Gravel Products, Inc. v. Neshem-Peterson, Inc., NESHEM-PETERSO

Decision Date24 June 1983
Docket NumberINC,No. 10300,NESHEM-PETERSO,10300
Citation335 N.W.2d 323
PartiesGRAVEL PRODUCTS, INC., Plaintiff and Appellant, v., Defendant and Appellee. Civ.
CourtNorth Dakota Supreme Court

McGee, Hankla, Backes & Wheeler, Minot, for plaintiff and appellant; argued by Russel G. Robinson, Minot; appearance by Orlin W. Backes, Minot.

Pringle & Herigstad, Minot, for defendant and appellee; argued by Jan M. Sebby, Minot.

ERICKSTAD, Chief Justice.

This is an appeal by the plaintiff, Gravel Products, Inc. (Gravel Products) from a judgment of the District Court of Ward County, dated July 30, 1982, dismissing on its merits and with prejudice Gravel Products' breach of contract action against the defendant, Neshem-Peterson, Inc. (Neshem). We affirm.

This controversy relates to the construction of a sunflower processing plant at Velva by Midwest Processing Company. Daniel Construction Company contracted to be the designer-builder or prime contractor for the plant. Neshem ultimately received a subcontract from Daniel Construction Company to provide class 13 road gravel and free drain sand for site preparation and a subcontract from Collins Construction Company to supply concrete aggregate for the project. Prior to receiving written contracts to supply these materials, Neshem sought and received bids from various contractors to supply these materials to Neshem. During August, 1980, Neshem informed Fisher Sand and Gravel (Fisher) that it had submitted the lowest bid and that Neshem anticipated Fisher would receive a contract to supply the materials if Neshem received subcontracts on the project.

On September 9, 1980, Harley Neshem, secretary-treasurer for Neshem, was approached by William Schriock, president of Gravel Products, who informed him that Gravel Products "was very interested in doing some of the work on the project." Harley responded that he didn't have any objection to having Gravel Products participate. A discussion between Schriock and Donald Jablonsky, general superintendent for Fisher, immediately followed whereby they tentatively agreed that Gravel Products would pay Fisher $30,000.00 for the right to supply to Neshem the materials which Fisher had anticipated supplying to Neshem. Harley Neshem, Jablonsky, and Schriock agreed to discuss the afternoon's conversations with their associates and to communicate by telephone later that evening. The ensuing telephone conversation is the occurrence through which the dispute on this appeal arose. Gravel Products asserts that during the telephone conversation Neshem entered a binding oral agreement to purchase materials from Gravel Products. Neshem asserts there was no commitment to purchase materials from Gravel Products.

During October, 1980, Neshem entered a contract with Lindteigen Construction Company to supply the materials Neshem ultimately needed to complete its subcontracts on the project. Gravel Products then commenced this action seeking damages against Neshem for breach of an oral contract. The district court determined that the telephone conversation on September 9, 1980, constituted "negotiation in the direction of an offer" but that there was no mutual consent to enter a binding purchase agreement. Accordingly, the district court entered its judgment dismissing the breach of contract action on its merits from which Gravel Products has filed this appeal. On appeal, Gravel Products asserts that the district court erred in its determination that there was no oral contract.

The determination of whether or not the parties' agreement or agreed-to terms meet the criteria necessary to be declared a valid contract is a question of law which is fully reviewable on appeal. Gulden v. Sloan, 311 N.W.2d 568 (N.D.1981). However, the determination of whether or not the parties have mutually consented to enter into an oral contract is a question of fact which will not be set aside on appeal unless it is clearly erroneous under Rule 52(a), N.D.R.Civ.P. Gulden, supra; Hirschkorn v. Severson, 319 N.W.2d 475 (N.D.1982). In Gulden, we stated:

"Section 9-03-01, N.D.C.C., provides that the consent of the parties to a contract must be free, mutual, and communicated by each to the other. In deciding whether or not the parties consented to entering into a contract we must look to the actions of the parties at the time, and after the agreement was made. To do so, we must rely on the evidence and the trial court's findings of fact. In reviewing the trial court's finding of fact, we apply the 'clearly erroneous' rule of 52(a), N.D.R.Civ.P." 311 N.W.2d at 571.

One significant factor relied on by the district court in determining that Neshem and Gravel Products did not enter a binding purchase agreement during the telephone conversation is that the parties were aware that Neshem did not have any contracts with the prime contractors to supply materials for the project and that Fisher had not received either a written contract or an oral notice to proceed from Neshem to supply materials. It is undisputed that during August, 1980, Harley Neshem informed Jablonsky that Neshem did not have a written contract and did not have a "verbal agreement" either. There is a dispute, however, regarding a subsequent communication. Jablonsky testified that on September 3, "Harley called and gave us notice to proceed on September 4, 1980." Harley Neshem testified to the contrary that he never gave Fisher a notice to proceed on the project and that a representative of Fisher "asked if they could move in. I said it was their option. They could move in if they wanted to, but that if we didn't have a contract we couldn't authorize them to proceed."

In support of its assertion that Neshem did enter a binding agreement during the telephone conversation, Gravel Products refers this Court to testimony of Harley Neshem whereby he concedes that he reluctantly agreed to Gravel Products' quote on price and quantities. The relevant portion of that testimony is as follows:

"A There was talk of prices and quantities. I recall saying that we had an ambiguous quantity in a railroad ballast and that the ballast was an important part of the conversation.

"Q Uh-huh.

"A I also advised them that I had been unable to make contact with my partners.

"Q Did they go through each one of the quantities and prices with you?

"A Yes.

"Q And what happened, then, when they quoted these? Did they ask you...

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2 cases
  • RRMC CONST., INC. v. Barth
    • United States
    • North Dakota Supreme Court
    • April 6, 2010
    ...provisions of N.D.C.C. § 9-09-05 are fact questions subject to clearly erroneous review. See, e.g., Gravel Products, Inc. v. Neshem-Peterson, Inc., 335 N.W.2d 323, 327 (N.D.1983) (applying clearly erroneous standard of review to consent finding); G.L. Ness Agency v. Woell, 335 N.W.2d 561, 5......
  • Pioneer Realty and Land Co. v. Mortgage Plus, Inc., 10524
    • United States
    • North Dakota Supreme Court
    • March 29, 1984
    ...of fact which will not be set aside on appeal unless it is clearly erroneous under Rule 52(a), N.D.R.Civ.P. Gravel Products, Inc. v. Neshem-Peterson, Inc., 335 N.W.2d 323 (N.D.1983); Hirschkorn v. Severson, 319 N.W.2d 475 Having reviewed the record in this case, we conclude that there is su......

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