No. 80-243
IN THE SUPREME COURT OF THE STATE OF MONTANA
EMPIRE STEEL MANUFACTURING COMPANY,
a Corporation,
Plaintiff and Respondent,
-vs-
R. E. CARLSON, doing business as
BURLESON TRANSPORTATION, and FRANK V.
BURLESON
Defendants and Appellants,
FRANK V. BURLESON,
Defendant and Third-Party
Plaintiff, and Co-Respondent,
-vs-
R. E. CARLSON, doing businessas BURLESON
TRANSPORTATION,
Third-Party Defendant and
Appellant.
Appeal from: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone, The Honorable
Charles Luedke, Judge presiding.
Counsel of Record:
For Appellant:
Olsen, Christensen & Gannett, Billings, Montana
For Respondent :
Crowley, Haughey, Hanson, Toole & Dietrich,
Billings, Montana
Gary Beiswanger, Billings, Montana
Submitted on Briefs: November 6, 1980
~ecided:January 27, 1981
Filed:
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Empire Steel Manufacturing Company (~mpire)
filed its
complaint in the District Court, Thirteenth ~udicial~istrict,
Yellowstone County, alleging in the alternative, that it had
a contract for the haulage of coal silos with either R. E.
Carlson, d/b/a Burleson Transportation or Frank Burleson;
that the contract for haulage had not been performed by
either; and that it had incurred damages thereby. Carlson
denied the haulage contract, and cross-claimed against
Burleson for indemnity should Carlson be held liable to
Empire. Burleson denied the haulage contract with Empire
and cross-claimed against Carlson for indemnity should
Burleson be held liable to Empire. The District Court entered
judgment in favor of Empire and against Carlson for $17,723.55,
plus accrued interest; against Carlson on his cross-claim
against Burleson; and dismissed Burleson's cross-claim
against Carlson.
Carlson appeals from the judgment of the District
Court.
In essence, the District Court, sitting without a jury,
found that Carlson through his employees had entered into a
contract to haul coal silos for Empire for the sum of $250
per section of silo. Because Carlson refused to perform the
contract, Empire had to procure another transportation
carrier to do the hauling, resulting in the damages awarded to
Empire.
Carlson raises these issues for our determination:
(1) The date of the alleged contract for haulage was
August 17, 1972, and Carlson was not legally authorized to
transport goods until August 28, 1972.
(2) The memorandum of Carlson's employee Lindner is
insufficient to provide a basis for a valid contract.
(3) In any event, Empire did not accept Carlson's
offer to contract nor rely on that offer in making its bid
for the fabrication of the coal silos.
(4) The employment relationship between Burleson and
Carlson was insufficient to bind Carlson to any contract
with Empire.
We begin the discussion by noting, as we have in the
past, that this Court, on appeal, may not set aside the
findings of a District Court unless they are clearly erroneous.
Rule 52(a), M0nt.R.Civ.P. We do not substitute our judgment
for that of the trier of fact, but only consider whether
substantial credible evidence supports the findings. We
view the evidence in the light most favorable to the prevailing
party, recognizing that substantial evidence may be weak or
conflicting with other evidence, yet still support the
findings. If credibility of witnesses is involved, the
determination of the weight given to the testimony is the
primary function of the trial judge sitting without a jury,
and not that of this Court. Heintz v. Vestal1 (1980), -
Mont . -, 605 P.2d 606, 609, 37 St.Rep. 99, 102, Cameron v.
Cameron (1978), Mont . , 587 P.2d 939, 945, 35 St.Rep.
1723, 1729.
In early 1972, Empire was planning to bid for the
fabrication of coal silos to be supplied to Bechtel Corporation
at Colstrip, Montana. At that time, Burleson was a certificated
Class 3 (now C) motor carrier, doing business as Burleson
Transportation. Empire sought from Burleson a bid for the
cost of the transportation of the silos from Billings to
Colstrip. Burleson came to the Empire plant to review the
blueprints and plans of the silos. Based on that examination,
his knowledge of the route, his desire for a "back haul",
and a system he would devise to transport the silo sections
over the highways to avoid obstructions, he gave Empire a
bid of $250 per section for the transportation. Moreover,
Burleson wrote up his bid and placed it in his "quote file"
for later reference if Empire turned out to be the successful
bidder.
