Superior Derrick Services, Inc. v. Anderson

• Decision Date: 07 May 1992
• Docket Number: No. C14-90-00543-CV,C14-90-00543-CV
• Citation: 831 S.W.2d 868
• Parties: 18 UCC Rep.Serv.2d 706 SUPERIOR DERRICK SERVICES, INC. & Champion Manufacturing Industries, Inc., Appellants, v. Arnold ANDERSON, d/b/a Electrodyne, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 868

831 S.W.2d 868

18 UCC Rep.Serv.2d 706

SUPERIOR DERRICK SERVICES, INC. & Champion Manufacturing Industries, Inc., Appellants, v. Arnold ANDERSON, d/b/a Electrodyne, Appellee.

No. C14-90-00543-CV.

Court of Appeals of Texas Houston (14th Dist.).

May 7, 1992.

Rehearing Denied June 18, 1992.

Michael L. Durham, Houston, for appellants.

E.L. Atkins, Arlington, for appellee.

Before ROBERTSON, SEARS and DRAUGHN, JJ.

OPINION

SEARS, Justice.

Superior Derrick Services, Inc. and Champion Manufacturing Industries, Inc. appeal from a judgment awarding appellee, Arnold Anderson, d/b/a Electrodyne, $99,500.00 on his claim on a sworn account for the sale of four workover rig masts. Appellants raise eleven points of error challenging the trial court's findings of fact on both legal and factual insufficiency grounds, challenging the admission of certain evidence, and challenging the trial court's conclusions of law. Because we find no evidence supporting the trial court's award of damages for one of the masts, we modify the judgment to delete the award of damages for this mast. As so modified, we affirm.

Pursuant to a purchase order dated January 12, 1982, appellee, Electrodyne agreed to design and manufacture several 104-foot, 210,000 pound masts for appellant, Champion, to utilize in the oil and gas industry. This purchase order describes the item as follows:

All 1982 requirements for 210 K masts--Min. of (8) eight masts, (16) sixteen forecast.

Price, through March 1983 will be $53,000.00 per mast assembly.

MAST ASSEMBLY TO INCLUDE:

a. 104', 210,000 pound mast designed and built to AISC and API specifications.

b. Hydraulic telescoping cylinder, installed.

c. Racking board & safety railings.

d. Rod basket and paramont [sic] 104 rod hangers.

e. ladder & crown safety platform.

f. Original Drawings and calculations, bearing the approval stamp of a Registered Texas Professional Engineer.

Delivery to be two (2) units per month, beginning first week of March, 1982.

The addressee on this purchase order is Electrodyne and the "ship to" space contains Champion's name and address. The remainder of the form, bearing Superior's name at the top and above the signature line, is preprinted. The purchase order is unsigned and other pre-printed terms and shipping specifications are blank.

Appellee developed the design and shop drawings which appellants approved. Mast 1 was inspected before completion by appellants in March 1982. Appellants found it excessively heavy. Appellants' witnesses testified that appellants rejected this mast. Appellee Anderson testified that appellants said they would find a use for Mast 1. Appellants did not pay for this mast.

Appellants and appellee redesigned the mast specifications for a lighter mast. Mast 2 was inspected and approved. Appellee delivered this mast to appellant Champion and received payment from appellant Superior in April 1982. Champion subsequently discovered defects and requested and received a $15,000.00 credit on this mast.

Mast 3 was inspected, approved, and shipped to appellant Champion in June 1982, before attempted repairs to Mast 2. Appellant Superior paid appellee $26,500 for Mast 3 in August 1982. Appellant Champion then cancelled the remainder of the purchase order. At the time of cancellation, appellee had completed approximately 60% of Mast 4.

On June 4, 1984, appellee filed suit against appellants seeking the balance due under the purchase order. In their first amended answer, appellants claimed the account alleged in appellee's petition was not due and denied that appellee performed all conditions precedent to his right of recovery. Appellants also alleged the masts tendered did not conform to the contract specifications. Appellants further filed a counterclaim for breach of contract, breach of warranty, and violation of the Texas DTPA, seeking recovery of the costs of repairing the masts received.

