Baker v. Compton

• Decision Date: 25 October 1983
• Docket Number: No. 2-582A140,2-582A140
• Citation: 455 N.E.2d 382
• Parties: 38 UCC Rep.Serv. 10 Jeannine L. BAKER and James A. Baker, Appellants (Plaintiffs below), v. George William COMPTON d/b/a Compton Climate Makers and Williamson Company, Appellees (Defendants below).
• Court: Indiana Appellate Court

Page 382

455 N.E.2d 382

38 UCC Rep.Serv. 10

Jeannine L. BAKER and James A. Baker, Appellants (Plaintiffs below), v. George William COMPTON d/b/a Compton Climate Makers and Williamson Company, Appellees (Defendants below).

No. 2-582A140.

Court of Appeals of Indiana,

Second District.

Oct. 25, 1983.

Kenneth L. Andrews, John T. Grimes, Kokomo, for appellants.

James P. Seidensticker, Jr., Daniel C. Emerson, Bose, McKinney & Evans, Indianapolis, Joe F. Watson, Watson & Hobbs, Tipton, for appellees.

SHIELDS, Judge.

Appellants, Jeannine L. Baker and James A. Baker (Baker), appeal the judgment for appellee, George William Compton d/b/a Compton Climate Makers (Compton) and against Baker on Compton's counterclaim for foreclosure of a mechanic's lien. Baker sued Compton and a second defendant, Williamson Company, (Williamson) for rescission of a contract to purchase from Compton and have Compton install heating and air conditioning equipment in an existing three-story building owned by Jeannine Baker being renovated by James Baker. Baker alleged Compton performed certain installation work in an unworkmanlike manner and, along with Williamson, recommended furnaces of insufficient capacity to heat the intended area. Compton counterclaimed for foreclosure of a mechanic's lien he had filed against the property. Baker raises three issues on appeal:

1) whether there was sufficient evidence to support the judgment for Compton on his counterclaim;

2) whether the trial court erred in failing to apply the principle of mitigation of damages;

3) whether the damages awarded Compton were excessive.

We remand for correction of the judgment and affirm subject to the correction.

The record shows James A. Baker and Compton entered into a Sales and Installation Contract on November 15, 1976 pursuant to which Baker agreed to buy and Compton agreed to sell and install thirteen (13) gas furnaces, thirteen (13) electric air conditioners, and ten (10) gas water heaters in an existing three story building in Tipton, Indiana, Baker was renovating for commercial and residential use.

Payment of the $27,000 purchase price was to be in installments, the first of which was "$12,000 on delivery of equipment for 1st and 2nd floors of Owners (sic) building. JAB (approx. 21-28 days)." Record at 144. The contract provided work was to commence immediately, progress as rapidly as possible, and be completed by June 1, 1977.

Compton began work November 15, 1976, the day of the contract. All thirteen furnaces were delivered either to Baker's building or to Compton's trailer in front of the building by December 3, 1976 when Baker and Compton disagreed over the ability of the two installed furnace units to heat the retail store in which they were placed and Compton orally demanded the initial payment of $12,000 under the contract. Seven air conditioners were also delivered to Compton's trailer by December 3, 1976. ¹

A meeting was arranged in mid December, 1976, at which Williamson assured Baker the two installed units would heat effectively when the remaining units were installed and functional. Baker requested that Compton begin the third furnace installation. Compton again orally demanded payment of the $12,000 installment due under the contract before he would resume installation. Baker offered to pay $3,000 but refused to pay $12,000, stating Compton had not performed $12,000 worth of work. Compton refused to accept less than the $12,000 due and performed no work under the contract after December 3, 1976.

On December 17, 1976, Compton, through counsel, made formal written demand for payment of the $12,000, advising Baker if payment was more than ten days delinquent, he would deem the contract defaulted. Record at 422. On approximately December 27 or 28, 1976, Baker telephoned Compton and told him he could come retrieve his equipment from the building. Compton declined to do so at that time believing the equipment for the first and second floors had to remain delivered for the ten days he had given Baker to pay the $12,000 or Compton would be in breach of the contract.

When Compton had not received payment by January 4, 1977, (his counsel advised him to wait a bit longer than ten days after the letter of December 17, 1976) he returned to the Baker building intending to take back the uninstalled but delivered equipment. He found the second and third floors were locked. ² He did retrieve the one furnace remaining uninstalled on the first floor. Compton telephoned Baker to inquire about his equipment but Baker told him to talk to his lawyer.

