Interform Co. v. Mitchell

• Decision Date: 03 May 1978
• Docket Number: Nos. 75-3075 and 75-3217,s. 75-3075 and 75-3217
• Citation: 575 F.2d 1270
• Parties: INTERFORM COMPANY, Plaintiff-Appellee, v. Leslie L. MITCHELL, d/b/a Mitchell Construction Company, and St. Paul Fire& Marine Insurance Company, Defendants-Appellants. INTERFORM COMPANY, Plaintiff-Appellant, v. Leslie L. MITCHELL, d/b/a Mitchell Construction Company, and St. Paul Fire& Marine Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1270

575 F.2d 1270

INTERFORM COMPANY, Plaintiff-Appellee, v. Leslie L. MITCHELL, d/b/a Mitchell Construction Company, and St. Paul Fire& Marine Insurance Company,

Defendants-Appellants.

INTERFORM COMPANY, Plaintiff-Appellant, v. Leslie L. MITCHELL, d/b/a Mitchell Construction Company, and St. Paul Fire& Marine Insurance Company,

Defendants-Appellees.

Nos. 75-3075 and 75-3217.

United States Court of Appeals Ninth Circuit.

May 3, 1978.

As Amended on Denial of Rehearing June 2, 1978.

Phillip M. Barber, Donald E. Knickrehm, Boise, Idaho, for defendants-appellants.

Allan J. Joseph, of Pettit, Evers & Martin, San Francisco, Cal., for plaintiff-appellee.

Appeal and Cross-Appeal From the United States District Court for the District of Idaho.

Before BARNES and SNEED, Circuit Judges, and JAMESON, ^* District Judge.

SNEED, Circuit Judge:

I.

Introduction.

The appellant Mitchell Construction Company used certain forms which belonged to Interform Company for molding concrete on two construction jobs it performed as prime contractor for the State of Idaho. Interform received $32,000 from Mitchell which Mitchell contended was the purchase price of the forms. Interform contended the $32,000 was a rental payment for use of the forms on Mitchell's first job. Consequently, in the district court Interform sought payment for Mitchell's use of its forms on the second job, and the return of its forms. Mitchell sought a decision giving it ownership of the forms and general and punitive damages for abuse of process.

The district court in a trial without a jury found that the parties had in fact entered into a contract in September 1971 for the rental of the forms for use in Mitchell's first job. It found that no oral or written agreement had been entered into for use of the forms in the second job; rather, Mitchell had used the forms "despite knowledge on his part that Interform was claiming ownership . . . and claimed a right to payment by Mitchell of additional rentals for further use of the forms." The use of the forms in the second job, the court found, benefited Mitchell and caused detriment to Interform. Finding also that Interform had not "volunteered" the free use of its forms, the court concluded that Mitchell had been unjustly enriched by its use of the forms. It found the fair rental value for the second job to have been $29,250 and, after deducting certain expenditures by Mitchell, awarded $26,750 to Interform. It denied Mitchell's counterclaim and declined to award attorney's fees to Interform. We affirm in all respects except as to attorney's fees. As to these we believe the trial court erred. We reverse and remand for further proceedings with respect to these.

II.

Facts.

Many of the pertinent facts were sharply disputed by the parties. Our statement of the facts will indicate the major areas of conflict. Preliminary negotiations in the spring and summer of 1971 without question centered entirely upon the rental of forms. On September 8, Mitchell, President of Mitchell Construction Company, and Miller, a salesman for Interform, drove around Seattle in order to observe some of Interform's concrete forms in use. As Miller was driving the group to a restaurant, Mitchell stated that he would be interested in purchasing the forms. Miller was surprised at this comment and testified that he "thought at first he was kidding, because up to that point no one had mentioned anything about a sale, and all of our quotes had been straight rental." (Tr.78).

Mitchell contends that the contract of sale was agreed to orally at that time, and was confirmed by a document which Mitchell sent to Interform. That document, admittedly backdated to September 8, was written between September 13 and 17 and was received by Interform on September 21. (See Document 1, Appendix). Entitled "Purchase Order," it requested Interform to "furnish" forms according to size and quantity specifications set forth therein. It also set price, time and payment terms, and contained the condition that "(i)f Mitchell Construction Company does the hauling, which is their option, there will be an allowance of $.43 per loaded mile."

