Christensen v. Ransom

• Court: Idaho Court of Appeals
• Writing for the Court: SILAK; SWANSTROM, J., and HART
• Citation: Christensen v. Ransom, 844 P.2d 1349, 123 Idaho 99 (Idaho App. 1992)
• Decision Date: 20 August 1992
• Docket Number: No. 18716,18716
• Parties: , 20 UCC Rep.Serv.2d 418 Thomas CHRISTENSEN, d/b/a Tom's Chemicals & Fertilizers, Plaintiff-Appellant, v. Max S. RANSOM and Rodney S. Ransom, d/b/a Ransom Angus Ranch, Defendants-Respondents.

Page 1349

844 P.2d 1349

123 Idaho 99, 20 UCC Rep.Serv.2d 418

Thomas CHRISTENSEN, d/b/a Tom's Chemicals & Fertilizers, Plaintiff-Appellant, v. Max S. RANSOM and Rodney S. Ransom, d/b/a Ransom Angus Ranch, Defendants-Respondents.

No. 18716.

Court of Appeals of Idaho.

Aug. 20, 1992.

Rehearing Denied Jan. 21, 1993.

Blaser, Sorensen & Hansen, Blackfoot, for plaintiff-appellant. Stephen J. Blaser argued.

Johnson & Meikle, Idaho Falls, for defendants-respondents. David A. Johnson argued.

SILAK, Judge.

This case involves a question whether a contract for the sale of farm equipment was formed. Thomas Christensen allegedly bought two tractors, two drills, and a baler from Rodney and Max Ransom for $40,000. Christensen claims that he agreed to lend $40,000 to the Ransoms to help them finance a lawsuit against the Farmer's Home Administration (FmHA). Christensen sued the Ransoms for payment of an alleged promissory note. The Ransoms counterclaimed for payment on the contract for the sale of farm machinery. Sitting without a jury, the trial court found that a contract for the sale of machinery had been formed and that Christensen owed the Ransoms $20,000. Christensen appeals arguing that the district court made several legal and factual errors in reaching its decision. We affirm the judgment of the district court.

The facts of this case are as follows. In October, 1984, the Ransoms needed additional funds to pay attorney fees and costs in their suit against the FmHA. The Ransoms discussed their lawsuit and their need for funding with Christensen's nephew. The nephew arranged a meeting between Christensen and the Ransoms. During the first meeting and subsequent meetings, Christensen and the Ransoms discussed various options, including a $20,000 loan, or in the alternative, a sale and purchase of farm equipment. The parties did not negotiate a written agreement during the fall of 1984.

In March, 1985, Christensen and the Ransoms reentered negotiations. The testimony is conflicting on the substance of the negotiations; however, a bill of sale was prepared by the Ransoms' attorney and on March 22, 1985, it was signed by the Ransoms and notarized at the office of an attorney chosen by Christensen. The bill of sale stated:

BILL OF SALE

We, MAX S. RANSOM and RODNEY S. RANSOM, doing business as RANSOM ANGUS RANCH, residing at 248 Valley Drive, Idaho Falls, Idaho, hereby on this day, March 8, 1985, sell to THOMAS CHRISTENSEN, residing south of Shelley, Idaho, the following farm machinery for the sum of $40,000.

Two 12 foot International Press Wheel Grain Drills

Model 620, Serial No. 0390168C007203

Serial No. 0390168C007233

Two Massey Ferguson Tractors

Model 1500, Serial No. 9C001212

Serial No. 9C003689

One Freeman Baler

Model 330, Serial No. 63921

Motor Serial No. 453699

Sellers are the lawful owners of the machinery listed above, and said machinery is free from all liens and encumbrances. Sellers have good right to sell the machinery and will warrant and defend the right against lawful claims and demands of all persons.

Christensen did not sign the bill of sale; however, he had the document recorded in the county recorder's office. On the same day Christensen signed a check to the Ransoms for $20,000.

The Ransoms' attorney also prepared a document titled "Agreement for Option to Repurchase Machinery." Under this agreement, the Ransoms would have had the option to repurchase the farm machinery for the same price at which it was sold, two years from the date the agreement was signed. According to Max Ransom's testimony, Christensen refused to consider an option to repurchase. The document was never signed by any of the parties. Three days later, on March 14, 1985, the Ransoms signed a second document which was typed on a form with the name and address of Christensen's business printed on the top right corner. The second document stated:

We, Max S. Ransom and Rodney S. Ransom doing business as Ransom Angus Ranch ... received from Thomas Christensen the sum of $20,000.00 plus other valuable considerations for the following Machinery.

