No. 13189 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1976 

FARMERS ELEVATOR COMPANY OF 

RESERVE, a corporation, 

Plaintiff and Respondent, 

-vs - 

DALE ANDERSON, 

Defendant and Appellant. 

Appeal from: District Court of the Fifteenth Judicial District, 

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 Falls, 

Montana 

Harrison, Loendorf and Poston, Helena, Montana 

Jerome T. Loendorf argued, Helena, Montana 

Submitted: May 24, 1976 

T 

Decided: dU!- -2 197f. --- JFEL -.z ;:j~-;. 

Filed : 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This appeal is taken from a judgment entered August 25, 1975, 

in the district court, Sheridan County. Farmers Elevator Co. 

of Iieserve, a cooperative enterprise, successfully sought damass 

for breach of a contract made with Dale Anderson, a local farmer 

in the Dagmar area. 

Anderson had been a patron of Farmers Elevator Co. for 

several years, and during the year 1972 he made numerous contracts 

with it for the sale and purchase of his durum wheat. At the time 

rhis action was commenced, Anderson had been farming for about ten 

years. He was thus generally familiar with the nature of grain 

trading in his area, and with the customs and procedures utilized 

by plaintiff in the conduct of its operations. 

On October 28, 1972, Anderson contracted with the Farmers 

Elevator Co. for the sale of 18,000 bushels of durum wheat at a 

price stipulated in the record to be $1.80 per bushel. Farmers 

Elevator Co. resold the wheat three days later for $2.44 per bushel 

to the Farmers Union Grain Terminal Association outlet in Great 

Falls, Montana. The contract was strictly oral, the only written 

evidence of the agreement being an unsigned notation in a small 

"book" used by Farmers Elevator Co. to record its purchases in the 

ordinary course of its business. Testimony and a confirmatory memorandum establish that the approximate delivery date contemplated by 

the parties was February 1973. 

Although the contract was oral in nature, we note Anderson 

has at no time denied the existence of the contract, the quantity 

contracted for, or the stipulated price. Farmers Elevator Co. 

normally contracts orally with its patrons and pays by check upon 
delivery, whether in full or partial sacisfaction df its purchase 

contracts. 

Pursuant to his contract, Anderson delivered 8,802 bushels 

of durum wheat in approximately 36 truckloads between March 27, 

1973, and May 30, 1973. He was paid for the delivered grain by 

customary check, except for the sum of $2,575.33. Although a check 

for this amount was issued by Farmers Elevator Co., it has not been 

delivered and i s s t i l l due and owing to Anderson. 

The reason for the variance between the proposed delivery 

date and the daks that delivery actually took place, is critical 

to the resolution of the issues presented. The record establishes, 

and the district court in fact found, that Farmers Elevator Co. 's 

ability to accept deliveries from its patrons is wholly dependent 

upon the availability of elevator space. In turn, the availability 

of elevator space depends directly on the availability of transoortation for outgoing shipments. When sufficient rail cars or 

trucks cannot be found to transport the grain, the elevator becomes 

backlogged for space. The delivery dates of established contracts 

must often be extended until transportation is secured, and the 

elevator is again capable of handling incoming deliveries. During 

the fall 1972 and early 1973, a serious regional boxcar shortage 

existed and consequently delivery dates on all purchase contracts 

were moved ahead. Because of the resultant shortage of elevator 

space, Anderson was allowed to deliver less than half of the durum 

wheat which he had sold, until transportation was obtained in early 

June 1973. 

By early summer the elevator was again in a position to 

receive wheat from Anderson. Anderson was well aware of this, as 
the record reveals he was contacted by phone, as well as by letters 

dated July 31, August 13, and September 18, 1973. During August 

1973 Anderson was personally visited by plaintiff's Board of 

Directors. On September 27, 1973, the Board Chairman learned 

by telephone of Anderson's refusal to deliver further on his contract. 

The next day plaintiff was forced to cover for the undelivered 

wheat, and purchased 9,198 bushels at the then current market price, 

which by that time had risen to $6.50 per bushel. It was established at trial that Anderson sold his wheat to another elevator 

in North Dakota for $5.35 per bushel. Anderson raised and harvested 

more wheat in August and September 1973, but he never tendered 

any of this to plaintiff or made any further effort to honor his 

contract with it. 

