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Full Opinion
No. 82-265
IN THE SUPREME COURT OF T I STATE OF MONTANA
fE
1982
MODERN MACHINERY,
Plaintiff and Appellant,
-vs-
FLATHEAD COUNTY,
Defendant and Respondent.
.1 from: District Court of the Eleventh Judicial District,
In and for the County of Flathead, The Honorable
Douglas G. Harkin, Judge presiding.
Counsel of Record:
For Appellant:
James D. Moore, Kalispell, Nontana
For Respondent :
Gary R. Christiansen, Kalispell, Montana
Ted 0 Lympus, County Attorney, Kalispell, Montana
.
Submitted on Briefs: Xovember 24, 1982
~ecided: December 29, 1982
Filed:
FJE C 2 ,; '1582
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n of the
Court.
Plaintiff b r o u g h t t h i s a c t i o n f o r breach of c o n t r a c t in the
E l e v e n t h J u d i c i a l D i s t r i c t i n F l a t h e a d County. A j u r y t r i a l com-
menced i n K a l i s p e l l , M o n t a n a , o n F e b r u a r y 2 4 , 1 9 8 2 . On F e b r u a r y
26, 1982, t h e j u r y r e t u r n e d a v e r d i c t awarding p l a i n t i f f $10,000.
P l a i n t i f f and d e f e n d a n t a p p e a l from t h e j u d g m e n t e n t e r e d upon t h e
jury's verdict.
On or a b o u t J u l y 3 0 , 1 9 7 9 , t h e F l a t h e a d C o u n t y c o m m i s s i o n e r s
issued a call for bids for the purchase of a jaw-type rock
c r u s h e r t o be used b y t h e F l a t h e a d C o u n t y r o a d d e p a r t m e n t . The
commissioners received three bids i n response t o t h e c a l l , one
from p l a i n t i f f in the amount of $305,725 and two from a n o t h e r
K a l i s p e l l d i s t r i b u t o r , Westmont; o n e f o r $ 2 0 1 , 1 9 3 and t h e o t h e r
f o r $200,870. On A u g u s t 2 2 , 1 9 7 9 , t h e d a y t h e b i d s were o p e n e d ,
t h e commissioners voted to t a k e t h e b i d s under advisement pending
recommendation of the county road department. Representatives
f r o m t h e r o a d d e p a r t m e n t and C o m m i s s i o n e r F r a n k Guay t h e n f l e w to
Cedar Rapids, Iowa, with plaintiff's agent, J i m Fox, to view
p l a i n t i f f 's crusher. C o m m i s s i o n e r Guay and t h e r e p r e s e n t a t i v e s
f r o m t h e r o a d d e p a r t m e n t were i m p r e s s e d w i t h f e a t u r e s c o n t a i n e d
on p l a i n t i f f ' s c r u s h e r which were not a v a i l a b l e on Westmont's
models.
On S e p t e m b e r 1 4 , 1 9 7 9 , t h e c o m m i s s i o n e r s m e t w i t h members of
t h e r o a d d e p a r t m e n t and J i m Fox to d i s c u s s t h e c r u s h e r b i d s . The
road department recommended that the commissioners purchase
plaintiff's crusher. C o m m i s s i o n e r Guay t h e n made a motion to
accept the road department's recommendation. The motion was
seconded by Commissioner J o a n D e i s t . The m o t i o n was r e c o r d e d i n
t h e m i n u t e s of t h e meeting as f o l l o w s :
" M o t i o n t o Guay t o a c c e p t t h e Road D e p a r t -
ment's recommendation to purchase gravel
c r u s h e r f r o m Modern M a c h i n e r y f o r $ 3 0 5 , 7 2 5 .
The o n l y o t h e r b i d b e i n g r e c e i v e d h a v i n g b e e n
f o r used power p l a n t g e n e r a t o r c o n t a i n e d i n a
second u n i t n o t a t t a c h e d t o t h e c r u s h e r
i t s e l f , t h e r e b y c r e a t i n g o p e r a t i o n a l problems.
