North Central Jobbers v. Snortland, 10281

• Decision Date: 27 January 1983
• Docket Number: No. 10281,10281
• Parties: NORTH CENTRAL JOBBERS, Northwood, North Dakota, Plaintiff and Appellee, v. Thomas SNORTLAND, Sharon, North Dakota, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 614

329 N.W.2d 614

NORTH CENTRAL JOBBERS, Northwood, North Dakota, Plaintiff and Appellee, v. Thomas SNORTLAND, Sharon, North Dakota, Defendant and Appellant.

Civ. No. 10281.

Supreme Court of North Dakota.

Jan. 27, 1983.

Gene C. Grindeland and Thomas R. Moe, Mayville, for plaintiff and appellee; argued by Thomas R. Moe, Mayville.

Wayne O. Solberg, of Solberg, Stewart, Boulger & Miller, Fargo, for defendant and appellant.

VANDE WALLE, Justice.

Thomas Snortland appealed from a judgment of the district court which required him to pay to North Central Jobbers $20,584.91 plus interest pursuant to the provisions of an oral contract between the parties. We affirm.

North Central Jobbers is a North Dakota corporation engaged in the business of buying, selling, and distributing merchandise. Thomas Snortland is a farmer and businessman. In 1977, the parties entered into an oral agreement whereby North Central Jobbers would use Snortland's two trucks and two trailers in its wholesale distribution business. In return, Snortland would receive the balance of the revenue produced by each truck less the expenses incurred.

The district court found that the verbal agreement had substantially the following terms:

"a.) The title to the trucks and trailers would be transferred to the corporation.

"b.) The corporation would use the trucks in distributing merchandise, usually attempting to have cargo in both going and returning.

"c.) The corporation would arrange for drivers and all trips.

"d.) The corporation would pay all expenses such as insurance, fuel, salaries, repairs and other expenses and handle all accounting work.

"e.) The expenses of each truck unit would be offset from the revenue produced and the balance would be paid to the former owner.

"f.) The corporation would pay the employers' share of Social Security contributions for the truck drivers and all unemployment insurance premiums without reimbursement from the Defendant.

"g.) The corporation would charge a flat fee for interest if the amount owing Defendant was less than $2,000.00. If over $2,000.00, Defendant would get such fee.

"h.) Shop rent and office overhead were also charged as expenses against the truck's revenue.

"i.) The revenue of each truck was the usual tariff charged in comparable hauling."

Snortland transferred two trucks and two trailers to North Central Jobbers in the fall of 1977. Snortland subsequently purchased stock from North Central Jobbers for $54,000 and lent the corporation $30,000 for operating capital. Approximately one year after the transfer of the trucks the parties had a disagreement over corporate policy. This disagreement eventually resulted in Snortland's getting his money back for the stock purchased and the repayment of the amount of his loan to the corporation. Subsequently, Snortland's trucks and trailers were returned to him and the contract was terminated.

Following the return of the trucks, North Central Jobbers sent Snortland a statement indicating that Snortland owed North Central Jobbers $20,584.91, the amount by which operating and maintenance expenses exceeded the revenue produced by the two trucks. ¹ Snortland refused to pay and North Central Jobbers commenced this action. The case was tried to the court and the testimony concerning the transaction was provided mainly by Lloyd Thorsgaard, the principal stockholder and chief executive officer of North Central Jobbers, and by Snortland. At the close of the trial the court found that a valid oral contract was formed between the parties and that pursuant to the terms of that contract Snortland was obligated to pay to North Central Jobbers the sum of $20,584.91 plus interest for expenses incurred by North Central Jobbers in the operation of Snortland's trucks. Judgment was entered accordingly. From this judgment Snortland appealed.

Snortland states the pertinent issues on appeal as follows:

"1. Did the trial court err in finding that there was a contract between the parties and in supplying the terms thereof?

"2. Did the trial court err in its conclusion that the contract, as determined by the court, had a lawful objective and was not void and unenforceable?"

