Source: http://mn.gov/law-library-stat/archive/ctapun/0010/160.htm
Timestamp: 2018-01-23 16:00:19
Document Index: 201231431

Matched Legal Cases: ['§ 513', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 336', '§ 513', '§ 513', '§ 336']

Gewain Hanson, d/b/a Willmar Welding and Boiler Repair, Respondent, vs. Michael Hartmann, d/b/a MOM's Dairy, Appellant. C3-00-160, Court of Appeals Unpublished, October 24, 2000.
C3-00-160
Gewain Hanson,
d/b/a Willmar Welding and Boiler Repair,
d/b/a MOM’s Dairy,
File No. C7-98-186
Judy Winters, Gavin, Olson & Savre, LTD, 1017 Hennepin Avenue, Glencoe, MN 55336 (for respondent)
Gary K. Wood, 4932 Poppy Lane, Edina, MN 55435 (for appellant)
Appellant purchased a boiler from respondent for use in the dairy business. Pursuant to their oral agreement, respondent delivered and installed the boiler. A dispute arose about the amount appellant owed, and respondent sued. Holding that the part-performance exception in Minn. Stat. § 513.06 applied, the district court rejected appellant's statute-of-frauds defense under Minn. Stat. § 336.1-206, and determined damages. Appellant contends that the exception in section 513.06 applies only as a defense to fraud, which respondent never pleaded, and that the applicable statute of frauds, Minn. Stat. § 336.1-206, bars the action. Appellant also contends that the evidence was insufficient to support the amount awarded. We affirm.
Respondent Gewain Hanson does business as Willmar Welding and Boiler Repair (Willmar Welding). Prior to July 1996, appellant Michael Hartmann, a trustee of a dairy business, MOM's Dairy (MOM's), contacted Hanson regarding boilers. Hartmann and Hanson met in July 1996, to discuss MOM’s need for a boiler, its cost, the cost of a reconditioned boiler, and equipment needed to make the boiler operational. Hanson informed Hartmann that a reconditioned boiler would cost $8,000; additional equipment required to make the boiler operational would cost extra; and installation of the boiler and necessary equipment would be performed on a time and material basis.
Approximately ten days after this meeting, Hartmann visited Willmar Welding to view a boiler and appurtenant equipment. Hanson and Hartmann discussed the $8,000 cost of the reconditioned boiler and its additional equipment costs, including an oil burner ($1,480), a condensate tank ($1,985), and a blow down tank ($985). Hanson and Hartmann again discussed the price of installation based on time and material. The two orally agreed to a reconditioned boiler price of $8,000 plus the cost of the requisite additional equipment, and installation cost based on time and material. Hartmann accepted this quote on July 16, 1996, paying $5,000 as a down payment for the boiler.
Because MOM’s is a milk processor, there was concern about oil potentially seeping into the milk. Hanson and Hartmann discussed changing the burner from an oil-based burner to an LP burner. They also discussed the fact that the cost of an LP burner would be greater than the cost of an oil burner. Hanson quoted an additional cost of $2,425 for an LP burner. Hartmann accepted this quote and instructed Hanson to change the burner from oil to LP.
On October 7, 1996, Hartmann gave Hanson a check for $3,000. Willmar Welding employees installed the boiler, working from March 4, 1997 to June 6, 1997, when the boiler became operational. During that period, Willmar Welding’s employees provided 173 hours of labor, for a total cost of $8,224. Hartmann never challenged the amount of hours the employees provided installing the boiler.
On approximately January 1, 1998, Hanson sent Hartmann a bill for $21,717.54, less $8,000 already paid, for a balance of $13,717.54. Hartmann was not billed for the condensate tank at this time. In February 1998, Willmar Welding employees returned to MOM’s business twice to repair the boiler.
On February 19, 1998, the date of the second repair, Hartmann gave Hanson $2,500. In March or April 1998, Hanson billed MOM’s for labor and material for the February repair work. Hanson also billed MOM’s for the condensate tank, for a total cost of $23,944.74, less the $10,500 already paid, for a balance of $13,384.94. Hanson gave MOM’s a $60 credit, but added $162.85 in interest, resulting in a balance of $13,547.79, against which MOM’s made no further payments.
Hanson brought suit for payment. The district court determined that a contract existed between the parties and entered judgment against Hartmann in the amount of $13,547.79, plus interest and costs pursuant to statute. This appeal followed.
Hartmann argues that the district court should not have construed the parties’ agreement to be outside the statute of frauds. The determination of whether the statute of frauds has been satisfied is generally a question of law. Upsher-Smith Labs. v. Mylan Labs., Inc., 944 F. Supp. 1411, 1425 (D. Minn. 1996).
A contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless the statutory requisites set forth in the uniform commercial code are accomplished and satisfied in some manner. Minn. Stat. §§ 336.2-105(1), 106(1), 201, and 304 (1998). The law requires certain evidence—other than the possibly perjured testimony of the claimant—to corroborate the existence of such an agreement. Sufficient corroborative evidence may be addressed in a variety of ways, but in this case, recourse to a simple doctrine will suffice.
Respondent misinterprets Minn. Stat. § 336.1-206 (1998) as exempting contracts for the sale of goods from the statute of frauds. Minn. Stat. § 336.1-206 states in its entirety:
336.1-206 STATUTE OF FRAUDS FOR KINDS OF PERSONAL PROPERTY NOT OTHERWISE COVERED.
