No. 83-107 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1954 

NORTHWEST POTATO SALES, INC., 

Plaintiff and Appellant, 

-vsCHARLES BECK, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Third Judicial District, 

In and for the County of Powell, 

The Honorable Robert J. Boyd, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Patrick F. Hooks, Townsend, Montana 

For Respondent: 

James J. Masar, Deer Lodge, Montana 

Submitted on Briefs: June 30, 1983 

Decided: March 2, 1984 

Filed: $f&.( , . 94 
Mr. Justice Daniel J. Shea delivered the Opinion of the 

Court. 

Plaintiff, Northwest Potato Sales, Tnc., a family 

corporation owned by the Martin McCullough family, and 

dealing primarily j.n the buying and selling of potatoes, 

appeals an order of the Powell County District Court 

dismissing its claim against the defendant, Charles Reck, for 

damages claimed as a result of an alleged failure by Beck to 

honor a contract to sell seed potatoes to Northwest Potato 

Sales. The trial court held that the alleged agreement was 

barred by the statute of frauds because Beck, although he had 

received the written contract containing the necessary terms, 

had not signed it. Although McCullough raised estoppel as a 

bar to Beck's rel-iance on the statute of frauds, and 

presented evidence on this issue, the trial court, in a 

memorandum opinion accompanying its findings and conclusions, 

but with no analysis of the evidence, and no attempt to apply 

the elements of estoppel to that evidence, held that the 

plaintiff failed to establish the requisite elements of 

estoppel. We reverse and hold that McCullough proved 

estoppel as a matter of law. 

The trial presented essentially three issues. First, 

whether there was an agreement between McCullough and Beck. 

On this issue, the trial court failed to make any findings 

and conclusions, but in a separate memorandum opinion the 

trial court did conclude that the parties had not reached 

agreement. Second, whether Beck was entitled to rely on the 

statute of frauds as a defense because he had not signed the 

written contract. To decide this issue, the trial court 

first ha.d to decide whether Reck was a "merchant" within the 

meaning of an exception to the statute of frauds as a 
defense. Third, whether Beck was estopped by his active and 

passive conduct from reliance on the statute of frauds as a 

defense. The findings and conclusions did not mention the 

estoppel issue, but the court concluded in a separate 

memorandum opinion that the plaintiff failed to establish the 

requisite elements of estoppel. In reaching this conclusion, 

however, the trial court failed to analyze this evidence bv 

application of the elements of estoppel. 

It is within this trial context that the issues are 

raised on appeal. First, McCullough asks this Court to imply 

a trial court finding that an agreement did exist, because 

the trial court could not have decided the statute of frauds 

issue unless it first found an agreement to exist. Second, 

McCullough argues the trial court applied an improper legal 

standard in concluding that Beck was not a "merchant." In 

reaching its conclusion the trial court stated: "Each of the 

farmer-growers and the one banker-rancher all agree that the 

farmer did not have the knowledge or skill in the market 

place as that of a buyer-broker." McCullough argues this is 

an improper legal standard by which to judge the status of 

both parties. While he concedes he is a "merchant", he 

argues that the test is not one of comparing the skills and 

knowledge of the parties, and that the parties need not have 

substantially similar skills before a conclusion is justified 

that both parties are "merchants" so that an exception to the 

statute of frauds is triggered. However, because we conclude 

that McCullough proved estoppel as a matter of law, we need 

not decide the implied findings issue and we need not remand 

the case to the trial court to make findings on the 

"merchant" issue based on a proper application of the law. 
The third, and dispositive issue, is whether McCullough 

proved the elements of estoppel. Beck argued at trial and 

now in his appeal brief that estoppel does not apply to the 

UCC statute of frauds. McCullough presented evidence on the 

existence of the contract and on Beck's active and passive 

conduct after he received the contract. This evidence was 

virtually uncontradicted and is sufficient to estop Beck from 

successfully invoking the statute of frauds. The trial court 

did not properly reach the estoppel issue. The separate 

findings and conclusions are silent on the estoppel issue. 

