Fitterer Sales Mont., Inc. v. Mullin

• Decision Date: 15 September 2015
• Docket Number: No. DA 15–0158.,DA 15–0158.
• Citation: 358 P.3d 885,2015 MT 272,381 Mont. 107
• Parties: FITTERER SALES MONTANA, INC., Plaintiff and Appellee, v. Clint MULLIN, Jr.; A & C Soaring Eagle, Inc., Defendants and Appellants.
• Court: Montana Supreme Court

381 Mont. 107

358 P.3d 885

2015 MT 272

FITTERER SALES MONTANA, INC., Plaintiff and Appellee

v.Clint MULLIN, Jr.; A & C Soaring Eagle, Inc., Defendants and Appellants.

No. DA 15–0158.

Supreme Court of Montana.

Sept. 15, 2015.

For Appellants: Ben T. Sather, Sather & Holm, PLLC; Billings, Montana.

For Appellee: Nicholas C. Grant, Ebeltoft Sickler Lawyers, PLLC; Dickinson, North Dakota.

Opinion

Justice JAMES JEREMIAH SHEA delivered the Opinion of the Court.

¶ 1 Clint Mullin Jr. (Clint) and A & C Soaring Eagle, Inc. (A & C) appeal the findings of fact, conclusions of law, and order of the Seventh Judicial District Court, Richland County, which found that Clint and A & C owed Fitterer Sales Montana, Inc. (Fitterer) $114,398.06, plus additional prejudgment interest, pursuant to a contract for the sale of fertilizer and chemicals. We affirm in part, reverse in part, and remand for entry of an amended judgment consistent with this Opinion.

¶ 2 The issues on appeal are as follows:

1. Whether there was a valid, binding contract between A & C and Fitterer for the sale of fertilizer and chemicals.

2. Whether Fitterer is entitled to prejudgment interest.

3. Whether Clint is personally liable for money owed under A & C's contract with Fitterer.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 3 Fitterer (formerly known as Valley Crop Care, Inc.) is a North Dakota corporation licensed to do business in Montana. A & C is a Montana corporation based in Lambert, Montana, and Clint is the president and sole shareholder. Starting in May 2007, A & C purchased chemicals and fertilizer on account from Fitterer. Fitterer employee Sara DiFonzo set up the account, Account No. 1577, under the name of Clint's son, Zach Mullin (Zach). Fitterer and A & C had no written agreement setting forth the terms of Account No. 1577.

¶ 4 A & C made chemical purchases from Fitterer through Zach in May and June of 2007. When purchasing chemicals, customers would normally come into Fitterer's office in Sidney, place the order, and sign a delivery ticket. According to DiFonzo, Zach normally stated he was with the “Mullins” and signed the tickets “Zachary.” In 2007, Fitterer had only one account under the name Mullin: Account No. 1577. DiFonzo was never informed by Clint or anyone else that Zach was not authorized to make purchases on A & C's account.

¶ 5 A & C also made multiple orders of fertilizer from Fitterer in 2007. When a customer placed a fertilizer order with Fitterer, the order was recorded on a legal pad. Fitterer's plant operator used the information to generate three copies of a delivery ticket. If the customer had any special instructions about the delivery, it was noted at the bottom of the delivery ticket. There were never any special instructions or restrictions placed on Account No. 1577. It was Fitterer's standard practice in 2007 to leave one copy of the delivery ticket at the plant for inventory purposes and send the other two copies with the driver who delivered the order. The driver retained one copy and left one copy with the delivered load.

¶ 6 Although Fitterer preferred to have the customer sign the delivery ticket upon delivery, its drivers rarely saw customers at the point of delivery. Multiple fertilizer and chemical distributors from the area testified at trial that fertilizer deliveries to working farms rarely result in a signed delivery ticket. Jerys Enget, Fitterer's general manager in 2007, testified that farmers normally do not sign for fertilizer deliveries because “Farmers are busy,” and the delivery drivers “[c]an't find them.”

¶ 7 Although it was uncommon in the industry, Clint signed two delivery tickets from Fitterer for fertilizer orders made by Zach on Account No. 1577, dated May 11, 2007, and May 19, 2007. After realizing that Account No. 1577 was under the name “Zach Mullin,” Clint contacted Fitterer in early June 2007 and asked the company to change the name on the account to “A & C Soaring Eagle, Inc.” The name “A & C Soaring Eagle Inc.” appears on a charging invoice dated June 5, 2007.

¶ 8 Clint claimed at trial that it was his policy that Fitterer was not allowed to leave fertilizer with A & C unless he was present and could sign for the delivery. However, Clint never informed DiFonzo, Enget, or any other Fitterer employee of this policy. Clint also admitted at trial that he never told Zach that Zach could not order fertilizer or chemicals from Fitterer.

¶ 9 Fitterer sent copies of invoices to its customers every few weeks, and customers also received monthly statements showing every purchase made on their account during the preceding month. A & C received monthly statements from Fitterer for May and June 2007, and A & C did not dispute any of the charges on those statements made to Account No. 1577.