The District Court found that Empire relied on Burleson's
transportation bid in making up Empire's bid to Bechtel.
On July 3, 1972, Burleson entered into an agreement
with Carlson to sell him the motor carrier business, including
the authority to operate as a Class C carrier under a certi-
ficate issued by Montana's Public Service Commission.
Carlson applied to the commission for transfer of the certificate,
stating that the parties desired the transfer to become
effective on July 8, 1972. On August 14, 1972, the Public
Service Commission approved the transfer, but the certificate
itself was not delivered to Carlson until he received it in
the mail on August 28, 1972.
After signing the sales agreement, and while the applica-
tion for certificate was pending, Carlson employed Burleson at
a monthly salary of $1,000. Burleson was employed from July
1972, until December 31, 1972, to assist in the orderly
transfer of the business from one owner to the other, and to
introduce the new management to Burleson's business contacts.
Carlson also employed Morris Lindner to assist in running
the business.
In August 1972, Empire sought a firm written commitment
for the silo hauling contract. Empire's employee, Greer,
got in touch with Burleson on August 17, 1972, seeking a
written confirmation of the $250 bid per section of silo.
Greer went to Carlson's office and received a written memo-
randum, from Lindner, which stated:
"EMPIRE STEEL MFG.
"BILLINGS, MONT.
"DEAR SIR
"WE WILL HAUL YOUR TANKS FROM BILLINGS TO
COALSTRIP FOR 250.00 DOLLARS PER TRIP IN
1973.
"THIS WILL INCLUDE LOADING AT EMPIRE YARD
& UNLOADING AT JOB SITE.
"BURLESON TRANSPORTATION
Before Empire obtained the written memorandum, Burleson
had informed Greer by telephone that the business had been
sold to Carlson but that Greer should have "no problem"
obtaining the written bid from Lindner, who was in Carlsonls
office. The bid was prepared by Lindner from Burlesonls
"quote file." At the time he received the memorandum,
Greer told Lindner that Empire would let him know when they
were ready to begin transportation of the silos. Greer
understood that the bid he received from Lindner was on
Carlsonls behalf.
Empire was the successful bidder on the coal silos. In
November 1972, Empire called Lindner to inform him that the
first silo section was ready for transportation to Colstrip.
Lindner then went to the Empire plant, viewed the silos, and
informed Empire that Carlson would not transport the silos
for the price set out in the memorandum. This refusal was
later confirmed by letter and subsequently Carlson offered
to transport the silo sections at a different price. Empire
made other arrangements for the transportation. It issued a
purchase order to Getter Trucking, which company transported
the silos for a total price of $25,223.55. The District
Court determined that if Carlson had honored the written
bid, the total costs for transportation to Empire would have
been $7,500. On that basis, the court awarded Empire damages
in the amount of $17,723.55, plus interest and costs.
Carlson's first issue is that he had no authority from the
state prior to August 28, 1972, to enter into transportation
contracts. He argues that the date the transportation company
was sold to Carlson was July 13, 1972, but that approval was
not secured from the Public Service Commission until it was
received in the mail on August 28, 1972. Since the memorandum
was executed by Lindner on August 17, 1972, Carlson contends
the memorandum predates his authority to haul goods in
Montana. Carlson further contends that it was Burleson's
contract, not Carlson's, and that the agreement between
Burleson and Carlson for the sale of the trucking business
did not include work or contracts in progress while the
application for certificate is pending.
Carlson points out that under the rules of the Public
Service Commission, no application for the transfer of a Class
C certificate may be retroactive, nor may it be effective
until approved by the commission. He also points to section
69-12-313(1), MCA, which states in applicable part:
"No Class C motor carrier . ..
shall operate
for the distribution, delivery, or collection
of goods, wares, merchandise, or commodities or
for the transportation of persons on any public
highway in this state without first having obtained
from the commission, under the provisions of this
chapter, a certificate that public convenience and
necessity require such operation."
