Capital Warehouse Co. v. McGill-Warner-Farnham Co., GILL-WARNER-FARNHAM

• Citation: 276 Minn. 108,149 N.W.2d 31
• Decision Date: 24 February 1967
• Docket Number: GILL-WARNER-FARNHAM,No. 40056,40056
• Parties: CAPITAL WAREHOUSE CO., Inc., Respondent, v. McCOMPANY, Appellant.
• Court: Minnesota Supreme Court

Page 31

149 N.W.2d 31

276 Minn. 108

CAPITAL WAREHOUSE CO., Inc., Respondent, v. McGILL-WARNER-FARNHAM COMPANY, Appellant.

No. 40056.

Supreme Court of Minnesota.

Feb. 24, 1967.

Rehearing Denied March 21, 1967.

Syllabus by the Court

1. In reviewing evidence, the findings of the trial court are entitled to the same weight as a jury verdict and will not be disturbed on appeal unless they are manifestly contrary to the evidence and without reasonable evidentiary support.

2. In the formation of a contract words alone are not the only medium of expression. There can be no distinction in the effect of a promise whether it be expressed in writing, orally, in acts, or partly in one of these ways and partly in others. It is the objective thing, manifestation of mutual assent, which is essential to the making of a contract.

Maun, Hazel, Green, Hayes, Simon & Aretz, St. Paul, for appellant.

Doherty, Rumble & Butler and Eugene M. Warlich, St. Paul, for respondent.

OPINION

MURPHY, Justice.

This is an appeal from a judgment awarding Capital Warehouse Company, Inc., the sum of $8,013.60, with interest and costs, for warehouse labor and services furnished appellant, McGill-Warner-Farnham Company. Appellant contends that the findings of the trial court to the effect that it is indebted to respondent on the basis of an oral or express contract is without support in the record.

Capital Warehouse Company, Inc., hereinafter referred to as 'Capital,' is engaged in the general warehousing business. McGill-Warner-Farnham Company, hereinafter referred to as 'Farnham,' is a corporation engaged in the office supply and equipment business. The warehouse building which was utilized in this transaction is referred to as 'Building 24.' It is one of 15 warehouse buildings owned by 8 members of the McNeely and Frenzel families, some of whom will be referred to specifically in the discussion to follow. It appears that Building 24 is a large structure having a total space area of 260,000 square feet. At the time of the transaction with which we are here concerned, the building was leased to Capital by its owners. The owners are designated in the record as Undivided Real Estate and will be referred to hereinafter as 'URE.' The owners act through two members of the McNeely-Frenzel families. They are H. G. McNeely and Paul Frenzel, who have powers of attorney from the tenants in common. The controlling stockholders of Capital are also members of the McNeely-Frenzel families. Its president is Paul Frenzel and its chairman of the board, H. G. McNeely. Capital's vice president and principal executive officer is John Seibel. The president and major stockholder of Farnham, Donald G. McNeely, is one of the cotenant-owners of Building 24 and is the son of H. G. McNeely and a nephew of Paul Frenzel. Don McNeely has no interest in Capital aside from the fact that as a cotenant he shares in whatever income is derived from rentals paid by Capital to URE on Building 24. This dispute grows out of a disagreement between members of the Frenzel-McNeely families who have a related and overlapping interest in the companies and properties involved in this transaction.

It would appear that from January through December 1962 certain property of Farnham consisting of commercial furniture was stored or kept in Building 24, leased by Capital. From the record the court could find that the transaction developed in the following way. Sometime in November or December 1961, Don McNeely informed Mr. Seibel, Capital's vice president and custodian of Building 24, that Farnham needed additional warehouse space and would like to store furniture in Building 24. He told Seibel 'that the furniture operation would be moving in and that to expert it because of his responsibility for security and safekeeping' of the building. Accordingly, stocks of Farnham's office furniture were received and stored in Building 24. Seibel testified that they used warehouse receipts on the first shipment but that 'was found to be a little clumsy because of Farnham's record keeping, and we were furnished a copy of each purchase order so that when we received this, we could return one copy of this purchase order to Farnham's so they could properly identify each shipment.' During the period in question shipments of furniture were received for Farnham, stored on the premises, and shipped out to Farnham's customers. Seibel testified, 'I don't recall how the special orders were handled, but all the warehouse stock was delivered to Farnham's uncrating crew by our warehouse man, and Farnham's representative signed for this as it was delivered to him or, at least, by the end of the day.' These records were not available at the trial. Seibel said, 'I think part of these records were sent back over to Farnham's. We found that some of the records were helpful in identifying some of these shipments, so we sent most of the records back to Farnham's, and I think the rest were destroyed.'

