No. 12292
I N THE SUPREME C U T O THE STATE O M N A A OR F F OTN
— 1972 —
STATE O M N A A ex rel. YELLOWSTONE P R COMPANY, F OTN AK
Relator,
T E DISTRICT COURT O THE FOURTH JUDICIAL DISTRICT O H F F THE STATE O MONTANA, I N AND FOR THE COUNTY O MISSOULA, THE F F HONORABLE E. GARDNER BROhNLEE, JUDGE PRESIDING,
Respondents. O r i g i n a l Proceedings. Counsel of Record:
For Appellant :
Gough, Booth, Shanahan and Johnson, Helena, Montana, C o r d e l l Johnson, Helena, Montana, argued.
For Respondent :
Tipp, Hoven and B r a u l t , Missoula, Montana. Vernon Hoven argued, Missoula, Montana.
Submitted: June 1 6 , 1972 Decided : O C T ] 8 192
PER CURIAM: R e l a t o r , Yellowstone Park Company, a p p l i e d t o t h i s Court f o r a w r i t of supervisory c o n t r o l o r o t h e r a p p r o p r i a t e order g r a n t i n g r e l i e f from t h e order of t h e d i s t r i c t c o u r t of t h e f o u r t h j u d i c i a l d i s t r i c t , county of Missoula, dated May 25, 1972, wherein t h e d i s t r i c t c o u r t granted p l a i n t i f f s ' motion f o r summary judgment on t h e i s s u e of l i a b i l i t y . This Court issued an order t o show cause on June 5 , 1972. B r i e f s were submitted and o r a l argument had. Relator Yellowstone Park Company i s t h e defendant i n two s e p a r a t e c i v i l a c t i o n s consolidated f o r t r i a l i n t h e d i s t r i c t court. The d i s t r i c t c o u r t c a s e s a r e : "Handee Foods, Inc., P l a i n t i f f v. Yellowstone Park Company, Defendant", Cause No. 35336; and " ~ a t i o n a lBusiness Factors, Inc., P l a i n t i f f v, Yellowstone Park Company, Defendant", Cause No. 35799. P l a i n t i f f s f i l e d a motion f o r summary judgment which was heard by t h e d i s t r i c t c o u r t on May 25, 1972. O t h e same d a t e , n t h e d i s t r i c t c o u r t entered i t s order g r a n t i n g summary judgment i n p a r t on the question of l i a b i l i t y i n both cases. From t h e p r e t r i a l o r d e r , t h e agreed statement of f a c t reads : "Handee Foods, Inc. i s a business located i n Missoula, Montana, represented by M r . F. W. Krieger, General Manager and President of t h e Company, It i s a d i s t r i - b u t o r of so-called 'convenience foods', which a r e foods t h a t have been pre-cooked, r e f r i g e r a t e d , and kept i n a r e f r i g e r a t e d condition u n t i l such time asbthey a r e ' r e - c o n s t i t u t e d ' o r cooked f o r s e r v i c e t o a customer. It does not s e l l t o t h e general p u b l i c , b u t s e l l s t o i n s t i - t u t i o n s , r e s t a u r a n t s , and i n g e n e r a l , t h e wholesale and
retail market. Handee Foods has '0 degree' storage facilities, located in Livingston, Montana, that are capable of handling large supplies of frozen food products over extended periods of time. "H. Shenson, Inc. is a corporation located in San Francisco, California, and is a meat purveyor, that sells generally to the retail market, institutions, restaurants, and similar situated businesses. It likewise 'breaks' or 'cuts up' meats, refrigerates the same, and offers them to its prospective customers. In the cause now before the Court, H. Shenson, Inc. is represented by Mr. Bud Murphy, Sales Manager for that company, National Business Factors, Inc., plain- tiff herein, is the owner and holder of the account of H. Shensan, Inc., by virtue of an assignment made to it h
by H. Shenson, Inc. e ell ow stone Park Company is a corporation which operates as a concessionaire under a concession agreement it has with the United States Department of Interior, National Park Service. Its activities in Yellowstone National Park include the owning and operating of several different hotels and restaurants which provide food and beverage service to the traveling public. "The business of Yellowstone Park Company is highly seasonal with the primary concentration of visitors to the Park being in the months of June, J'uly and August of each year. Yellowstone Park Company is represented in this matter by Mr. R.L. Boyd, its Vice President and Con- troller, Mr. Peter Rogers who was the Food and Beverage Director for Yellowstone Park Company in 1969 and 1970, and Mr. Percy Butler, who is the Executive Chef for Yellow- stone Park Company. II
According to the pretrial order, plaintiffs contend: 1. That Yellowstone Park Company was to use all of the products ordered from Shenson, Inc. and Handee Foods, Inc,, during the Yellowstone Park season of 1970, or to pay for such products as were not used, 2. That the total amount of the products for which Yellowstone Park Company is obligated to pay, is to Shenson Meats the sum of $4,119.12, and Handee Foods, Inc., in the sum of $36,621.52. 3. That Handee Foods, Inc., in addition to the price of the goods as represented by the account, is entitled to the cost of storage at the Livingston warehouse, at the rate of $600 per month from October 1, 1970, to date. According to the pretrial order, defendant contends: 1. That under the terms of the agreement between Yellowstone Park Company and Handee Foods, Yellowstone Park Company issued its purchase orders for estimated approximate usages for the 1970 season and Yellowstone Park Company was obligated to pay for and did pay for only those items that were ordered specifi- cally for delivery and delivered to Yellowstone Park Company in Yellowstone National Park; and that the total price of the goods so delivered under the terms of the agreement was $630,711.73, and that the exact same amount, $630,711.73, was paid by Yellowstone Park Company to Handee Foods, Inc. 2. That it was the intent of the parties to the agreement that Handee Foods, Inc. would be responsible for any oversupply of food products left on hand in the Handee Foods warehouse in Livingston at the end of the 1970 season. 3. That Yellowstone Park Company has paid for all of the goods delivered to it by Handee Foods, Inc, and Yellowstone Park Company does not owe Handee Foods, Inc. $36,621,52 or any other amount.