Mitchell asserts that this sales agreement reflected an agreement arrived at during the tour of September 8. Miller, on the other hand, testified that he did not have authority to set a sales price, and that his attempt that day to contact Dashew, the President of Interform, by telephone to receive instructions was unsuccessful. Miller's version, which the trial judge chose to accept, was supported by testimony of the pilot who had flown Mitchell to Seattle and accompanied him on the tour. The trial judge also agreed with Interform that the contract was arrived at during a telephone conversation on September 13 between Mitchell and Dashew, at which time a rental agreement as to quantity and price was reached.

On September 14, a "speed memo" (See Document 3, Appendix) was sent from Mitchell's general superintendent to Miller asking: Jim, Have you ordered the Pans? What is the delivery date? Are you sending shape drawings? Are you sending Freight rate allowance? When we get this information we will send a P.O. for proper amount. We wish to check this frieght (sic) first." The freight issue was settled shortly thereafter, because the "purchase order" discussed above, drawn between September 13, and 17, sets forth a resolution of the question.

Several days after Mitchell's purchase order was dispatched, a confirmation was sent by Interform, set forth on a second sheet of Mitchell's standard purchase form (See Document 2 and n.5, Appendix) and also containing the word "furnish." Three bills of lading and three invoices (See Documents 4 and 5, Appendix) from Interform followed, each specifically referring to the "rental" of the forms. No one at Mitchell objected to these six documents. At trial Mitchell, his general supervisor and his jobs supervisor testified that they had never seen or checked the invoices or bills of lading.

The trial court judge chose not to believe this, nor did he find credible other inconsistent testimony offered by Mitchell. He did, however, accept Interform's evidence of a custom within the construction trade by which builders would order equipment for rental on purchase forms.

III.

Analysis.

As this case arises under our diversity jurisdiction, we are bound to apply, as best we can, Idaho's common law of contracts, as well as its interpretation of relevant provisions of the Uniform Commercial Code. Our review in this case is further constrained by our obligation to accept factual determinations by the district court which are not clearly erroneous. The resolution of the credibility of conflicting witnesses, crucial to this case, is such a factual determination. Metro-Goldwin-Mayer Corp. v. Fear, 104 F.2d 892, 897 (9th Cir. 1939); Comish v. Smith, 97 Idaho 89, 540 P.2d 274, 276 (1975); Crenshaw v. Crenshaw, 68 Idaho 470, 199 P.2d 264, 268 (1948). Aware of these constraints, our review must begin by focusing on the documents presented by Mitchell as constituting the contract. These consist of Mitchell's purchase order and Interform's confirmation. Mitchell insists that these documents were intended to be the final expression of their agreement, i. e., an integration of all previous undertakings into two documents, and that parol evidence is not admissible to vary their meaning. Moreover, their meaning is that which a reasonably intelligent person would give to them unaided by any prior or contemporaneous statements by the parties thereto. We shall address this contention first and then turn to the trial court's disposition of Interform's claim with respect to the second job. Finally, we will consider certain claims by Mitchell, St. Paul Fire and Marine Insurance Company, and Interform with respect to the surety bond and attorney's fees.

A. Integration and Interpretation.

Appellant's contention regarding the two purchase orders brings to the fore principles of contract law pertaining to the integration of writings and the interpretation of written contracts, the formal statement of which provides inadequate warning of the complexity that attends their application. Thus, the Idaho Supreme Court many years ago observed:

"In the construction of a contract, the court will endeavor to arrive at the real intention of the parties, and will consider the facts and circumstances out of which the contract arose, and will construe the contract in the light of such facts and circumstances."

Wood River Power Co. v. Arkoosh, 37 Idaho 348, 215 P. 975 (1923).

Also in determining whether the intention of the parties is to be ascertained only from the written agreement that Court has stated:

"Where preliminary negotiations are consummated by written contract, the writing supersedes all previous understandings and the intent of the parties must be ascertained from the writing."

Nuquist v. Bauscher, 71 Idaho 89, 94, 227 P.2d 83 (1951). These pronouncements, by no means unique or complex, obscure more than reveal the existence of a fundamental difference concerning the manner in which integration and interpretation should be approached. That difference relates to how a writing is to be viewed and the respective roles of the judge and jury.

One view is to treat the writing as having a unique and quite compelling force. Under that approach a writing "supersedes all previous undertakings" when the writing taken as a whole appears complete and the alleged additional terms ordinarily and naturally would have been included in the writing by reasonable parties situated as were the parties to the writing. See Calamari and Perillo, Contracts, 103-111 (1977) (hereinafter Calamari & Perillo). Also a writing which so supersedes all previous undertakings, i. e., which is integrated, means what a reasonably intelligent person, "acquainted with all the operative usages and knowing all the circumstances prior to and contemporaneous...