Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. v. Y-Tex Corp.

• Decision Date: 08 February 1979
• Docket Number: Y-TEX,No. 4936,MEUSE-RHINE-IJSSEL,4936
• Citation: 590 P.2d 1306
• Parties: 26 UCC Rep.Serv. 292 CATTLE BREEDERS OF CANADA LTD., Appellant (Plaintiff below), v.CORPORATION, Appellee (Defendant below).
• Court: Wyoming Supreme Court

Page 1306

590 P.2d 1306

26 UCC Rep.Serv. 292

MEUSE-RHINE-IJSSEL CATTLE BREEDERS OF CANADA LTD., Appellant (Plaintiff below), v. Y-TEX CORPORATION, Appellee (Defendant below).

No. 4936.

Supreme Court of Wyoming.

Feb. 8, 1979.

Rehearing Denied March 9, 1979.

James W. Owens (argued), of Murane & Bostwick, Casper, for appellant.

L. B. Cozzens (argued), and Charles G. Kepler, of Simpson, Kepler, Simpson & Cozzens, and William P. Rohrbach, Cody, for appellee.

Before RAPER, C. J., and McCLINTOCK, THOMAS and ROSE, JJ., and GUTHRIE, J., Retired. ^*

RAPER, Chief Justice.

This appeal arises from an order of the district court granting the motion for summary judgment made by defendant-appellee, Y-Tex Corporation (Y-Tex). The plaintiff-appellant, Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. (MRI), appeals from the order, contending that a factual dispute in regard to the parties' agreement was created by the evidence presented, that the law of "impossibility of performance" and "frustration of purpose" was inappropriately applied by the district court, and that there was no breach of contract by MRI. ¹

We will reverse the summary judgment and remand for trial.

MRI is in the business of producing and selling bovine semen for artificial insemination. Y-Tex was in the business of selling and distributing bovine semen for producers such as MRI. On June 21, 1974, MRI and Y-Tex entered into an agreement which generally provided that Y-Tex was to be the exclusive distributor of MRI semen on the "American Continent". This agreement was performed by the parties until, on July 14, 1975, an understanding was reached whereby the June 21, 1974 exclusive distributing agreement was terminated, subject to certain terms and conditions. ² We set out in its entirety the crucial July 14, 1975 termination agreement:

"As per our various telephone conversations, Y-Tex Corporation and Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. have agreed to terminate our contract dated the 21st day of June, 1974, on the following terms and conditions:

"1. It is agreed and understood that Y-Tex has sold 12,901 semen units from the bull, Mr. Image, which semen has not yet been delivered to Y-Tex. Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. hereby agree to deliver to Y-Tex all semen collected from the bull, Mr. Image, as per our original contract mentioned above, until such time as these orders have been filled. Once the 12,901 semen unit order has been filled, Y-Tex shall have no claim to any semen production, and our agreement shall terminate.

"2. Y-Tex Corporation hereby agrees to allow Meuse-Rhine-Ijssel Cattle Breeders of Canada Ltd. the right to sell or contract with others to sell future semen production from Mr. Image so long as it is specifically understood that any semen produced by Mr. Image will first be applied to Y-Tex's order for 12,901 semen units as per our original agreement.

"If this substantially outlines our agreement, please approve this by signing a copy of this letter and, after retaining one executed copy for your records, return an executed copy for our records." ³

MRI alleges that Y-Tex failed to live up to its end of the bargain in that MRI stood ready to deliver the 12,901 units of semen but Y-Tex "refused to accept sales and sales orders from customers for the sale of the 12,901 units of semen." In the district court the parties disputed the meaning of the July 14, 1975 agreement. MRI claimed it was a firm order for 12,901 units of semen. Y-Tex claimed it was only a reservation of up to 12,901 units of semen but that it was under no obligation to buy any semen. Y-Tex's argument was based on the fact that nowhere in the agreement did Y-Tex say it agreed to "buy" 12,901 units of semen. Further, Y-Tex argued, the June 21, 1974 agreement provided:

"MRI CATTLE BREEDERS agree to provide Y-TEX at Cody, Wyoming, such M.R.I. semen as Y-TEX shall from time to time order, subject however to the actual production of semen by each bull in question."