M o t i o n s e c o n d e d b y J o a n A. D e i s t , motion
carried. Note :, Me1 W o l l a n v o t e s no o n
c r u s h e r b i d as t h e lower b i d f o r a j a w c r u s h e r
was v e r y a d e q u a t e and a s a v i n g s o f $ 1 0 0 , 0 0 0 . "
Everyone i n a t t e n d a n c e a t t h e m e e t i n g who t e s t i f i e d a t the
trial felt that the county was going to eventually purchase
plaintiff I s crusher. On S e p t e m b e r 1 7 t h e f o l l o w i n g Monday, an
a t t o r n e y r e p r e s e n t i n g Westmont d e l i v e r e d a l e t t e r to c o m m i s s i o n e r
F r a n k Guay w h i c h r e q u e s t e d t h a t t h e award to p l a i n t i f f be v a c a t e d
o r h e would s e e k t o e n f o r c e W e s t m o n t ' s r i g h t s i n t h e matter by
w h a t e v e r means p e r m i t t e d by l a w . Guay t h e n c a l l e d J i m Fox in
M i s s o u l a and t o l d him i f t h e c r u s h e r had b e e n o r d e r e d from t h e
f a c t o r y , to have t h e o r d e r s t o p p e d .
On Wednesday, Fox and a n o t h e r r e p r e s e n t a t i v e f o r p l a i n t i f f ,
L a r r y E x e , m e t Guay i n H e l e n a , M o n t a n a , t o d i s c u s s t h e c r u s h e r .
Guay t e s t i f i e d a t t r i a l t h a t he a g a i n t o l d Fox and Exe to s t o p
o r d e r on t h e c r u s h e r i f it h a d , i n f a c t , been ordered. Fox and
Exe t e s t i f i e d t h a t t h e m e e t i n g i n H e l e n a was m a i n l y to d i s c u s s
t h e p o l i t i c a l r a m i f i c a t i o n s to Guay s h o u l d t h e sale be c o m p l e t e d .
A f t e r t h e meeting i n Helena, Exe c a l l e d t h e f a c t o r y to see how
f a r t h e y had p r o g r e s s e d o n t h e o r d e r . Exe t o l d t h e f a c t o r y to
l e t him know how much e x p e n s e would be i n c u r r e d i f p l a i n t i f f was
t o s t o p o r d e r on t h e c r u s h e r a t t h a t t i m e . T h a t was t h e l a s t
c o n t a c t p l a i n t i f f had w i t h t h e f a c t o r y c o n c e r n i n g a s t o p o r d e r o n
the crusher.
F O X , Guay and Exe t h e n met w i t h A s s i s t a n t County A t t o r n e y ,
Charles Kuether , a t the F l a t h e a d County commissioner's o f f ice.
Again, Guay told plainti f f ' s representatives not to order the
crusher. Guay s t a t e d t h a t t h e b i d award w a s n o t f i n a l u n t i l t h e
c l e r k and r e c o r d e r ' s o f f i c e i s s u e d a l e t t e r a c c e p t i n g p l a i n t i f f ' s
b i d and r e j e c t i n g a l l o t h e r b i d s . A second meeting w i t h K u e t h e r
followed attended by Fox, Exe , Guay and p l a i n t i f f l s attorney.
Again, Guay s t a t e d t h e b i d award was n o t f i n a l u n t i l the clerk
and recorder's office issued notice of the successful bid.
P l a i n t i f f 's counsel requested a letter directing p l a i n t i f f to
e i t h e r o r d e r or s t o p o r d e r on t h e c r u s h e r . Guay r e f u s e d to d r a f t
s u c h a l e t t e r s t a t i n g t h a t s i n c e t h e c o m m i s s i o n e r s had n o t f o r -
mally ordered the crusher i t was not necessary to rescind an
order. That was the last meeting between plaintiff and the
commissioner's o f f ice.
On November 11, 1979, plaintiff tendered the crusher to
F l a t h e a d County p u r s u a n t to the statement i n the call f o r bids
t h a t d e l i v e r y m u s t be w i t h i n f o r t y - f i v e d a y s from d a t e of o r d e r .
