Budget Systems, Inc. v. Seifert Pontiac, Inc.

• Decision Date: 23 February 1978
• Docket Number: No. 77-246,77-246
• Citation: 579 P.2d 87,40 Colo.App. 406
• Parties: , 25 UCC Rep.Serv. 630 BUDGET SYSTEMS, INC., a Delaware Corporation, Plaintiff-Appellant, v. SEIFERT PONTIAC, INC., a Delaware Corporation, Defendant-Appellee. . III
• Court: Colorado Court of Appeals

Page 87

579 P.2d 87

40 Colo.App. 406, 25 UCC Rep.Serv. 630

BUDGET SYSTEMS, INC., a Delaware Corporation, Plaintiff-Appellant, v. SEIFERT PONTIAC, INC., a Delaware Corporation, Defendant-Appellee.

No. 77-246.

Colorado Court of Appeals, Div. III.

Feb. 23, 1978.

As Modified On Denial of Rehearing March 30, 1978.

Kenneth C. Groves, Denver, for plaintiff-appellant.

Inman, Flynn & Coffee, P. C., Robert D. Inman, Denver, for defendant-appellee.

KELLY, Judge.

Budget Systems, Inc., sued Seifert Pontiac, Inc., for breach of contract, and appeals the judgment of the trial court granting Seifert's motion to dismiss at the close of Budget's case. Budget contends that, under the rule of Teodonno v. Bachman, 158 Colo. 1, 408 P.2d 284 (1965), the judgment in favor of Seifert was not warranted. We agree and therefore reverse.

Budget Systems, Inc., commenced this action after Seifert refused to repurchase 67 automobiles pursuant to a written contract entered into between Budget Rent-a-Car of Colorado, Inc. ¹, and Seifert. Seifert justified its refusal to repurchase the automobiles on the basis that the written contract as modified by a prior course of dealing and a letter from Budget allowed it to reject those automobiles which had been driven in excess of 9000 miles. Consequently, Budget sold these cars elsewhere and sought to recover the difference between the sale price and the price it would have obtained had the cars been repurchased by Seifert.

This case is unusually postured because Budget called Seifert's vice president, Robert Solomon, as an adverse witness during its case-in-chief. Solomon's testimony reflects that, beginning in 1968, Phil Hahn, the independent owner of the local Budget franchise, entered into several oral agreements with Seifert for the purchase of automobiles to be used in his car rental operation. Each agreement provided that after a certain length of time, usually six months, the automobiles would be repurchased from Hahn if they had not been used for more than 6000 miles.

There is indication in the record that, in 1971, Budget purchased this franchise from Phil Hahn, and Phil's son, Dale Hahn, became the local manager. Budget insisted on a written contract to cover the purchase and repurchase of the rental cars. The written contract entered into between Budget and Seifert did not place any restrictions on the number of miles the vehicles could be used before offering them to Seifert for repurchase.

Several months after the execution of this contract, Seifert became concerned about the mileage being accumulated on some of the vehicles. Following a meeting with Seifert's representative, the manager of Budget sent Seifert a letter, dated May 15, 1973, which summarized the meeting and stated, in part:

"It was further agreed that when one of your units begins to accumulate mileage in excess of 9000, that the time left in service of this vehicle will be negotiated."

In July 1973, a second written contract was entered into between Budget and Seifert. As in the earlier agreement, the July contract defined commercially unacceptable vehicles for the purpose of repurchase, but made no mention of a mileage limitation.

At the close of Budget's case, the trial court granted Seifert's motion to dismiss, finding that Budget had failed to make out a prima facie case of breach of contract. Although the written contract contained no mileage limitation, the court found that there was no breach by Seifert since the previous dealings between Phil Hahn and Seifert established that the cars would not be driven in excess of 6000 miles, and these dealings could be used to "supplement or qualify" the terms of the written agreement between Seifert and Budget. Additionally, based on Budget's letter of May 15, 1973, the trial court found that the agreement between Seifert and Budget did not require Seifert to repurchase a vehicle with more than 9000 miles unless Seifert had authorized the use of the vehicle for the extra miles.

Budget contends that, at the close of its case, the evidence was insufficient to establish that the written contract had been modified by a prior course of dealing between Budget and Seifert since the only testimony on this issue related to oral agreements negotiated by Phil Hahn. We agree.

The Uniform Commercial Code which governs this transaction provides in part:

"(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct." Section 4-1-205, C.R.S.1973 (emphasis added).

The code also defines a party as a "person who has engaged in a transaction or made an agreement within this title," § 4-1201(29), C.R.S.1973, and recognizes that the term "party" includes a person who is acting through an agent. See § 4-1-201, C.R.S.1973, (Official Comment 29).

The evidence here is insufficient to support a finding that a prior course of dealing had been established between Budget and Seifert. Altho...