Robertson Lumber Co. v. Stephen Farmers Co-op. Elevator Co., 39601

• Decision Date: 22 April 1966
• Docket Number: No. 39601,39601
• Citation: Robertson Lumber Co. v. Stephen Farmers Co-op. Elevator Co., 143 N.W.2d 622, 274 Minn. 17 (Minn. 1966)
• Parties: ROBERTSON LUMBER COMPANY, Appellant, v. STEPHEN FARMERS COOPERATIVE ELEVATOR COMPANY, Respondent.
• Court: Minnesota Supreme Court

Page 622

143 N.W.2d 622

274 Minn. 17

ROBERTSON LUMBER COMPANY, Appellant, v. STEPHEN FARMERS COOPERATIVE ELEVATOR COMPANY, Respondent.

No. 39601.

Supreme Court of Minnesota.

April 22, 1966.

Syllabus by the Court

1. Where a written contract to construct a building is shown to be complete except for an alleged oral warranty of fitness, the understanding of the parties is deemed to be merged and integrated in the various instruments constituting the agreement, and the warranty may not under those circumstances be proved by parol.

2. A contractor who adopts a faulty design and utilizes inadequate materials in erecting a building, as a result of which it collapses, may be held liable for a breach of implied warranty of fitness for the purpose if the contractor holds himself out, expressly or by implication, as competent to undertake the contract, and the owner has no particular expertise in the kind of work contemplated, furnishes no plans, designs, specifications, details, or blueprints, and tacitly or expressly indicates his reliance on the experience and skill of the contractor, after making known to him the specific purposes for which the building is intended.

Robins, Davis & Lyons, and Lawrence Zelle, and Marvin Freedman, Minneapolis, Stokes, Vaaler, Gillig & Warcup, Grand Forks, N.D., for appellant.

Saetre, Myhre & Huddleson, Warren, for respondent.

OTIS, Justice.

This is an action to foreclose a mechanics lien for work and material furnished in repairing a grain-storage building. Defendant counterclaims for breach of warranty in the original construction. The trial court sitting without a jury awarded defendant damages. Plaintiff appeals from the judgment.

Defendant, referred to herein as the co-op, is an organization of farmers engaged in the business of buying, selling, and storing grain at Stephen, Minnesota. Early in 1959, the co-op decided to expand its storage facilities. To that end it consulted a number of contractors, including the plaintiff lumber company. One of the prospective bidders interested the co-op in a 'pole-type' building as distinguished from a conventional steel bin. Representatives of plaintiff and defendant visited such a building in Mayville, North Dakota. The contract was then let to plaintiff which supplied the material and subcontracted the construction to one Elmer Johnson of Warren, Minnesota. The building was completed in September 1959 and filled with 95,000 bushels of wheat.

On February 10, 1961, the building collapsed, giving rise to this litigation. The co-op promptly advised the lumber company that it would look to it for fulfillment of an express oral warranty of fitness which the co-op asserted was a part of the building contract. The lumber company denied the warranty. After some discussion concerning the retention of an engineer to establish the cause of the collapse, the manager of the co-op directed the lumber company to proceed with the repairs, without resolving the issue of responsibility for the expenses thus incurred. After completing the repairs, the lumber company presented the co-op a bill for $7,323.24 and ultimately filed a mechanics lien, which it here seeks to foreclose. Defendant's counterclaim is for cleaning the wheat, transportation, labor, machinery rental, and loss of rental and grain. It was awarded $5,311.23.

The trial court found, among other things:

'That on or about July 1, plaintiff expressly guaranteed or warranted that the building to be erected by it would safety store and hold 100,000 bushels of wheat for a period of one year or for the period of the first filling, whichever was later.

'That during the negotiations between plaintiff and defendant, the latter made known to the former the particular purpose for which said building was intended to be used, namely, the storage of 100,000 bushels of grain, and that defendant relied upon plaintiff's skill, judgment and experience as a builder to furnish a building reasonably fit for such purpose.

'That plaintiff undertook to and did furnish all plans and specifications required for the construction of said building.

'That the failure and collapse of the walls of said building was due to or caused by inadequacies in materials furnished and used by plaintiff in constructing said building and the plaintiff's failure to properly design the building to meet the stresses and strains certain to occur from its intended use.

'That the grain storage building after being repaired by plaintiff was reasonably fit for the purpose of storing 75,000 bushels of wheat.'

The following are the court's conclusions of law:

'That plaintiff was obligated to repair the grain storage building after its failure pursuant to the express warranty given by plaintiff's representatives and under the terms of an implied warranty that said building would be reasonably fit for the storage of 100,000 bushels of wheat.

'That defendant is entitled to a judgment of dismissal with prejudice on the plaintiff's claim and to a judgment in the sum of Five Thousand Three Hundred Eleven and 23/100 Dollars ($5,311.23) on defendant's counterclaim together with its costs and disbursements herein.'

In an accompanying memorandum, the court stated that the various instruments which constituted the contract did not integrate or merge the entire understanding of the parties and that an oral warranty of fitness might therefore be proved. In granting judgment on the counterclaim, the court also relied on the Uniform Sales Act, Minn. St. 512.15(1), as authority for finding a breach of implied warranty.

On appeal, the lumber company asserts the trial court erred in (1) giving effect to the oral express warranty; (2) invoking the sales act to find a breach of implied warranty of fitness; and (3) failing to permit plaintiff recovery on its mechanics lien.

1. The principles which determine whether the entire understanding of the parties is integrated and merged into a writing or series of writings so as to bar under the parol evidence rule testimony of oral conditions are fully set forth in a number of Minnesota cases and need not be reviewed. ¹ Suffice it to say that we do not here find the various instruments to be incomplete. ² As Mr. Justice Mitchell said in Thompson v. Libby, 34 Minn. 374, 377, 26 N.W. 1, 2:

'* * * But to allow a party to lay the foundation for such parol evidence by oral testimony that only part of the agreement was reduced to writing, and then prove by parol the part omitted, would be work in a circle, and to permit the very evil which the rule was designed to prevent.'

The test of completeness was stated thus in Bjornstad v. Northern States Power Co., 195 Minn. 439, 444, 263 N.W. 289, 291: ³

'While the writing itself is the criterion, it is not necessary that its incompleteness should appear on its face from a mere inspection. The situation of the parties, the subject-matter, and attendant circumstances may be shown in aid of construing the writing as to whether it is or is not complete.'

The defendant co-op has been unable to call our attention to any omitted terms or conditions which extrinsically or intrinsically render the understanding incomplete, except with respect to the claimed warranty. We hold that under the circumstances of this case it was error to receive in evidence the testimony concerning an express warranty orally created. ⁴

2. We do not agree that the contract is governed by the Uniform Sales Act but concur in the court's conclusion that there was an implied warranty of fitness for the purpose inherent in the building contract undertaken by the plaintiff lumber company.

Essentially, it is the position of the lumber company that the elements of implied fitness for the purpose are not present because, as they assert, the co-op furnished the design and the lumber company merely constructed the building in the manner the co-op directed. McCree & Co. v. State, 253 Minn. 295, 311, 91 N.W.2d 713, 724; Glass v. Wiesner, 172 Kan. 133, 238 P.2d 712. However, we believe the record supports the finding of the court which rejects this contention. It is true that one of the other prospective bidders first proposed the pole-type storage facility and that the lumber company apparently had no previous experience in this type of construction. Indeed, it...