The county refused to accept delivery of the machine. On
November 2 0 , 1979, t h e c o m m i s s i o n e r s m e t and i s s u e d a l e t t e r to
p l a i n t i f f s t a t i n g t h e y had d e c i d e d t o r e j e c t a l l b i d s r e c e i v e d i n
response to its call f o r b i d s on t h e rock crusher. Plaintiff
s u b s e q u e n t l y t r a n s p o r t e d t h e c r u s h e r to Tempe, A r i z o n a , w h e r e it
was finally sold. On December 11, 1 9 7 9 , plaintiff filed a
complaint in the District Court of the Eleventh Judicial
District, in and for the County o f Flathead, against Flathead
County alleging breach of contract. After a jury trial com-
mencing F e b r u a r y 24, 1982, the jury returned a verdict in favor
of plaintiff assessing damages in the amount of $10,000.
Plaintiff then filed this appeal and defendant cross-appeals .
The s u b s t a n c e o f t h e a p p e a l s is as f o l l o w s :
1. Whether t h e r e w a s a v a l i d c o n t r a c t .
2. Whether t h e j u r y was p r o p e r l y i n s t r u c t e d o n t h e m e a s u r e
o f damages.
3. Whether the jury verdict was supported by substantial
c r e d i b l e evidence.
The e s s e n t i a l e l e m e n t s o f a c o n t r a c t are: p a r t i e s c a p a b l e of
contracting, consent, a lawful objective, and consideration.
Section 28-2-102, MCA; Keil v. Glacier P a r k Inc. (1980),
Mont . -- - , 614 P.2d 5 0 2 , 5 0 5 , 37 S t . R e p . 1151. I n t h i s case t h e
i s s u e o f w h e t h e r or n o t t h e r e w a s a c o n t r a c t g o e s to t h e r e q u i r e -
ment of consent. There is c o n s e n t t o c o n t r a c t when t h e r e h a s
b e e n a n o f f e r and a c c e p t a n c e of t h e o f f e r .
Here, p l a i n t i f f I s w r i t t e n bid i s s u e d i n r e s p o n s e to F l a t h e a d
County's call f o r b i d s c o n s t i t u t e s an o f f e r . However, a w r i t t e n
b i d h a s c o n s i s t e n t l y b e e n c o n s t r u e d as n o t h i n g more t h a n a n o f f e r
to perform labor or supply materials, and the o f f e r does not
r i p e n i n t o a c o n t r a c t u n t i l accepted by t h e o f f e r e e . C a r r i g e r v.
Ballenger ( 1 9 8 1 ) , - - -- -- Mont . - - - - , 628 P.2d 1106, 1108, 38
St.Rep. 864. Thus, w e must d e t e r m i n e w h e t h e r t h e F l a t h e a d County
commissioners accepted plaintiff I s offer thereby creating a
contract.
A f t e r t h e b i d s were o p e n e d , t h e c o m m i s s i o n e r s v o t e d to t a k e
the bids under advisement pending a recommendation by the
F l a t h e a d County road department. On S e p t e m b e r 1 4 , 1 9 7 9 , t h e com-
m i s s i o n e r s m e t w i t h members o f t h e r o a d d e p a r t m e n t and J i m Fox t o
discuss the bids. A t that meeting the members of the road
department recommended that the commissioners purchase
plaintiff I s crusher. A m o t i o n was made, s e c o n d e d and r e c o r d e d :
" M o t i o n by Guay t o a c c e p t t h e r o a d d e p a r t m e n t ' s r e c o m m e n d a t i o n t o
p u r c h a s e g r a v e l c r u s h e r from Modern M a c h i n e r y f o r $ 3 0 5 , 7 2 5 . 0 0 ."
(Emphasis added. )
Commissioner J o a n D e i s t t e s t i f i e d t h a t t h e commissioners nor-
m a l l y make o n e o f t h r e e m o t i o n s upon b i d s r e c e i v e d i n r e s p o n s e t o
a c a l l f o r b i d s ; m o t i o n t o a c c e p t ; m o t i o n t o d e n y ; o r m o t i o n to
take under advisement. Initially, the commissioners took the
c r u s h e r b i d s u n d e r a d v i s e m e n t p e n d i n g r e c o m m e n d a t i o n of t h e road
department. On S e p t e m b e r 1 4 , the road department recommended
that the commissioners purchase plaintiff t s crusher.