And although an attempt was made in the accompanying 

memorandum to dispose of the estoppel issue, the tria-1 court 

failed to analyze the estoppel evidence that McCullough had 

presented, and failed to apply the elements of estoppel to 

this evidence. We are left with the unsupported conclusion 

of the trial court that "[tlhe plaintiff has failed to 

establish the requisite elements of estoppel." 

We set forth sufficient facts here to provide a general 

background picture and we then add more fa-cts while applying 

the estoppel elements to the evidence. 

On July 17, 1980, Martin McCullough, pursuant to a 

general custom with other Montana farmers and also pursuant 

to a custom established with Beck in three previous dealings, 

sent Beck a written contract confirming what McCullough 

believed was an oral. telephone agreement for Beck to sell to 

McCullough 10,000 pounds of certified seed potatotes at $4.50 

per cwt (cwt being the price per 100 pounds of potatoes). 

McCullough farms seed potatoes with his son in Broadwater 

County Montana, but his primary business is that of a 

licensed potato broker with some 20 years experience. 

McCullough operates his business, a family corporation 
consisting of himself, his wife, and a son, out of Kennewick, 

Washington. Charles Beck is a farmer rancher in Powell 

County, who grows other crops and raises livestock, but who 

also had almost 15 years experience as a seed potato farmer. 

He was familiar with the marketing of seed potatoes, although 

he did not have the overall general experience of Martin 

McCullough. McCullough and Reck had been neighbors in times 

past, and McCullough had for several years Leased 700 acres 

from Beck on which he grew seed potatoes. Their dealings had 

always been above board and each characterized the other as 

an honest person. 

The written contract sent to Reck was in compliance with 

the UCC statute of frauds, and was sufficient to bind 

McCullough. By the time McCullough had sent the contract to 

Beck, McCul.lough had already made commitments to Washington 

"table-stock" farmers to purchase 10,000 pounds of Beck 

potatoes for use in the following spring planting season. 

Beck testified that he was fully aware of McCullough's 

practice in obtaining commitments from Washington 

"table-stock" farmers, and that he assumed McCullough had 

followed that practice in this instance. 

Although Beck did not sign the contract (he testified at 

trial that he threw the contract away), he did nothing 

between July 17 and late November to tell McCullough they did 

not have an a-greement. McCullouqh was not particularly 

worried about Beck not returning the siqned contract beca.use 

he testified that Beck was habitually slow in getting his 

paperwork done. During the period from July 17th to the end 

pcei v$ 

of November, McCullough acted in reliance on what heto be Beck's promise, and during this same period Beck 
actively and passively led McCullough to believe the contract 

would be honored. 

The market price for seed potatoes rose steadily from 

July to November, and at the end of November, when the market 

price was approximately $9.00 per cwt (or twice that of the 

terms stated in the July 17th contract), Beck informed 

McCullough for the first time that they did not have a 

contract. He told McCullough that he had never agreed to the 

terms and that in any event he had not signed the contract. 

Because McCullough had commj-tted 10,000 cwt of Beck's seed 

potatoes to Washington "table-stock" farmers, McCullough was 

forced to borrow an additional $45,000 at interest to obtain 

the cash sufficient to buy seed potatoes at the higher market 

price of approximately $9.00 per cwt. Beck also took action 

with respect to his seed potato crop. Although he insisted 

that he was not hound by the July 17th contract because he 

had not signed it, Beck nonetheless sold his 1980 seed potato 

crop on three verbal contracts -- he did not require written, 

signed contracts for any of those transactions. 

This Court has never held that the absence of a 

signature to a contract otherwise binding is absolute]-y fatal 

to a contract for the sale of personal property. We 

recognized this principle most recently in Cargill Inc. v. 

Wilson (1975), 166 Mont. 346, 532 P.2d 988, where the defense 

was that the seller had not agreed to the contract because he 

had not signed the contract, even though his name had been 

signed to the contract by the grain dealer, with the seller's 

acquiescence. Although we recognized that the requirement of 

some writing is important to evidence the agreement, we held 

strict adherence to the signature requirement is not 

necessary where the "relationship and course of dealings 
between the parties justifies one party's belief that the 

other has consented to the written statement of contract, 

even though he had not signed it." 532 P.2d at 990. If the 

necessary relationship and course of dealings is established, 

we held that: 

11 . . . the contract may be enforced. The 

beneficial purposes of the statute of frauds a.re 

preserved - the dangers of mistake or fraud are 

averted -- and the ends of justice are served." 

