### No. 82-265 

### INTHE SUPREME COURTOF TfIE STATE OF MONTANA 1982

MODERNMACHINERY, Plaintiffand Appellant,

-vsFLATHEADCOUNTY, DefendantandRespondent.

.1from: DistrictCourt of the Eleventh Judicial District, In and for the County of Flathead,The Honorable Douglas

### G. Harkin, Judgepresiding.

Counsel of Record: ForAppellant: James D. Moore, Kalispell,Nontana

For Respondent: 

### Gary R. Christiansen,Kalispell, Montana Ted 0.

### Lympus,CountyAttorney, Kalispell,Montana

Submittedon Briefs: Xovember 24, 

### 1982 ~ecided:December 29, 1982

Filed: 

## FJE

# C2,;

## '1582Mr. Justice John Conway Harrison delivered the Opinion of the Court.

Plaintiff brought this action for breach of contract in the EleventhJudicialDistrict inFlathead County. Ajury trial 

### commenced inKalispell, Montana, on February 24, 1982. On February 26, 1982, the jury returned a verdict awarding plaintiff $10,000. Plaintiff and defendant appeal from the judgment entered upon the jury's verdict. On 

### or about July30, 1979, the Flathead County commissioners issued a call for bids for the purchase of a jaw-type rock crusher to be used by the Flathead County road department. The commissioners received three bids in response to the call, one from plaintiff in the amount of $305,725 and 

### two from another Kalispell distributor, Westmont; one for $201,193 and the other for$200,870. On August 22, 1979, the day the bids 

### were opened, the commissioners voted 

### to take the bids under advisement pending recommendation of the county road department. Representatives from the road department and Commissioner Frank Guay then flew to Cedar Rapids, Iowa, with plaintiff's agent, Jim Fox, to view plaintiff's crusher. Commissioner Guay and the representatives from the road department 

### were impressed with features contained

on plaintiff's crusher which 

### were not available on Westmont's models. On September 14, 1979, the commissioners 

### metwith members of the road department and JimFox to discuss the crusher bids. The road department recommended that the commissioners purchase plaintiff's crusher. Commissioner Guay then made a motion to accept the road department's recommendation. The motion was seconded by Commissioner Joan Deist. The motion 

### was recorded in theminutes of the meeting as follows: "Motion to Guay to accept the Road Department's recommendation 

### to purchase gravel crusher from Modern Machinery for $305,725. The only other bid being received having been forused power plant generator contained ina second unit not attached to the crusher itself, thereby creating operational problems. Motion seconded by Joan A. Deist, motioncarried. Note:, Me1 Wollan votes no on crusherbid as the 

### lower bid fora jaw crusher 

### was very adequate and a savingsof $100,000." Everyone in attendance at the meeting who testified at the trial felt that the county 

### was going 

### to eventually purchase plaintiffIscrusher. On September 17 the following Monday, an attorneyrepresentingWestmont delivered a 

### letterto commissioner FrankGuay which requested thatthe award to plaintiff be vacated



### or he would seek to enforce Westmont's rights in the 

### matter by whatever means permitted by 

### law. Guay then called JimFox in Missoula and told him if the crusher had been ordered from the factory, 

### to have the order stopped. On Wednesday, Fox and another representative for plaintiff, Larry Exe, metGuay in Helena, Montana, 

### to discuss the crusher. Guay testified at trial that he again told Fox and Exe to stop order on the crusher if it had, in fact, been ordered. Fox and Exe testified that the meeting in Helena 

### was mainly to discuss thepolitical ramifications to Guay should the 

### sale be completed. After the meeting in Helena, Exe called the factory 

### to see how far they had progressed on the order. Exe told the factory 

### to let him know how much expense would be incurred if plaintiff 

### was 

### to stop order on the crusher at that 

### time. That 

### was the 

### last contactplaintiff had with the factoryconcerning a stoporderon the crusher. FOX,Guay and Exe then 

### met with Assistant County Attorney, Charles Kuether

## , at the Flathead County commissioner's office. Again, Guay told plaintiff's representatives not to order the crusher. Guay stated that the bid award was not final until the clerkand recorder's office issued a letteraccepting plaintiff's bid and rejecting allotherbids. A second meeting with Kuether followed attended by Fox, Exe

## , Guay and plaintiffls attorney. Again, Guay stated the bid award 

### was not final until the clerk and recorder's office issued notice of the successful bid. Plaintiff's counsel requested 

### a letter directing plaintiff 

### to eitherorder

### or stoporderon the crusher. Guay refused 

### to draftsuch a letter stating that since the commissioners had not formally ordered the crusher it was not necessary 

### to rescind an order. That was the last meeting between plaintiff and the commissioner's office. On November 11, 1979, plaintiff tendered the crusher to Flathead County pursuant to the statement in the call for bids that deliverymust be within forty-five days from dateof order. The county refused to accept delivery of the machine. On November 20, 1979, the commissioners 