C o m m i s s i o n e r Guay moved t o a c c e p t t h e r o a d d e p a r t m e n t ' s recommen-
dation, t h e m o t i o n was s e c o n d e d and d u l y r e c o r d e d i n t h e m i n u t e s
o f t h e meeting. The t h i r d c o m m i s s i o n e r l a t e r n o t e d a no v o t e on
the minutes as he wasn't in attendance at the September 14
meeting.
F l a t h e a d C o u n t y a r g u e s t h e r e w a s n o t a c c e p t a n c e as t h e r e w a s
n o n o t i c e o f b i d award i s s u e d by t h e c l e r k and r e c o r d e r ' s o f f i c e .
However, everyone in attendance a t the meeting, including the
c o m m i s s i o n e r s , t e s t i f i e d t h a t t h e y t h o u g h t t h e c o m m i s s i o n e r s were
g o i n g t o buy p l a i n t i f f I s crusher. W e f i n d t h e r e was a c c e p t a n c e
on t h e p a r t o f F l a t h e a d C o u n t y when t h e c o m m i s s i o n e r s a c c e p t e d
and made m i n u t e s reflecting the acceptance, and plaintiff was
o n l y f u l f i l l i n g i t s o b l i g a t i o n on t h e c o n t r a c t b y o r d e r i n g and
delivering the crusher. T h e r e is no s t a t u t o r y p r o v i s i o n f o r t h e
p r o c e d u r e a r g u e d by t h e c o u n t y .
Flathead County f u r t h e r argues t h e r e was no w r i t i n g which
satisfies the statute of frauds, sect i o n 30-2-201 , MCA. As
s t a t e d above, t h i s Court has p r e v i o u s l y held a w r i t t e n bid can
ripen into a contract if accepted by t h e o f f e r e e . C a r r i g e r v.
Ballenger, supra. Here, we have found the written bid was
a c c e p t e d b y C o m m i s s i o n e r Guay I s m o t i o n which was s e c o n d e d by Com-
m i s s i o n e r D e i s t and r e c o r d e d i n t h e m i n u t e s of t h e S e p t e m b e r 1 4
meeting. Thus, there was a valid contract, not barred by t h e
s t a t u t e of frauds.
The n e x t i s s u e is w h e t h e r t h e j u r y w a s p r o p e r l y i n s t r u c t e d o n
t h e measure of damages. First, p l a i n t i f f a r g u e s t h e g i v i n g of
court's instruction No. 7 was i n e r r o r . The i n s t r u c t i o n s t a t e s :
" I f you f i n d t h a t t h e P l a i n t i f f is e n t i t l e d to
d a m a g e s , you may award a n y of t h e f o l l o w i n g :
1 ) L o s t n e t p r o f i t s ; 2 ) I n c i d e n t a l damages
s u c h as e x p e n s e s i n c u r r e d i n t h e t r a n s p o r -
t a t i o n of g o o d s a ÂŁ t e r t h e b u y e r ' s b r e a c h ."
The m e a s u r e of damages when a b u y e r w r o n g f u l l y r e j e c t s or
r e v o k e s a c c e p t a n c e o f g o o d s is g o v e r n e d by t h e U n i f o r m Commercial
Code. S e c t i o n 30-2-703, MCA, states: "Where t h e b u y e r wrong-
f u l l y r e j e c t s or r e v o k e s a c c e p t a n c e o f g o o d s ... the aggrieved
s e l l e r may: ( d ) r e s e l l and r e c o v e r damages as h e r e i n a f t e r p r o -
vided ( 30-2-706 ) ; ( e) recover damages for nonacceptance
(30-2-708) . . ." Pursuant t o s e c t i o n 30-2-706, MCA: "the
s e l l e r may r e c o v e r t h e d i f f e r e n c e b e t w e e n t h e r e s a l e p r i c e and
the contract price together with any incidental damages . . .
less expenses saved in consequence of the buyer's breach."