¶ 10 Account No. 1577 became past due on June 11, 2007, for purchases made in May 2007, and the account became past due on July 11, 2007, for purchases made in June 2007. A & C paid Fitterer four payments of $7,500, totaling $30,000. The four payments were made on October 1, 2008; November 1, 2008; December 1, 2008; and January 8, 2009. At the time of trial, the principal balance due on Account No. 1577 was $63,149.73.

¶ 11 On September 30, 2009, Fitterer filed suit in the District Court alleging that A & C and Clint personally owed Fitterer $98,183.91 as of July 31, 2009 on Account No. 1577. Fitterer alleged that it was owed interest on the amount due at a rate of 18% per year.

¶ 12 On April 21, 2010, the District Court granted a motion by A & C to compel discovery and awarded A & C attorney fees in the amount of $1,035. Although the order required both the discovery requests to be completed and the attorney fees to be paid within 30 days, the record does not reflect whether Fitterer complied with the April 21, 2010 order.

¶ 13 On April 23, 2012—over two years later—the District Court issued a “Notice of Older Case” to the parties. The notice stated: “[S]aid cause will be dismissed for failure of the Plaintiff to prosecute the action, unless, within sixty (60) days from the date hereof, good cause is shown why said action should continue.” Fitterer responded to the notice on June 19, 2012, stating that it had filed a motion for partial summary judgment that day and, alternatively, that “this matter is ready for trial and [Fitterer] requests a trial at the convenience of the Court.” A & C moved to dismiss the action, arguing that Fitterer was not authorized to do business in Montana. On October 24, 2013, the District Court denied both Fitterer's motion for summary judgment and A & C's motion to dismiss.

¶ 14 The District Court held a bench trial on December 3–4, 2014. On January 7, 2015, the District Court issued its findings of fact, conclusions of law, and order for judgment, finding that A & C and Clint personally breached the contract with Fitterer by failing to pay for the fertilizer and chemicals A & C ordered, accepted, and used. The District Court ordered A & C and Clint to pay Fitterer $114,398.06,¹ which included $63,149.73 in unpaid principal and $51,248.33 in interest calculated at a rate of ten percent per year from June 11, 2007 to November 30, 2014. The court also ordered A & C and Clint to pay $526.04 per month in prejudgment interest, retroactive to December 1, 2014, until judgment was entered. A & C and Clint appeal the order of the District Court.

STANDARDS OF REVIEW

¶ 15 We review the findings of a trial court sitting without a jury to determine if the court's findings are clearly erroneous. Conagra, Inc. v. Nierenberg, 2000 MT 213, ¶ 22, 301 Mont. 55, 7 P.3d 369. A finding of fact is clearly erroneous if it is not supported by substantial evidence, if the trial court misapprehended the effect of the evidence, or if a review of the record leaves this Court with the definite and firm conviction that a mistake has been made. Nierenberg, ¶ 22. In determining whether the trial court's findings are supported by substantial credible evidence, we must view the evidence in the light most favorable to the prevailing party. Nierenberg, ¶ 22.

¶ 16 We review a district court's conclusions of law for correctness. Nierenberg, ¶ 23. We review a district court's grant or denial of prejudgment interest to determine if the district court's interpretation of the law is correct. Swank Enter., Inc. v. All Purpose Serv., Ltd., 2007 MT 57,¶ 14, 336 Mont. 197, 154 P.3d 52.

DISCUSSION

¶ 17 1. Whether there was a valid, binding contract between A & C and Fitterer for the sale of fertilizer and chemicals.

¶ 18 A & C argues that it had no valid, binding contract with Fitterer. A & C notes that “[i]dentifiable parties capable of contracting, consent, a lawful object, and sufficient consideration comprise the essential elements of any contract,” citing Zier v. Lewis, 2009 MT 266, ¶ 19, 352 Mont. 76, 218 P.3d 465. A & C argues that only Clint had the authority to bind A & C to any contract for the purchase of chemical or fertilizer, and therefore only Clint could provide the requisite consent to form a binding contract between A & C and Fitterer. A & C argues that, because Clint never signed for fertilizer deliveries on behalf of A & C or purchased chemicals on behalf of A & C, no valid contract exists.

¶ 19 Fitterer argues that this was a contract for the sale of goods and is therefore governed by Chapter 2 of Montana's Uniform Commercial Code (UCC), § 30–2–101 et seq., MCA. “ ‘Goods' means all things ... which are movable at the time of identification to the contract for sale.” Section 30–2–105(1), MCA. Fitterer contends this includes fertilizer and chemicals used for agricultural purposes. We agree.

¶ 20 “[T]he U.C.C. rules governing sales agreements are far more permissive ... than the general common law rules governing contract formation.” Nierenberg, ¶ 28. “A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.” Section 30–2–204(1), MCA. A &...