### met and issued a letter to plaintiff statingthey had decided toreject allbids received in response 

### to its call for bids on the rock crusher. Plaintiff subsequently transported the crusher to Tempe, Arizona, where it



### was finally sold. On December 11, 1979, plaintiff filed a complaint in the District Court of the Eleventh Judicial District, in and for the County of Flathead, against Flathead County alleging breach of contract. After a jury trial commencing February 24, 1982, the jury returned a verdict in favor of plaintiff assessing damages in the amount of $10,000. Plaintiff then filed this appeal and defendant cross-appeals

# . The substanceof the appeals is as follows: 1. Whether there

### was a valid contract. 2. Whether the jury 

### was properly instructed on the measure of damages. 3. Whether the jury verdict 

### was supported by substantial credible evidence. The essential elements of a contract 

### are: parties capable of contracting, consent, a lawful objective, and consideration. Section 28-2-102, MCA; Keil v. Glacier Park Inc. (1980), Mont

# .-- -

### ,614 P.2d 502, 505, 37 St.Rep. 1151. In thiscase the issue of whether 

### or not therewas a contract goes to the requirement of consent. There is consent to contract when there has been an offer and acceptance of the offer. Here, plaintiffIswritten bid issued inresponse 

### to Flathead County's 

### call for bids constitutes an offer. However, a writtenbid has consistentlybeen construed as nothing more than anoffer to perform labor or supply materials, and the offer does not ripen into a contractuntil accepted by the offeree. Carrigerv. Ballenger (1981)

## , ---- -- Mont

# . ----

### , 628 P.2d 1106, 1108, 38 St.Rep. 864. Thus, 

### wemust determinewhether the Flathead County commissioners accepted plaintiffIs offer thereby creating a contract. After the bids 

### were opened, the commissioners voted to take the bids under advisement pending a recommendation by the Flathead County road department. On September 14, 1979, the 

### commissioners 

### metwith members of the road department and JimFox to discuss the bids. At that meeting the members of the road department recommended that the commissioners purchase plaintiffIscrusher. A motion 

### was made, seconded and recorded: "Motion by Guay 

### to accept the road department's recommendation 

### to purchase gravel crusher from Modern Machinery for $305,725.00

# ." (Emphasisadded.) CommissionerJoanDeisttestified thatthe commissioners normallymake one of threemotions upon bids received inresponse to

a 

### call for bids; motion to accept; motion 

### to deny; 

### or motion 

### to take under advisement. Initially, the commissioners took the crusher bids under advisement pending recommendation of the road department. On September 14, the road department recommended that the commissioners purchase plaintiffts crusher. CommissionerGuaymoved 

### to accept the road department's recommendation, the motion 

### was seconded and duly recorded in the minutes of the meeting. The third commissioner later noted a no vote on the minutes as he wasn't in attendance at the September 14 meeting. Flathead County argues therewas not acceptance as there was

nonotice of bid award issued by the clerk and recorder's office. However, everyone in attendance at the meeting, including the commissioners, testified thatthey thought the commissioners 

### were going to buy plaintiffIscrusher. We find there 

### was acceptanceon the part of Flathead County when the commissioners accepted and made minutes reflecting the acceptance, and plaintiff was only fulfilling 

### its obligation on the contract by ordering and delivering the crusher. There 

### is no statutoryprovision for the procedure argued by the county. Flathead County further argues there 

### was no writing which satisfies the statute of frauds, section 30-2-201 

## , MCA. As stated above, this Court has previously held a written bid can ripen into a contract if accepted by the offeree. Carriger v. Ballenger, supra. Here, 

### we have found the written bid 

### was accepted byCommissioner GuayIsmotion which 

### was seconded by Commissioner Deist and recorded in the minutes of the September 14 meeting. Thus, there was a valid contract, not barred by the statuteof frauds. The next issue is whether thejury 

### wasproperly instructed on the measure of damages. First, plaintiff argues the giving of court's instructionNo. 7

### was inerror. The instruction 

### states: "If you find that thePlaintiff 

### is entitled to damages, you may award any of the following: 1) Lost net profits; 2) Incidental damages such 

### as expenses incurred in the transportationof goods a£

### ter the buyer's breach

# ."
The measure of damages when a buyer wrongfully rejects 

### or revokes acceptance of goods is governed by theUniformCommercial Code. Section 30-2-703, MCA, states: "Where the buyer wrongfully

