Massey-Ferguson Credit Corporation v. Brown

No. 13126

I N THE SUPREME COURT OF THE STATE OF M N A A
OTN

' 1976

MASSEY-FERGUSON CREDIT CORPORATION,
a corporation,

P l a i n t i f f and Respondent,

BRUCE BROWN,

Defendant and A p p e l l a n t .

Appeal from: D i s t r i c t Court of the Tenth J u d i c i a l D i s t r i c t ,
Honorable LeRoy L. McKinnon, Judge p r e s i d i n g .

Counsel o f Record:

For A p p e l l a n t :

James C. W i l k i n s , Jr. a r g u e d , Lewistown, Montana

F o r Respondent :

Leonard H. McKinney argued, Lewistown, Montana

Submitted: February 2, 1976

Decided : !'!!!4;i 2 4 1976
,-
Filed :
,i;
C
!, i 2 A- :-fc
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 Opinion of
t h e Court.

T h i s i s a n a p p e a l from a judgment f o r p l a i n t i f f e n t e r e d

i n t h e d i s t r i c t c o u r t , F e r g u s County. P l a i n t i f f Massey-Ferguson

C r e d i t C o r p o r a t i o n b r o u g h t t h e a c t i o n t o r e c o v e r t h e b a l a n c e due

on a r e t a i l i n s t a l l m e n t c o n t r a c t i n v o l v i n g t h e s a l e of farm

machinery. T r i a l was h e l d October 4 , 1974, b e f o r e Hon. LeRoy

L. McKinnon, s i t t i n g without a jury. Judgment was e n t e r e d on

A p r i l 9, 1975 f o r p l a i n t i f f . Defendant Bruce Brown a p p e a l s from

t h a t judgment.

A p p e l l a n t Brown i s a l o c a l f a r m e r and r a n c h e r i n t h e

Lewistown, Montana,area. Respondent i s t h e a s s i g n e e of t h e

former Dan Morrison & Sons, a now d e f u n c t Massey-Ferguson im-

plement d e a l e r i n t h e c i t y of Lewistown.

I n e a r l y August, 1970, a p p e l l a n t Brown began n e g o t i a t i n g

w i t h t h e f i r m Dan Morrison & Sons f o r a used Model 990 New Holland

combine farm machine. To a s c e r t a i n t h e c o n d i t i o n of t h e used

machine, Brown i n q u i r e d of Morrison c o n c e r n i n g h i s d e a l i n g s w i t h

t h e former owner, o n e B i l l S e i l s t a d . Morrison o f f e r e d t o c a l l

S e i l s t a d and Brown was a b l e t o speak w i t h him w h i l e Morrison

l i s t e n e d on a n e x t e n s i o n t e l e p h o n e . S e i l s t a d informed Brown o f

t h e m a c h i n e ' s d e f i c i e n c i e s and Morrison promised t o r e p a i r them.

On August 22, 1970, a p u r c h a s e o r d e r was s i g n e d and t h e machine

was d e l i v e r e d t o Brown s e v e r a l d a y s l a t e r . Brown used t h e machine

t o c u t a few a c r e s of b a r l e y , b u t a broken s h a f t made f u r t h e r u s e

of t h e machine i m p o s s i b l e . S e v e r a l weeks l a t e r , a p p r o x i m a t e l y

October 1, 1970, Brown r e p a i r e d t h e machine and a g a i n began t o

c u t , b u t problems w i t h t h e combine f o r c e d him t o s t o p b e f o r e

f i f t e e n a c r e s had been c o v e r e d .

Throughout t h e p e r i o d between August 22, 1970 and Octo-

b e r 1, 1970, Morrison made s e v e r a l v i s i t s t o a p p e l l a n t ' s r a n c h

i n hopes of s e c u r i n g h i s s i g n a t u r e on a r e t a i l s a l e s a g r e e m e n t ,
but without success. O October 2 , 1970 Brown went t o town
n

and t o l d Morrison t h a t he could n o t a c c e p t t h e machine. Appel-

l a n t ' s r e a s o n s f o r t h i s d e c i s i o n and h i s testimony concerning
t h e e v e n t s which t h e r e a f t e r o c c u r r e d appear i n t h e r e c o r d :

"A. The work t h a t it needed done and t h e con-
d i t i o n t h a t it was i n , and Don s a i d t h e y would
f i x a l l t h i s , and I w a s n ' t v e r y i n t e r e s t e d i n
t h e d e a l y e t , b u t anyway, he wrote down a l l t h e
s t u f f I s a i d t h a t needed done, and he guaranteed
t h a t i t would be done, and -
"Q. W o wrote t h i s down?
h A. Don d i d . * * *
"Q. And he g o t t h e i n f o r m a t i o n from whom? A.
A s t o what t o do?

