Conagra, Inc. v. Nierenberg

• Citation: 7 P.3d 369,2000 MT 213,301 Mont. 55
• Decision Date: 10 August 2000
• Docket Number: No. 99-138.,99-138.
• Parties: CONAGRA, INC., d/b/a Peavey Company, a corporation, Plaintiff and Appellant, v. Ralph NIERENBERG and Dennis Nierenberg, Defendants and Respondents.
• Court: United States State Supreme Court of Montana

7 P.3d 369

2000 MT 213

301 Mont. 55

CONAGRA, INC., d/b/a Peavey Company, a corporation, Plaintiff and Appellant, v. Ralph NIERENBERG and Dennis Nierenberg, Defendants and Respondents.

No. 99-138.

Supreme Court of Montana.

Submitted on Briefs September 23, 1999.

Decided August 10, 2000.

K. Dale Schwanke, Jardine, Stephenson, Blewett & Weaver, Great Falls, Montana, For Appellant.

Robert G. Olson, Frisbee, Moore & Olson, Cut Bank, Montana, For Respondent.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 ConAgra, Inc., d/b/a Peavey Company (ConAgra) appeals from a judgment issued by the Ninth Judicial District Court, Toole County, in favor of Ralph and Dennis Nierenberg (Nierenbergs), following a non-jury trial. We reverse.

¶ 2 ConAgra raises the following issues:

1. Did the District Court err by finding and concluding that Dennis Nierenberg, as an agent for the Nierenbergs, did not admit making a contract to sell wheat to ConAgra?

2. Did the District Court err by concluding that the Nierenbergs did not receive written confirmation of the sale and purchase of their grain within a reasonable time?

3. Did the District Court err by not finding that the Nierenbergs were estopped from claiming the confirmation was not received in a reasonable time and from denying a contract had been made?

4. Is there substantial credible evidence that the Nierenbergs agreed to sell 12,500 bushels of their wheat to ConAgra on April 9, 1996?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 This matter concerns whether an enforceable oral contract bound the respective parties to the purchase and sale of 12,500 bushels of wheat in the spring of 1996. It is undisputed that the Nierenbergs, who operate a wheat farm near Shelby, Montana, were never bound by a written contract bearing one of their signatures. ConAgra, which operates a grain elevator in Shelby and regularly buys and sells grain, brought suit claiming that the oral agreement between the two parties entitled it to recover $14,125 in expectation damages after the Nierenbergs failed to sell their wheat as promised.

¶ 4 A critical factor in this dispute is the fact that during that spring the price of wheat was steadily rising on a daily basis by as much as 20 cents per-bushel.

¶ 5 Following a non-jury trial on September 25, 1998, the District Court entered judgment for the Nierenbergs, on December 10, 1998. The court, in its Findings of Fact and Conclusions of Law, determined that ConAgra had failed to sufficiently establish that an enforceable oral agreement existed between the parties, and thus the Nierenbergs prevailed on their statute of frauds defense.

¶ 6 The origins of this dispute can be traced to a phone call placed by Dennis Nierenberg (hereinafter Dennis), on April 9, 1996, which was a Tuesday. On that day, Dennis, acting for himself and his father, Ralph Nierenberg, discussed the sale of the Nierenbergs' number-one, dark northern spring wheat with Marcus Raba (Raba), who at the time managed ConAgra's Shelby, Montana, grain elevator.

¶ 7 According to ConAgra's version of the conversation, the parties agreed that 12,500 bushels of wheat would be sold by the Nierenbergs and purchased by ConAgra for $5.01 a bushel. At that time, Raba filled out a customary order sheet memorializing the terms discussed during the phone call. ConAgra contends that such an oral agreement by phone is routine, as a matter of its own course of dealing with the Nierenbergs and other area farmers, as well as within the trade of grain purchase and sales by other area grain elevators.

¶ 8 Dennis, on the other hand, maintains that he was doing nothing more than checking the market price that day, and that it was understood that unless he signed a contract no enforceable agreement was reached. He alleges that he has never consummated a grain sale with ConAgra without first signing a written contract. It is undisputed that he requested that a written contract be prepared for his signature, and that Raba followed this instruction. In dispute is whether Dennis requested that the contract be mailed to his residence (which he contends), or whether he stated that he would stop by the elevator at some later time and sign the contract (which ConAgra contends).

¶ 9 Following the phone call, Raba instructed Eve Jacobson (Jacobson), another ConAgra employee, to prepare what ConAgra characterizes as a written "confirmation" contract based on the order sheet. ConAgra asserts that "Marcus signed it and held it for Dennis to come in and sign." According to ConAgra, when Dennis failed to show up at the elevator and sign the contract within the next few days, Raba "sent the original contract he signed to Dennis's Shelby address on April 17," which was the following Wednesday.

