Hagel v. Buckingham Wood Products, Inc.

• Decision Date: 19 December 1977
• Docket Number: No. 9370,9370
• Citation: 261 N.W.2d 869
• Parties: Gary M. HAGEL and Susan I. Hagel, Plaintiffs and Appellants, v. BUCKINGHAM WOOD PRODUCTS, INC., d.b.a. Midwestern Homes, and Ed Koch, Individually, and as Agent for Buckingham Wood Products, Inc., Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 869

261 N.W.2d 869

Gary M. HAGEL and Susan I. Hagel, Plaintiffs and Appellants, v. BUCKINGHAM WOOD PRODUCTS, INC., d.b.a. Midwestern Homes, and Ed Koch, Individually, and as Agent for Buckingham Wood Products, Inc., Defendants and Appellees.

Civ. No. 9370.

Supreme Court of North Dakota.

Dec. 19, 1977.

Rehearing Denied Jan. 11, 1978.

Orville A. Schulz, New Salem, for plaintiffs and appellants.

Zuger & Bucklin, Bismarck, for defendants and appellees; argued by Robert V. Bolinske, Bismarck.

SAND, Justice.

Plaintiffs Gary M. and Susan I. Hagel (hereinafter Hagels) appealed from that portion of the Burleigh County District Court's judgment dismissing the complaint against co-defendant Buckingham Wood Products, Inc., d.b.a. Midwestern Homes (hereinafter Midwestern Homes). Hagels brought an action against Midwestern Homes and Ed Koch, individually and as agent for Midwestern Homes, which resulted in a judgment only against Koch and in favor of Hagels, in the amount of $16,208.17, for failing to complete the construction of a home.

The Hagels initiated their first contact with Midwestern Homes by responding to an ad placed in the Bismarck Tribune. The Hagels mailed the ad to Midwestern Homes' main office in Rapid City, South Dakota, in October 1974, and received a catalog in which a letter from Midwestern Homes designating Randall Pooley as the area representative was enclosed.

In November 1974, Koch telephoned the Hagels, and according to their testimony, advised them that he was a representative of Midwestern Homes. (Koch disputed that he was a representative.) A meeting between the Hagels and Koch was subsequently arranged. At that meeting, Koch gave the Hagels a newer edition of Midwestern Homes' catalog, which contained the handwritten notation, "Ed Koch Cost. Co., Bismarck, 223-8260," on the cover's upper left-hand corner. Koch also gave the Hagels a pen with "Midwestern Homes" advertised on it.

At this first meeting in November 1974, Koch assisted the Hagels in reviewing the housing designs contained in the Midwestern Homes' catalog. According to Koch's testimony, he informed the Hagels that he was a local builder-contractor involved in constructing prefabricated homes.

After several meetings with Koch, the Hagels selected the "Jamestown" home design with modifications, including the addition of a double garage and a recreation room. According to undisputed testimony, the Hagels could purchase the home as (1) package material only; (2) partially completed; or (3) fully completed. The Hagels chose a fully completed "Jamestown" home, with only the exterior painting and landscaping left unfinished.

In a January 1975 letter, Midwestern Homes quoted Koch the figure of $19,298.54 as the retail price of the "Jamestown" home package. On 3 February 1975, the Hagels and Koch signed a single instrument entitled "Proposal" for both the purchase and construction of the home, for a total price of $36,543.18, including $20,700.03 specified for the "Jamestown" home package. The agreement was subject to financing, which the Hagels secured from the Veterans Administration with the help of Koch and the technical assistance of Midwestern Homes' personnel. Koch then ordered the home from Midwestern Homes.

On 24 March 1975, Midwestern Homes sold the "Jamestown" home package to Koch for $17,665.12, or almost a ten percent discount on the retail price of $19,298.54 quoted earlier for Koch and the Hagels. Construction on the Hagels' home began 22 April 1975. During the period of construction, signs were placed in front of the site and in the picture window of the house advertising it as a Midwestern Home.

Before the prefabricated walls were delivered, Randall Pooley, area representative for Midwestern Homes, visited the construction site to measure the basement of the home. At the time the prefabricated walls were delivered to the home site, a Midwestern Homes' truck or crane assisted in raising the walls.

Construction on the Hagel home proceeded smoothly until August 1975, when Koch, apparently out of funds, abandoned the construction, leaving the home incomplete.

The Hagels' action against Buckingham Wood Products, Inc., d.b.a. Midwestern Homes, and Ed Koch, individually, and as an agent of Midwestern Homes, sought damages in the amount of $30,000.00 for a breach of contract allegedly committed by Midwestern Homes and its agent, Koch.

The trial court gave the Hagels a judgment but only against Koch individually, in the amount of $16,208.70, but dismissed the complaint against Midwestern Homes. The Hagels appealed from the judgment dismissing the complaint against Midwestern Homes.