On January 10, 1977, Compton's counsel again wrote to Baker advising him the contract was now considered defaulted by Compton. Record at 429. The letter informed Baker he could take delivery and pay for the three furnaces and seven air conditioners in the trailer outside the building or Compton would return them to the manufacturer for a refund, less a handling charge, which he would charge to Baker. Baker did not respond and Compton returned the equipment for a refund.

On January 31, 1977, Compton executed a notice of intention to hold a mechanic's lien which was recorded February 1, 1977. Baker brought suit to rescind the contract on March 16, 1977 and Compton counterclaimed for foreclosure of his $23,296.53 mechanic's lien. Baker appeals the trial court's judgment for defendants Compton and Williamson and against Baker on the complaint and in favor of Compton and against Baker on the counterclaim in the amount of $23,296.53 plus attorney's fees of $4,200. His appeal challenges the judgment in favor of Compton on the counterclaim and the court's findings in that regard. ³

I. Applicability of Uniform Commercial Code

Where, as here, the trial court has on its own motion made findings pursuant to Indiana Rules of Procedure, Trial Rule 52(A), this court will not set aside such findings or conclusions unless they are clearly erroneous. Mishawaka Brass Mfg. v. Milwaukee Valve Co., (1983) Ind.App., 444 N.E.2d 855, 857. The judgment controls as to any issue not covered by the findings and must be upheld if sustainable on any theory. Id.; Trial Rule 52(D). In determining whether the findings are clearly erroneous, we will neither weigh the evidence nor judge the credibility of the witnesses but will consider only the evidence in the record and reasonable inferences therefrom which support the judgment. The findings will be disturbed only if the record lacks facts or reasonable inferences which support them. Indiana Tri-City Plaza Bowl, Inc. v. Estate of Glueck, (1981) Ind.App., 422 N.E.2d 670, 674.

The trial court's findings reveal the written contract of November 15, 1976 was treated as a sale of goods under Article 2 of the Uniform Commercial Code (UCC). While Baker does not explicitly attack this treatment of the contract as falling within the UCC, we nevertheless deem it sufficiently important to merit our comment because our resolution of the issue on appeal necessarily involves application of provisions and principles of the UCC.

Article 2 of the UCC applies to "goods", which are defined in part as "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale...." I.C. 26-1-2-105 (Burns Code Ed.1974). Furnaces, air conditioners, water heaters, piping and other pieces of equipment fit within the definition of goods. Howard Dodge & Sons, Inc. v. Finn, (1979) Ind.App., 391 N.E.2d 638. ⁴ However, the November 15, 1976 Sales and Installation Contract signed by James A. Baker and George William Compton d/b/a Compton Climate Makers created a commitment to provide installation services as well as to sell the goods.

Such contracts are not, because of their mixed nature, automatically outside the scope of Article 2. The recognized purpose of the UCC is to promote uniformity in commercial transactions and the scope of goods should not be narrowly construed so as to contravene that purpose. Thompson Farms, Ind. v. Corno Feed Products, (1977) 173 Ind.App. 682, 366 N.E.2d 3, 16 (quoting Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co., (7th Cir.1976) 532 F.2d 572, 580). As explained by the United States Court of Appeals for the Eighth Circuit:

"[W]e find a dearth of authority going to a point relied upon ..., namely, that the Code was not meant to cover 'nondivisible mixed [goods and services] contracts of this type.' Rather, the cases presenting mixed contracts of this type are legion. The test for inclusion or exclusion is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved (e.g., contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g. installation of a water heater in a bathroom)."

Bonebrake v. Cox, (8th Cir.1974), 499 F.2d 951, 960 (footnotes omitted). See Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co., cited with approval in Uebelhack Equip., Inc. v. Garrett Bros., (1980) Ind.App., 408 N.E.2d 136, n. 1.

The predominant thrust of a mixed contract is a factual question determined by a review of the contract and the circumstances surrounding the formation and contemplated performance of the contract. Glover School & Office Equip., Inc. v. Dave Hall, Inc., (1977) Del.Super., 372 A.2d 221, 223. The relationship of the cost of goods to the total contract price is one factor to consider in determining whether the thrust of a contract is goods or services. See Uebelhack Equip., Inc. v. Garrett Bros., 408 N.E.2d at 137, n. 1. See also Lincoln Pulp & Paper Co. v. Dravo Corp., (1977 N.D. Maine) 436 F.Supp. 262, 275; Glover School & Office Equip., Inc. v. Dave Hall, Inc., 372 A.2d at 223. Although there is no price breakdown in this contract, the evidence shows the cost of equipment represented the majority of the total contract...