Two basic issues are raised on appeal: 

(1) Is enforcement of the oral agreement and the alleged 

modification as to 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 in fact 

modified by a course of performance within the meaning of section 

87A-2-208, R.C.M. 1947? 

In a commercial setting such as here, Montana law provides 

that no contract for the sale of goods, for the price of $500 or 

more, is enforceable unless some writing exists sufficient to 

establish that an agreement between the parties was reached. 

Section 87A-2-201, R.C.M. 1947. However, several exceptions are 

listed in the statute, one is: 

"(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other 

respects is enforceable 
"(b) if the party againsr whom enforcement 

is sought admits in his pleading, testimony or 

otherwise in court that a contract for sale was 

made, but the contract is not enforceable under 

this provision beyond the quantity of goods admitted * * *." 

That the agreement, but for the lack of writing, is "valid 

in other respects" is not contested by the parties. There can 

he no doubt of Anderson's admissions, in his deposition and at 

trial, as to the existence of the contract. At trial he testif ied : 

"Q. So your testimony is that there was an 

agreement for you to sell eighteen thousand bushels 

of durum? A. Yes. 

"Q. And that agreement was made in October, October 

28th, of 1972, is that correct? A. Yes. I I 

The so-called "judicial admission" exception to the Statute 

of Frauds as set forth by section 87A-2-201(3)(b) prevents a litigant from simultaneously admitting the existence of a contract 

and claiming the benefits of the statute. 2 Williston on Sales, 

(4th Ed.), 514-9, p. 303. The basic rationale behind this exception relates directly to the very purpose of the rule itself, as 

enunciated in Gravelin v. Porier, 77 Mont. 260, 281, 282, 250 P. 

"'As the primary object is to prevent mistakes, 

frauds, and perjuries, by substituting written for 

oral evidence in the most important classes of 

contracts, the courts of equity have established the 

principle * * * that it shall not be used as an 

instrument for the accomplishment of fraudulent purposes; designed to prevent fraud, it shall not be 

permitted to work fraud. "I 

In that the original oral contract is not rendered unenforceable by the Statute of Frauds, we next examine the effect of the 

alleged modification as to the date of delivery. Section 87A-2- 

209 (3), provides : 
"The requirements of the statute of frauds section 

of this chapter * * * must be satisfied if the contract as modified is within its provisions ." 

While the record is clear as to Anderson's "admissions" 

regarding the original contract, no such admission was shown 

concerning the alleged modification of the delivery date. Anderson argues that if the original contract is enforceable that 

the exception which brought the original oral contract out of 

the Statute of Frauds, cannot be applied to the alleged oral 

modification and enforcement of the contract as modified under 

section 87A-2-209(3) is barred. However, this does not complete the 

analysis under the facts here. Anderson's deliveries after the set 

date must be considered. 

Section 878-2-209(4) provides that an attempt at modification which is void under the statute of frauds may still operate 

as a waiver to assert the defense through the course of performance 

engaged in by the parties under section 878-2-208, R.C.M. 1947. 

2 Williston on Sales (4th Ed.), 5 12-6, p. 23. While the trial 

court did not make a specific finding holding there was a waiver, 

its findings when read as a whole, do find there was a waiver and 

consent by Anderson. Under section 87A-1-103, the Uniform 

Commercial Code can be supplemented, for purposes of interpretation, 

by the general principles of law and equity, unless specifically 

displaced by the Code. The facts presented in the instant case, 

require that we find that a waiver such as is contemplated by 

section 87A-2-209(4) occurred and we agree. 

The term "waiver" is generally defined as a voluntary and 

intentional relinquishment of a known right, claim or privilege. 

Mundt v. Mallon, 106 Mont. 242, 76 P.2d 326; State ex rel. 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 renunciation 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 constitute 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 performance" 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 interpreting 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 acquiescense in the elevator's need to extend the delivery date. Anderson'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: 

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\*,. J # Justices 

II 

Hon. Gordon R. Be 

Judge, sitting for Mr. Chief 

Justice James T. Harrison.