4 That, in connection with t k .claim of H. Shenson, Inc., . Yellowstone Park Company has paid for all of the goods de- livered directly from H. Shenson, Inc. to Yellowstone Park Company and Yellowstone Park Company does not owe H. Shenson, Inc, or National Business Factors, its assignee, the sum of $4,119.12 or any other amount. 5. That, under no circumstances, and particularly under the circumstances that exist in this case, would Handee Foods be entitled to any amount of damages representing storage costs incurred by Handee Foods, Inc. at the warehouse it rented in Livingston. Subsequently, plaintiffs moved for summary judgment and the district court issued an order granting summary judgment on the question of liability. That order states in part: "On December 9, 1969 the Defendant wrote a letter to the Plaintiff. Plaintiff contends the letter is a writing expressing the agreement between the parties. Determination of that point before the trial is very necessary. If the writing contains the agreement of the parties, and if the Court can determine from the writing who is the actual owner of the food items that remained in the warehouse at the end of the 1970 season, then the question of liability is settled and no parol evidence would be permitted to show any other oral agreement. "In the opinion of the Court the letter does settle the question of liability and therefore parol evidence would not be admissible to vary any of its terms. The letter was written by the Defendant and must be inter- preted as provided in Chapter 7, of Title 13, RCM 1947, and as provided in 13-720, the words are to be interpreted most strongly against the party who put them in the writing. II The letter referred to in the court's order reads: "Mr. Fritz Krieger "Handee Foods Incorporated "802 Milton 11 Missoula, Montana 59801 "Dear Fritz : "So that we keep up to date with each others progress, we are still going ahead as scheduled on converting our food program to total convenience. We are in the process
t h i s month of preparing our purchase orders f o r convenience equipment t o t a l i n g some $144,000.00. This equipment includes Thermotainers, Vischer Steamers, Convection Ovens and a d d i t i o n a l f r e e z e r s . John King, Plans and P r o j e c t s O f f i c e r and I have spent t h i s p a s t month deciding what brands of equip- ment we want t o buy and we r e c e n t l y returned from t h e N w York Hotel Show, a t which time some of our e questions were answered, a s t o t h e brand of equipment. "At t h e same time, I am concerned about t h e progress you a r e making, a s we a r e counting on you handling our e n t i r e convenience food products, which w i l l be coming from b a s i c a l l y t h r e e purveyors and i n a d d i t i o n , seven small purveyors. I want t o make s u r e your warehouse d e a l i s firm and t h a t you a r e ready t o proceed t o r e - model t h e e x i s t i n g building. There i s going t o be a huge volume and I want t o make s u r e you have ample r e c e i v i n g , proper t i g h t c o n t r o l systems and t h a t you a r e going t o have t h e equipment t o d i s t r i b u t e t h e product throughout t h e Park. Nothing has changed r e l a t i v e t o n i g h t d e l i v e r i e s a t four a r e a warehouses ehroughout t h e Park. 1t I have made up t h e new menus and I am p u t t i n g them i n t o f i n a l form f o r approval of p r i c e s t o t h e Government and i t i s estimated t h a t we w i l l be purchasing through you, some $650,000,00 t o $850,000.00 worth of product, Almost a l l of t h i s product, t o t a l i n g c l o s e t o 100 i t e m s w i l l be s e t f o r d e l i v e r y between A p r i l 1 and 15 t o your f a c i l i t i e s i n Livingston. A s we have previously discussed, you w i l l r e c e i v e 20% over and above t h e c o s t of t h e merchandise, t o r e c e i v e , t o warehouse and t o d i s t r i b u t e t h e s e products t o us. 20% w i l l be added t o t h e c a s e p r i c e on each item. "On t h e b i g t h r e e d i s t r i b u t o r s , I have made, o r a i n t h e m process of concluding arrangements whereby you w i l l be a b l e t o pay t h e s e b i l l s i n t h r e e i n s t a l l m e n t s - June, J u l y and August, even though t h e product w i l l have been d e l i v e r e d i n A p r i l , However, such an arrangement i s n o t p o s s i b l y where manufacturers a r e supplying only one item, such a s our bacon Allentown, Pennsylvania; and our sausage from Memphis, Tennessee; and our s t u f f e d baked p o t a t o from M i l - waukee. tI These awe j u s t examples of our one-item houses, whereby t h e t r u c k load w i l l have t o be paid f o r by you a f t e r d e l i v e r y , even though we do n o t consume t h e product i n i t s e n t i r e t y u n t i l October. It I n t h e near f u t u r e , I w i l l give you a l i s t of a l l t h e purveyors and t h e i r products; t h e packing specs w i t h t h e p r i c e t h a t you w i l l pay t o them and t h e p r i c e t h a t we w i l l pay you which w i l l , of course, include 20% on top of t h e factory price. It Please keep m advised a s t o your progress, so t h a t I am e assured you w i l l be i n t h e p o s i t i o n of handling our food program f o r next year and succeeding years. tt Sincerely,
S/ " Peter "Peter Rogers It Food & Beverage Director."
