No. 92-375 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

LUMBER ENTERPRISES, INC., 

a Montana corporation, 

Plaintiff, Respondent and Cross-Appellant, 

DUANE F. HANSEN and PEGGY HANSEN, 

d/b/a MODEL LOG HOMES, 

Defendants, Appellants and Cross-Respondents, 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas A. Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Marcelle C. Quist, Quist Law Office, 

Bozeman, Montana 

For Respondent: 

John H. Tarlow, Landoe, Brown, Planalp & Braaksma, 

P.C., Bozeman, Montana . 

Submitted on Briefs: January 8, 1993 

FEI~ 1 1993 Decided: February 11, 1993 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

This is an action for breach of contract. The District Court 

for the Eighteenth Judicial District, Gallatin County, granted 

judgment to Lumber Enterprises, Inc., in the amount of $45,460.50 

plus interest and costs. Duane F. Hansen and Peggy Hansen appeal. 

Lumber Enterprises, Inc., cross-appeals. We affirm. 

The issues are: 

1. id the ~istrict Court abuse its discretion in application 

of § 30-2-309, MCA? 

2. Should the court have awarded prejudgment interest to 

Lumber Enterprises, Inc.? 

Lumber Enterprises, Inc., is a Montana corporation with its 

principal place of business at Gallatin Gateway, Montana. It sells 

specially prepared logs for log homes through a network of dealers. 

Duane F. Hansen and his wife Peggy Hansen do business as Heartbilt 

Homes (formerly Model Log Homes) in Stockton, Illinois, as a dealer 

of Lumber Enterprises' products. 

The parties have had a working relationship since 1972. On 

October 29, 1985, at the request of the Hansens, the parties agreed 

to a special pricing arrangement for approximately thirty loads of 

logs to be delivered in January, February and March of 1986. 

Lumber Enterprises agreed to the reduced price to keep its crews 

busy during the winter months. 
The thirty loads were delivered but, at the request of the 

Hansens, over a much longer period of time than originally agreed. 

The last load was shipped on October 31, 1988. The price of the 

last twelve of the thirty loads is the subject of this lawsuit. 

On April 27, 1987, Lumber Enterprises issued a new price list 

to the Hansens and told them to "take it or leave it." The practical effect was to raise prices to the Hansens by about 50 percent. 

After the April 1987 price change, the Hansens ordered twelve loads 

of logs to complete the thirty-load agreement of October 1985. 

They paid for the first nine of those twelve loads at the new 1987 

prices, but under protest. Mr. Hansen testified he told the office 

manager for Lumber Enterprises that eventually there would have to 

be a reconciliation of the 1987 prices. The Hansens did not make 

payment for the last three loads, contending that this was the only 

way to force Lumber Enterprises to deal with their concerns. 

Lumber Enterprises brought suit claiming $45,460.50 was due 

from the Hansens for logs, catalogs, trusses and insulation, using 

the 1987 prices. The Hansens contended the twelve disputed loads 

should have been billed at 1985 prices. They further contended 

that Lumber Enterprises owed them $859 as part of a professional 

photography bill: a credit of $9,827.55 for half logs billed as 

full logs; and a $500 credit for help in photographing and 

assembling new company catalogues. By the Hansens' calculations, 

Lumber Enterprises owed them money. 
After trial, the District Court concluded that because of the 

long history of amicable dealings between the parties, neither 

party saw the need to have a formal written contract. It concluded 

that the Hansens would expect to deal with Lumber Enterprises in 

the future, because of the specialized nature of the product. The 

court concluded that the parties, by their conduct, allowed the 

shipments agreed to in the October 1985 negotiations to extend past 

the express terms of the contract and that the practical effect of 

the contract between the parties and their modifications of that 

contract was to transform the relationship into a contract calling 

for successive performances but indefinite in duration. The court 

concluded that 6 30-2-309, MCA, applied: 

Absence of specific time provisions -- notice of termination. (1) The time for shipment or delivery or any other 

action under a contract if not provided in this chapter 

or agreed upon shall be a reasonable time. 

(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a 

reasonable time but unless otherwise agreed may be 

terminated at any time by either party. 

(3) Termination of a contract by one party except on the 

happening of an agreed event requires that reasonable 

notification be received by the other party and an 

agreement dispensing with notification is invalid if its 

operation would be unconscionable. 

The court further concluded that the unilateral announcement 

of new prices by Lumber Enterprises on April 27, 1987, did not 

satisfy the requirement under § 30-2-309 (3), MCA, of reasonable 

notice. Taking into account the long history of dealings between 
the parties, the court deemed that thirty days' notice would be 

reasonable before Lumber Enterprises changed its prices. 