It is undisputed that the application for transfer of
certificate to Carlson was approved by the commission on
August 14, 1972, although the certificate itself was not
reissued and delivered to Carlson until August 28. Under
the rules of the commission, the transfer was at least
effective as of August 14. Nothing in section 69-12-313(1),
MCA, prevents an applicant from contracting, pending issuance
of the certificate, for the transportation of goods. In
fact, it is contemplated in section 69-12-313(4), MCA, that
such contracts as are in existence at the time of the
application will be submitted to the commission for its
examination. In any event, the hauling here was not done
until after August 28, 1972, when in fact Carlson was authorized
by certificate and could have performed the haulage contract.
The District Court found no difficulty in the fact that
the memorandum signed by Lindner was for "Burleson Transporta-
tion." In that connection, the District Court found that
Empire's employee, Greer, went to the premises where Burleson
had conducted business and where Carlson was carrying Burleson's
business forward pending the application. At that time,
Carlson's manager, Lindner, made the written memorandum, in
the presence of Burleson, and at a time when it was undisputed
between the parties that no such business entity existed.
The court found that the name "Burleson Transportation" was
used only because the Carlson name could not be used until
the certificate of authority had been received by Carlson.
The evidence supports this finding of fact by the ~istrict
Court.
In his next contention, Carlson challenges the sufficiency
of the Lindner memorandum to constitute a valid contract
(See section 28-2-903, MCA) . Carlson contends that "tanks"
are not "silos"; that Lindner had no conception of the size of
the silos that would be hauled at the time of the signed
memorandum; and that the memorandum does not provide for
insurance, for pilot cars, en route expenses, dates of
haulage, nor the number of "tanks" to be hauled.
To support his contention, Carlson points to Lindner's
testimony that he thought he was giving a bid on "normal
tanks that you could haul on a flatbed trailer and go down
the road 55 miles per hour without any problems with wires,
pilot cars, or any of the other things that are involved;"
that when Lindner wrote the memorandum, he did not have any
information available to him as to the size of the materials
to be hauled. Even Greer testified the silos were larger
than usual and Greer admitted that "three different people
might reach three different interpretations" on the memorandum.
The memorandum, argues Carlson, constituted an offer to haul
"tanks" and not silos and the offer to haul tanks was never
accepted by Empire. Carlson argues that the mutual intention
of the parties at the time in the sense which the promissor
believed the contract to cover, related to tanks and not
silos and that therefore, under sections 28-3-301 and 28-3-
306(1), MCA, the memorandum must be interpreted against
Empire. For the District Court to insert the word "silo" in
place of the word "tank" constituted rewriting of the contract
by the District Court, contra to our holding in Shuey v.
Hamilton (1963), 142 Mont. 83, 381 P.2d 482, that contracts
must not be rewritten by the court.
Empire answers this issue by replying that the memorandum
itself was not construed by the District Court to be a
contract in and of itself, but rather as an offer to Empire,
which Empire accepted on August 17, 1972, when Greer told
Lindner that Greer would let him know when Empire was ready
to transport the silos to Colstrip. Thus, Empire contends
acceptance of the offer was communicated to Carlson through
his employee Lindner and this created a binding contract.
To constitute a valid memorandum of a contract, no
particular form of language or instrument is necessary.
Johnson v. Ogle (19471, 120 Mont. 176, 181, 181 p.2~1789,
791. The memorandum must contain all the essentials of the
contract but if the material elements are stated in general
terms, not all the details or particulars need be stated.
Johnson v. Elliot (1950), 123 Mont. 597, 604, 218 P.2d 703,
707. Parol evidence is admissible to explain ambiguities in
the note or memorandum relied upon as establishing a contract,
and to apply the note or memorandum to the subject matter of
the contract. Johnson v. Ogel, supra, 120 Mont. at 182. At the
time the memorandum was executed, both Burleson and Lindner
were employees of Carlson, and accordingly, Carlson is
imputed to have whatever knowledge either employee had
respecting the subject matter of the contract which in good
faith in the exercise of ordinary care and diligence should
have been communicated from the employees to the employer.
Section 28-10-604, MCA. Here the employer is deemed to have
had notice of the facts known to his employees in entering
into the agreement, Stone-Ordean-Wells Co. v. Anderson
(1923), 66 Mont. 64, 212 P. 853, and notice to the employees,
or either of them, is notice to the principal. Caterpillar
Tractor Co. v. Johnson (1935), 99 Mont. 269, 43 P.2d 670.
