Hamilton Hauling, Inc. v. GAF Corp.

• Decision Date: 16 September 1986
• Docket Number: No. WD,WD
• Citation: 719 S.W.2d 841
• Parties: HAMILTON HAULING, INC., Appellant, v. GAF CORPORATION, Respondent, and John A. Bajt, Defendant. 37187.
• Court: Missouri Court of Appeals

Page 841

719 S.W.2d 841

HAMILTON HAULING, INC., Appellant, v. GAF CORPORATION, Respondent and John A. Bajt, Defendant.

No. WD 37187.

Missouri Court of Appeals,

Western District.

Sept. 16, 1986.

Application to Transfer Denied Dec. 16, 1986.

Weldon W. Perry, Jr., Perry & Rust, Lexington, for appellant.

William L. Turner, Sarah W. Hays, Gage & Tucker, Kansas City, for respondent.

Before SHANGLER, J., Presiding, and DIXON and LOWENSTEIN, JJ.

DIXON, Judge.

Plaintiff Hamilton Hauling, Inc., appeals from a jury verdict for defendant GAF Corporation in a contract action. The only claims of error relate to instructions. Fundamental to the instruction issue is whether John Bajt, an agent of GAF, had the authority to execute a contract on behalf of GAF. The contract in question required GAF, a manufacturer, to purchase a minimum of over $800,000 of raw materials annually from Hamilton Hauling for a period of ten years.

Bajt was a purchasing agent or buyer at GAF's Kansas City plant from 1973 until 1980. Prior to that Bajt worked as an assistant purchasing agent at GAF's Joliet, Illinois plant. Duties of a purchasing agent generally included the acquisition and purchase of all raw materials and related supplies necessary to sustain plant production on a day-to-day basis.

In that capacity, Bajt conducted all negotiations and sales transactions with various vendors for the purchase of raw materials, particularly wood chips, for the Kansas City plant. In the last year of his employment, Bajt purchased approximately $6,000,000 worth of raw materials to be used in production at the plant. None of these purchases were by any document other than a purchase order pursuant to Bajt's actual authority.

The evidence showed that under GAF's internal policy, buyers at Bajt's level had authority to make purchase orders not exceeding $25,000 in amount or one year in duration. Any order or contract exceeding those limits had to be approved in advance by GAF's corporate headquarters. All purchase orders were eventually sent to corporate headquarters for review. Bajt acknowledged the $25,000 limit on the purchase of items for maintenance, repair and operations but denied that it applied to the acquisition of raw materials. No evidence was presented to show that buyers like Bajt customarily entered into long term contracts or contracts involving amounts over $25,000. In all his years with GAF, Bajt never entered into any long term contract except the one at issue in this case.

Hamilton Hauling, solely owned by Warren Hamilton, had supplied a variety of goods and services to GAF and its corporate predecessors at the plant since 1954. During his course of business with GAF, Hamilton had dealt with three different purchasing agents. Hamilton had never had a long term contract with GAF but dealt with it consistently on a purchase order basis. A purchase order could be cancelled by GAF at any time. Hamilton was aware that GAF had at one time entered into a contract with another wood chip vendor prior to the time the agreement here was executed. Bajt was also aware of that contract and knew that it had been signed at corporate headquarters.

A continuous, uninterrupted supply of wood chips was essential to meet the production demands of the plant. The harsh winter of 1978/1979 adversely affected GAF's ability to obtain an adequate supply of wood chips. Bajt negotiated with Hamilton for several months encouraging him to go into the wood chip business so that Bajt might obtain a dependable supplier of wood chips. Hamilton was wary about supplying wood chips to GAF on a purchase order basis because he previously had been cancelled twice by GAF on orders involving delivery of raw materials. Preparation by Hamilton to supply GAF with the needed wood chips would be costly, and Bajt was aware of that. On February 1, 1979, Bajt and Hamilton entered into a contract to purchase which required GAF to purchase approximately 26,000 tons of wood chips annually from Hamilton and his two associates at a minimum cost of more than $800,000 per year for 10 years. The agreement was drawn up by Hamilton's attorney and signed by Bajt in Hamilton's office. Bajt left the original agreement with Hamilton. The agreement was subject to renegotiation of price increases at six-month intervals.

Bajt admitted that he never sent a copy of the contract to GAF's corporate headquarters. No one at GAF seemed to know about the agreement other than Bajt's secretary. Hamilton acknowledged that he never told his two associates in the wood chip business that he had a contract with GAF; in fact, he indicated to them that he only had a purchase order.

