McMillan v. Meuser Material & Equipment Co., Inc.

• Decision Date: 27 September 1976
• Docket Number: No. 76--21,76--21
• Parties: , 20 UCC Rep.Serv. 110 Joe McMILLAN, Appellant, v. MEUSER MATERIAL & EQUIPMENT CO., INC., Appellee.
• Court: Arkansas Supreme Court

Page 911

541 S.W.2d 911

260 Ark. 422, 20 UCC Rep.Serv. 110

Joe McMILLAN, Appellant, v. MEUSER MATERIAL & EQUIPMENT CO., INC., Appellee.

No. 76--21.

Supreme Court of Arkansas.

Sept. 27, 1976.

Rehearing Denied Nov. 1, 1976.

Crouch, Blair, Cypert & Waters by Michael H. Mashburn, Springdale, for appellant.

Davis, Douglas & Penix, Springdale, for appellee.

HOLT, Justice.

The trial court, sitting as a jury, found appellant McMillan breached a contract to buy a bulldozer from appellee Meuser and assessed $2,700 as appellee's damages ($2,595 actual and $105 incidental). From that judgment comes this appeal.

On December 13, 1973, the parties entered into their agreement. The purchase price, including a bellhousing, was $9,825, f.o.b. Springdale. Meuser arranged transportation of the bulldozer to Greeley, Colorado, the residence of appellant. On December 24, 1973, McMillan stopped payment on his check asserting that since the agreed delivery date was December 21, the delivery was past due. Appellee's version is that the delivery date was January 1, 1974. After unsuccessful negotiations between the parties or about two months after the appellant purchaser stopped payment on his check, appellee brought this action. On March 5, 1975, or about fourteen months following the alleged breach of the purchase contract, appellee sold the bulldozer for $7,230 at a private sale. During this fourteen month interval, the equipment remained unsheltered, although regularly serviced, on an Arkansas farm, which was its situs when the sale contract was made.

We first consider appellant's assertion that the resale by appellee did not constitute the good faith and commercial reasonableness which is required by Ark.Stat.Ann. § 85--2--706 (Add.1961). Appellee responds that this defense was not properly raised at trial. We must disagree with appellee. Appellee alleged in its complaint that it had made reasonable efforts to resell the bulldozer. The length of time between the alleged breach and the resale were joined in issue by appellee's direct testimony:

Q: Bill, at the end of a year what did you do with the bulldozer? Did you decide you wanted to keep it or did you decide to sell it?

A: No, after I kept the cat the twelve months for the man and he didn't come get it and didn't accept it, and this had all been filed and the paper work, and what-have-you, on it, I turned around and started seeking a buyer for it.

The time of the resale was again referred to, without objection, in the cross-examination of the appellee:

Q: I believe you also testified that you waited a year after the 13th of December (1973), I guess, before you started trying to sell it again; is that right?

A: That is true.

Q: Okay. So from December 13, '73 until approximately December of '74, you kept it?

A: I didn't try to sell it until after the first of the year, this year. (1975)

Q: So from December 13th, 1973, until the first of this year, you just let it sit?

A: I did.

Q: You didn't try to sell it for a whole year?

A: Nope.

Furthermore, appellant in his motion for a directed verdict specifically invoked § 85--2--706 and, inter alia, stated '(T)hat sale is not commercially reasonable and they cannot rely on that for damages in this case.' As indicated, after review of the record, we are of the opinion that the issue of the commercial reasonableness of the resale was sufficiently raised at trial for our determination of the issue.

We turn now to appellant's contention that the resale by appellee Meuser was not in accordance with the requirements of § 85--2--706. The statute provides in pertinent part:

(1) Under the conditions stated in Section 2--703 (§ 85--2--703) on seller's remedies, the seller may resell the goods concerned (f)or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2--710 (§ 85--2--710)), but less expenses saved in consequence of the buyer's breach.

(2) Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a until or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place, and terms must be commercially reasonable. . . .

Thus, in order to recover the damages prescribed in subsection (1), subsection (2) requires that every aspect of the resale including the method, manner, time, place, and terms must be commercially reasonable. The purpose of the resale provisions is discussed in Anderson, Uniform Commercial Code 2d, § 2--706:19, at p. 385, where it is stated:

. . . the object of the resale is simply to determine exactly the seller's damages. These damages are the difference between the contract price and the market price at the time and place when performance should have been made by the buyer. The object of the resale in such a case is to determine what the market price in fact was. Unless the resale is made at about the time when performance was due it will be of slight probative value, especially if the goods are of a kind which fluctuate rapidly in value, to show what the market price actually was at the only time which is legally important.

In Comment 5 following § 85--2--706, the writers make it clear that 'what is such a reasonable time depends upon the nature of the goods, the conditions of the market and the other circumstances of the case.'

In Bache & Co., Inc. v. International Controls Corp., D.C., 339 F.Supp. 341 (1972), it was held, as least as to the sale of securities, that the resale must be as soon as practicable following notice of the buyer's refusal to accept tender of the goods. There a delay in excess of a month before resale was held unreasonable. In Uganski v. Little Giant Crane & Shovel, Inc., 35 Mich.App. 88, 192 N.W.2d 580 (1971), Uganski, the buyer, after his revocation of acceptance, resold heavy equipment, a crane, some two years and two months from the date of his notice of revocation of acceptance. There the court held his two year delay in reselling the crane was commercially unreasonable.

Here, even though we accord a liberal interpretation to the U.C.C., § 85--1--106, which mandates that remedies be so administered, we are of the view that the resale of the bulldozer, in excess of fourteen months after the alleged breach, will be of 'slight...