Carlson employed Burleson in July 1972 and paid him a
salary for his work until December 31, 1972. ~urleson's
function was to aid in smoothly transferring the Burleson
business to Carlson. Lindner's memorandum was based on
Burleson's "quote file" so that the Empire contract was a
part of the employment for which Burleson had been hired,
that is to transfer smoothly the Burleson business over to
Carlson. Lindner was the agent of Carlson, clothed with the
authority to conduct the business in the absence of Carlson,
and to enter into contracts of haulage for Carlson. See,
White v. Sorenson (1963), 141 Mont. 318, 377 P.2d 364.
-9-
Burleson had examined the blueprints of the silos at
the time he was first in contact with Empire. His knowledge
as well as that of Lindner is imputed to Carlson. Their
par01 evidence of that knowledge is properly applied to the
memorandum to determine the parties' intent as to the subject
matter of the contract. Johnson v. Ogle, supra. On that
basis, we find the memorandum was sufficient.
Next Carlson contends that the method of acceptance by
Empire was not sufficient to constitute a binding contract
between the parties, and there is no proof that Empire
relied on Burleson's figures in bidding for the Bechtel
silos.
Carlson points out that when Empire contracted with
Getter Trucking for the transportation of silos, Empire
simply made out a purchase order to Getter as a means of
confirming the contract between them. This method of accept-
ance, contends Carlson, is the only method that Empire
should have used in accepting the memorandum offer.
The District Court answers this contention in its
finding that Carlson's offer was accepted by Empire. ~indner
and Burleson were both employees of Carlson and both knew
that it was being delivered to Empire for the purpose of
consummating the proposal previously offered by Burleson to
Empire. Empire advised Lindner that it would notify him
when the silos were ready to be transported. Upon their
successful bid, Empire did request the transportation in
accordance with the method of acceptance the parties had
agreed to. These findings are supported by substantial
credible evidence, are not clearly erroneous and therefore,
under Rule 52(a), M.R.Civ.P., may not be set aside by us.
The last contention of Carlson is that since ~indner
and Burleson were employees and not agents, no relationship
existed between either Burleson or Lindner with Carlson
that would be binding upon him. In effect, Carlson is
saying that Burleson and Lindner were mere employees, not
agents, and that only agents could bind Carlson to the
memorandum.
Here, Carlson is arguing that Burleson was an employee
for limited purpose and as such, had no authority as an
agent to bind Carlson to the haulage contract. Carlson
further contends that if a principal-agent relationship did not
exist between Burleson and Carlson, there could be no imputation
of Burleson's knowledge to Empire, nor could the doctrine of
collateral estoppel apply against Carlson.
The District Court found that Empire had relied on the
contract in making its bid to Bechtel, based upon the cost
figure for transportation furnished by Burleson and restated
by Carlson through his agent Lindner. That is a correct
appraisal of what the evidence shows the arrangement to have
been. While the District Court did not state that it was
relying upon estoppel against Carlson in so many words, it
did conclude that Empire had relied upon the price given by
Burleson and had changed its position in such reliance by
entering into a contract with Bechtel Corporation; further
that Burleson knew the plaintiff intended to rely upon such
prices;and that Carlson was charged with such knowledge
because Burleson was Carlson's employee. heref fore, concluded
the court, Carlson was estopped from denying its obligation
to perform the haulage contract. The evidence here indicates
that Empire, relying upon Carlson and his employees, changed
its position for the worse in making its bid to Bechtel, which
shows reliance, an element of estoppel. City of Billings v ,
Pierce (1945), 117 Mont. 255, 161 P.2d 636.
The c o n c l u s i o n s of law found by t h e D i s t r i c t C o u r t
l o g i c a l l y f o l l o w i t s f i n d i n g s of f a c t . W e f i n d no b a s i s t o
say t h a t t h e findings of t h e District Court a r e erroneous,
much less c l e a r l y e r r o n e o u s , as r e q u i r e d by Rule 5 2 ( a ) . The
judgment o f t h e D i s t r i c t C o u r t i s a f f i r m e d .
Justice
W e Concur:
CMef J u s t i c e
T h i s c a u s e was s u b m i t t e d p r i o r t o January 5 , 1981.