No 

No. 98-034

IN THE SUPREME COURT OF THE STATE OF MONTANA

1998 MT 280

MONICA R. SMITH, 

Plaintiff and Appellant, 

v.

GENERAL MILLS, INC., 

a corporation, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Twelfth Judicial District, 

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In and for the County of Liberty, 

Honorable John Warner, Judge Presiding.

COUNSEL OF RECORD:

For Appellant:

Keith A. Maristuen and John F. Jenks, Bosch, Kuhr, Dugdale, 

Martin and Kaze, Havre, Montana

For Respondent:

K. Dale Schwanke, Jardine, Stephenson, Blewett and Weaver, 

Great Falls, Montana

Argued: September 29, 1998

Submitted: October 20, 1998

Decided: November 17, 1998 

Filed:

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__________________________________________

Clerk

Chief Justice J. A. Turnage delivered the Opinion of the Court. 

¶1. Monica R. Smith (Monica) appeals from the order of the Twelfth Judicial District 

Court, Liberty County, denying her post-trial motions in an action filed by her 

against General Mills, Inc. (General Mills), for conversion of funds and breach of 

contract. Monica also appeals from the ruling of the District Court that General 

Mills was not barred from seeking enforcement of a separate contract under the 

Uniform Commercial Code's statute of frauds. We affirm. 

ISSUES

¶2. 1. Did the District Court err in holding that John Smith was a "merchant" for 

purposes of applying the exception to the statute of frauds found under § 30-2-201(2), 

MCA?

¶3. 2. Did the District Court err in failing to enter judgment as a matter of law? 

¶4. 3. Did the District Court err in denying Monica's motion for an award of court 

costs? 

BACKGROUND

¶5. Monica and her husband operated a farm north of Chester, Montana (the Smith 

farm or the farm), from 1945 until his death in 1984. After their father's death, 

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Monica's sons, Frank Smith (Frank) and John Smith (Jack) operated the farm as 

partners for a number of years. Eventually, Jack went on to pursue other 

occupations, and Frank continued to operate the farm on his own. Frank died in 

1993, leaving Monica as his sole heir. Monica nominated Jack as the personal 

representative of Frank's estate. 

¶6. During 1993 and part of 1994, Jack operated the Smith farm under a lease from 

Frank's estate. Some of the land had been seeded with spring wheat prior to Frank's 

death, and this crop was harvested by Jack in 1993. Unfortunately, the 1993 spring 

wheat crop was damaged by frost and so became marketable only as feed wheat. 

After harvesting the 1993 crop, Jack placed approximately 21,000 bushels of the feed 

wheat into storage on the farm. Although the 1993 feed wheat belonged to Monica, 

Jack was authorized to sell the wheat on her behalf at such times and at such prices 

as he deemed appropriate. 

¶7. It was alleged by General Mills, and the jury in this case so found, that on August 

12, 1994, Jack, acting as an agent on behalf of Monica during the course of a 

telephone conversation between Jack and the manager of General Mills' Joplin, 

Montana, grain elevator, entered a contract for the sale of the feed wheat to the 

Joplin elevator for a price of $2.55 per bushel (hereinafter the Joplin elevator 

contract or Joplin contract). Following this conversation, a written agreement 

confirming the terms of this contract was prepared and mailed to Jack. Although 

Jack admitted receiving the contract, he did not execute or return it to the Joplin 

elevator. Jack later denied the existence of the Joplin contract, and ultimately sold 

the feed wheat to General Mills' Tiber, Montana, grain elevator for $3.00 per bushel 

under a contract formed on September 16, 1994 (hereinafter the Tiber elevator 

contract or Tiber contract). 

¶8. The controversy between these parties arose when General Mills withheld 

$15,000 out of the payment issued to Monica on the Tiber elevator contract, asserting 

that due to Jack's breach of the Joplin elevator contract, General Mills was entitled 

to an offset of the difference on the two contracts. In an effort to recover the withheld 

payment, Monica filed this complaint against General Mills alleging conversion of 

the funds or, in the alternative, breach of the Tiber elevator contract. General Mills 

counterclaimed, asserting that Monica, through her agent, Jack, was in breach of the 

Joplin elevator contract, and that General Mills was therefore entitled to offset the 

debt it owed to Monica on the Tiber contract by the amount of damages it sustained 

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through nonperformance of the Joplin contract. Monica responded by asserting that 

enforcement of the Joplin contract was barred by the statute of frauds, because Jack 

had never signed the contract mailed to him by the Joplin elevator. 

¶9. At the close of the evidence in a jury trial on the merits, the District Court ruled 

as a matter of law that enforcement of the Joplin elevator contract was not barred by 

the statute of frauds under the Uniform Commercial Code's "merchant exception" 

to the statute of frauds. All other issues were submitted to the jury, and a verdict was 

issued in favor of General Mills. Findings of fact set forth in the jury's special verdict 

include a finding that Jack had entered into a contract with General Mills' Joplin 

elevator on behalf of Monica for the sale of 20,000 bushels of feed wheat, that this 

contract was breached when Jack refused to deliver the grain, and that under the 

terms of the contract, General Mills was entitled to cancel the contract and recover 

the cost of pricing out that contract at the market price for feed wheat as of the time 

of cancellation. At the close of trial, Monica filed a motion for new trial, or in the 

alternative for a judgment as a matter of law, and for an award of court costs. The 

District Court denied both of Monica's motions, and this appeal followed. 

