No. 85-320 

IN THE SUPREF4E COURT OF THE STATE OF MONTANA 

1986 

WILLARD NELSON, 

Plaintiff and Respondent, 

-vsDAVIS MODERN MACHINERY, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Eleventh Judicial District, 

In and for the County of Flathead, 

The Honorable Michael Keedy, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Warden, Christiansen, Johnson & Berg; Todd A. Hammer, 

Kalispell, Montana 

For Respondent: 

M. Richard Gebhardt, Ronan, Montana 

Submitted on Briefs: Dec. 18, 1385 

Decided: March 13, 1986 

Filed: 

MAR I 3 1986 

0 

t2&z 7%- 

Clerk 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Respondent filed his complaint with the District Court 

of the Eleventh Judicial District alleging breach of warranty 

and negligence by appellant. Trial was held without a jury 

in three disjointed. sessions on December 7, 1983, January 19, 

1984, and May 17, 1984. Ten months later, on March 15, 1985, 

the District Court issued its findings of fact and conclusions of law in favor of respondent. The court entered 

judgment in the sum of $25,664.68 with no offset for balance 

due appellant or mitigation of damages. This appeal ensued. 

The findings of fact by the District Court are not 

sufficient to support the damages awarded. We therefore 

reverse and remand for new trial. 

Appellant raises the following issues: 

1. Did the District Court err in concluding there was 

breach of warranty and dealer negligence after finding that 

the machine was taken by respondent on a "tryout" basis? 

2. Did the District Court err in not making any findings with regard to mitigation of damages? 

3. Did the District Court err in admitting a repair 

hill without testimony that could establish that the bill was 

admissible hearsay? 

4. Did the District Court err in finding the sila.ge 

was unsuitable because of inferior protein content? 

5. Did the District Court err in failing to offset the 

balance due to appellant from the damages awarded to 

respondent? 

There was conflicting or insufficient testimony at 

trial regarding several matters important for the proper 

resolution of this case. The following summarizes the 
findings of the District Court. Because the scenario is 

incomplete, however, certain details are filled in by reference to the trial transcript where noted. 

Respondent, Willard Nelson, runs a dairy farm near 

Charlo, Montana. In the summer of 1980, he raised peas, 

barley and oats which were to be made into silage. The 

silage, in turn, was to feed his forty milk cows in the fall 

and winter. Unfortunately, the crops were put up too dry for 

the chemical and biological reactions which preserve silage 

in a state nutritious for cows. The dryness of the crops 

resulted from delays caused by the faulty operation of a 

piece of farm equipment known as a silage chopper. The 

silage proved unsuitable as food for milk cows, and respondent suffered a loss in milk production. He was also forced 

to buy hay in order to feed his cattle through the winter. 

In late July 1980, respondent went to appellant's store 

to purchase a silage chopper. He needed a unit that was 

compatible with the power take-off assembly on his "Super 90" 

I4assey Ferguson tractor which rotated at 540 revolutions per 

minute (rpm's). In order to work properly, a chopper must be 

compatible with the tractor in rpm's and horsepower. Appellant was aware of the type of chopper required by respondent, 

and respondent relied on appellant to furnish him with a 

compatible chopper. Appellant proposed to sell respondent a 

used "880" New Holland chopper which l~e thought would meet 

respondent's need. 

However, there was uncertainty regarding both the rpm's 

requirements of the chopper and whether or not respondent's 

tractor possessed enough power to operate the chopper properly. F.ather than running tests at the store, the parties 
agreed that respondent would take the chopper on a "tryout" 

basis, to determine compatibility. 

Respondent took the chopper to his farm and ordered a 

yolk (a part required for coupling the chopper with the power 

take-off) from Stedje Brothers, a local dealer in New Holland 

farm equipment. When the yolk arrived, respondent attached 

the chopper to his tractor and began chopping in his field. 

However, the chopper kept plugging up and causing delay. We 

note at this time that testimony from Stedje Brothers may 

have helped clarify when the chopper was taken by respondent. 

Unfortunately, no one from Stedje Brothers was called to 

testify. 

Respondent complained to appellant in late July or 

August, and appellant sent an employee to the farm to adjust 

and sharpen the knives on the chopper. When the problems 

persisted, appellant told respondent that the tractor was 

likely underpowered. Possibly, though the findings by the 

District Court do not say, because respondent planned to buy 

a larger tractor for the next season, he agreed to purchase 

the chopper anyway after appellant deducted $200 from the 

purchase price. The findings of fact are unclear as to when 

during the harvest this transaction occurred. However, the 

respondent testified at trial that it did not occur until 

after all of the crops were harvested. He also testified 

that he took the chopper "as is" at this time, because he 

thought the problem was with his tractor and not the chopper. 

The District Court, however, determined that an "as is" 

provision written on the purchase order was ineffective as a 

disclaimer of implied warranty. 

There are additional findings of fact regarding the 

purchase order and a financing agreement with dates which do 
not fit with the chronology presented in this scenario. 

However, these documents were either altered or manipulated 

to such a degree during appellant's efforts to obtain financing for respondent that their evidentiary value is questionable. The Court notes that appellant's employee, Don 

Blasdell, signed the purchase order and handled much of the 

dealings with respondent. We a.re puzzled why there was no 

testimony by Blasdell to help clear up the chronology and 

manipulations during the transaction. 

The next spring, respondent discovered that the faulty 

operation of the chopper was the result of incompatible rpm's 

between the chopper and the tractor rather than the lack of 

power in his tractor as represented by appellant. Respondent 

brought this action against appellant in District Court for 

breach of warranty and negligence. The District Court found 

in favor of respondent based on implied warranty of fitness, 

negligence and constructive fraud. Appellant appeals that 

judgment . 