In points of error one and two, appellants challenge the legal and factual sufficiency of the evidence to support the trial court's findings that appellee manufactured four masts which were conforming goods as that term is defined by TEX.BUS. & COM.CODE ANN. § 2.106. Because we have a statement of facts, the trial court's findings of fact are not conclusive. Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 44 (Tex.App.--Houston [14th Dist.] 1985), writ ref'd n.r.e. per curiam, 699 S.W.2d 199 (Tex.1985). In reviewing the trial court's findings of fact for legal and factual sufficiency of the evidence supporting them, we apply the same standards as we apply in reviewing the sufficiency of the evidence supporting a jury's finding. Okon v. Levy, 612 S.W.2d 938, 941 (Tex.Civ.App.--Dallas 1981, writ ref'd n.r.e.). Thus, in reviewing appellant's legal insufficiency points, we may consider only the evidence and inferences, viewed in their most favorable light, that tend to support the trial court's finding, disregarding all evidence to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988). If there is any evidence of probative force to support the finding, we must uphold the finding. See Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988).

In reviewing appellant's claim of factual insufficiency, we must examine all of the evidence. Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex.1986). We may set aside the finding only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).

The trial court found that appellants accepted Masts 1-3 and that Mast 4 was substantially complete and identified to the purchase order when appellants notified appellee they would neither accept nor purchase any additional masts under the purchase order. The trial court concluded that the four masts were conforming goods and that any defects did not substantially impair the value of the contract so as to excuse or justify appellants' cancellation or repudiation of the agreement.

Section 2.106(b) provides:

Goods or conduct including any part of a performance are "conforming" or conform to the contract when they are in accordance with the obligations under the contract.

TEX.BUS. & COM.CODE ANN. § 2.106(b) (Vernon 1968). If the contract is an installment contract, a buyer may reject any installment that is non-conforming "if the non-conformity substantially impairs the value of that installment and cannot be cured...." TEX.BUS. & COM.CODE ANN. § 2.612(b) (Vernon 1968). Comment 5 to § 2.612 provides that cure of a non-conformity can be afforded by an allowance against the price. TEX.BUS. & COM.CODE ANN. § 2.612, comment 5 (Vernon 1968). Section 2.612(c) provides that when "a non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole." The aggrieved party, however, reinstates the contract "if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments." TEX.BUS. & COM.CODE ANN. § 2.612(c) (Vernon 1968).

Appellants discuss evidence that they assert establishes the masts were non-conforming goods. This consists of testimony by appellants' expert regarding various defects in the masts. The evidence also showed, however, that an engineer employed by appellants inspected the masts in detail before requesting shipment of the masts. Appellee admitted that the masts were not completely assembled when delivered because appellant planned to paint the masts after delivery. When appellants discovered that the legs of Mast 2 were not completely straight, appellee testified that, rather than returning the mast to appellee for repairs, appellee thought it would be more cost effective for appellants to correct the problems at appellants' yard. The evidence showed that appellants agreed with this method of repairing the mast and that appellee agreed to give appellants a credit of $15,000.00 for the repair of this mast. After acceptance of Mast 3, appellants discovered similar waviness in the legs of Mast 3. Appellee was paid only $26,500.00 for this mast, or half the agreed purchase price.

We find sufficient evidence supporting the trial court's conclusion that the masts were conforming goods under § 2.612. The testimony showed that the defects were curable and under § 2.612, an installment is non-conforming only if the non-conformity substantially impairs the value of the installment and the non-conformity cannot be cured. See TEX.BUS. & COM.CODE ANN. § 2.612(b) (Vernon 1968). We overrule points of error one and two.

In points of error three and four, appellants claim that no evidence or insufficient evidence supports the trial court's findings that appellants anticipatorily repudiated and breached their agreement with appellee. Under these points of error, appellants present essentially the same argument as under points of error one and two, that the masts were non-conforming goods and that the non-conformity substantially impaired the value of the contract thereby justifying appellant's cancellation of the contract. Because we have previously held that sufficient evidence supports the trial court's conclusion that the masts were conforming goods, appellants' cancellation or repudiation of the remainder of the purchase order was unjustified. We hold that there was sufficient evidence to support the trial court's related conclusion that appellants anticipatorily repudiated the contract. We overrule points three and four.

In points of error five and six, appellants claim there is no evidence, or alternatively, there is insufficient evidence, to support the trial court's findings that appellee delivered four masts to appellants. In Finding of Fact No. 21, the trial court found there was no agreement between the...