DISCUSSION

¶10. Did the District Court err in holding that John Smith was a "merchant" for purposes of applying the 

exception to the statute of frauds found under § 30-2-201(2), MCA?

¶11. Whether or not a person qualifies as a merchant under the Uniform 

Commercial Code is a mixed question of law and fact. See Dawkins & Co. v. L&L 

Planting Co. (Miss. 1992), 602 So.2d 838, 843. Our standard of review as to 

conclusions of law, questions of law, legal components of ultimate facts, or mixed 

questions of law and fact is whether the lower court's determination of law is correct.

Maguire v. State (1992), 254 Mont. 178, 182, 835 P.2d 755, 757-58. 

¶12. Section 30-2-201, MCA, sets forth the statute of frauds governing contracts for 

the sale of goods in Montana. The general provision of that statute reads in pertinent 

part: 

Except as otherwise provided in this section a contract for the sale of goods for the price 

of $500 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 

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broker. 

Section 30-2-201(1), MCA. Section 30-2-201(2), MCA, commonly referred to as the 

"merchant exception" to the statute of frauds, abrogates the requirement that a contract be 

in writing to be enforceable when the contract is between merchants:

Between merchants if within a reasonable time a writing in confirmation of the contract 

and sufficient against the sender is received and the party receiving it has reason to know 

its contents, it satisfies the requirements of subsection (1) against such party unless written 

notice of objection to its contents is given within 10 days after it is received.

Section 30-2-201(2), MCA. The term "merchant" is defined by § 30-2-104(1), MCA, as

a person who deals in goods of the kind or otherwise by his occupation holds himself out 

as having knowledge or skill peculiar to the practices or goods involved in the transaction 

or to whom such knowledge or skill may be attributed by his employment of an agent or 

broker or other intermediary who by his occupation holds himself out as having such 

knowledge or skill.

¶13. Although the question of whether a farmer may be deemed a merchant for 

purposes of § 30-2-201(2), MCA, is a matter of first impression for this Court, there 

are a number of other jurisdictions which have had occasion to address it. Despite 

the split of authority on this issue, a majority of courts have held that under the 

Uniform Commercial Code, a farmer may be included under the definition of 

"merchant" in some instances. See, e.g., Prenger v. Baker (Iowa 1995), 542 N.W.2d 

805; Dawkins & Co., 602 So.2d at 838; Colorado-Kansas Grain Co. v. Reifschneider

(Colo. App. 1991), 817 P.2d 637; Burkhart v. Marshall (Ohio App. 1989), 578 N.E.2d 

827; Goldkist, Inc. v. Brownlee (Ga. App. 1987), 355 S.E.2d 773; Agrex, Inc. v. Schrant 

(Neb. 1986), 379 N.W.2d 751; Nelson v. Union Equity Co-op. Exchange (Tex. 1977), 

548 S.W.2d 352. However, whether a particular farmer qualifies as a merchant 

cannot be determined through application of a per se rule; rather, it is a conclusion 

that must be reached on a case by case basis. Pierson v. Arnst (D. Mont. 1982), 534 F.

Supp. 360, 362; Rush Johnson Farms, Inc. v. Missouri Farmers Ass'n., Inc. (Mo. App. 

1977), 555 S.W.2d 61, 65.

¶14. The facts relied upon by the District Court in its determination that Jack was a 

merchant subject to the "merchant exception" to the statute of frauds were explicitly 

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set forth in the record by the District Court and were not in substantial dispute at 

trial. Among the considerations given weight by the District Court were the fact that 

Jack had an operative knowledge of the grain marketing system, including how the 

buying and selling worked, how competition moved the market, and what factors 

affected price. He was familiar with all facets of marketing the grain, including 

knowledge of the product, how to produce it, how to store it, where and how to sell it, 

and how to negotiate the best terms possible for its disposition. Jack's experience in 

marketing grain spanned a period of many years, and he had even been entrusted 

with the marketing of grain in a fiduciary capacity for his mother and his brother's 

estate. Furthermore, Jack acknowledged in writing as part of the Tiber elevator 

contract that he was a merchant for purposes of marketing the grain he produced. 

¶15. Our review of the record supports the District Court's conclusion that Jack was 

a dealer in grain or otherwise by his occupation held himself out as having 

knowledge or skill peculiar to the marketing of grain. We therefore affirm the ruling 

of the District Court that the confirmation sent to Jack by the Joplin elevator was 

sufficient to satisfy the statute of frauds under § 30-2-201(2), MCA. 

¶16. Did the District Court err in failing to enter judgment as a matter of law?

