Del Hayes & Sons, Inc. v. Mitchell

• Decision Date: 30 May 1975
• Docket Number: No. 45016,45016
• Court: Minnesota Supreme Court
• Parties: , 17 UCC Rep.Serv. 16 DEL HAYES & SONS, INC., Respondent, v. Bruce MITCHELL, Individually, and Mitchell Feed & Seed Company, Appellants.

Page 588

230 N.W.2d 588

304 Minn. 275, 17 UCC Rep.Serv. 16

DEL HAYES & SONS, INC., Respondent, v. Bruce MITCHELL, Individually, and Mitchell Feed & Seed Company, Appellants.

No. 45016.

Supreme Court of Minnesota.

May 30, 1975.

Syllabus by the Court

1. Trial court has power to grant summary judgment, sua sponte, without meeting formal notice requirement of Rule 56.03, Rules of Civil Procedure, under certain circumstances.

2. Neither promissory nor equitable estoppel is available under the facts of this case to take the oral agreement out of the statute of frauds, Minn.St. 336.2--201(1).

3. Both acceptance and receipt of all of the goods in question are required under Minn.St. 336.2--201(3)(c) before avoidance of the statute of frauds is recognized.

4. Where individual defendant failed to make a proper record on the question of whether he acted in his individual capacity or as corporate agent, he was precluded from raising the issue on appeal.

Walsh & Nelson and Jerold O. Nelson, Minneapolis, for appellants.

Smith & Pringle and Gary L. Pringle, Monticello, for respondent.

Heard before OTIS, KELLY and CHANAK, JJ., and considered and decided by the court en banc.

NICHOLAS S. CHANAK, JUSTICE. ^*

Appeal by defendants from summary judgment of the District Court, Sherburne County, in favor of plaintiff for goods sold and delivered and denying recovery on the counterclaim. We affirm.

On November 24, 1972, the parties entered into an oral agreement whereby plaintiff contracted to sell, and defendants agreed to purchase for future delivery, certain soybeans for a price of $3.50 per bushel. Approximately 4,020 bushels were delivered to defendant on May 16 and 17, 1973. The market value of the beans had increased to $8 or $9 per bushel at time of delivery, and after delivery continued to rise, reaching $10 per bushel.

The parties' disagreement as to the quantity of beans, the subject of the oral contract, culminated in this action. Plaintiff claimed that the contract was for 4,000 bushels of beans, and defendants insisted that plaintiff promised to sell a 'bin of beans.' Under defendants' view, plaintiff had failed to deliver approximately 1,000 to 1,500 bushels of the total beans contracted for and remaining in plaintiff's bin. At no stage of the negotiations or agreement was any writing in any form, relating to the agreement, executed by either of the parties.

Plaintiff was never paid for the beans delivered. As a consequence, plaintiff sought recovery of the agreed price for the number of bushels actually delivered (which the parties later stipulated was $13,151.73), and defendants counterclaimed for damages resulting from plaintiff's failure to deliver the beans remaining in plaintiff's bin after delivery of 4,020 bushels.

At the pretrial conference on December 27, 1973, the trial court raised the issue of the statute of frauds, Minn.St. 336.2--201, which provides that an agreement for the sale of goods of a value of more than $500, to be enforceable, must be in writing, and so noted in its pretrial order of January 2, 1974, but without a final determination.

At the conference in chambers between court and counsel, preliminary to the selection of a jury, on the day set for trial, January 22, 1974, plaintiff moved to amend its reply to defendants' counterclaim by raising the affirmative defense of the statute of frauds. At the same time, defendants moved to amend their counterclaim to plead affirmatively estoppel. Both motions were granted.

After the court indicated at the latter conference that the defendants could not prove their alleged counterclaim, defendants were then permitted to make an offer of proof as to (1) facts relied upon to prove defendants' version of the verbal agreement and (2) conduct or representations of plaintiff which would constitute an estoppel. The court then determined that defendants' counterclaim was within the statute of frauds and that the conduct and representations of the plaintiff, even if true, did not constitute an estoppel. Rejected also was defendants' contention that a jury issue arose as to whether a 'bin of beans' was a commercial unit. Defendants had argued that acceptance of part was acceptance of the entire unit within the meaning of Minn.St. 336.2--606(2), so as to take the oral agreement out of the statute of frauds under § 336.2--201(3)(c).

