### No. 13189 INTHE 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 ajudgment 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 1972he made numerous contracts with it for the sale and purchase of his durum wheat. 

### Atthe time rhis action was commenced, Anderson had been farming for about ten years. He was thus generally familiarwith the nature of grain trading inhis 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 ata price stipulated in the record tobe $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 inGreat Falls, Montana. The contract was strictlyoral, the only written evidence of the agreement being an unsigned notation in a small "book" used by Farmers Elevator Co. to record itspurchases inthe ordinary course 

### of itsbusiness. Testimony and a confirmatory memorandum establish that the approximate delivery date contemplated by the parties was February 1973. Although the contract was oral innature, we note Anderson has atno time denied the existence of the contract, the quantity contracted for, or the stipulatedprice. Farmers Elevator Co. normally contracts orallywith itspatrons and pays by check upondelivery, whether in fullor 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 grainby 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 ldue and owing toAnderson. The reason for the variance between the proposed delivery date and the daks that delivery actually took place, iscritical 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 

### itspatrons 

### iswholly 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 sufficientrailcars or trucks cannot be found to transport the grain, the elevatorbecomes backlogged for space. The delivery dates of established contracts must oftenbe 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 allpurchase 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 transportationwas 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, aswell as by letters dated July 

### 31, August 13, and September 18, 1973. During August 1973Anderson was personally visitedby 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 atthe then currentmarket price, which by that time had risen to $6.50 per bushel. 

### It was established attrialthatAnderson soldhiswheat to another elevator inNorth Dakota for $5.35 per bushel. Anderson raised and harvested

more wheat inAugust and September 1973, but he never tendered any of this toplaintiff ormade 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 deliverybarred 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 themeaning 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, isenforceable 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 satisfythe requirements of subsection (1) but which 

### isvalid inother respects 

### is enforceable"(b) if the party againsr whom enforcement is sought admits inhis pleading, testimony or otherwise incourt that a contract for salewas made, but the contract isnot 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, inhis deposition and at trial, 

### as to the existence of the contract. Attrialhe testified: "Q. So your testimony 

### is that therewas an agreement for you to selleighteen thousand bushels of durum? 

### A. Yes. "Q. And that agreement was made in October, October 28th, of 1972, 

### is that correct? A. Yes. II The so-called "judicial admission" exception to the Statute of Frauds as set forthby section 87A-2-201(3)(b) prevents a litigant from simultaneously admitting the existence of a contract and claiming thebenefits of the statute. 

### 2 Williston on Sales, (4th Ed.), 514-9, p. 303. The basic rationalebehind this exception relates directly to the very purpose of the rule itself, as enunciated inGravelin v. Porier, 

### 77Mont. 260, 281, 282, 

### 250 P.

"'As the primary object istoprevent mistakes, frauds, and perjuries, by substituting written for oral evidence inthemost important classes of contracts, the courts of equityhave established the principle

# ** * that it shallnot be used as an instrument for the accomplishment of fraudulent purposes; designed to prevent fraud, it shallnot be permitted towork fraud. "I In that the original oral contract is not rendered unenforceableby 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 asmodified iswithin itsprovisions

# ." While the record 

### is clear as toAnderson's "admissions" regarding the original contract, no such admission was shown concerning the allegedmodification of the delivery date. Anderson argues that if the original contract isenforceable 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 asmodified under section 87A-2-209(3) isbarred. However, this does not complete the analysis under the facts here. Anderson's deliveries after the set datemust be considered. Section 878-2-209(4) provides that an attempt atmodificationwhich isvoid under the statute of frauds may stilloperate

as 

### a waiver to assert the defense through the course of performance engaged inby 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 iscontemplated by section 87A-2-209(4) occurred and we agree. The term "waiver" 

### is generallydefined 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, 

### 80Mont. 97, 257 

### P. 1014. InNorthwestern Fire & 

### Marine InsuranceCo. v. Pollard, 74Mont. 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 somebenefit or advantage,which,but for such waiver, a partywould have enjoyed. Itmay be proved by express declarations

# *** or by a course of acts and conduct

# *** as to induce the belief that itwas his intentionand purpose towaive."' (Emphasis supplied.) By delivering,pursuant to contract,approximately 36 truckloads ofwheat to the elevator between March 27 and May 30, 1973,Anderson established a course of conduct sufficient to constitute awaiver ofhis right to assert a defense under the statute of frauds. Andersonbegan to deliver on a date well after the delivery date originally contemplated,and his actions certainly induced plaintiff's apparentbelief 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 iswhether the actions ofAnderson betweenMarch 27 and May 

### 30, 1973,constituted a "course of performance" and whether these actswere, 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 transactionwhich is fairly to be regarded as establishing a 

### commonbasis of understanding for interpreting their expressions and other conduct." Under section 87A-2-208(1) "any course of performance accepted or acquiesced inwithout 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 deliverywere sufficient for the district court to imply a 

### finding of acceptance or acquiescense in the elevator's need to extend the deliverydate. Anderson's failure to make timely objection to the elevator's temporary refusal to accept delivery is of particular significancehere. For although section 87A-2-208would not specificallyrequire a timely objectionunder these circumstances, such a condition must be implied if the law is to be construedwith any meaning in the commercial setting. Oskey Gasoline and Oil Co., Inc. v. OKC Refining, Inc., 364F.Supp. 1137;Flood v. 

### M.P. Clark, Inc., 319 F.Supp. 1043. The judgment is affirmed.

We Concur:

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### ,y< /$ 

### \*,. 

# J

# 

### Justices

II 

### Hon. Gordon

### R. Be Judge, sitting forMr. Chief Justice James

### T. Harrison.