Cargill-, supra, 532 P.2d at 990. 

Although the facts of Cargill are not directly analogous 

to the factual situation here, the case clearly recognizes 

that lack of a signature to a contract for the sale of goods 

is not indispensable to the enforcement of a contract 

otherwise binding. And that is the situation here. But here 

we rely on the principles of estoppel in holding that Beck 

cannot be permitted to rely on the statute of frauds where 

his active and passive conduct in the transaction 1-ed 

McCullough to detrimentally rely on the belief that he had a 

contract. 

Although Beck cites authority holding that estoppel 

cannot apply to a UCC statute of frauds transaction, we have 

no difficulty in holding to the contrary. The UCC expressly 

mentions estoppel as one of the genera1 principles of law 

that supplement the UCC (section 30-1-103, MCA), unless other 

parts of the UCC expressly displace that principle. Here no 

provision of the UCC states that estoppel cannot be applied 

to defeat a statute of frauds defense. Furthermore, another 

UCC provision, section 30-1-203, MCA, requires good faith in 

all UCC transactions, stating: "Every contract or duty 

within the [Uniform Commercial Code] imposes as obligation of 

good faith in its performance or enforcement." 
Relying on this good faith provision, the Oreqon Court 

of Appeals in Potter v. Hatter Farms, Inc. (Ore. 1982) , 641 

P.2d 628, in a factual situation much like the situation 

here, held that estoppel as a bar to enforcement of the 

statute of frauds, is consistent with the obligation of good. 

faith required in all UCC transaction. And other cases with 

factual pa-tterns similar to this case have recognized 

estoppel as a principle to defeat reliance on the statute of 

frauds as a defense to a contract suit. See Warder and Lee 

Elevator v. Britten (Iowa 1979), 274 N.W.2d 339; Decatur 

Cooperative Association v. Urban (Ks. 1976), 547 P.2d 323; 

Farmers Elevator Company of Elk Point v. Lyle (S.D. 1976), 

238 N.W.2d 290. And, although the case did not involve a 

statute of frauds issue, this Court applied estoppel to UCC 

banking procedures in Reyer v. First National Bank of Dillon 

(1-980) , Mont . , 612 P.2d 1285. Clearly, in the 

absence of a provision expressly prohibiting application of 

estoppel to particular provisions of the UCC, estoppel 

applies to UCC transactions. 

This Court has recognized equitable estoppel, promissory 

estoppel, and estoppel by silence. Sweet v. Colburn School 

Supply (1982), 196 Mont. 367, 639 P.2d 521 (equitable 

estoppel); Keil v. Glacier Park, Inc. (1980), Mont. 

614 P.2d 502 (promissory estoppel) ; City of Billings v. 

Pierce Packing Company (1945), 117 Mont. 755, 161 P.2d 636. 

McCullough argues that he is entitled to relief by 

application of any one of these prj-nciples of estoppel-, and 

he has set forth in detail the evidence to support that 

conclusion. Beck, on the other hand, presented no evidence 

to refute McCul-lough' s evidence, and Beck's appellate brief 

ignores the evidence marshalled by McCullough to support an 
estoppel application. Beck simp1.y argues that estoppel does 

not apply to a UCC statute of frauds transaction, a 

contention that we decide to the contrary. 

Although we base our decision on estoppel by silence, we 

cannot deny that the facts may fit elements of estoppel also 

appropriate to equitable estoppel. This is so, because as is 

so often the case in any branch of the law, each form of 

estoppel does not fall into a neatly packaged and exclusive 

category. Rather, the forms of estoppel also blend with each 

other. For example, here there was not only a duty to speak 

imposed on Beck because of his relationship to PlcCullough and 

his knowledge that McCullough wa.s relying on a be1 ief that a. 

contract existed, there was also active conduct by Beck that 

can only be interpreted as constituting an intent to mislead 

McCullough into thinking that Beck wou1.d honor the July 17th 

contract. 