(1) Except in the cases described in subsection (2) of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond $5,000 in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by that party’s authorized agent.
(2) Subsection (1) of this section does not apply to contracts for the sale of goods (section 336.2-201) nor of securities (section 336.8-113) nor to security agreements (section 336.9-203).
The purpose of Minn. Stat. § 336.1-206, is to fill gaps left by other statute-of- fraud provisions. But this section does not apply to contracts for the sale of goods which are governed by separate statute-of-frauds language in section 336.2-201. Minn. Stat. § 336.2-201(1) provides:
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 the party’s authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
Unlike section 336.1-206, section 336.2-201 provides for certain circumstances that will overcome the need for a written contract for the sale of goods. A contract that does not satisfy the requirements of Minn. Stat. § 336.2-201(1), but which is valid in other respects, is enforceable “with respect to goods for which payment has been made and accepted or which have been received and accepted (section 336.2-606).” Minn. Stat. § 336.2-201(3)(c).
Minn. Stat. § 336.2-606 (1998) provides that acceptance of goods occurs when the buyer
(b) fails to make an effective rejection (subsection (1) of section 336.2-602), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller’s ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by the seller.
Here, Hartmann received the goods, permitted their installation, retained them thereafter, and used them in a manner inconsistent with continued ownership by Willmar Welding. Hartmann did not reject the boiler and equipment; if they are “goods” under the code, Hartmann’s conduct necessarily invokes operation of Minn. Stat. § 336.2-606, obviating the necessity of a writing.
“Goods” are defined in the U.C.C. as all things (including specially manufactured goods) that are “movable at the time of identification to the contract for sale * * *.” Minn. Stat. § 336.2-105(1). The subject boiler is just such an item. At the time of identification to the contract it was indeed moveable; the fact that after installation it was no longer mobile is of no consequence. See Valley Farmers' Elevator v. Lindsay Bros. Co., 398 N.W.2d 553, 556 (Minn. 1987) (“The time for testing whether a transaction is a sale of goods—i.e., a sale of movable things—is at the time of identification to the contract, [that is], * * * before * * * installation.”). Courts have found similarly large items to be sales of goods. See, e.g., Id., 398 N.W.2d at 556 (agreement for design, sale, and installation of grain storage system predominantly involved the sale of goods). TCF Bank & Sav., F.A. v. Marshall Truss Sys., Inc., 466 N.W.2d 49, 51-52 (Minn. App. 1991) (subcontract between subcontractor and general contractor requiring subcontractor to manufacture and assemble wooden trusses from lumber and deliver them to building site for installation was predominately contract for sale of goods under the U.C.C.), review denied (Minn. Apr. 29, 1991). That this contract for goods also included installation is of no material consequence. A hybrid contract involving the sale of goods with a provision for services is examined by reference to the "predominant factor" test. Valley Farmers' Elevator, 398 N.W.2d at 556. The sale of goods clearly predominates in this transaction, and the statute of frauds under section 336.2-201 therefore applies. The oral contract is enforceable under section 336.2-201(3)(c) because appellant received and accepted the goods.
The district court found that although there was no writing, the contract was outside the scope of the statute of frauds because the court retained equitable power through Minn. Stat. § 513.06 (1998), which state:
The district court relied upon the equitable doctrine of part performance operating to preclude the application of the statute of frauds because, like the statute of frauds, “[p]art performance is also a basis for preventing fraud.” In re Guardianship of Huesman, 354 N.W.2d 860, 863 (Minn. App. 1984). Discussion of Minn. Stat. § 513.06, and the exercise of the district court’s inherent equitable powers is now unnecessary. The district court reached the correct result despite its error in concluding that the incorrect statute of frauds applied. An appellate court will not reverse a correct decision simply because it is based on incorrect reasons. Katz v. Katz, 408 N.W.2d 835, 839 (Minn. 1987).
Hartmann also argues that there was insufficient evidence to support the judgment. But to set aside a district court’s findings of fact as clearly erroneous, the findings must be manifestly contrary to the weight of evidence or not reasonably supported by the evidence as a whole. Wangen v. Swanson Meats, Inc., 541 N.W.2d 1, 2-3 (Minn. App. 1995), review denied (Minn. Jan. 25, 1996). Due regard must be given to the opportunity of the district court to judge the credibility of the witnesses. Minn. R. Civ. P. 52.01.
Hartmann quotes several transcript excerpts to show that the district court erred in its conclusion. However, none of these excerpts, placed in context, show clearly that the evidence did not support the district court’s decision. One issue most deserving of closer scrutiny is whether or not the cost of the “Webster burner” included the front burner plate—valued at $350. As Hartmann argues, the transcript appears to indicate that Hanson may have admitted that the price was to include the front plate. But there is a patent ambiguity. The language that appears to admit the mistake comes immediately after Hanson’s clear denial that the front plate was included in his cost estimate. Accordingly, the district court is permitted the inference it made and its findings are not clearly erroneous.
This transaction is no model of contractual precision. It is fraught with problems, some potential and many—too many—fully realized. We conclude that Minn. Stat. § 336.2-201(1), the fact that Hartmann received and accepted the boiler, and the significant work required to complete the installation provided sufficient corroboration of the existence of an agreement. The goods were received and accepted, and the parties’ agreement is therefore enforceable, notwithstanding the lack of a written agreement.
The district court properly determined that the parties’ oral contract is enforceable, and did not err in calculating damages.