"Q. Right. A . I d i d . I was t h e one t h a t t o l d
him what was needed done o r what I f e l t needed
t o be done, and he s a i d t h e r e i s no problem.

"Q. Is t h i s a t t h e time you signed t h e c o n t r a c t ?
A. T h i s was a c t u a l l y , probably f i f t e e n minutes
p r i o r t o me s i g n i n g t h e c o n t r a c t .

"Q. Did M r . Koch [Massey-Ferguson r e p r e s e n t a t i v e
and w i t n e s s t o t h e s a l e s c o n t r a c t ] t a k e any p a r t ,
make any comments o r s a y o r do a n y t h i n g ? A. H e
s a i d t h a t he had been w i t h Massey f o r s o many
y e a r s and t h a t he knew Don, * * * and he s a i d you
know h i s word i s good. I f he s a y s h e ' s going t o
f i x it, h e ' l l f i x it."

The i t e m s t o be r e p a i r e d were a p p a r e n t l y w r i t t e n down, b u t never
made a p a r t of t h e c o n t r a c t . There i s , however, no q u e s t i o n

t h a t t h e s e r e p r e s e n t a t i o n s o r promises t o r e p a i r t h e machine were
i n f a c t made, a s t h e y were never denied by Morrison and t h e above-

quoted testimony a p p e a r s i n t h e r e c o r d w i t h o u t o b j e c t i o n . Several

days a f t e r t h e c o n t r a c t was s i g n e d , Morrison s e n t a mechanic o u t
t o r e p a i r t h e combine, b u t f o r some r e a s o n he d i d n o t r e p a i r

it. The machine was never r e p a i r e d . ~ u r i n gt h e summer 1971,
Morrison c l o s e d h i s b u s i n e s s a s a farm implement d e a l e r . On
J u l y 1 4 , 1971, Morrison wrote a p p e l l a n t t o inform him of t h i s
f a c t , and t o o f f e r t h e s e r v i c e s of a n o t h e r implement d e a l e r t o
r e p a i r t h e machine, b u t a s a t i s f a c t o r y arrangement could n o t be
made.
 The c o n t r a c t , which had been a s s i g n e d t o r e s p o n d e n t

on t h e day of i t s e x e c u t i o n , c a l l e d f o r a n i n i t i a l payment on

November 1, 1971, and c o n t a i n e d a n a c c e l e r a t i o n c l a u s e i n case

of d e f a u l t . A p p e l l a n t f a i l e d t o make any payment on t h e a g r e e -

ment, and on December 9 , 1971, w r o t e t h e r e s p o n d e n t i n a n a t t e m p t

t o explain h i s position. The machine was r e p o s s e s s e d n i n e months

l a t e r and was f i n a l l y s o l d t o a n o t h e r implement d e a l e r f o r $1850.

Respondent d e d u c t e d t h e sales p r i c e and sued f o r d e f i c i e n c y .

Appellant counterclaimed f o r t h e p r i c e of h i s trade-in, the

r e n t a l p a i d f o r u s e of a n o t h e r combine f o r t h e 1971 s e a s o n , and

f o r h i s l a b o r and p a r t s expended i n t h e r e p a i r of t h e combine.

Two b a s i c i s s u e s a r i s e on a p p e a l :

1) Did t h e s e l l e r b r e a c h and r e n d e r u n e n f o r c e a b l e h i s

c o n t r a c t w i t h t h e buyer i n f a i l i n g t o perform h i s promise t o

repair.

2) May t h i s d e f e n s e be v a l i d l y a s s e r t e d a g a i n s t s e l l e r ' s

a s s i g n e e under s e c t i o n 87A-9-206(1), R.C.M. 1947?

I t i s t h e p o s i t i o n of respondent t h a t t h e c o n t r a c t i s

c o m p l e t e on i t s f a c e , t h a t p a r 0 1 e v i d e n c e may n o t be a d m i t t e d t o

v a r y t h e t e r m s s t a t e d t h e r e i n , and t h a t no b r e a c h c o u l d have

o c c u r r e d which i s p r o v a b l e i n a c o u r t o f l a w . S e c t i o n 87A-2-202,

R.C.M. 1947, p r o v i d e s :

" F i n a l w r i t t e n expression--par01 o r e x t r i n s i c
evidence. T e r m s w i t h r e s p e c t t o which t h e confirm-
a t o r y memoranda of t h e p a r t i e s a g r e e o r which a r e
o t h e r w i s e set f o r t h i n a w r i t i n g i n t e n d e d by t h e
p a r t i e s a s a f i n a l e x p r e s s i o n o f t h e i r agreement
with r e s p e c t t o such t e r m s a s a r e included t h e r e i n
may n o t be c o n t r a d i c t e d by e v i d e n c e o f any p r i o r
agreement o r o f a contemporaneous o r a l agreement
b u t may be e x p l a i n e d o r supplemented

