Court Opinion

ID: 9779239
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:41:06.036927+00
Date Added: 2024-06-11T07:33:24.036666
License: Public Domain

NYE, Chief Justice
(dissenting).
I respectfully dissent. The original Dissenting Opinion is withdrawn and the following Opinion is substituted therefor.
Plaintiff, Laredo Hides Company, Inc. sued H & H Meat Products Company, Inc. for damages based on a contract. H & H defended contending that Laredo Hides had breached the contract and was not entitled to any damages. The case was tried before the court without the intervention of a jury. The court agreed that the contract had been breached and entered a take-nothing judgment.
Findings of fact and conclusions of law were filed by the trial court. This being a non jury case, the trial court is the judge of the credibility of the witnesses and the weight to be given to their testimony. Where there is probative evidence to support the findings and judgment of the trial court, they are controlling on us, even though some of the evidence is conflicting and the appellate court might have reached a different conclusion. In determining whether the trial court’s findings are sufficient and are supported by any evidence of probative value, the appellate court will give credence only to that evidence favorable to the findings and will disregard all evidence to the contrary. Kolbo v. Blair, 397 S.W.2d 125 (Tex.Civ.App. — Corpus Christi 1964 n.r.e.).
H & H processes cattle and sells hides as a by-product. Laredo Hides purchases hides from H & H among others. A written contract was executed whereby Laredo Hides agreed to buy all of H & H’s hide production for the period from March through December of 1972. Prior to the contract in question, H & H had considerable difficulty in collecting moneys from Laredo Hides. By contract agreement specifying cash, but by actual practice, Laredo Hides would give its check to H & H at the time it picked up the hides. Loz-ano’s Transfer Company acted as agent for Laredo Hides for delivery of the check and for the purpose of picking up the hides from H & H for delivery to Laredo Hides.
On Saturday (March 18, 1972), the day in question, Lozano, the owner of the transfer company, discovered that his truck driver had left to pick up the hides from H & H and had forgotten the check, Loza-no called H & H and talked to Hinojosa explaining to him what had happened. Hin-ojosa instructed Lozano to put the check in the mail. When the driver arrived at H & H’s plant, he told Hinojosa that he did not have the check. Hinojosa told him that he had talked to Lozano and that it was all right to load the truck.
There was much testimony concerning the mailing of the check. However, the check was not received on Monday or on Tuesday morning (March 21, 1972). Hinojosa then called Prada, the owner of Laredo Hides, sometime between 10:30 and 11:30 a.m. Tuesday morning. Hinojosa was upset. He told Laredo Hides’ owner, Prada, that the check had not arrived. Prada told Hinojosa of H & H, that the check had been mailed. Hinojosa replied “ . . .1 don’t believe you. I am going to give you a chance. Get me the money by 4:30 p.m., in my possession, or I will not sell you another hide.” This was the extent of Tuesday’s conversation. Following this conversation, Prada of Laredo Hides went immediately to the bank in Laredo, Texas. He arranged to transfer Nine Thousand Dollars ($9,000.00) (the amount of the check) directly to H & H’s account in the Mid-Valley State Bank in Weslaco and stopped payment on the check that had been mailed. Following this, Prada then caused two telegrams to be sent to Hinojosa, one from the bank telling Hino-*227josa what had been done by the bank and the other confirming the oral modification of the contract. The second telegram reads as follows:
“H & H MEAT PRODUCTS CO INC. PO BOX 358 TEL 565-3177 MERCEDES TEX 78570
AS PER OUR TELEPHONE CONVERSATION OF TODAY, WE HAVE CANCELLED PAYMENT ON CHECK NUMBER 4021 WHICH WAS ORIGINALLY DELLIVERED BY US TO LOZANO TRAVFER ON MARCH 17, 1972 AND WHICH ACCORDING TO YOU HAS NOT BEEN RECEIVED TO DATE. THE LAREDO NATIONAL BANK HAS TODAY EXTENDED CREDIT TO YOUR ACCOUNT AT THE MID-VALLEY STATE BANK IN WESLACO, TEXAS IN THE AMOUNT OF $9.000.00 (NINE THOUSAND DOLLARS 00/100) IN FULL SATISFACTION OF OUR OBLIGATION FOR THE SHIPMENT OF HIDES DELIVERED ON MARCH 18, 1972 TO LOZANO TRANSFER
LAREDO HIDES CORP”
The transfer of funds was not received by H & H on Tuesday by 4:30 p.m. Hino-josa treated the failure to make payment (by 4:30 p.m. on Tuesday, March 21, 1972), as a breach of the agreement between H & H and Laredo Hides.
The plaintiff Laredo Hides in its appeal contends that the trial court erred in holding that Laredo Hides had breached the contract. The majority agrees reversing and rendering judgment for $152,960.04 against H & H.