This Court set out the rule of estoppel by silence in 

Sherlock v. Greaves (1938), 106 Mont. 206, 76 ~.2d 87, where 

we stated: 

"To constitute an estoppel by silence or 

acquiescence, it must appear that the party to be 

estopped was hound in equity and good conscience to 

speak, and that the party claiming estoppel relied 

upon the acquiescence and was misled thereby to 

change his posi-tion to his prejudice. [citing 

authority] Mere silence cannot work an estoppel. 

To be effective for this purpose, the person to be 

estopped must have had an intent to mislead or a 

willingness that another would be deceived; and the 

other must have been misled by the silence." 

Sherlock v. Greaves, supra, 106 Mont. at 217, 76 

P.2d at 91. 

The general situatj.on is that Beck and McCullough knew 

each other well for many years, they had many dealings with 

each other over the years, and. they had three previous potato 

seed sales where the same procedure was followed. Rased on 
past experience, Reck knew that McCull.ough had most probably 

committed the 10,000 cwt of Beck potatoes to Washington 

"table-stock" farmers, and Beck testified that he assumed 

such was the case in this transaction. Beck further 

testified that from July 17, 1980, until the end of November, 

1980, McCullough at all times believed that he had a contract 

with Beck. And yet if Beck did subjectively believe that he 

had no contract with McCullough, he admitted he did nothing 

to inform McCullough of his position until the end of 

November. If Beck believed he had no contract with 

McCullough, he was clearly bound in equity and good 

conscience to tell. McCullough at his earliest opportunity 

that he believed he had no contract. But Beck was silent. 

However, the situation that existed after Beck received 

the July 17th contract in the mail, involves more than mere 

silence. Between July 17th and the end of November, 

McCullough testified that both Beck and Beck's wife told him 

on more than one occasion that the contract would be signed 

and sent to McCullough. Although Mrs. Beck denied the 

substance of these conversations with McCullough by stating 

that she could not recall the details of the calls, 

McCulloughls testimony about his conversations with Charles 

Reck stands unrefuted. Further, on two occasions Beck told 

McCullough that his banker was concerned that he had not made 

a good deal but that he (Beck) was unconcerned because he was 

running the operation, not the banker. One of these 

occasions was in October when McCullough stopped at the Beck 

place an his way from Townsend, Montana to the state of 

Washington. This testimony also stand unrefuted. And 

finally, McCullough testified to a visit to the Beck place in 

August to check on the potato crops. Although Charles Reck 
was not there (he was in Dillon according to the farm hand 

who spoke to McCullough) , and Mrs. WcCullough testified that 

she could not recall whether McCullough visited the farm in 

August, McCullough's testimony about his visit and the 

details of his ~risit cannot be ignored. Clearly, he would 

not have visited the Beck place to check on the progress of 

the seed potato crop unless he thought he had a contract with 

Beck. All of this is clear evidence that Beck, by his active 

as well as passive conduct, led McCullough to believe that he 

had a contract with Beck. 

The uncontradicted evidence is that McCullough clearly 

relied to his detriment on the belief, fostered by Beck's 

active and passive conduct, that he had a contract with Beck. 

It was not until the end of November, when the market price 

for seed potatoes was up to $9.00 per cwt, that Beck first 

told McCullough that a misunderstanding had occurred, that he 

had never agreed to the contract, and that in any event he 

had not signed the contract. When McCullough learned of 

Beck's decision, in order to cover his commitment to 

Washington "table-stock" farmers for 10,000 cwt of Beck's 

seed potato crop, McCullough was forced to borrow an 

additional $45,000 at interest to purchase the potato seeds 

at the existing higher market price of $9.00 per cwt. 

Finally, although Beck now makes an issue of not having 

signed the July 17th contract, he did not hesitate in selling 

his 1980 seed potato crops to others on the basis of 

unwritten, unsigned contracts. The only difference was that 

*w\ Beck sold his crops for the kkm existing market price of 

approximately $9.00 per cwt rather than the $4.50 per cwt he 

would have obtained had he honored the July 17th contract 

with McCullough. 
These facts establish an estoppel by silence as a matter 

of law. 

We reverse the iudgment of the District Court and remand 

for consideration of the proper damages owed to McCul.lough. 

We Concur: 

Justices