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Keywords

contractbreach of contractdamagestrialgood faith
contractdamagesstatutetrialwillgood faithappellantappellee

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McMillan v. Meuser Material & Equipment Co., Inc., 260 Ark. 422, 541 S.W.2d 911, 20 UCC Rep.Serv. 110

Facts

On December 13, 1973, Meuser and McMillan entered into a contract for the sale of a bulldozer for $9,825. McMillan stopped payment on his check on December 24, 1973, claiming the delivery was late, while Meuser contended the delivery date was January 1, 1974. After unsuccessful negotiations, Meuser sold the bulldozer for $7,230 on March 5, 1975, approximately fourteen months after the alleged breach, during which time the bulldozer remained unsheltered on a farm.

On December 13, 1973, the parties entered into their agreement. The purchase price, including a bellhousing, was $9,825, f.o.b. Springdale. Meuser arranged transportation of the bulldozer to Greeley, Colorado, the residence of appellant. On December 24, 1973, McMillan stopped payment on his check asserting that since the agreed delivery date was December 21, the delivery was past due. Appellee's version is that the delivery date was January 1, 1974. After unsuccessful negotiations between the parties or about two months after the appellant purchaser stopped payment on his check, appellee brought this action. On March 5, 1975, or about fourteen months following the alleged breach of the purchase contract, appellee sold the bulldozer for $7,230 at a private sale.

Issue

Was the resale of the bulldozer by the seller commercially reasonable, and did the trial court err in allowing the seller to amend its complaint?

We first consider appellant's assertion that the resale by appellee did not constitute the good faith and commercial reasonableness which is required by Ark.Stat.Ann. s 85—2—706 (Add.1961). Appellee responds that this defense was not properly raised at trial. We must disagree with appellee.

Rule

Under Ark.Stat.Ann. s 85—2—706, a seller may recover damages from a breach of contract if the resale is made in good faith and in a commercially reasonable manner.

The statute provides in pertinent part: (1) Under the conditions stated in Section 2—703 (s 85—2—703) on seller's remedies, the seller may resell the goods concerned (f)or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2—710 (s 85—2—710)), but less expenses saved in consequence of the buyer's breach.

Analysis

The court found that the issue of commercial reasonableness was sufficiently raised at trial, noting that the seller's delay of over fourteen months in reselling the bulldozer was commercially unreasonable. The court emphasized that the resale must occur within a reasonable time to accurately reflect market conditions at the time of breach, and the seller's actions did not meet this standard.

Here, even though we accord a liberal interpretation to the U.C.C., s 85—1—106, which mandates that remedies be so administered, we are of the view that the resale of the bulldozer, in excess of fourteen months after the alleged breach, will be of ‘slight probative value’ as an indication of the market price at the time of the breach.

Conclusion

The Supreme Court affirmed the trial court's judgment in favor of the seller, contingent upon a remittitur of the damages awarded.

Consequently, the judgment is affirmed upon the condition that the award of $2,595 for actual damages is offered as a remittitur within the next seventeen days. Otherwise, the judgment is reversed and remanded.

Who won?

Meuser prevailed in the case because the court found that the seller's actions were justified and that the delay in resale was commercially unreasonable.

The trial court, sitting as a jury, found appellant McMillan breached a contract to buy a bulldozer from appellee Meuser and assessed $2,700 as appellee's damages ($2,595 actual and $105 incidental).

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