2--12 ft. International Press Wheel Grain Drills

2--Massey Ferguson Tractors

1--Freeman Baler

Bill of Sale is recorded Bingham County[,] Blackfoot, Idaho[.]

There was conflicting testimony on the question whether the actual purchase price of the farm equipment was $20,000 or $40,000. The dispute was based, in part, on the existence of the second document. After hearing the testimony and weighing the evidence, the trial court found that the bill of sale was the written evidence of the terms of the contract and that the second document was a receipt for the initial $20,000 payment on the $40,000 debt.

Christensen did not take physical possession of the equipment at the time he made the $20,000 payment. In the spring of 1985, Christensen told the Ransoms that they could use the grain drills if they kept track of the usage. He also asked that another farmer, Duane Haggart, be allowed to use the grain drills. Christensen told the Ransoms that he had no immediate need for the equipment. He stated that he would make the final payment when he came to pick up the equipment. Christensen never made further payment on the equipment.

In March, 1987, Christensen and his nephew went to the Ransom's ranch to take the equipment. The Ransoms refused to allow Christensen to take the machinery because they had not received the final payment. According to the testimony of Max Ransom, Christensen threatened to sue the Ransoms for breach of the sale contract and for breach of a promissory note. Christensen held a photocopy of a signed promissory note for $40,000 up to the passenger window of the pickup truck in which he was sitting. The promissory note was never submitted to the district court.

Later that month, Christensen filed a complaint against the Ransoms alleging they had breached a contract for the sale of farm equipment. The alleged purchase price of the equipment was $20,000. Christensen also alleged that the Ransoms had agreed to repurchase the farm equipment in one year for $40,000. Christensen attached a copy of the bill of sale as an exhibit to his complaint.

The Ransoms answered the complaint and filed a counterclaim. In their answer, they denied that the purchase price was $20,000. With respect to the alleged agreement to repurchase, they asserted the affirmative defenses of unconscionability, the statute of frauds, lack of consideration, failure to perform condition precedent, fraud, constructive fraud, and duress. As a remedy, the Ransoms asked the court to rescind the alleged contract to repurchase. In the counterclaim, they alleged a breach of the purchase contract. They alleged that the purchase price of the farm equipment was $40,000 and that Christensen had paid $20,000. The counterclaim allowed for a potential offset for the Ransoms' use of the equipment but requested an additional offset for the cost of storing the equipment.

In his reply to the counterclaim, Christensen denied that the purchase price for the equipment was $40,000 and denied that he had only partially performed the contract. Christensen raised no affirmative defenses to the counterclaim. At the time of trial, Christensen changed his position and alleged that the transaction was actually a loan which was secured by the farm equipment in question.

The dispute was tried before the district court, sitting without a jury. Following the trial, the court held that the parties had entered into a contract for the sale of farm equipment for $40,000 and that the contract was governed by Article 2 of the Uniform Commercial Code, I.C. § 28-2-201 through § 28-2-725. The court held that, even though Christensen had not signed the bill of sale, the contract was not barred by the statute of frauds because Christensen had admitted the existence of the contract in his complaint and because the conduct of the parties showed that they recognized the contract. The court further held that Christensen took effective possession of the equipment by authorizing other people to use it. The court also held that the risk of loss and depreciation passed to Christensen at the time the Ransoms delivered the bill of sale. The court held that the document which was signed on March 14, 1985, was a receipt for the $20,000 Christensen initially paid on the contract. The court found that Christensen breached the contract and ordered Christensen to pay the balance of the contract. The court allowed an offset against the judgment of $247.80, the reasonable rental value of the equipment for the time the Ransoms used it. The district court awarded interest, costs, and attorney fees to the Ransoms.

After the judgment was entered, Christensen moved to amend the findings of fact and conclusions of law. He withdrew the first motion to amend and later filed a second motion to amend. In the second motion, Christensen claimed that the fact that the Ransoms originally paid only $30,000 for the equipment and the fact that he had no need for the equipment supported his contention that the transaction was a loan rather than a sale. Christensen also claimed that the serial numbers on the machinery were different from the serial numbers listed on the bill of sale; he argues that because of this, the Ransoms had no right to sell him the equipment. Christensen also claimed that the reasonable rental for the grain drills was $2.00 per acre and the charge for the use of the tractor should have been $160.00 per day beginning on March 15, 1985. Christensen further argued that any ambiguity in the bill of sale should have been construed against the Ransoms because their attorney drafted the document. He also argued that the computation of interest was incorrect. Finally, he asked the district court to reweigh the evidence and acknowledge the alleged inconsistency and lack of credibility of the Ransoms' testimony.

On May 7, 1990, Christensen filed a notice of...