"(a) by c o u r s e o f d e a l i n g o r u s a g e of t r a d e
( s e c t i o n 87A-1-205) o r by c o u r s e o f p e r -
formance ( s e c t i o n 87A-2-208); and

"(b) by e v i d e n c e of c o n s i s t e n t a d d i t i o n a l t e r m s
u n l e s s t h e c o u r t f i n d s t h e w r i t i n g t o have
been i n t e n d e d a l s o a s a c o m p l e t e , and ex-
c l u s i v e s t a t e m e n t of t h e t e r m s o f t h e a g r e e m e n t . "
The Uniform Commercial Code a s a d o p t e d i n Montana, o p e r a t e s t o

e x c l u d e e x t r i n s i c o r p a r o l e v i d e n c e o n l y where t h e d i s t r i c t

c o u r t f i n d s t h a t t h e w r i t i n g i s , on i t s f a c e , a f u l l and f i n a l

i n t e g r a t i o n of t h e p a r t i e s embracing a l l t h e t e r m s of t h e a g r e e -

ment, o r where t h e e v i d e n c e o f f e r e d i s i n c o n s i s t e n t o r c o n t r a -

d i c t o r y t o t h e t e r m s of t h e w r i t t e n i n s t r u m e n t . Martel Construc-

t i o n I n c . v . Gleason Equipment, I n c . , 166 Mont. 479, 534 P.2d

883, 32 St.Rep. 402; 2 W i l l i s t o n on S a l e s B 13-9, p. 88 ( 1 9 7 4 ) ;

67 Am J u r 2d S a l e s , B 194.

Under t h e f a c t s and c i r c u m s t a n c e s p r e s e n t e d , t h e p a r o l

e v i d e n c e r u l e c a n n o t be a p p l i e d t o e x c l u d e e v i d e n c e of t h e promise

t o repair. H e r e the d i s t r i c t court did not find the writing w a s

a f u l l and f i n a l i n t e g r a t i o n of t h e p a r t i e s . Rather, t h e c o u r t

s p e c i f i c a l l y found " t h e s e l l e r s promised t o make n e c e s s a r y r e p a i r s " .

I n l i g h t o f t h e t e s t i m o n y and e x h i b i t s , it i s c l e a r t h e d i s t r i c t

c o u r t could not reasonably f i n d otherwise. While t h e p a r o l e v i -

d e n c e i s s u e was r a i s e d by r e s p o n d e n t i n i t s t r i a l b r i e f , a l l

t e s t i m o n y and e x h i b i t s which w e r e o f f e r e d t o p r o v e t h e e x i s t e n c e

of a n i n d e p e n d e n t agreement t o r e p a i r w e r e a d m i t t e d w i t h o u t o b j e c -

tion. A s a r e s u l t t h e record not only contains a p p e l l a n t ' s t e s t i -

mony r e g a r d i n g t h e agreement t o r e p a i r , b u t s e v e r a l a d m i s s i o n s

by t h e s e l l e r , i n open c o u r t , a f f i r m i n g t h e agreement:

"Dave Morrison:

"A. T h i s was t h e day t h a t I informed Bruce
[ a p p e l l a n t ] t h a t w e would t a k e c a r e of t h e
combine and we would make a r r a n g e m e n t s f o r
t h e combine t o be f i x e d .

"Q. W e l l , was it f i x e d ? A. No, s i r , i t
wasn't fixed."

W need n o t c o n s i d e r f u r t h e r t h e c o m p l e x i t i e s of t h e p a r o l
e

e v i d e n c e r u l e o r i t s a p p l i c a b i l i t y t o t h e f a c t s of t h i s c a s e . Here

t h e f a i l u r e t o o b j e c t a t t h e t i m e t h e e v i d e n c e was o f f e r e d was

f a t a l , e s p e c i a l l y where r e s p o n d e n t was f i r s t t o i n t r o d u c e p a r o l
e v i d e n c e t e n d i n g t o e s t a b l i s h t h e e x i s t e n c e of t h e agreement.