The findings of fact by the District Court do not 

support its conclusions of law. Furthermore, because of the 

disjointed trial and the long delay before issuance of the 

District Court's opinion, we reviewed the transcript carefully. The testimony appearing in the transcript is contradictory and insufficient to properly resolve the dispute. We 

therefore find that a new tria.1 is necessary. 

I 

Appellant's primary claim of error concerns an inconsistency between a finding of fact and conclusion of law by 

the District Court. The point is well taken. 

The District Court made the following finding of fact: 
4. However, as there was some uncertainty in the minds of the parties at 

the time of Plaintiff's purchase whether 

the chopper would require interface with 

a 540- or 1000-rpm power take-off, and 

because Defendant did not take the time 

and trouble to test the chopper mechanically, in accordance with its usual 

practice, it. was understood and agreed 

between the parties that Plaintiff would 

take and use it on a "tryout" basis to 

ascertain whether the chopper indeed was 

compatible with his tractor and equipment. In fact, but unbeknownst to the 

parties at that time, it was not. 

On the other hand, the court concluded that appellant was 

liable based on breach of implied warranty of fitness, negligent misrepresentation and constructive fraud. We agree with 

appellant that the findings and conclusions by the District 

Court are inconsj..stent and. contradictory for reasons that 

will follow. 

The breach of warranty claim is governed by the Uniform 

Commercial Code (UCC) as adopted by Montana. The UCC classifies buyer's remedies conceptually on the basis of whether 

(1) the buyer has rejected or revoked acceptance of the 

goods, S 30-2-711, MCA; or (2) the buyer has accepted goods 

which do not conform to the contract, $ 30-2-714, MCA. As 

such, different remedies are available for seller's breach 

prior to and subsequent to acceptance. The breach of warranty remedy appears only und.er the provision for "breach in 

regard to accepted goods," 5 30-2-714, MCA, and damages for 

breach of warranty are mea.sured by reference to the time of 

acceptance, 30-2-714 (2) , &lCA. Therefore, an action for 

breach of warranty cannot arise until after acceptance. 

We cannot determine from the District Court's findings 

when acceptance occurred. One finding of fact says the 

chopper was purchased when respondent took it to his farm, 

thereby implying that acceptance occurred that time . 
contrast, another finding of fact says that the chopper was 

taken to use on a "tryout" basis. Goods taken for a tryout 

have not been accepted. See 5 30-2-606, MCA. Because acceptance is critical to the outcome of this case, these conflicting findings constitute error. 

The finding by the District Court that respondent took 

the chopper on a "tryout" basis because of uncertainty in the 

minds of the parties is likewise inconsistent with the theories of negligent misrepresentation and constructive fraud. 

Both theories require misrepresentation. Because respondent 

took the chopper on a tryout basis, there could be no misrepresentation at that time. If, however, the misrepresentation 

occurred at some later date, we cannot determine from the 

findings when that was. Since appellant can only be liable 

for damage occurring after the misrepresentation, the District Court erred in calculating damages from the moment 

respondent took the chopper. 

11 

Appellant ' s next allegation of error coiicerns mitigation of damages. This Court recognizes a duty to take reasonable steps to reduce property damages. See Spackman v. 

Ralph M. Parsons Co. (1966), 147 Mont. 500, 414 P.2d 918. 

There was testimony that respondent may have reduced his 

damages by baling the crops as hay. The District Court 

however, made no findings or conclusions on mitigation. This 

omission constitutes error. 

111 

The District Court awarded respondent $619.13 for the 

repair of the clutch in his tractor's power take-off unit. 
This award was based solely on a bill purporting to be from 

Stedje Brothers that was admitted as an exhibit over appellant's hearsay and relevancy objection. There was no testimony from a representative of Stedje Brothers to establish 

the authenticity of the bill or what caused the need for the 

repair. The District Court admitted the bill as having "such 

circumstantial guaranties of reliability as to allow it to 

come in under the residual exception of the hearsay rule" but 

offered no explanation as to what the guaranties were. See 

Rule 804 (24) , M.R..Evid. Appellant alleges error. We agree. 

We can see no "circumstantial guaranties of reliability" to allow for admission of the bill as a hearsay exception 

under Rule 804 (24) , M.R.Evid. The District Court therefore 

abused its discretion in admitting the bill. There was 

further error in awarding dama.ges based solely on the hearsay 

bill and without evidence that the incompatibility between 

the tractor and chopper caused the need for the repair. 

IV 

The next issue we will consider concerns the District 

Court's finding that the silage had inferior protein content. 

Appellant claims that respondent Nelson was unqualified to 

testify on chemical changes in the silage, and that there was 

no competent evidence to show protein content of the silage. 

We agree, but we consider the finding harmless. The important finding, that the silage was unsuitable food for milk 

cows, is supported by substantial evidence in the record, 

including testimony by respondent and appellant's expert 

witness, Dave Kettle. However, additional expert testimony 

on silage chemistry would have been beneficial at trial and 
may be necessary on retrial to properly resolve the other 

issues. 

Finally, appellant complains that the District Court 

failed to set off the amount owed appellant by respondent on 

the outstanding balance of the purchase price. The record 

clearly supports this claim. Fa-irness dictates that the 

outstanding balance on the chopper must be deducted from any 

damages awarded the respondent. 

We remand for new trial. Fle direct that any damages 

awarded respondent be reduced by the unpaid balance on the 

chopper. 

Xe concur: