Cargill, Inc. v. Kavanaugh

• Citation: 228 N.W.2d 133
• Decision Date: 04 April 1975
• Docket Number: No. 9069,9069
• Parties: 16 UCC Rep.Serv. 1196 CARGILL, INC., Plaintiff-Appellant, v. Patrick J. KAVANAUGH, Defendant-Appellee. Civ.
• Court: United States State Supreme Court of North Dakota

Page 133

228 N.W.2d 133

16 UCC Rep.Serv. 1196

CARGILL, INC., Plaintiff-Appellant, v. Patrick J. KAVANAUGH, Defendant-Appellee.

Civ. No. 9069.

Supreme Court of North Dakota.

April 4, 1975.

Syllabus by the Court

1. Effective appellate review of findings of fact of trial court is limited to determination of whether findings are clearly erroneous. Rule 52(a), N.D.R.Civ.P.

2. Finding of fact of trial court was not clearly erroneous.

3. Section 9--09--06, N.D.C.C., providing that contract in writing may be altered only by subsequent writing or by subsequent executed oral agreement is substantive law and not a mere rule of evidence.

4. Oral agreement altering provisions of prior written contract is executed as contemplated by the provisions of Section 9--09--06, N.D.C.C., when party seeking to enforce oral agreement has performed the agreed-upon actions expected from the enforcing party pursuant to the oral agreement.

5. Where asserted oral modification of prior integrated written contract was not executed pursuant to the terms of Section 9--09--06, N.D.C.C., proof of such modification fails as a matter of law, since evidence thereof is not cognizable by the court.

6. In light of the circumstances in this case, contracting party's request of other party in default to render performance and defaulting party's equivocal response were insufficient indications of an intent to enter into a further binding legal agreement based upon such request and the response thereto.

7. Alleged contract is not legally enforceable when nature of asserted contract, if legally binding, would be such that parties at time of making could not have practically conceived of possible consideration therefor flowing from enforcing party to party denying making of such contract as a result of the contract.

8. Fact that party in default did not specifically disavow intention to perform obligation in default does not constitute breach of obligation of good faith imposed upon contracting parties pursuant to Section 41--01--13, N.D.C.C.

9. Where contract or provision thereof is prepared by one party to contract (unless the product of negotiation), doubt arising due to ambiguities in said contract or provision should be resolved against the preparing party.

10. First contracting party who solely set forth in contract exclusive liquidated-damages clause, which provided for alternate performance by payment of liquidated damages, will not be heard to say that liquidated-damages clause should not be applied in case where second party to contract opts for the alternative performance under circumstances not inherently prejudicial to first party who suffers additional damages due solely to own neglect to mitigate damages.

11. Where action sounds in contract, invocation of equity powers of court is inappropriate in absence of showing requiring intervention of equitable principles.

12. Section 41--01--15(1), N.D.C.C., providing for proof of a prior course of dealing between the parties has for its purpose the filling in of hiatus or ambiguities in the agreement sued upon.

13. Reviewing court cannot review alleged errors of law in the excluding of testimony where offer of proof as to evidence which would have been adduced by such testimony is lacking.

14. Trial court did not abuse its discretion in denying motion for new trial when it determined that newly discovered evidence proffered as basis therefor would not materially affect the substantial right of the movant. Rule 59, N.D.R.Civ.P.

Haugland & Heustis, Devils Lake, for plaintiff-appellant; argued by John C. Haugland, Devils Lake.

R. C. Heinley, Carrington, for defendant-appellee.

SAND, Judge.

Plaintiff Cargill appeals from a judgment in its favor on the basis that such judgment is insufficient because improperly predicated, and from the trial court's denial of its motion for modification of judgment.

The parties are in agreement on the following facts: That

On October 20, 1972, the appellant Cargill entered into a written contract to buy 7,500 bushels of #1 hard amber durum wheat from the appellee Patrick J. Kavanaugh, a farmer.

The terms of that written contract provided that Kavanaugh was to deliver said wheat to Cargill at its Lakota, North Dakota, elevator between June 1, 1973, and June 15, 1973, and that Cargill was to pay for said wheat $1.97 per bushel.

The contract further provided that should Kavanaugh default in delivery, he (Kavanaugh) '. . . agrees to pay to (Cargill) as damages for default in delivery hereunder the difference between the above specified price (I.e., $1.97 per bushel) and the highest market price . . . on the date of default.'