The majority opinion holds that there was evidence that the original contract was modified by H & H and by Laredo Hides’ agent (Lozano Transfer Company) permitting Laredo Hides’ check to be mailed to H & H in satisfaction of the obligation. The majority refuses to recognize further modification of the contract by H & H’s demand and Laredo Hides’ acceptance that the money for the hides be received by H & H by 4:30 p.m. on Tuesday.
Chapter 2 of V.T.C.A. Business and Commerce Code is applicable to this case. Section 2.102 applies to transactions in goods. What is included within the meaning of “transactions in goods” is described in section 2.105 defining what is covered by the meaning of the term “goods” and section 2.106(a) defines contract, agreement and contract for sale. Because the transactions in the case at bar fall within the above sections, Chapter 2 and its subsections must be considered in determining and adjudicating the rights, duties and obligations of the parties.
Section 2.209(a) of Chapter 2 provides that an agreement modifying a contract within this chapter needs no consideration to be binding. Such agreement is binding between the parties (2.209(a) ) if the requirements of the statute of frauds section of Chapter 2 (section 2.201) are satisfied 2.209(c). Section 2.201 designates the formal requirements which must be met in order to satisfy the statute of frauds. The facts and circumstances of the case at bar show that these requirements have, been met (2.201(b) ). The parties were merchants (2.204(a) ; 2.204(c) ) and a writing in confirmation of their oral modification was present and received by H & H.
The modifying agreement entered into by Laredo Hides was shown in two instances. First, it occurred after H & H proposed the new terms as to time of payment (4:30 p.m. Tuesday). Laredo Hides pursued a course of conduct that could only be viewed as agreeing to the new terms. Laredo Hides went to its bank and attempted to transfer cash to H & H’s account. It caused to be sent, two telegrams representing that funds had been transferred to H & H’s account. It stated that payment on the check that had been mailed to H & H had been stopped. The language in the telegram expressly shows that *228Laredo Hides acquiesced in the new terms of payment as modified. Laredo Hides’ intention being that the payment terms in the original contract, that was modified by the agreement to allow Lozano Transfer Company to mail the check to H & H, was no longer controlling.
Laredo Hides breached the first modification of the contract when they stopped payment on the check. There was no way for H & H to be paid except by the subsequent new modification. This act alone would prevent the trial court’s judgment from being reversed and rendered. But when Laredo Hides tried to perform by transferring funds to H & H’s account, but failed, this breach requires an affirmance of the trial court’s judgment. The trial court’s specific findings of fact, supported by ample evidence, necessitates this holding. The court found:
“I find as a fact that defendant thereafter orally by telephone agreed with plaintiff to accept payment for such hides if said payment were in defendant’s possession by 4:30 o’clock PM on March 21, 1972, but further in such telephone conversation with plaintiff’s agent advised that if such payment were not in defendant’s possession by said time, that defendant would sell no further hides to plaintiff under said contract.”
The majority opinion assumed that H & H had the right to cancel the contract only if Laredo Hides had breached the “whole contract”. This assumes that the contract was an installment contract covered under Article 2, Section 2.612 of the Bus. & Com. Code, and even if Laredo Hides had breached its contract, it did not substantially impair the value of the whole contract so as to give H & H the right to terminate the contract as a whole. I disagree with this holding for two (2) reasons. First, a fact question is raised as to whether or not the failure to pay as agreed on a single installment impaired the entire contract with respect to the remaining installments agreed to he performed. The evidence showed that H & H had received many checks from Laredo Hides which were found to be returned for insufficient funds. This was the reason that the written contract provided “cash on delivery”. These insufficient fund checks created problems as to H & H paying its suppliers and prevented H & H from meeting other obligations incurred in its business. These facts were sufficient to support the trial court’s implied findings that H & H had a right to terminate the whole contract. See Commentary in White & Summers U.C.C. at page 2S9. The Court of Civil Appeals must uphold the trial court’s judgment if the implied findings are supported by the evidence. Rosales v. Rosales, 377 S.W.2d 661 (Tex.Civ.App. — Corpus Christi 1964, no writ).
Second, Section 2.612, U.C.C. defines an installment contract as one which requires or authorizes the delivery of goods in separate lots to be separately accepted. This language contemplates a contract for the purchase of a specified quantity of goods which will be delivered in specified quantities at specified time intervals. The subject contract between H & H and Laredo Hides provided for all of H & H Meat Products Company’s production. Such term is so indefinite as to preclude the contract from being an installment contract. Such a contract can only be viewed as an output contract. Any breach of an output type contract would give H & H the right to cancel the contract irregardless of whether it goes to the “whole contract” or not. The provisions of Section 2.612, U.C.C. are not applicable.
Because Chapter 2 of the Business and Commerce Code is applicable throughout, the parties had the right to orally modify the written contract. Such oral modification satisfied the statute of frauds. It therefore became binding between the two parties. Laredo Hides having failed to perform in accordance with the contract as modified breached the contract giving H & H the right to terminate the contract. I would hold that the evidence and the trial *229court’s findings support the judgment. Appellee’s motion for rehearing should be granted and the judgment of the trial court should be affirmed.