The i s s u e before t h i s Court i s n o t confined s o l e l y t o t h e question of whether t h e r e remains a genuine i s s u e of m a t e r i a l f a c t concerning t h e oversupply of food i n t h e Handee warehouse a t t h e c l o s e of t h e 1970 season b u t , r a t h e r , was t h e evidence i n t h e record produced through discovery t h a t c r e a t e s t h i s i s s u e properly excluded by the t r i a l c o u r t . This evidence i n - cludes par01 evidence by P e t e r Rogers, on behalf of defendant, t h a t d i r e c t l y d i s p u t e s any i n f e r e n c e s i n t h e h e r e t o f o r e quoted l e t t e r of December 9, 1969, t h a t defendant would be r e s p o n s i b l e f o r oversupply; evidence of t h e course of conduct contained i n defendants e x h i b i t s "F" and "G" t o be construed with t h e l e t t e r ; and a l s o evidence of "customs of t h e Trade". This a p p l i e s t o Cause 35336, Handee Foods. I n Cause 35799, National Business F a c t o r s , i t appears t h a t a l l items s o l d d i r e c t l y t o defendant were paid f o r and t h e d i s p u t e concerns i t e m s handled through Handee,and t h e u l t i m a t e i s s u e i n t h i s cause would be t h e same a s t h a t of Cause 35336. The l e t t e r upon which t h e d i s t r i c t c o u r t based i t s d e t e r - mination does n o t speak d i r e c t l y t o t h e i s s u e of oversupply a t t h e c l o s e of t h e 1970 season, Any determination must be had from t h e general language contained i n t h e l e t t e r a s a whole, a s was demonstrated by t h e d i s t r i c t c o u r t . W hold t h e language e t o be ambiguous and s u b j e c t t o a d d i t i o n a l c l a r i f i c a t i o n a s t o t h e t r u e i n t e n t of t h e p a r t i e s under t h e a p p r o p r i a t e s e c t i o n s of t h e Montana Uniform Commercial Code, T i t l e 87A, R.C.M. 1947, and more p a r t i c u l a r l y s e c t i o n s 87A-2-101, et,seq., R.C.M. 1947. Section 87A-2-202, R.C,M. 1947, provides: "Terms with r e s p e c t t o which t h e confirmatory memoranda of t h e p a r t i e s agree o r which a r e other- wise s e t f o r t h i n a w r i t i n g intended by the p a r t i e s a s a f i n a l ex i t h respect t o such terms n o t be con- t r a d i c t e d by n t o r of a contemporaneous o r a l agreement b u t may be explained o r supplemented "(a) by course of d e a l i n g o r usage of t r a d e ( s e c t i o n 87A-1-205) o r by a course of per-
formance (section 87A-2-208); and "b by evidence of consistent additional terms () unless the court finds the writing to have been in- tended also as a complete and exclusive statement of the terms of the agreement," (Emphasis supplied). In the comment which follows Section 2-202, Uniform Commercial Code, Uniform Laws Annotated, it is pointed out that there are no prior uniform statutory provisions under previous uniform codes. The comment then goes on to point out that the purpose of Section 2-202, is to definitely reject: "a () Any assumption that because a writing has been worked out which is final on some matters, it is to be taken as including all the matters agreed upon; ( ) The premise that the language used has the "b meaning attributable to such language by rules of construction existing in the law rather than the meaning which arises out of the commercial context in which it was used; and "c () The requirement that a condition precedent to the admissibility of the type of evidence specified in paragraph (a) is an original determination by the court that the language used is ambiguous.I I Paragraph (a) of section 8712-2-202, R.C.M. 1947, makes admissible, evidence of course ofdealing, usage of trade and course of performance to explain or supplement the terms of any writing stating the agreement of the parties in order that the 'trueunderstanding of the parties as to the agreement may be reached. Further, the course of actual performance by the parties is considered the best indication of what they intended the writing to mean. See: Hunt Foods & Industries, Inc. v. Doliner, 270 NeY.S.2d 937; Michael Schiavone & Sons, Inc, v. Securalloy Company, In&., (D.C.Conn. 1970), 312 F.Supp. 801, The judgment of the trial court is reversed and the cause remanded to the district court for trial in conformity with this opinion.