Kavanaugh defaulted in delivery as provided for in this contract.

In his answer and at the pre-trial conference Kavanaugh admitted he was in default on the written contract and offered to settle the matter on the basis of the liquidated-damages clause contained in that contract. Cargill refused this offer of settlement and, at trial before the district court, sought to show that the parties had either orally agreed to modify the written contract so as to extend the delivery date (date of default) or that the parties had agreed to a new oral contract differing only from the superseded written contract in terms of a later delivery date (date of default).

The trial judge, after having heard the evidence in the matter, promulgated as one of his findings of fact, in Paragraph VII, the following:

'That the plaintiff (Cargill) has failed to establish that there was an extension of that (written) contract (of October 20, 1972) beyond the 15th day of June, 1973.'

Cargill challenges this finding of fact and requests this court declare the finding of fact to be otherwise.

It is so well settled as not to require citation that the scope of our review as to the findings of fact of a trial judge is limited by rule 52(a), North Dakota Rules of Civil Procedure, which provides, in pertinent part, that 'Findings of fact shall not ble set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.'

In In re Estate of Elmer, 210 N.W.2d 815, 820 (N.D.1973), this court, attempting to elucidate the term 'clearly erroneous,' said:

'A finding is 'clearly erroneous' only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948). The mere fact that the appellate court might have viewed the facts differently, if we had been the initial trier of the case, does not entitle us to reverse the lower court. Nee v. Linwood Securities Co., 174 F.2d 434 (8th Cir. 1949); Wright & Miller, Federal Rules of Civil Procedure, Sec. 2585, p. 729 et seq.'

With these tenets in mind, we have thoroughly reviewed the record in this case and find that the evidence of record in support of Cargill's assertion that the date of default was July 27, 1973 (when the relevant market price was $5.82 per bushel), rather than June 15, 1973 (when the relevant market price was $2.70 per bushel), consists of the testimony at trial of Mr. Kavanaugh and of Orville Peterson, Cargill's Lakota elevator manager. ¹

The gist of the testimony, even when we look at it in a light most favorable to Cargill, which we are not required to do, is as follows:

In May 1973, Orville Peterson (hereinafter Peterson) told Kavanaugh that he could bring in the grain provided for in the contract at any time as there was elevator space available to handle it. Kavanaugh asked how much it would cost to buy his way out of the October 20, 1972, contract and Peterson quoted an approximate figure.

In early June and on June 10, 1973, Peterson told Kavanaugh he could begin delivering the wheat. Kavanaugh's response of June 10 was that he was busy with Spring's work and, implicitly, couldn't deliver the wheat at that time or in the near future.

After June 15, 1973 (the last day Kavanaugh could deliver the wheat contracted for without being in default under the written contract) Peterson contacted Kavanaugh several times about beginning to deliver the wheat but Kavanaugh was either noncommittal about doing so or had some excuse such as the fact that he was doing summer-fallowing or that he could not deliver in the rain.

Finally, on July 24, 1973, after Peterson contacted Kavanaugh and requested him to deliver the grain, Kavanaugh, for the first time, said that he could not deliver the grain for the contract price and would like to see if things could be settled out somehow. Kavanaugh asked Peterson to contact his superior so some sort of settlement could be worked out. Cargill states that this was the first inkling that it had that Kavanaugh did not intend to honor the contract.

On July 25, 1973, Kavanaugh went to the office of Orville Peterson, where the latter asked him to sign an extension of the delivery date specified in the original contract. Kavanaugh refused to do so. Peterson also asked him to start delivering the grain but Kavanaugh said that he couldn't do so while it was raining. Peterson then gave Kavanaugh until July 27 to deliver the grain.

On July 27, Kavanaugh said he would not deliver the grain for the original contract price and he was advised by Peterson that the contract was to be considered canceled.

We will examine these facts to determine whether the contentions of the appellant Cargill that the delivery date specified on the written contract was extended pursuant to an oral agreement to modify the written contract or whether (and this point seems to be more strongly contended by the appellant) the written contract was superseded by a later oral contract between the parties to deliver the grain have any substantial basis in law.

But because of appellant's contention that the written contract was modified in...