After the execution of the agreement, Bajt continued to issue standard purchase orders for all wood sold to GAF by Hamilton, and the purchase orders were routinely sent to GAF's corporate headquarters. The wood supplied by Hamilton pursuant to the purchase orders issued after the signing of the agreement was inconsistent with the tonnage requirements specified in the agreement. Bajt was terminated by GAF in September 1980 and in December 1980, GAF notified Hamilton Hauling that no further deliveries of wood chips would be accepted. Hamilton produced the contract. GAF disclaimed any knowledge of the contract and denied the authority of Bajt to have made such a contract on its behalf.

At trial Hamilton testified that Bajt had told him that he had authority to execute the contract and Hamilton believed him. There was substantial evidence, however, that Hamilton was aware of limitations on Bajt's authority to contract. Both of Hamilton's associates in the wood chip business testified that they had informed Hamilton of conversations with Bajt in which Bajt had indicated his limited authority to contract. These conversations took place prior to the execution of the agreement between Hamilton and Bajt.

Hamilton acknowledged that he had entered into contracts with two other corporations and in each instance the contract had been prepared and executed at the corporate headquarters of the respective company rather than by the local plant manager. It was Hamilton Hauling's theory throughout the trial that Bajt bound GAF because he acted with apparent authority.

On appeal, Hamilton Hauling complains that the instruction given by the trial court defining apparent authority was erroneous. GAF's initial response is that since the instruction was "offered" by Hamilton Hauling, Hamilton Hauling may not now complain of error because the instruction was given. During the instruction conference Hamilton Hauling tendered a definition of apparent authority in Instruction A, which was refused. The court then indicated it would give GAF's apparent authority instruction, offered to the court as Instruction B. Under that compulsion Hamilton Hauling modified GAF's instruction and "offered" it to the trial judge. That was the definition of apparent authority given by the trial court in Instruction 9. During the instruction conference counsel for Hamilton Hauling made a record that the modified Instruction B was offered only because the trial court had refused Instruction A.

In support of its argument that Hamilton Hauling waived any error in the instructions, GAF cites cases which stand for the general proposition that a party may not complain of an instruction that it offered. This doctrine, which is an application of the general principle of "invited error," is well established. In Arnel v. Roettgen, 530 S.W.2d 20, 22 (Mo.App.1975), the court said:

The doctrine of "invited error" on which defendant relies in this case may apply in proper cases to instructions. A good statement of how the rule should be so applied appears in Morris v. Klein, 400 S.W.2d 461, 465 (Mo.App.1966), where it is stated that "a party may not predicate error on a theory of law he himself has adopted." The doctrine therefore prevents a party from attacking an instruction which he himself selected or devised under which to submit to the jury his theory of substantive law on which he asks the case to be decided. Thus, a party has frequently been barred from complaining of his own verdict-directing instruction.

While the instruction challenged in the instant case is not a verdict directing instruction, it is a definitional instruction critical to the theory of the verdict-directing instruction.

The issue is not to be resolved simplistically by who "offered" the instruction; the circumstances of the "offer" must also be considered. Instruction A was Hamilton Hauling's theory of the law of apparent agency to be applied in this case. Instruction B embodied the theory GAF was espousing. When the court indicated it was going to give Instruction B, it had in effect taken the instruction "offered" by GAF. The modification of Instruction B by Hamilton Hauling was not substantive on the issue the instruction presented. The modification was not such a change in substance that the instruction was "adopted," "selected," or "devised" by Hamilton Hauling. The claim of error is not waived in this case.

GAF also argues that:

In order to claim prejudice from a jury instruction Missouri now requires specific objections at the time of the instruction conference. James Lee v. Mitchell Mirbaha, No. 49262 (January 21, 1986); Fowler v. Park Corp., 673 S.W.2d 749 (Mo. banc 1984); Hudson v. Carr, 668 S.W.2d 68, 71-72 (Mo. banc 1984). Compliance in the motion for a new trial with Rule 70.03 of the Missouri Rules of Civil Procedure no longer automatically preserves instructional error for appeal. James Lee v. Mitchell Mirbaha, No. 49262 (January 21, 1986). Appellant made no specific objection to its proposed instruction 9 at the time of the instruction conference.

GAF contends that Hamilton Hauling may not complain about the instruction to which "no objections" were made. To the extent GAF's argument is based upon Lee v. Mirbaha, No. 49262 (Mo.App.E.D. Jan. 21, 1986), it is without authority...