Having further advised counsel that under Minn.St. 336.2--201(3)(c) the payment for the 4,020 bushels was enforceable because it was in 'respect to goods * * * which have been received and accepted' and therefore not within the statute of frauds, the trial court ordered judgment, which is the subject of this appeal. ¹

Defendants' appeal raises the following issues: (1) Whether the trial court exceeded its authority in granting what was in effect a summary judgment on its own motion on the basis of the information disclosed by the interrogatories, depositions, files, pleadings, pretrial conference, and offer of proof preliminary to trial. (2) Did the question of whether plaintiff was estopped to raise the statute of frauds constitute a genuine issue of material fact? (3) Did the question of whether a 'bin of beans' is a commercial unit within the meaning of the Uniform Commercial Code (hereafter UCC) constitute a genuine issue of material fact? (4) Did the trial court err in entering judgment against Bruce Mitchell individually?

Summary Judgment Sua Sponte

Defendants contend that the trial court exceeded its authority because it granted a summary judgment on its own motion on the day of trial without notice to the parties. In support of that contention, defendants rely on McAllister v. Independent School Dist. No. 306, 276 Minn. 549, 149 N.W.2d 81 (1967).

We did hold in McAllister, as defendants contend, that under Rule 56.03, Rules of Civil Procedure, ² the stated time of 10 days' formal notice is mandatory, absent a clear waiver by the adversary. The aggrieved party there vigorously opposed the motion for summary judgment by defendants on two grounds: (1) Notice was 5 days short, and (2) plaintiffs had other evidence to submit.

The circumstances which are presented here distinguish McAllister v. Independent School Dist. No. 306, Supra. Significant are the following facts: (1) The pretrial conference was held on December 27, 1973, at which time the trial court raised the issue of the statute of frauds relative to defendants' counterclaim and incorporated the issue in its pretrial order of January 2, 1974, in effect affording written notice of the issue to both parties; (2) by the same order, trial by jury was set for January 22, 1974, in effect affording defendants a 20-day opportunity to prepare to meet the issue raised; (3) on the day set for trial, at a conference in chambers between court and counsel preliminary to selection of a jury, the court reviewed its pretrial order, reiterated its opinion that the defendants could not pursue their counterclaim because of the statute of frauds, secured agreement of counsel as to the amount of plaintiff's claim, and then afforded defendants an opportunity to make their offer of proof; (4) defendants availed themselves of that opportunity by attempting to show genuine fact issues as to the provisions of the oral agreement and facts relating to estoppel and were fully heard as to all the questions involved; (5) the trial judge thereupon ruled that the statute of frauds precluded defendants' counterclaim and denied estoppel; (6) at the time defendants voiced no objection on the record to the procedure employed by the court; and (7) no prejudice was shown by defendants by reason of the absence of a formal motion.

Neither the summary judgment rule nor any other procedural rule gives the trial court express authority to enter a summary judgment on its own motion. The authority is derived from the inherent power of the trial court to dispose summarily of litigation when there remains no genuine issue as to any material fact and judgment must be ordered for one of the parties as a matter of law. The same conditions must exist as would justify a summary judgment on motion of a party. Green v. Kaesler-Allen Lumber Co., 197 Kan. 788, 420 P.2d 1019; Sheild v. Welch, 4 N.J. 563, 73 A.2d 536; Roberts v. Braynon, 90 So.2d 623 (Fla.1956); Buffington v. Continental Cas. Co., 69 N.M. 365, 367 P.2d 539 (1961). See, also, Rule 16(6), Rules of Civil Procedure. Concededly, there were genuine fact issues involved in the instant case. But as their resolution would in no way affect the application of the rules of law which we adopt herein, the trial court properly denied defendants a jury trial on those issues.

In Niazi v. St. Paul Mercury Ins. Co., 265 Minn. 222, 121 N.W.2d 349 (1963), we considered facts analogous to those in this case. There, plaintiffs had brought an action under the medical pay and uninsured motorist provisions of an automobile insurance policy. The policy provisions required that such disputes be arbitrated in accordance with the rules of the American Arbitration Association. At the pretrial conference, the trial court, either on its own motion or upon oral motion of the attorney for the insurer, ordered the proceedings stayed until plaintiffs submitted the dispute to arbitration pursuant to the policy. No formal application for stay and order for arbitration had been made by defense counsel. Plaintiffs sought a writ of mandamus from this court alleging that the trial court had in effect granted a summary judgment on its own motion in a manner not in compliance with the rules.

In denying the application for the writ, we reasoned as follows:

'* * * (T)he trial judge does have power under Rule 56.04 to grant summary judgment with respect to all or some of the issues raised by the pleadings. (Citations omitted.)

"Unless the objecting party can show prejudice arising from the lack of notice * * *, exercising (summary judgment) power at pre-trial is sound. Seldom...