¶17. Our standard of review of denial of a motion for judgment as a matter of law 

under Rule 50(b), M.R.Civ.P., is whether substantial evidence supports the verdict of 

the jury. Kapner, Wolfberg & Assoc. v. Blue Cross (1995), 270 Mont. 283, 285, 891 

P.2d 530, 532. Substantial credible evidence is evidence which a reasonable mind 

might accept as adequate to support a conclusion. Kneeland v. Luzenac America, Inc., 

1998 MT 136, ¶ 45, ___ P.2d ___, 55 St.Rep. 541, ¶ 45. Upon reviewing a jury verdict 

the evidence must be viewed in the light most favorable to the prevailing party. 

Kneeland, ¶ 45.

¶18. Monica contends that the evidence in this case does not support the jury's 

findings that an oral contract existed between Jack and General Mills' Joplin 

elevator. We disagree. Jack's testimony indicates that on the day the oral contract 

was formed he was out in the field combining barley, and so could not have placed 

the phone call to the Joplin elevator for the sale of the feed wheat. However, the 

testimony of the manager of the Joplin elevator was that Jack did in fact place such a 

call and that a contract was negotiated on that day. Furthermore, the secretary at the 

Joplin elevator testified that she overheard the telephone conversation between Jack 

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and the elevator manager and shortly thereafter prepared the contract documents in 

conformity with the substance of the conversation. 

¶19. The jury's findings in this instance are dependent upon a determination of the 

credibility of each of these witnesses. When conflicting evidence exists, it is the 

province of the jury to judge the credibility and weight of the evidence; this Court 

will not retry a case or reweigh evidence on appeal. Kneeland, ¶ 45; Fox Grain and 

Cattle Co. v. Maxwell (1994), 267 Mont. 528, 539, 885 P.2d 432, 439. We therefore 

hold that there is substantial credible evidence in the record to support the jury's 

verdict that a contract was formed on August 12, 1994, between Jack and General 

Mills' Joplin elevator for the sale of 20,000 bushels of feed wheat.

¶20. Monica also contends that no substantial evidence was presented at trial to 

support the jury's verdict that November 2, 1994, was an appropriate date for 

General Mills to cancel and price out the Joplin contract. In particular, Monica relies 

upon testimony which indicated General Mills knew of Jack's repudiation of the 

Joplin contract as early as September 20, 1994, a date when the market price for 

covering the undelivered goods would have cost five cents less per bushel. It is 

Monica's contention that General Mills was obligated to price out the Joplin contract 

at the market price for feed wheat on September 20, 1994, rather than on November 

2, 1994. 

¶21. Our review of the record reveals that there was substantial credible evidence to 

support the jury's verdict that November 2, 1994, was a reasonable date upon which 

to cancel and price out the Joplin contract. Upon being notified that Jack was not 

going to deliver the grain under the Joplin contract, the manager of the Joplin 

elevator contacted his superior in the regional office in Great Falls, Montana, who 

followed up on that information with a written letter to Jack requesting performance 

under the contract and setting a deadline for cancellation of the contract if 

performance was not forthcoming. When its deadline was not met, General Mills 

canceled the contract and priced out its damages at the market price for feed wheat 

on that day, as it was entitled to do under the terms of its contract. 

¶22. Section 30-2-610(a), MCA, specifically authorizes an aggrieved party to a 

repudiated contract to await the performance of the repudiating party for a 

commercially reasonable time before deeming the contract breached. The jury found 

General Mills' actions in urging Jack's performance before canceling the contract to 

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be commercially reasonable, and we see no reason to disturb this finding on appeal. 

We therefore affirm the decision of the District Court in denying Monica's motion 

for judgment as a matter of law. 

¶23. Did the District Court err in denying Monica's motion for an award of court costs? 

¶24. Monica assigns as her third error on appeal the failure of the District Court to 

award her court costs as the prevailing party on General Mills' counterclaim. In 

reviewing a district court's award of costs, our standard of review is whether the 

district court abused its discretion. Gilluly v. Miller (1995), 270 Mont. 272, 274, 891 

P.2d 1147, 1148. In its Order on Post-Trial Motions, the District Court declined to 

award court costs to Monica on the grounds that Monica was not the prevailing 

party on General Mills' counterclaim. General Mills abandoned its counterclaim at 

the close of the evidence, and no instructions were given to the jury in relation to the 

counterclaim. Monica made no objection to the lack of jury instructions on that 

issue, and the jury's verdict made no reference whatsoever to the allegations in the 

counterclaim. Based on these considerations, we hold that the District Court did not 

abuse its discretion in denying Monica's request for court costs.

¶25. For the reasons stated above, we affirm the rulings of the District Court on all 

issues presented in this appeal. 

/S/ J. A. TURNAGE

We concur: 

/S/ KARLA M. GRAY

/S/ TERRY N. TRIEWEILER

/S/ JIM REGNIER 

/S/ JAMES C. NELSON

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/S/ WILLIAM E. HUNT, SR.

/S/ W. WILLIAM LEAPHART

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