W e apply t h e long e s t a b l i s h e d r u l e t h a t an o b j e c t i o n t o t h e

a d m i s s i o n o f par01 e v i d e n c e c a n n o t be r a i s e d f o r t h e f i r s t

t i m e on a p p e a l , and t h a t such a n o b j e c t i o n i s waived when no

e f f o r t i s made t o p r e s e r v e i t a t t h e t i m e it i s o f f e r e d . Anno:

92 A.L.R. 810.

Having d e t e r m i n e d t h a t s e l l e r ' s b r e a c h of o r a l c o n t r a c t

i s a v a l i d d e f e n s e a g a i n s t t h e a c t i o n on t h e r e t a i l i n s t a l l m e n t

agreement, we now c o n s i d e r whether t h i s d e f e n s e c a n be a p p l i e d

t o respondent, seller's assignee. Respondent asserts t h e s e l l e r ' s

b r e a c h i s n o t a n a p p l i c a b l e d e f e n s e a g a i n s t t h e a s s i g n e e of t h i s

r e t a i l installment contract. Undeniably, a p p e l l a n t ' s s i g n a t u r e

a p p e a r s on a c o n t r a c t which s t a t e s :

" * * * b u y e r ( s ) w i l l n o t s e t up any c l a i m , o r
d e f e n s e which he may have a g a i n s t t h e s e l l e r a s
a d e f e n s e * * * i n any a c t i o n * * * by t h e s e l l e r ' s
assignee."

The e n f o r c e a b i l i t y of c o v e n a n t s o f t h i s t y p e i s governed by

s e c t i o n 87A-9-206(1), R.C.M. 1947, which p r o v i d e s i n p e r t i n e n t

part:

" * * * a n agreement by a buyer o r l e s s e e t h a t
he w i l l n o t a s s e r t a g a i n s t a n a s s i g n e e any
c l a i m o r d e f e n s e which he may have a g a i n s t t h e
s e l l e r o r l e s s o r i s e n f o r c e a b l e by a n a s s i g n e e
who t a k e s h i s a s s i g n m e n t f o r v a l u e , i n good
f a i t h and w i t h o u t n o t i c e o f a c l a i m o r d e f e n s e
* * * 1'.

I n o u r view, r e s p o n d e n t Massey-Ferguson C r e d i t C o r p o r a t i o n

c a n n o t be c o n s i d e r e d among t h o s e whose p r o t e c t i o n i s c o n t e m p l a t e d

by s e c t i o n 8724-9-206(1). The e v i d e n c e shows t h a t r e s p o n d e n t ' s

r e p r e s e n t a t i v e p a r t i c i p a t e d , a t l e a s t t o some d e g r e e , i n making

t h e s a l e by o r a l l y a f f i r m i n g t h e s e l l e r ' s p r o m i s e s t o a p p e l l a n t

buyer. I t i s c l e a r from t h e e x h i b i t s t h a t t h e c o n t r a c t w a s

e x e c u t e d and a s s i g n e d a t a b o u t t h e same t i m e and upon t h e same

i n s t r u m e n t , and t h e b l a n k form s a l e s c o n t r a c t employed w a s i n t h i s
c a s e f u r n i s h e d by r e s p o n d e n t c o r p o r a t i o n . Under t h e s e c i r -

c u m s t a n c e s , i t h a s been h e l d t h e a s s i g n e e d o e s n o t t a k e t h e

a s s i g n m e n t " w i t h o u t n o t i c e of a c l a i m o r d e f e n s e " and i s

t h e r e f o r e n o t e n t i t l e d t o t h e enforcement p r o t e c t i o n p r o v i d e d by

s e c t i o n 87A-9-206(1), R.C.M. 1947. N e w Holland Machine Company

v. L e w i s , (Tex. Civ. App. 1 9 7 1 ) , 4 7 0 S.W.2d 234; Anno: 4 4 ALR2d

8 , 157-161. W f i n d t h e s e r u l i n g s i n s t r i c t accord with t h e
e

p u r p o s e and p o l i c y behind t h i s s e c t i o n o f t h e Uniform Commercial

Code, a s e x p l a i n e d i n Massey-Ferguson, Inc. v. Utley, (KY. 1969) I

"We c o n s i d e r it t o be t h e p o l i c y of t h e Uniform
Commercial Code t o encourage t h e s u p p l y i n g o f
c r e d i t f o r t h e buying of goods by i n s u l a t i n g t h e
l e n d e r from l a w s u i t s o v e r t h e q u a l i t y o f t h e
goods. But w e c o n c e i v e t h a t t h e i n s u l a t i o n
was i n t e n d e d p r i m a r i l y f o r f i n a n c i a l i n s t i t u t i o n s
r a t h e r t h a n t h e m a n u f a c t u r e r who f i n a n c e s h i s own
s a l e s . He n e e d s no inducement t o s u p p l y c r e d i t f o r
t h e p u r c h a s e of h i s goods b e c a u s e t h e whole o b j e c t
of h i s b u s i n e s s i s t o s e l l h i s goods."

The judgment o f t h e d i s t r i c t c o u r t i s r e v e r s e d . The c a u s e

i s remanded f o r c o n s i d e r a t i o n of a p p e l l a n t ' s c o u n t e r c l a i m .

\ L. I
, Justice

-
.' Chief J u s t i c e

Justices