Moulton Cavity & Mold, Inc. v. Lyn-Flex Industries, Inc., LYN-FLEX

• Decision Date: 26 January 1979
• Docket Number: LYN-FLEX
• Citation: 396 A.2d 1024
• Court: Maine Supreme Court
• Parties: 25 UCC Rep.Serv. 1026 MOULTON CAVITY & MOLD, INC. v.INDUSTRIES, INC.

Page 1024

396 A.2d 1024

25 UCC Rep.Serv. 1026

MOULTON CAVITY & MOLD, INC. v. LYN-FLEX INDUSTRIES, INC.

Supreme Judicial Court of Maine.

Jan. 26, 1979.

Murray, Plumb & Murray, John C. Lightbody (orally), Peter L. Murray, Portland, for plaintiff.

Smith, Elliott, Wood & Nelson by Stephen Lamson (orally), Roger S. Elliott, Saco, for defendant.

Before McKUSICK, C. J., and WERNICK, ARCHIBALD, DELAHANTY, GODFREY and NICHOLS, JJ.

DELAHANTY, Justice.

Defendant, Lyn-Flex Industries, Inc., appeals from a judgment entered after a jury trial by the Superior Court, York County, in favor of plaintiff, Moulton Cavity & Mold, Inc. The case concerns itself with an oral contract for the sale of goods which, as both parties agree, is governed by Article 2 of the Uniform Commercial Code, 11 M.R.S.A. §§ 2-101 Et seq. For the reasons set forth below, we agree with defendant that the presiding Justice committed reversible error by instructing the jury that the doctrine of substantial performance applied to a contract for the sale of goods. We do not agree, however, that based on the evidence introduced at trial defendant is entitled to judgment in its favor as a matter of law. The appeal is therefore sustained and the case remanded for a new trial.

An examination of the record discloses the following sequence of events: On March 19, 1975, Lynwood Moulton, president of plaintiff, and Ernest Sturman, president of defendant, orally agreed that plaintiff would produce, and defendant purchase, twenty-six innersole molds capable of producing saleable innersoles. The price was fixed at $600.00 per mold. Whether or not a time for delivery had been established was open to question. In his testimony at trial, Mr. Moulton admitted that he was fully aware that defendant was in immediate need of the molds, and he stated that he had estimated that he could provide suitable molds in about five weeks' time. ¹ Mr. Sturman testified that "I conveyed the urgency to (Mr. Moulton) and he said 'within three weeks I will begin showing you molds and by the end of five weeks you will have (the entire order).' "

In apparent conformity with standard practice in the industry, plaintiff set about constructing a sample mold and began a lengthy series of tests. These tests consisted of bringing the sample mold to defendant's plant, fitting the mold to one of defendant's plastic-injecting machines, and checking the innersole thus derived from the plaintiff's mold to determine if it met the specifications imposed by defendant. After about thirty such tests over a ten-week period, several problems remained unsolved, the most significant of which was "flashing," that is, a seepage of plastic along the seam where the two halves of the mold meet. Although characterized by plaintiff as a minor defect, Mr. Moulton admitted that a flashing mold could not produce a saleable innersole. ²

It was plaintiff's contention at trial, supported by credible evidence, that at one point during the testing period officials of defendant signified that in their judgment plaintiff's sample mold was turning out innersoles correctly configured so as to fit the model last supplied by defendant's customer. ³ Allegedly relying on this approval, plaintiff went ahead and constructed the full run of twenty-six molds.

For its part, defendant introduced credible evidence to rebut the assertion that it had approved the fit of the molds. It also noted that Moulton's allegation of approval extended only to the fit of the mold; as Moulton conceded, defendant had never given full approval since it considered the flashing problem, among others, unacceptable. ⁴

On May 29, some ten weeks after the date of the oral agreement and five weeks after the estimated completion date, Mr. Sturman met with plaintiff's foreman at the Moulton plant. A dispute exists regarding the substance of the ensuing conversation. Plaintiff introduced evidence tending to show that at that time, Mr. Sturman revoked defendant's prior approval of the fit of the sample mold and demanded that plaintiff redesign the molds to fit the last. Testimony introduced by defendant tended to show that it had never approved the fit of the molds to begin with and that on the date in question, May 29, plaintiff's foreman indicated that plaintiff simply would not invest any more time in conforming the molds to the contract. Mr. Sturman met the next day with Mr. Moulton, and Moulton ratified the position taken by his foreman. Thereupon, Mr. Sturman immediately departed for Italy and arranged to have the molds produced by the Plastak Corporation, an Italian mold-making concern, at a cost of $650.00 per mold. Plaintiff later billed defendant for the contract price of the molds, deducting an allowance for "flashing and shut-off adjustments." Upon defendant's refusal to pay, plaintiff brought this action for the price less adjustments. Defendant counterclaimed for its costs in obtaining conforming goods to the extent that they exceeded the contract price.

