Condon Bros., Inc. v. Simpson Timber Co.

• Decision Date: 04 September 1998
• Docket Number: No. 20857-1-II,20857-1-II
• Citation: 966 P.2d 355,92 Wn.App. 275
• Parties: , 37 UCC Rep.Serv.2d 547 CONDON BROS., INC. Appellants, v. SIMPSON TIMBER COMPANY, a Washington corporation,. Respondent.
• Court: Washington Court of Appeals

Page 275

92 Wn.App. 275

966 P.2d 355, 37 UCC Rep.Serv.2d 547

CONDON BROS., INC. Appellants, v. SIMPSON TIMBER COMPANY, a Washington corporation,. Respondent.

No. 20857-1-II.

Court of Appeals of Washington Division 2.

Sept. 4, 1998.

Amy C. Clemmons, Evans Craven & Lackie, Spokane, for Appellants.

John R. Nelson, Preston Gates & Ellis, Spokane, for Respondent.

MORGAN, Judge.

Condon Brothers, Inc., appeals an adverse jury verdict in its breach-of-contract suit against Simpson Timber Company. It claims the trial court erred by refusing to apply the Uniform Commercial Code (UCC) and by excluding certain hearsay. We affirm.

Simpson Timber Company owned and operated a private railroad for hauling timber. The railroad included a 400-foot-long trestle known as the Neby bridge.

In 1993, Simpson had no further need for a five-mile section of its railroad. As a result, it wanted a contractor to "take up" that section and buy the rails, ties, and other salvageable materials. According to Condon, it was possible to take up the section without harming the land.

In June 1993, Condon submitted a written offer of $25,000 for the right to take up the section and retain the rails, ties and other salvageable materials. A competitor Pacific Railroad Salvage (PRS), bid $40,000. Simpson did not accept either offer.

On December 9, 1993, Condon submitted a second written offer. It proposed to redeck the Neby bridge and take up the five-mile section of railroad that Simpson wanted to abandon, in exchange for which it would receive the rails, ties, and other salvageable materials. The written offer did not state when Condon would perform the work, although it did state that Condon would complete the work within a 14-day window. Apparently, the parties discussed orally that Condon would perform the work in July 1994. ¹

On January 5, 1994, Simpson added two terms to the face of Condon's December 9 offer: Simpson would retain one mile of angle bars and tie plates, and Condon would post a $100,000 performance bond. After making these changes, Simpson signed on the face of the offer--although not in the space labelled "acceptance of proposal"--and returned the offer to Condon. The parties dispute whether Simpson manifested an acceptance, and whether Condon ever agreed to the additional terms.

On January 6, 1994, John Weidemann telephoned Simpson's main switchboard. As an employee of A & K Railroad Materials, another of Condon's competitors, he was interested in purchasing any rails, ties, and related materials that Simpson was no longer using. He asked the switchboard operator to connect him with Frank Brehmyer, whom he thought was Simpson's railroad superintendent. The switchboard operator said Brehmyer had retired, so Weidemann asked to speak to whoever was in charge of the railroad. Indicating that "she believed that the railroad department was now under the mill department," ² the switchboard operator transferred him to a man whose name Weidemann did not record. Weidemann told the man "who I was and what I was calling about," and the man immediately responded "that the ten miles had been contracted to Condon Brothers." ³

On January 6, 1994, a Simpson employee named Mike Treadwell was in charge of both the mill and the railroad. He was "the sole employee with authority to negotiate [the] sale of the railroad at issue in this case." ⁴ According to him, he did not participate in the conversations described by Weidemann.

On or after January 6, Weidemann wrote the name "Jim Tinsdale" next to his notes of the January 6 conversation. Later, he was not sure whether the name related to his January 6 phone call to Simpson, or to some other activity. Simpson did not employ a person named Jim Tinsdale.

Sometime after January 6, Weidemann again called Simpson about rails and ties, and he again was referred to the person he had talked with on January 6. Again, however, he did not get the name of the person he spoke with.

In the spring, Simpson decided the Neby bridge should be redecked in May, not July. It asked Condon to accelerate its schedule, but Condon said it would have a problem doing that. Simpson then found and hired another contractor, who redecked the bridge in May. Simpson also sold the five miles of rails, ties, and related materials to PRS for $72,500.