¶ 10 It is undisputed that Dennis received the confirmation contract on April 19, 1996, a Friday, and that this contract expressly provided the terms discussed on April 9, 1996: 12,500 bushels of wheat at $5.01 per bushel. The contract also provided a time of shipment: April 9, 1996 to May 31, 1996, and provided discount information, which pertains to reductions in the sales price determined by the actual quality of the grain, including protein, moisture content, and "waste." The District Court would find that the parties never discussed such discounts during the phone conversation. Also, the confirmation form provided no printed signature line for the seller, Dennis. Instead, a handwritten line was drawn in above the printed signature line, where Raba had signed. Raba would explain at trial that whether a farmer actually signs and returns such a confirmation contract is a formality that has no bearing on the formation of such an agreement; rather, the farmer's receipt confirms the existing oral agreement. He asserted that such oral contracts account for more than 90 percent of ConAgra's grain purchases.

¶ 11 After receiving the confirmation contract that day, a Friday, Dennis stopped by the elevator, and discussed lowering the quantity to 10,000 bushels. Dennis maintains that this request resulted from his concern, as well as his father's, that he did not have 12,500 bushels of wheat, which had been stored on their farm since the 1995 harvest. Raba, in turn, explained to Dennis that, essentially, it was too late, that the grain in the Nierenbergs' bins already belonged to ConAgra, that it is common for ConAgra to turn around and sell the grain to another buyer immediately after making such an oral agreement, and that Dennis would be financially liable for any shortages under the contract, which required that the 12,500 bushels be delivered by May 31, 1996. The District Court would find that ConAgra had in fact resold the grain shortly after April 9, 1996.

¶ 12 Dennis did not assert, at this time, that a contract had not been formed between the parties. The confirmation contract provided that it "will be enforceable in accordance with the exact terms unless you promptly notify us in writing with any objections." Apparently, he and Raba instead discussed the possibility of filling the 12,500 bushel requirement out of the Nierenbergs' 1996 harvest. The parties did not reach an agreement on this. Dennis indicated that he would measure the grain in the Nierenbergs' bins—which he apparently had not done that spring—and also indicated that he would seek a legal clarification concerning the contract confirmation he had received that day. He would later testify that he was unable to reach the grain bins that day due to muddy road conditions. He apparently had no similar difficulty in reaching an attorney.

¶ 13 Dennis returned later that day, after 4 p.m., and discussed selling 600 bushels in his daughter's name with Jacobson (Raba had already left for the day). The per-bushel price at that time was $5.60. Dennis instructed Jacobson to mail the contract to his residence. Dennis would later explain that this transaction—which he did not honor, either, and would be found liable for subject to his stipulation at a partial summary judgment hearing—was for the sole purpose of testing how long it would take ConAgra to mail him the contract. The confirmation arrived at his residence a few days later, apparently on the following Monday, according to deposition and trial testimony.

¶ 14 The Nierenbergs ultimately sold the 12,500 bushels to another grain elevator, Harvest States, for $5.85 per bushel the following Tuesday, April 23, 1996. Believing that he had no obligation to sell wheat to ConAgra—based on the advice of counsel— Dennis did not notify Raba or any other ConAgra agent of his sale to Harvest States. Raba called him some time later, apparently in early or mid-May. Again, Dennis did not indicate that he did not believe he was obligated to perform under an oral agreement. Instead, Dennis "put him off" by telling Raba that he would deliver the wheat "one of these days."

¶ 15 After independently learning of the Nierenbergs' sale to Harvest States, ConAgra, in a May 24, 1996 letter, advised the Nierenbergs that it would assert its contractual rights, and demand payment of the difference between the contract price ($5.01 per bushel), and the current market price ($6.14 per bushel) it had incurred in purchasing other grain to fulfill its sale obligations pursuant to its purchase of the Nierenbergs' wheat. Thus, ConAgra pursued this matter in order to recoup the $1.13 per-bushel price on 12,500 bushels for a total of $14,125.

¶ 16 In their Answer, the Nierenbergs denied that the parties entered into a contract, and asserted, as an affirmative defense, the signed-writing requirement under the statute of frauds, pursuant to the Uniform Commercial Code governing sales under § 30-2-201(1), MCA. Thus, any alleged oral contract between the parties was unenforceable, because the sale of goods price exceeded $500, and it is undisputed that Dennis never signed a contract.

¶ 17 In a March 19, 1998 order granting partial summary judgment, ...