Agrarian Grain Co., Inc. v. Meeker

• Decision Date: 18 July 1988
• Docket Number: No. 90A02-8703-CV-00117,90A02-8703-CV-00117
• Citation: 526 N.E.2d 1189
• Parties: 7 UCC Rep.Serv.2d 786 AGRARIAN GRAIN CO., INC., Appellant (Defendant Below), v. Don MEEKER, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 1189

526 N.E.2d 1189

7 UCC Rep.Serv.2d 786

AGRARIAN GRAIN CO., INC., Appellant (Defendant Below), v. Don MEEKER, Appellee (Plaintiff Below).

No. 90A02-8703-CV-00117.

Court of Appeals of Indiana Second District.

July 18, 1988.

Ordered Published Aug. 17, 1988.

Christopher E. Baker, Rubin & Levin, Indianapolis, S. Daniel Weldy, III, Gallivan, Hamilton, Seese, Patterson & Weldy, Bluffton, for appellant.

Mark Paul Smith, Krueckeberg and Smith, Ft. Wayne, for appellee.

SHIELDS, Presiding Judge.

Agrarian Grain Co., Inc. (Agrarian) appeals a judgment awarding Don Meeker d/b/a Meeker's of Hildalgo, Illinois, damages on his complaint for overdue rent and denying Agrarian damages on its counterclaim for breach of warranty. We affirm in part and reverse in part.

On October 21, 1969, Agrarian entered into a written contract with Meeker. Under the terms of the contract, Meeker agreed to add six rings of height to ten existing nine-ring grain bins owned by Agrarian. The additional space would then be leased to Agrarian for a four year term with an option to purchase.

In April 1970, a windstorm blew a bin under construction, in the south row, into a completed bin in the north row. Meeker replaced the bin in the south row but refused to replace the north row bin. By November of 1970, the five bins on the south row were completed and filled with grain. In less than a week, the south row of bins began to recorrugate, i.e., collapse or buckle. Following the problem with the destroyed bin in the north row and the recorrugation of the bins in the south row, Agrarian withheld further rental payments.

On December 2, 1974, Meeker filed a complaint for the overdue rental payments plus interest. Agrarian counterclaimed for damages as a result of Meeker's breach of contract. It demanded costs for the replacement of the destroyed bin in the north row and reconstruction of the five recorrugated bins in the south row.

The trial court awarded Meeker rental payments and interest totalling $86,191.20; it awarded Agrarian $23,912.41, including interest, for the destroyed bin in the north row but denied it damages for the five recorrugated bins in the south row. The parties, as did the trial court, treated this transaction as a sale of goods under Article 2 of the Uniform Commercial Code.

The restated issues are:

1) whether the trial court's finding that Agrarian did not notify Meeker of a revocation of its acceptance of the bins is clearly erroneous;

2) whether the trial court's finding that the implied warranty of merchantability was disclaimed is clearly erroneous; and

3) whether the trial court's judgment on the counterclaim is contrary to its findings.

On review, the requested special findings of fact and conclusions entered by the trial court are binding upon this court unless those findings or conclusions are clearly erroneous, i.e., we are definitely and firmly convinced the trial court committed error. In determining whether the findings are clearly erroneous, this court will not reweigh the evidence nor determine the credibility of the witnesses, and will consider only the evidence in the record which supports the findings and the reasonable inferences which can be drawn from that evidence. Campins v. Capels (1984), Ind.App., 461 N.E.2d 712. Of course, the judgment entered by the trial court must accord with its special findings. If the judgment entered by the trial court is contrary to its special findings, it is contrary to law.

Agrarian argues the trial court's special finding that it did not notify Meeker it was revoking its acceptance of the bins is clearly erroneous.

Agrarian bases its argument upon Meeker's testimony he knew Agrarian was unhappy and dissatisfied with the five south row bins when Agrarian discontinued further rental payments after the recorrugation of the five bins.

Among other conditions, IC 26-1-2-608(2) (Burns 1974) provides revocation of acceptance is "not effective until the buyer notifies the seller of it." Based upon this requirement the trial court's finding is not clearly erroneous. Actual knowledge by Meeker that Agrarian's non-payment was due to its dissatisfaction does not unequivocally equate to notice of revocation.

Revocation has the effect of permitting the buyer to avoid his obligation to pay for the previously accepted goods (or to have his payment returned) if he returns the goods to the seller. IC 26-1-2-608(3), IC 26-1-2-602(2)(c) (Burns Supp.1988). Hence, notice of revocation must fairly apprise the seller that the buyer is returning the goods. Agrarian's failure to make further payments due to its dissatisfaction with the bins does not lead only to the conclusion it was returning the bins. Indeed the reasonable conclusion is Agrarian wanted the bins repaired. Therefore, the trial court's finding that Agrarian did not give notice of revocation to Meeker is not clearly erroneous. Accordingly, we affirm the trial court's judgment on Meeker's complaint.

Agrarian argues the trial court's judgment against it on the counterclaim is contrary to law because the trial court's undisputed special findings mandate a judgment for Agrarian based upon Meeker's breach of the implied warranty of merchantability. Agrarian relies upon the statutory implied warranty of merchantability while Meeker argues the implied warranty of merchantability was excluded.

IC 26-1-2-314 (Burns Supp.1988) dictates:

(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind....

IC 26-1-2-316 (Burns Supp.1988) in relevant part, provides:

(2) Subject to Subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous....

(3) Notwithstanding subsection (2) (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is," "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty....

The trial court concluded the warranty of merchantability was disclaimed by language contained in Items 10 and 23 of the lease agreement. However, neither item mentions merchantability. Item 10 negates Meeker's liability for any consequential damages caused by the use of the bins and Item 23...