P u r s u a n t t o s e c t i o n 30-2-708, MCA: " t h e m e a s u r e of damages f o r
n o n a c c e p t a n c e or r e p u d i a t i o n by t h e b u y e r is t h e d i f f e r e n c e b e t -
ween t h e m a r k e t p r i c e a t t h e t i m e and p l a c e f o r t e n d e r and the
u n p a i d c o n t r a c t p r i c e t o g e t h e r w i t h a n y i n c i d e n t a l damages ...
l e s s e x p e n s e s s a v e d i n c o n s e q u e n c e of t h e b u y e r ' s b r e a c h ." or "If
t h e m e a s u r e o f damages p r o v i d e d i n s u b s e c t i o n ( 2 ) i s i n a d e q u a t e
t o p u t t h e s e l l e r i n as good a p o s i t i o n as p e r f o r m a n c e would h a v e
d o n e t h e n t h e m e a s u r e o f damages is t h e p r o f i t . . . which the
seller would have made from full performance by the buyer
together with any i n c i d e n t a l damages . . ., due a l l o w a n c e for
c o s t s r e a s o n a b l y i n c u r r e d and d u e c r e d i t f o r p a y m e n t s or p r o c e e d s
o f resale ."
W e f i n d c o u r t ' s u n s t r u c t i o n n o . 7 was n o t a c o r r e c t s t a t e m e n t
of the l a w as s t a t e d b y t h e U . C . C . The p o s s i b l e m e a s u r e s of
damages u n d e r t h e U . C . C . are n o t s t a t e d i n p e r m i s s i v e l a n g u a g e ,
but rather, are m a n d a t o r y and s p e c i f i c a l l y s t a t e t h e amount of
r e c o v e r a b l e damage d e p e n d i n g upon t h e remedy s e l l e r h a s p u r s u e d .
The District Court's use of the words "may award any of the
following" in i n s t r u c t i o n no. 7 implied to t h e jury t h a t they
were n o t r e q u i r e d b y l a w t o award s p e c i f i c damages. Thus, the
g i v i n g o f t h e D i s t r i c t C o u r t ' s i n s t r u c t i o n n o . 7 was i n e r r o r as
b e i n g i n c o n t r a d i c t i o n of t h e U.C.C.
P l a i n t i f f a l s o claims t h e g i v i n g o f t h e f o l l o w i n g i n s t r u c t i o n
was i n e r r o r :
"A p a r t y who a l l e g e s t h a t it h a s b e e n damaged
b y t h e b r e a c h of c o n t r a c t by a n o t h e r p a r t y is
bound t o e x e r c i s e r e a s o n a b l e care and d i l i -
g e n c e t o a v o i d l o s s and t o m i n i m i z e i t s
damage. A p a r t y may n o t r e c o v e r f o r losses
which could have been prevented by r e a s o n a b l e
e f f o r t s on i t s p a r t ."
W e f i n d t h e g i v i n g of t h i s i n s t r u c t i o n w a s i n error. In t h i s
case a method of mitigating damages is addressed by section
30-2-704 ( 2 ) , MCA. The s e c t i o n s t a t e s :
"Where t h e g o o d s a r e u n f i n i s h e d a n a g g r i e v e d
s e l l e r may i n t h e e x e r c i s e of r e a s o n a b l e com-
mercial j u d g m e n t f o r t h e p u r p o s e s of a v o i d i n g
l o s s and of effective realization either
c o m p l e t e t h e m a n u f a c t u r e and w h o l l y i d e n t i f y
t h e g o o d s t o t h e c o n t r a c t o r cease m a n u f a c t u r e
and r e s e l l f o r s c r a p or s a l v a g e v a l u e o r
p r o c e e d i n a n y r e a s o n a b l e manner."