The district judge agreed with Y-Tex's argument and, although he stated he had difficulty with the "reservation" theory because a specific number was used, he concluded, after citing the above passage from the parties' June 21, 1974 agreement:

"In the Court's opinion then the only obligation on the defendant at the time of the original contract was to purchase whatever semen it so desired even if that included no orders on the part of the defendant and was restricted in quantity only from a production basis. Construing this contract together with the oral termination and the July 14, 1975 letter, the Court feels that the defendant has established his point and that the specific number of doses set forth in said letter was a reservation and a reservation only. Therefore, the defendant was not obligated to buy any semen from the plaintiffs but could if it so desired purchase semen in amounts not to exceed 12,091 (sic) doses." ⁴

Y-Tex also raised in the district court the questions of impossibility of performance and commercial frustration. In part, the district court based its decision to grant the motion for summary judgment on these issues. The district judge stated that impossibility of performance by Y-Tex was created by cancellation of orders by customers of Y-Tex because semen was not available during the breeding season. Further, he concluded that there was commercial frustration, and that Y-Tex had no obligation to find new customers. ⁵ The thrust of the decision letter indicates that the trial judge was deciding questions of fact regarding breeding time as it related to the contracts between MRI and Y-Tex.

We note that neither of the parties called to the attention of the district court the applicability of the Uniform Commercial Code (U.C.C.). ⁶ It is readily apparent that act is intended to cover the problems raised in this case and it should be used as applicable. ⁷ We look at a motion for summary judgment in the same light as the district judge and as though it was originally before us, because we now have the same materials he did upon which to base a decision. Seay v. Vialpando, Wyo.1977, 567 P.2d 285; Shrum v. Zeltwanger, Wyo.1977, 559 P.2d 1384. It is not considered a new issue to consider additional relevant authority in the disposition of a case. This does not interfere with the course of the litigation selected by the parties. There is no reason to keep secret the proper law applicable to a case just because overlooked. The trial judge and the parties had available the U.C.C. to the extent applicable. The U.C.C. became a part of the contract as though written into its terms. Tri-County Electric Association v. City of Gillette, Wyo.1978, 584 P.2d 995; Application of Hagood, Wyo.1960, 356 P.2d 135.

We are also concerned with the propriety of granting a motion for summary judgment under the circumstances considered here. If there is a genuine issue of fact, summary judgment is to be denied. Seay v. Vialpando, supra; Shrum v. Zeltwanger, supra. Moreover, the propriety of granting a motion for summary judgment depends upon the correctness of the court's dual finding that there is no genuine issue as to any material fact and that the prevailing party is entitled to judgment as a matter of law. Johnson v. Soulis, Wyo.1975, 542 P.2d 867.

As shall be evident from the following discussion, material issues of fact were identified by MRI and additional issues of fact are apparent when the governing statutes are considered. Neither party challenged the validity of the June 21, 1974 exclusive dealing agreement, nor do we. Such an agreement is recognized by the U.C.C.:

§ 34-21-223:

"(1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded.

"(2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale." (Emphasis added.)

This section creates an inherent question of fact which plaintiff could rightfully present to the trier of fact. ⁸ As long as the June 21, 1974 agreement was in force, MRI was entitled to good faith performance by Y-Tex. ⁹ See, Uniform Laws Annotated, Uniform Commercial Code, Vol. 1, § 2-306, official comment 5; Feld v. Henry S. Levy & Sons, Inc., 1975, 37 N.Y.2d 466, 373 N.Y.S.2d 102, 105, 335 N.E.2d 320, 323.

Of equal importance is the ambiguity present on the face of the July 14, 1975 termination agreement. The letter recites that the agreement was reached by telephone conversations. That it may not have been intended to be a complete statement of the parties' agreement to terminate their June 21, 1974 agreement appears clearly in the letter: "If this Substantially outlines our agreement * * *." (Emphasis added.) ¹⁰ The defendant, Y-Tex, in the memorandum filed with its motion for summary judgment, and in its brief here, repeatedly refers to an oral agreement. The letter agreement contains no clause to the effect that it incorporates all the agreement of the parties. Additionally, we see an ambiguity in the language of paragraphs "1" and "2" of the letter agreement. From paragraph "1", it can be gleaned that perhaps there was only an agreement to fill orders obtained by Y-Tex and it might be implied that if an order was cancelled, there was no order to be filled. That conclusion is somewhat shaky, however. On the other hand, paragraph numbered "2" can be construed to be Y-Tex's order for 12,901 semen units in accordance with the original formal agreement of the earlier date. In both paragraphs reference is made to the...