At the time the transaction was initiated between Seibel and Don McNeely, it doesn't appear that the terms of the proposed undertaking were precisely stated. Sometime in May 1962 Seibel had discussions with McNeely with reference to 'reasonable arrangements' for payment of the services by Farnham. McNeely told Seibel that he would arrange to have Farnham's general manager talk to him with reference to the arrangements. Within a couple of days Farnham's manager, Gordon Heusinkveld, called at Capital, advising Seibel that he had been sent by Farnham to arrange for the rents, and it was agreed that Farnham would pay $3.75 an hour for labor charges furnished by Capital and space rental on the basis of 6 cents per square foot per month. Seibel testified that Heusinkveld agreed to these terms but suggested that Farnham be billed for 2-month periods. In his deposition, which was placed in evidence, Heusinkveld testified that he and Seibel had discussed the charges for both labor and space and that he agreed on the rates to be charged. With reference to his conference with Seibel, he testified, 'Situations like that were always handled in this manner: Mr. McNeely would call me on the phone and say you will go to St. Paul, you will meet a Mr. Seibel and he will tell you that the charges for such and such are so much per hour, you agree to it. It's good deal. So I would agree to it. We didn't set the rates. I just agreed to something that was already set up by Mr. McNeely.'

It appears from the record that in June 1962 Farnham paid Capital for labor and space in the amount of $2,081.25. Bills were submitted each month by Capital to Farnham but no further payments were made until August 26, 1963, at which date Farnham paid $3,595.36, which, together with the earlier payment, represented the total amount of Capital's stated charges for labor at $3.75 an hour. The balance of the claim, which is contested, amounts to $8,013.60 and represents unpaid warehouse service. In relation to this item, the Farnham ledger account for Capital indicates that there was paid to Capital on December 31, 1964, the sum of $8,013.60. This payment was never made. The evidence indicated that, on December 17, 1964, there was prepared by Farnham a check in the sum of $8,013.60 payable to H. G. McNeely, attorney in fact for URE. This was issued pursuant to Don McNeely's written instructions. He testified that it was to be used in an effort to compromise the claim. In sending his instructions to prepare the check, Mr. McNeely noted 'Balance due Capital Warehouse Co. $8,013.60.'

As opposed to Capital's claim that there was in fact an agreement by Farnham to pay for storage space as well as labor, we have the testimony of Farnham's president that the office furniture was placed in Building 24 under an 'interim' or tentative agreement. He testified that there was a great deal of empty space in Building 24 and that, as one of the persons responsible for its successful operation, he was interested in making some effort to have the space utilized. Capital used only a small part of it, and the rent derived from the building was based on the amount of space used. At that time Minnesota Mining & Manufacturing Company had leased direct from URE 60,000 square feet which it used for warehouse purposes. Apparently there was in the back of Don McNeely's mind the notion that Farnham's furniture might be kept on the premises under some kind of direct arrangement with his cotenants without obligation to Capital. He testified at one point that because of the distance of Building 24 from the Farnham establishment its use for storage space would be disadvantageous and uneconomical. This statement, however, is not consistent with other testimony. The record indicates that the fact Minnesota Mining was using part of the floor space had a bearing on Farnham's decision to move its stock there. Mr. McNeely testified, 'I discovered * * * that * * * Farnham was supplying Minnesota Mining with some new desks, and I believe this time is coincident with Minnesota Mining's new building on Highway 12, and it seemed logical to...