T h i s s e c t i o n is b e t t e r u n d e r s t o o d by l o o k i n g t o t h e O f f i c i a l
Comment t o s e c t i o n 30-2-704 ( 2 ) , MCA:
"Under this Chapter the seller is given
e x p r e s s power t o c o m p l e t e m a n u f a c t u r e or p r o -
c u r e m e n t of g o o d s f o r t h e c o n t r a c t u n l e s s t h e
e x e r c i s e o f r e a s o n a b l e c o m m e r c i a l j u d g m e n t as
t o t h e f a c t s a s t h e y a p p e a r a t t h e time he
l e a r n s o f t h e b r e a c h makes it c l e a r t h a t s u c h
a c t i o n w i l l r e s u l t i n a material i n c r e a s e i n
d a m a g e s . The b u r d e n is upon t h e b u y e r t o show
t h e c o m m e r i c a l l y u n r e a s o n a b l e n a t u r e of t h e
seller's a c t i o n i n completing manufacture."
Here, C o m m i s s i o n e r Guay e x p r e s s e d c o n c e r n a b o u t t h e c o n t r a c t
a t an e a r l y date, but, the board of commissioners refused to
repudiate the contract. The c o u n t y h a s power to c o n t r a c t , and
its contracts are the contracts of i t s board of county com-
missioners, n o t of the i n d i v i d u a l members thereof. B e n n e t t v.
Petroleum County e t a l . ( 1 9 3 0 ) , 8 7 Mont. 4 3 6 , 447, 288 P. 1 0 1 8 ,
1020. C o m m i s s i o n e r Guay d i d n o t h a v e t h e a u t h o r i t y t o i n d i v i -
dually revoke the contract and when plaintiff asked that the
b o a r d t a k e some a c t i o n it r e f u s e d . T h u s , p l a i n t i f f was a c t i n g i n
a c o m m e r c i a l l y r e a s o n a b l e m a n n e r to f u l f i l l i t s o b l i g a t i o n u n d e r
the contract. I f p l a i n t i f f had n o t d e l i v e r e d t h e c r u s h e r w i t h i n
forty-five days, it would h a v e b r e a c h e d t h e c o n t r a c t and e x p o s e d
itself to legal liability. Had t h e b o a r d t a k e n some a c t i o n a t a n
e a r l y d a t e , p l a i n t i f f c o u l d h a v e m i t i g a t e d i t s damages u n d e r sec-
tion 30-2-704, MCA. The D i s t r i c t C o u r t ' s instruction unfairly
placed the entire burden to mitigate damages upon plaintiff
w h e r e a s t h e comments t o s e c t i o n 30-2-704, MCA, state: " t h e bur-
d e n is upon t h e b u y e r [ F l a t h e a d C o u n t y ] t o show t h e c o m m e r i c a l l y
unreasonable nature of the seller 's act i o n in completing
manufacture." Thus, t h e g i v i n g of t h e C o u r t t s i n s t r u c t i o n w a s i n
error.
The l a s t i s s u e i s w h e t h e r t h e j u r y v e r d i c t w a s s u p p o r t e d b y
s u b s t a n t i a l credible evidence. As s t a t e d a b o v e , t h e m e a s u r e of
damages is governed by section 30-2-706, MCA, and section
30-2-708, MCA. Under s e c t i o n 30-2-706, MCA, t h e damages would be
the contract price ($305,725) p l u s incidental damages less t h e
resale p r i c e ( $ 1 8 6 , 4 9 9 . 8 6 ) and e x p e n s e s s a v e d i n c o n s e q u e n c e of
the buyer's breach. Under s e c t i o n 30-2-708 ( 2 ) t h e damages would
be plaintiff's anticipated profit ($78,879.56) plus incidental
damages less credit for payments made o r proceeds of resale.
Using either section in this instance the record shows
plaintiff's damages were f a r i n e x c e s s of $ 1 0 , 0 0 0 a n d t h e r e is
no s u b s t a n t i a l c r e d i b l e e v i d e n c e which c a n s u p p o r t t h e j u r y v e r -
dict.
We affirm the case as to county's liability and judgment
i s r e v e r s e d and t h e case is remanded to t h e D i s t r i c t C o u r t f o r a
h e a r i n g o n damages by f o l l o w i n g t h e a p p l i c a b l e s t a t u t e s .