The Hagels contend the trial court erred by not finding that a continuing relationship of principal and agent existed between Midwestern Homes and Koch for the construction of the home, making Midwestern Homes liable for the breach of contract committed by Koch, its agent.

The pertinent findings of fact by the trial court are:

"VIII.

"There exists no written or oral contract between Midwestern Homes and its builder-dealers except those individual contracts entered into for the sale by Midwestern and the purchase by the builder-dealer of each individual house package.

"IX.

"In the instant case, plaintiffs saw an ad in a local newspaper advertising Midwestern homes. They clipped the coupon from the ad, filled it out and sent it to Midwestern to get a catalog of Midwestern homes. In response, plaintiffs received a catalog from Midwestern.

"X.

"Sometime thereafter, when plaintiffs were at a Bismarck hospital, awaiting the birth of their second child, in November of 1974, plaintiffs received a telephone call from defendant Koch. A meeting was arranged shortly thereafter at plaintiffs' home in Center, North Dakota. At that meeting, Koch delivered a newer edition of the Midwestern catalog to plaintiffs.

"XI.

"After several additional meetings and telephone conversations, plaintiffs decided to purchase the "Jamestown" type home with several changes and additions.

"XII.

Defendant Koch was neither the actual nor ostensible agent of Buckingham Wood Products, Inc., d/b/a/ Midwestern Homes for the construction of the subject home.

"XIII.

"Plaintiffs knew or should have known that they were entering into an agreement with Koch, not Midwestern Homes, for the construction of their home.

(Intervening numbers were skipped.)

"XIX.

"Midwestern Homes has fully performed its agreement by providing the house package contracted for and by remedying the minor defects in the materials claimed by plaintiffs.

"XXII.

"The Court's Memorandum Opinion dated April 4, 1977, and the findings of fact and other matters contained therein are hereby incorporated herein by reference and made a part hereof."

The trial court's memorandum opinion states, in part, as follows:

"The next contact the plaintiffs had was through Ed Koch. It is obvious from the circumstances and the testimony that when Midwestern Homes received the inquiry from the plaintiffs, that organization in turn contacted Mr. Koch to pursue the matter further. There is some conflict in the testimony as to how Mr. Koch characterized himself when he introduced himself to the plaintiffs, but it is clear that he was, at that point, acting as agent for Midwestern Homes. A company can only act through its agents and, in fact, the evidence shows that the entire course of dealing with Midwestern Homes and the plaintiffs was conducted through Mr. Koch.

". . . But any such relationship as does exist between these two parties relates to the furnishing of the home as a package and not to the construction of that home.

". . . There is no doubt that Mr. Koch functioned as an agent on behalf of Midwestern Homes for certain purposes. But those purposes related to the selling of the home. The contract to construct the home is a separate matter in which the plaintiffs could have selected Ed Koch, hired someone else, or done the work themselves.

"Thus, while there are many indicia of an agency relationship referred to by the plaintiffs, those indicia are not such as would lead a person of reasonable intelligence to believe that Midwestern Homes had undertaken any obligation to actually construct the packaged home. . . . The Court concludes that it has not been established that Mr. Koch was an agent of Midwestern Homes, actual or ostensible, for the construction of the house."

The trial court, in its conclusions of law, stated:

"II.

"Defendant Koch was neither the actual nor apparent nor ostensible agent of Buckingham Wood Products, Inc. d/b/a/ Midwestern Homes for the construction of plaintiffs' home.

"III.

"Plaintiffs have failed to establish an agency relationship between Buckingham Wood Products, Inc. d/b/a/ Midwestern Homes and Koch for the construction of the home by clear and convincing evidence as is required and have, therefore, failed to sustain their burden of proof."

A brief review of some of the pertinent evidence and the atmosphere it produced under which the transaction took place will be helpful in developing a better understanding and resolution of the ultimate issue.

The first contact the Hagels had with Midwestern Homes, outside of the newspaper ads, was the catalog they received from Midwestern Homes (in response to their mailing in a clipping of the newspaper ad) containing the following letter which was attached to the inside of the first page of the catalog:

                         :                 "MIDWESTERN HOMES
                         
                         :N OF BUCKINGHAM WOOD PRODUCTS, INC
                         
                Corner   :    AREA CODE 605 TELEPHONE 342 6560
                torn     :       P.O. BOX 2064
                out      :       RAPID CITY, SOUTH DAKOTA 57701
                         
                         :                DATE    YOUR AREA REPRESENTATIVE
                         :
                         :    Hagel     11-11-74     Randall Pooley
                        :1                           Box 640
                 : er,   ND   58530                  Rapid City, SD 57701
                

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