The findings of the trial court that a contract was formed between the parties and that the terms of the contract were essentially as set forth previously in this opinion are findings of fact governed by Rule 52(a) of the North Dakota Rules of Civil Procedure. See Tallackson Potato Co., Inc. v. MTK Potato Co., 278 N.W.2d 417 (N.D.1979). Findings of fact are not to be set aside unless clearly erroneous, and due regard is to be given to the opportunity of the trial court to judge the credibility of the witnesses. Rule 52(a), N.D.R.Civ.P. We have held that a finding of fact is clearly erroneous "when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made." Anderson v. Mooney, 279 N.W.2d 423, 426 (N.D.1979).

Snortland contends that no "meeting of the minds" occurred between the parties. Snortland apparently claims that he was either unaware of or mistaken as to the terms of the contract and therefore there was no mutual consent and the contract cannot be enforced. As authority for his contention Snortland cites Sections 9-03-01, 9-03-03, and 9-03-16 of the North Dakota Century Code. ²

The phrase "meeting of the minds" was criticized by this court in Amann v. Frederick, 257 N.W.2d 436, 439 (N.D.1977):

"The invocation of the shorthand expression 'meeting of the minds' is more misleading than helpful in deciding contract issues. Mutual assent to a contract is indeed required, but that assent must be evidenced in some way, and if the evidence is clear enough, the contract will be binding, regardless of mental reservations or misunderstandings of one or both parties, in the absence of fraud or other recognized ground for setting aside the contract. It is the words of the contract and the manifestations of assent which govern, not the secret intentions of the parties....

* * *

"Professor Williston sums it all up by saying that the term 'meeting of the minds' is a 'familiar cliche, still reechoing in judicial dicta,' and that it is a nineteenth-century expression which seems to be contrary to the rule 'long ago settled that secret intent was immaterial, only overt acts being considered in the determination of such mutual assent' as the law requires. Williston on Contracts, 3d Ed., Sec. 22."

See also Anderson v. Mooney, supra, 279 N.W.2d at 426, n. 1.

We are satisfied that the circumstances indicate a sufficient objective manifestation of consent for the trial court to find that a contract was formed between North Central Jobbers and Snortland. Following the discussions during which the oral agreement concerning the use of Snortland's trucks was reached, Snortland transferred title and physical possession of the trucks to North Central Jobbers. The trucks traveled over 130,000 miles while remaining in the possession of North Central Jobbers for more than a year. During much of this period, Snortland was involved in North Central Jobbers' business as a stockholder and creditor of the corporation. He visited the corporate headquarters and had access to the corporate books and to the trucks. Snortland is not a novice in the business world. He has considerable farming interests and other business investments.

Upon review of the record, including the testimony at trial, we conclude that the trial court did not clearly err when it found a contract existed between North Central Jobbers and Snortland.

Snortland contends, however, that even if a contract between the parties did exist, the trial court erred in finding the terms of the oral agreement. ³ Snortland does not contest the amount of expenses alleged, but argues that no agreement was reached to provide for the reimbursement or compensation of North Central Jobbers for losses sustained in the operation and maintenance of Snortland's trucks. Snortland asserts that the trial court improperly engaged in speculation by supplying terms to the contract not contemplated by the parties. Snortland urges we conclude that he was entitled to the net revenue, if any, from the use of the trucks but was not responsible for any losses.

The terms of the oral contract found by the trial court are findings of fact which will not be set aside unless clearly erroneous. Rule 52(a), N.D.R.Civ.P. Lloyd Thorsgaard testified that the agreement entered into for the use of Snortland's trucks was substantially the same type of agreement entered into by North Central Jobbers with a number of other truck owners. Included in Thorsgaard's testimony were all the terms the court found to be part of the oral contract. Snortland submitted no evidence to show a different oral contract existed. Due regard must be given to the opportunity of the trial court to judge the credibility of the witnesses. Rule 52(a), N.D.R.Civ.P.

The trial court found part of the oral contract provided:

"d.) The corporation would pay all expenses such as insurance, fuel, salaries, repairs and other expenses and handle all accounting work "e.) The expenses of each truck unit would be offset from the revenue produced and the balance would be paid to the former truck owner."

Snortland argues these provisions cannot be construed to impose liability upon the truck owner when the expenses of each truck exceed the amount of revenue produced. However, because the contract manifests no contrary intention, these provisions must be implied...