other materials 
when, and if, purchased. The purchase order, of course, does refer to the 
project and provides for delivery "as called for."

 
 

[¶5.]     After work commenced, 
Century delivered several loads of concrete to the high school expansion job 
site. An independent testing laboratory tested the concrete and concluded that 
it did not measure up to the strength standards required by the school district. 
Century protested the result of those tests and obtained independent testing, at 
its own expense, which showed the concrete was within the required standards. 
Even so, the school district ordered Lower to "stop pouring," and compliance 
with that order would have resulted in a complete work stoppage. Lower then 
asked the school district if obtaining the concrete from another supplier would 
be an acceptable alternative. The school board agreed to this suggestion, and 
work on the expansion project continued. Century had not been involved in this 
decision and discovered it only when its loaded trucks were turned away from the 
job site. From that point on, the concrete was delivered by the new supplier. 
The contract dispute between Century and Lower followed.

 
 

[¶6.]     The trial court granted 
a motion for summary judgment submitted by Lower. The argument that the contract 
claim by Century could not be sustained because the alleged contract did not 
comply with § 34-21-208(a), W.S. 1977, was accepted. Century has appealed the 
order granting summary judgment.

 
 

[¶7.]     Section 34-21-208(a), 
provides as follows:

 
 
"Except as 
otherwise provided in this section a contract for the sale of goods for the 
price of five hundred dollars ($500.00) or more is not enforceable by way of 
action or defense unless there is some writing sufficient to indicate that a 
contract for sale has been made between the parties and signed by the party 
against whom enforcement is sought or by his authorized agent or broker. A 
writing is not insufficient because it omits or incorrectly states a term agreed 
upon but the contract is not enforceable under this paragraph beyond the 
quantity of goods shown in such writing."

 
 
The parties 
agree that the purchase order contemplated the sale of concrete for an amount in 
excess of $500; that the purchase order does constitute a writing within the 
statute; and that the purchase order is signed by an agent of Lower. The price 
terms are clear and unambiguous. The dispute focuses upon the phrase which reads 
"but the contract is not enforceable under this paragraph beyond the quantity of 
goods shown in the writing." The purchase order does not set forth any specific 
quantity of concrete.

 
 

[¶8.]     Century points, 
however, to § 34-21-209, W.S. 1977, which states, in pertinent 
part:

 
 
"(a) Terms 
with respect to which the confirmatory memoranda of the parties agree or which 
are otherwise set forth in a writing intended by the parties as a final 
expression of their agreement with respect to such terms as are included therein 
may not be contradicted by evidence of any prior agreement or of a 
contemporaneous oral agreement but may be explained or 
supplemented:

 
 
"(i) By 
course of dealing or usage of trade (section 1-205 [§ 34-21-212]) or by course 
of performance (section 2-208 [§ 34-21-215]); and

 
 
"(ii) By 
evidence of consistent additional terms unless the court finds the writing to 
have been intended also as a complete and exclusive statement of the terms of 
the agreement."

 
 
Century 
then invokes the provisions of § 34-21-223, W.S. 1977:

 
 
"(a) A term 
which measures the quantity by the output of the seller or the requirements of 
the buyer means such actual output or requirements as may occur in good faith, 
except that no quantity unreasonably disproportionate to any stated estimate or 
in the absence of a stated estimate to any normal or otherwise comparable prior 
output or requirements may be tendered or demanded."

 
 
Century 
contends that, according to the usage in the trade, concrete generally is 
obtained by a purchase order such as this, and that the purchase order 
contemplates the requirements for the job. In connection with this argument, the 
provisions of § 34-21-124, W.S. 1977, become significant. That statute provides, 
in pertinent part:

 
 
"(b) A 
usage of trade is any practice or method of dealing having such regularity or 
observance in a place, vocation or trade as to justify an expectation that it 
will be observed with respect to the transaction in question. The existence and 
scope of such a usage are to be proved as facts * * *.

 
 
"(c) A 
course of dealing between parties and any usage of trade in the vocation or 
trade in which they are engaged or of which they are or should be aware give 
particular meaning to and supplement or qualify terms of an 
agreement."

 
 

[¶9.]     In summary, Century's 
position is that the purchase order refers to the CampbellCounty high school expansion job. The job 
specifications include an estimate of concrete needed for completion, although 
it seems clear that this is an open-ended estimate because work such as this is 
not accomplished in a carefully controlled environment, and the quantities can 
vary substantially. Century then urges that the issuance of a purchase order 
such as this is consistent with the usage of the trade and that, according to 
the usage of the trade, it is understood to be a requirements 
contract.