In August, Condon sued Simpson for breach of contract. Relying on the UCC, and in particular on RCW 62A.2-207, ⁵ Condon claimed that it had made an offer on December 9; that Simpson had accepted that offer on January 5; that a contract had resulted; and that Simpson had breached the contract. Relying on the common law, Simpson claimed that its response of January 5 was not an acceptance, and that no contract had been formed.

Before trial, Simpson moved for an order declaring that the case was governed by the common law of contracts rather than Article 2 of the UCC. It also moved for an order excluding, on hearsay grounds, Weidemann's description of his January 6 phone call to Simpson. The trial court granted both motions.

In May 1996, the trial court convened a jury trial. At its end, the jury was asked by special interrogatory whether Condon and Simpson had achieved a meeting of the minds. The jury answered "no" and returned a verdict for Simpson. Condon then filed this appeal.

I.

Condon claims that the case is governed by Article 2 of the UCC, and that the trial court erred by ruling otherwise. Article 2 applies to transactions in goods, but not to transactions in real property. ⁶ The term "goods" generally includes things "movable at the time of identification to the contract for sale." ⁷ The term also includes things attached to realty (and thus generally not movable at the time of identification to the contract for sale) if those things are "described in the section on goods to be severed from realty (RCW 62A.2-107)." ⁸ That section provides:

(1) A contract for the sale of minerals or the like including oil and gas or a structure or its materials to be removed from realty is a contract for the sale of goods within this Article if they are to be severed by the seller....

(2) A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) or of timber to be cut is a contract for the sale of goods within this Article whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting.... [ ⁹

We first consider whether we are dealing with a "structure" within the meaning of subsection (1). Because the UCC uses but does not define the term "structure," we look to the dictionary definition of the term. ¹⁰ Webster's Third International Dictionary defines "structure" as "something constructed or built," or as "something made up of more of less interdependent elements of parts." ¹¹ Black's Law Dictionary defines "structure" as [a]ny construction, or any production or piece of work artificially built up or composed of parts joined together in some definite manner. That which is built or constructed; an edifice or building of any kind.[ ¹²

Webster's gives examples that include a dam, building, highway, road, railroad, excavation, and "posts or stakes across a stream." ¹³ Based on these definitions, we hold that a five-mile section of railroad, affixed to the land at the time a contract is formed, is a "structure" for purposes of subsection (1). Thus, the general problem here is when a contract for the sale of a "structure" attached to land falls within Article 2 of the UCC.

We begin by considering subsection (1) of RCW 62A.2-107. A contract for the sale of a "structure" falls within Article 2 by virtue of that subsection only if the seller is to sever. The parties agree that the seller was not to sever here. Therefore, subsection (1) does not bring the transaction at issue within Article 2.

We next consider subsection (2), the effect of which the parties dispute. According to Condon, a contract for the sale of a "structure" that the buyer is to sever falls under subsection (2), and thus within the UCC, so long as the buyer can sever the structure without material harm to the land. According to Simpson, a contract for the sale of a "structure" that the buyer is to sever can never fall under subsection (2), or within the UCC.

At bottom, the parties' disagreement is grammatical. Condon is really asserting that the phrase, "but not described in subsection (1)," which we put in bold above, modifies the noun "contract," which we underlined above. If that is right, we should interpret subsection (2) as if it read: "A contract ... not described in subsection (1)[, including a contract for the sale of a structure that is not to be severed by the seller,] ... is a contract for the sale of goods within this Article," so long as the structure can be severed without materially harming the land. Simpson, on the other hand, is really asserting that the phrase, "but not described in subsection (1)," which we put in bold above, modifies the noun "things," which we italicized above. If that is right, we should interpret subsection (2) as if it read: "A contract for the sale ... of ... things ... not described in subsection (1) ... is a contract for the sale of goods within this Article" so long as the things can be severed from the land without materially harming the land.

Looking to the intent of the drafters, ¹⁴ we hold that Simpson is right. The text of subsection (2) uses the words "things [a] attached to realty and [b] capable of severance without material harm thereto but [c] not described in subsection (1)." The three lettered phrases are connected and parallel, and it is seems unlikely that [c] was intended to modify "contract" when [a] and [b] necessarily modify "things."

Moreover, this view is confirmed by the official comment to UCC 2-107. It states that subsection (1...