At trial, plaintiff's basic theory of recovery was that it had received approval with regard to the fit of the sample mold, that in reliance on that approval it had constructed a full run of twenty-six molds, and that defendant had, in effect, committed an anticipatory breach of contract within the meaning of Section 2-610 by demanding that the fit of the molds be completely redesigned. On its counterclaim, and in response to plaintiff's position, defendant advanced the theory that plaintiff had breached the contract by failing to tender conforming goods within the five-week period mentioned by both parties.

After the presiding Justice had charged the jury, counsel for plaintiff requested at side bar that the jury be instructed on the doctrine of substantial performance. Counsel for defendant entered a timely objection to the proposed charge which objection was overruled. The court then supplemented its charge as follows:

The only point of clarification that I'll make, ladies and gentlemen, is that I've referred a couple of times to performance of a contract and you, obviously, have to determine no matter which way you view the contract to be, and there might even be a possible third way that I haven't even considered, whether the contract whatever it is has been performed and there is a doctrine that you should be aware of in considering that. That is the doctrine of substantial performance.

It is not required that performance be in any case one hundred percent complete in order to entitle a party to enforcement of their contractual rights. That is not to say within the confines of this case that the existence of flashing would be excused or not be excused. It is just a recognition on the part of the law when we talk about performance, probably if we took any contract you could always find something of no substance that was not completed one hundred percent. It is for you to determine that whether it has been substantially performed or not and what in fact constitutes substantial performance.

In your consideration, and as I say in this case, that's not to intimate that something like flashing is to be disregarded or to be considered. It's up to you based upon facts.

The jury returned a verdict in favor of plaintiff in the amount of.$14,480.82. ⁵

I

In Smith, Fitzmaurice Co. v. Harris, 126 Me. 308, 138 A. 389 (1927), a case decided under the common law, we recognized the then-settled rule that with respect to contracts for the sale of goods the buyer has the right to reject the seller's tender if in any way it fails to conform to the specifications of the contract. We held that "(t)he vendor has the duty to comply with his order in kind, quality and amount." Id. at 312, 138 A. at 391. Thus, in Smith, we ruled that a buyer who had contracted to purchase twelve dozen union suits could lawfully refuse a tender of sixteen dozen union suits. Various provisions of the Uniform Sales Act, enacted in Maine in 1923, codified the common-law approach. R.S. (1954) ch. 185, §§ 11, 44. The so-called "perfect tender" rule came under considerable fire around the time the Uniform Commercial Code was drafted. No less an authority than Karl Llewellyn, recognized as the primum mobile of the Code's tender provisions, (See, e. g., W. Twining, Karl Llewellyn and the Realist Movement 270-301 (1973); Carroll, Harpooning Whales, of Which Karl N. Llewellyn is the Hero of the Piece; or Searching for More Expansion Joints in Karl's Crumbling Cathedral, 12 B.C.Indus. & Comm.L.Rev. 139, 142 (1970)), attacked the rule principally on the ground that it allowed a dishonest buyer to avoid an unfavorable contract on the basis of an insubstantial defect in the seller's tender. Llewellyn, On Warranty of Quality and Society, 37 Colum.L.Rev. 341, 389 (1937). Although Llewellyn's views are represented in many Code sections governing tender, ⁶ the basic tender provision, Section 2-601, represents a rejection of Llewellyn's approach and a continuation of the perfect tender policy developed by the common law and carried forward by the draftsmen of the Uniform Sales Act. See Official Comment, § 2-106; Priest, Breach and Remedy for the Tender of Nonconforming Goods Under the Uniform Commercial Code: An Economic Approach, 91 Harv.L.Rev. 960, 971 (1978). Thus, Section 2-601 states that, with certain exceptions not here applicable, the buyer has the right to reject "if the goods or the tender of delivery fail In any respect to conform to the contract . . . ." (emphasis supplied). Those few courts that have...