 
 

[¶10.]  We are persuaded by authority cited by 
Century. In Wilsonville Concrete Products v. Todd Building Company, 281 Or. 345, 
574 P.2d 1112 (1978), the court held that a purchase order very much like the 
one involved in this case "memorialized a `Requirements Contract.'" In Chicopee 
Concrete Service, Inc. v. Hart Engineering Company, 20 Mass. App. 315, 479 N.E.2d 748 (1985), the court held the Uniform Commercial Code to be controlling 
with respect to a subcontract for the sale of concrete and, relying upon Mishara 
Construction Company, Inc. v. Transit-Mixed Concrete Corporation, 365 Mass. 122, 
310 N.E.2d 363 (1974), held that the "purchase order constituted a valid 
contract." Chicopee, 479 N.E.2d  at 750. In that case, as 
in this one, the sale and purchase of concrete was memorialized only through a 
simple purchase order, and the general contractor violated the agreement by 
relying upon another supplier. Its attempt to justify its action on the premise 
that no valid contract existed was rejected by the court.

 
 

[¶11.]  We conclude that the resolution of this 
issue in Oregon and Massachusetts is 
compatible with cases which this court has decided, and that the rule 
articulated by those courts represents the correct view of the 
law.

 
 

[¶12.]  Considering the provisions of § 
34-21-223(a), quoted above, there can be no doubt that a contract is 
contemplated under the Uniform Commercial Code in which the quantity term is not 
clearly and specifically stated but, instead, is described in terms of 
"requirements" or "output." We have recognized that statutory provisions become 
a part of the bargain contemplated by the parties in Wyoming as though the 
statute actually were included in the terms. Meuse-Rhine-Ijssel Cattle Breeders 
of Canada Ltd. v. Y-Tex Corporation, 590 P.2d 1306 (Wyo. 1979); Tri-County Electric Association, Inc. v. City 
of Gillette, 584 P.2d 995 (Wyo. 1978). It further is 
clear that the legislature, in adopting § 34-21-209, quoted above, intended that 
written agreements within the Uniform Commercial Code could be explained or 
supplemented by "usage of trade" evidence. A contract which appears ambiguous in 
this regard can be explained by parol evidence. Mountain Fuel Supply Company v. 
Central Engineering & Equipment Company, 611 P.2d 863 (Wyo. 1980); Y-Tex 
Corporation. As they offered to do in the materials considered for purposes of 
summary judgment, Century is entitled to produce evidence of "usage of trade," 
including the quantity terms, to supplement the terms of the agreement. The 
material which was presented leads to a strong inference that because of the 
particular nature of this transaction, calling for an undetermined quantity of 
concrete, "usage of trade" is a central issue.

 
 

[¶13.]  The burden is upon Lower to demonstrate 
that the writing was intended as a total integration to bring it within the 
concept of § 34-21-209(b), W.S. 1977. Anderson & Nafziger v. G.T. Newcomb, 
Inc., 100 Idaho 175, 595 P.2d 709 (1979). Conversely, 
Century must establish the "usage of trade" to justify its reliance upon the 
other statutes which it urges in this appeal. It must carry that burden of proof 
at trial. Valentine v. Ormsbee Exploration Corporation, 665 P.2d 452 (Wyo. 1983); Mountain 
Fuel. If the "usage of trade" is established, however, those who engage in the 
given trade or industry are presumed to have knowledge of it and are bound by 
it. Actual knowledge is not essential. Valentine.

 
 

[¶14.]  It is a well-accepted doctrine that the 
Uniform Commercial Code parol evidence rule is intended to liberalize the 
rigidity of the common law and to eliminate the presumption that a written 
contract is a total integration. Zwierzycki v. Owens, 499 P.2d 996 (Wyo. 1972). In addition, 
the Uniform Commercial Code is intended to expand commercial practices through 
custom and usage as well as by agreement between the parties. Section 34-21-102, 
W.S. 1977. This purpose demands a liberal construction. Rigid adherence to the 
statute of frauds is contrary to this philosophy, and our policy has been to 
sustain a contract whenever possible; we have not sought technical grounds for 
defeating a contract. Kuehne v. Samedan Oil Corporation, 626 P.2d 1035 
(Wyo. 1981); 
Tri-County Electric, 584 P.2d 995. This case does not justify a different 
approach.

 
 

[¶15.]  In summary, the philosophy of the Uniform 
Commercial Code and a consideration of all its provisions leads to a suggestion 
that this agreement was not integrated by the purchase order. The "usage of 
trade" affords a method to establish the quantity requirement of § 34-21-208(a). 
The materials submitted in connection with the resistance to the motion for 
summary judgment demonstrate facts that could justify a conclusion that the 
quantity of concrete contemplated by the parties was the quantity needed for the 
job. There is a genuine issue of material fact as to the intent of the parties 
in entering into this agreement. Therefore, summary judgment was not proper. 
Y-Tex Corporation, 590 P.2d 1306. The summary judgment entered by the district 
court is reversed.