### rejects or revokes acceptance of goods

# . .. the aggrieved seller may: (d)

### resell and recover damages 

### as hereinafter provided (30-2-706 ); 

### (e ) recover damages for nonacceptance (30-2-708) 

# . . ." Pursuant to section 30-2-706, MCA: 

### "the seller may recover the difference between the resale price and the contract price together with any incidental damages 

# . . . less expenses saved in consequence of the buyer's breach." Pursuant 

### to section 30-2-708, MCA: "the measure of damages for nonacceptance 

### or repudiation by the buyer 

### is the differencebetween the market price at the 

### time and place for tender and the unpaid contract price together with any incidental damages

# .

# ..less expenses saved inconsequence of the buyer's breach

# ."or "If the measure of damages provided in subsection (2) is inadequate 

### toput the seller in

### as good a position as performance would have done then the measure of damages 

### is the profit

# . .. which the seller would have made from full performance by the buyer together with any incidental damages 

# ..., due allowance for 

### costs reasonably incurred and due credit forpayments 

### or proceeds of resale

# ."

We find court's unstructionno. 7was not a correct statement of the 

### law as stated by the U.C.C. The possible measures of damages under the U.C.C. 

### are not stated inpermissive language, but rather, 

### are mandatory and specifically state the amount of recoverable damage depending upon the remedy sellerhas pursued

# . The District Court's use of the words "may award any of the following" in instruction no. 7 implied 

### to the jury that they



### were not required by 

### law to award specific damages. Thus, the giving of the District Court's instructionno. 7

### was in

### error as being incontradiction of the U.C.C. Plaintiff 

### also claims the givingof the following instruction



### was in

### error: "A party who alleges that it has been damaged by the breach of contract by anotherparty is bound to exercise reasonable care and diligence 

### to avoid loss and to minimize its damage. A party may not recover for 

### losses which could have been prevented by reasonable effortson itspart

# ."

We find thegivingof this instruction

### was in

### error. In this

case a method of mitigating damages is addressed by section 30-2-704 (2),MCA. The section states: "Where the goods 

### are unfinished an aggrieved 

### seller may in the exercise of reasonable 

### commercial judgment for the purposes of avoiding loss and of effective realization either complete the manufacture and wholly identify thegoods 

### to the contract or

### cease manufacture and 

### resell for scrap 

### or salvage value or proceed inanyreasonable manner." This section 

### is better understood by looking 

### to the Official Comment to section30-2-704 (2),MCA: "Under this Chapter the 

### seller is givenexpress power to complete manufacture 

### or procurement 

### of goods for the contract unless the exercise of reasonable commercial judgment as 

### to the facts as they appear 

### at the 

### time he learns of the breach makes it clear that such action will result in a 

### material increase in damages. The burden is upon the buyer to show the commerically unreasonable nature of the 

### seller's action incompletingmanufacture." Here, Commissioner Guay expressed concern about the contract at an early date, but, the board of commissioners refused to repudiate the contract. The county has power 

### to contract, and its contracts are the contracts of 

### its board of county commissioners, not of the individual members thereof. Bennett v. Petroleum County et al. (1930), 87Mont. 436, 447, 288 P. 1018, 1020. Commissioner Guay did not have the authority to individually revoke the contract and when plaintiff asked that the board take 

### some action it refused. Thus, plaintiff 

### was acting in

a commercially reasonable manner to fulfill its obligation under the contract. If plaintiff had not delivered the crusher within forty-five days, it would have breached the contract and exposed itself tolegalliability. Had the board taken some actionatan earlydate, plaintiff could have mitigated itsdamages under 

### section 30-2-704, MCA. The District Court's instruction unfairly placed the entire burden 

### to mitigate damages upon plaintiff whereas the comments to section 30-2-704, MCA, 

### state: "the burden 

### is upon the buyer [Flathead County] 

### to show the commerically unreasonable nature of the seller's 

### action in completing manufacture." Thus, the givingof the Courttsinstruction

### was in



### error. The last issue is whether the jury verdict was supported by substantial credible evidence. As stated above

### , the measure of damages is governed by section 30-2-706, MCA, and section 30-2-708, MCA. Under section 30-2-706, MCA, the damages would be the contract price ($305,725) plus incidental damages 

### less the 

### resale price ($186,499.86) and expenses saved in consequence of the buyer's breach. Under section 30-2-708 (2)the damages would be plaintiff's anticipated profit ($78,879.56) plus incidentaldamages less credit for payments made or proceeds of resale. Using either section in this instance the record shows plaintiff's damages 

### were far in excess of $10,000 and there 

### is

no substantial credible evidence which can support the jury verdict. We affirm the case as 

### to county's liability and judgment is reversed and the case is remanded 

### to the District Court for a hearingon damages by following the applicable statutes.