For purposes of calculating damages, the court allowed the 

parties to supplement the evidence to show how many loads of logs 

were ordered by the Hansens during the thirty-day period beginning 

April 27, 1987. The parties stipulated that no loads were ordered 

during that period. The court then ruled that the Hansens owe 

Lumber Enterprises $45,460.50, plus costs of suit. The court 

denied the credits sought by the Hansens for photography and half 

logs, the damages sought by the Hansens for breach of good faith 

and consequential damages, and the request of Lumber Enterprises 

for attorney fees. 

The Hansens appeal and Lumber Enterprises cross-appeals. 

I 

Did the District Court abuse its discretion in application of 

$3 30-2-309, MCA? 

The Hansens claim the April 27, 1987 price increase by Lumber 

Enterprises was a unilateral modification of a term of the contract, not a termination of the contract. They assert that the 

attempted modification of the contract was not made in good faith 

and that the original contract should be enforced. They claim the 

remedy should have been the one for modification of contract in the 

absence of good faith. 
The test of good faith as to merchants includes observance of 

reasonable commercial standards of fair dealing in the trade. This 

may in some situations require an objectively demonstrable reason for seeking a modification. But such matters 

as a market shift which makes performance come to involve 

a loss may provide such a reason even though there is no 

such unforeseen difficulty as would make out a legal 

excuse from performance under Sections 30-2-615 and 30-2- 

616. 

Official Comment to 5 30-2-209, MCA. 

A Lumber Enterprises manager testified that the April 27, 1987 

price increase was necessary "[b]ecause we were losing money at the 

1985 price agreement." He testified that when the original agreement was entered, Lumber Enterprises had never before sold truckloads of logs without the usual trim work done on them, and they 

believed the price was proper. However, after a year of supplying 

the Hansens with such logs, they realized they were selling the 

logs at a price below the cost of production. We conclude that the 

test of good faith has been met. 

More importantly, the Hansens ignore that the contract had 

already been extended indefinitely, with the acquiescence of both 

parties, at the time of the April 27, 1987 price increase. The 

indefinite extension placed the contract within § 30-2-309 (2), MCA, 

in that "the contract provides for successive performances but is 

indefinite in duration." Under that statute, termination is 

allowed "at any time by either partyu in such a contract. 
The Hansens contend that the contract between the parties was 

never terminated, so that 30-2-309(3), MCA, does not apply. 

Termination is defined at 3 30-2-106(3), MCA, as "when either party 

pursuant to a power created by agreement or law puts an end to the 

contract otherwise than for its breach." As stated above, 3 30-2- 

309 (2) , MCA, provides that either party has the power, at any time, 

to terminate a contract for successive performances but indefinite 

in duration. We conclude that when Lumber Enterprises unilaterally raised its prices, it had the power to, and did, put an end to 

the previous contract between the parties. 

Section 30-2-309(3), MCA, provides that a party is entitled to 

"reasonable notification" before a contract is terminated. The 

statute leaves to the finder of fact the determination of what is 

"reasonable notification." Here, the contract between the parties 

originally called forthe purchase of approximatelythirty loads of 

logs during a three-month period. The time was extended for over 

a year, at the Hansens' request, before Lumber Enterprises changed 

its prices. We conclude that, in this case, the court did not 

abuse its discretion in adopting thirty days' notice as reasonable 

and in determining that the Hansens were entitled to the original 

contract price only on additional loads of logs purchased during 

that amount of time. 

In buying loads of logs more than thirty days after the 

unilateral price increase, the Hansens effectively entered into a 
new contract with Lumber Enterprises. Lumber Enterprises brought 

this suit to collect on the unpaid debt under that contract. 

We hold that the District Court did not abuse its discretion 

in application of 5 30-2-309, MCA. 

I1 

Should the court have awarded prejudgment interest to Lumber 

Enterprises, Inc.? 

One of the reasons the District Court denied the request of 

Lumber Enterprises for prejudgment interest was that Lumber Enterprises did not file a brief in support of its motion to amend the 

findings to allow the award of prejudgment interest. The filing of 

a supporting brief is required by Uniform District Court Rule 2(b) : 

[Flailure to file a Brief within five days [of the filing 

of a motion] by the moving party shall be deemed an 

admission that the motion is without merit. 

By failing to abide by this rule, Lumber Enterprises admitted at 

the trial court level that its motion for the award of prejudgment 

interest was without merit. As a result, it waived its right to 

bring a request to this Court to award such interest. We therefore 

will not consider this issue. 

Affirmed. 

/ 

/' cw 

Chief Justice L,. 

8 
We concur: