Opinion ID: 2229760
Heading Depth: 1
Heading Rank: 3

Heading: facts

Text: On June 21, 1986, Hallam entered into a written agreement, consisting of three purchase orders, with Lange for Lange to construct a $510,000 four-bin grain elevator facility for Hallam. A change order, dated October 6, 1986, provided some relatively minor changes at a cost of $4,500. Lange agreed to provide and erect (1) two Blount/MFS 48-foot-diameter bins and two Blount/MFS 60-foot-diameter bins with aeration fans and temperature cables in each bin, (2) a custom-built dump pit and boot pit with a 7,000-bushels-per-hour (b.p.h.) drag conveyor, (3) a leg support tower with platforms, (4) a swivel loadout spout with support tower, (5) a gravity 7,000-b.p.h. grain cleaner, (6) a Blount/York model 36-70 elevator leg 7,000-b.p.h., (7) 7,000-b.p.h. drag unloading conveyors, and (8) two 7,000-b.p.h. drag conveyors mounted on catwalks. Most of the parts were manufactured by MFS Blount/ York (Blount), which company provided working drawings to Lange for the construction of the facility. Blount was not a party to the contract or a party to this litigation. In addition to the list of parts, the purchase orders included typewritten provisions stating that a clean level site is to be provided by the buyer and electrical hook-up beyond the Main disconnect is included. Stricken from each purchase order was a preprinted provision stating, Concrete, Electrical Wiring, Gas Hook-up, Fill Sand and Level Site to be furnished by the Buyer [Hallam]. William Lange, president of Lange, testified that he and Melvin Holsing, president of Hallam, verbally agreed that to avoid water draining into the grain facility, the floor of the grain bins should be 1 foot above the top of the railroad tracks which were located to the west of the construction site. Holsing testified that he wanted  nothing below 12 inches above the tracks. (Emphasis supplied.) Apparently, there was a general understanding that Lange would attempt to have the bins ready to receive grain by the fall of 1986. Construction began in late June or early July 1986. Excavation of the site uncovered some concrete rubble and foundations. The rubble was removed by Lange and Beatrice Concrete, a company that had previously owned the site. By late September, Lange had constructed two 48-foot-diameter bins on the west side of Hallam's property, and Hallam began loading them with grain. While loading the first bins, Holsing and his employees noticed that grain was boiling over in places and plugging the system. They found that various mechanisms in the system, including the leg, the boot pit shroud, and the upper spouts, were not operating properly. As a result, several adjustments were made to the system. Holsing testified he tested the system and determined that it was moving approximately 4,000 b.p.h. Holsing notified a Lange foreman, and a Blount representative was called. Blount's representative testified that he inspected the facility and found that it was functioning as it was designed for. He said he attempted to test the system's capacity, but could not do so because of dirt collecting in the spouts of the distributor. He was to return later to conduct a capacity test, but never did. Hallam claims that the capacity problem occurred because of Lange's poor workmanship in constructing the system. Henry Hollman, a local grain bin contractor, testified for Hallam as an expert witness. In his opinion, the spouts had not been angled steeply enough to prevent the accumulation of grain and dust. William Lange testified that dirt and dust from the grain prevented the manufacturer's representative from conducting a capacity test. Lange also testified that he and his workers angled the spouts in accordance with the manufacturer's recommendations. Lange said that based on these instructions, he constructed the spouts steeply enough for the grain to flow but not so steep that it would cause excessive grain damage. The manufacturer's instructions did not address how many bushels per hour would flow through the spouts at the recommended angles. Lange eventually completed the two 60-foot-diameter bins, and Hallam also filled them with grain. Lange left the construction site December 22 or 23, 1986. Lange filed a construction lien on January 19, 1987, and then brought this action to foreclose. William Lange acknowledged that when his crew left the Hallam site several items had yet to be completed. Lange deducted the $1,985 cost of completing these items from the amount it claimed was due under the lien. Hallam claims it owed Lange no further payments because Lange failed to substantially perform the contract between the parties. Hallam also counterclaimed against Lange, alleging six separate causes of action. Hallam's counterclaims (or, in the alternative, claims for setoffs) are based on problems that developed before and after Lange left the construction site. In addition to the bushels per hour capacity problem, Hallam's main complaints include: (1) The unload augers from the two west bins were located less than 12 inches above the railroad tracks at the point where the augers entered the leg pit through a pipe. (Holsing testified that by the spring of 1986, water would leak through the pipe where the unload augers came into the pit, causing the operation to shut down.) (2) The aeration fan motors were not timely connected to an electrical supply. (Holsing testified that he had to hire his own electrician, who connected the fan for bin No. 4 sometime around October 26 or 27, 1986. The electrician hired by Holsing testified that after he connected the fan for bin No. 4, someone told him that he should leave because they had their own contractor or own electrician. Holsing testified that some time in December, the fans for bins Nos. 1 and 2 became operational.) (3) Upon unloading bin No. 4 in the fall of 1987, heat sensor cables manufactured by Rolfes broke off and became caught in the conveyor systems. (Heat sensor cables hang down into the bin at various locations and monitor the temperature of the stored grain. Holsing testified that each time the cables broke off, the system had to be shut down and the cables cut out. The same problem occurred when bin No. 3 was unloaded during March 1990. Holsing testified that cables broke off in bins Nos. 3 and 4 a total of 42 times.) (4) Side draws supplied and installed by Lange malfunctioned after Lange left the Hallam construction site in December 1986. (A side draw is a valve that allows grain to be obtained from the side of the bin without elevating the grain through the auger system. Holsing testified that the cables on all the side draws fell off, so that the valves could not close to control the amount of grain that flowed out.) (5) Bin No. 4 broke open at its seam about 1 1/8 inches during the fall of 1988, and the bottom seam of bin No. 3 ruptured, spilling grain out of the bin's door. (Holsing testified that several other seams popped open and that a sheet of metal began to rip.)