Summary
noting that "under ordinary circumstances" an oral agreement between parties for the sale of goods is not enforceable unless the agreement is "in writing and signed by the parties"
Summary of this case from Wall Recycling, LLC v. 3Tek Glob.Opinion
No. COA12–1347.
2013-08-6
H. Neil JACKSON, Plaintiff, v. CAPE FEAR TURF FARM, INC., Defendant.
H. Clifton Hester of Hester, Grady, Hester, & Payne, P.L.L.C., attorney for plaintiff. No brief filed for defendant.
Appeal by plaintiff from judgment entered 1 June 2012 by Judge Sherry Dew Tyler in Bladen County District Court. Heard in the Court of Appeals 25 April 2013. H. Clifton Hester of Hester, Grady, Hester, & Payne, P.L.L.C., attorney for plaintiff. No brief filed for defendant.
ELMORE, Judge.
H. Neil Jackson (plaintiff) appeals from a judgment which ordered that he recover nothing from defendant. We reverse and remand.
I. Background
In April 2003, plaintiff and Cape Fear Turf Farm, Inc. (defendant) entered into an oral agreement in which plaintiff would cultivate sod on land owned by his mother and defendant would harvest that sod and deliver it to buyers. Under their agreement, plaintiff and defendant would split the proceeds after the sod was delivered to the customers. The dispute central to this appeal appears to have begun in 2007, when plaintiff believed defendant had underpaid him for the sod harvested, while defendant believed it was owed money from plaintiff for the costs associated with replacing sod that had died prior to delivery.
On 9 June 2008, plaintiff filed suit against defendant for breach of contract. In his complaint, plaintiff alleged that “based on the sod removed by the Defendant in 2006 and 2007, Defendant owes approximately $33,000.00 to Plaintiff[.]” Defendant denied this claim, arguing, in part, that plaintiff had been paid all money owed, and, in the alternative, that the parties' oral agreement failed to satisfy the UCC statute of frauds. Defendant also filed a counterclaim against plaintiff, alleging that the sod died before it could be delivered to the customers. Thus, plaintiff was required to share in the costs incurred to replace the sod because “the risk of loss for unconforming goods was jointly on the Plaintiff and Defendant until the sod took hold on the Defendant's customers' lawns.”
On 1 June 2012, the trial court entered a judgment denying both parties' claims. The trial court found that 1) the parties did not execute any written agreement for the harvesting of the sod, and 2) that on several instances plaintiff accepted, endorsed, and cashed checks from defendant for the sod in which the memo line of the check reflected that the payment represented payment in full for the sod. The trial court further found that while defendant had incurred expenses to replace the defective sod, plaintiff had no responsibility for those expenses. The trial court then concluded that 1) the parties did not have a contract for the sale/purchase of sod, 2) plaintiff received full payment from defendant for the sod, and 3) plaintiff was not responsible for costs for replacement of the sod. Accordingly, the trial court ordered that plaintiff recover nothing from defendant, and defendant recover nothing from plaintiff. Plaintiff now appeals.
II. Analysis
“The standard of review on appeal from a judgment entered after a non-jury trial is ‘whether there is competent evidence to support the trial court's findings of fact and whether the findings support the conclusions of law and ensuing judgment.’ “ Cartin v. Harrison, 151 N.C.App. 697, 699, 567 S.E.2d 174, 176 (quoting Sessler v. Marsh, 144 N.C.App. 623, 628, 551 S.E.2d 160, 163 (2001)), disc. review denied,356 N.C. 434, 572 S.E.2d 428 (2002).
A. Enforceable Contract
Plaintiff first argues that the trial court erred in finding that there was no enforceable contract. Specifically, plaintiff argues that under an exception to the writing requirement of the UCC, defendant admitted in its pleadings and testimony that a contract existed between the parties. We agree.
According to the UCC statute of frauds, “a contract for the sale of goods ... is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties[.]” N.C. Gen.Stat. § 25–2–201(1) (2011). Under this section, “ ‘[g]oods' means all things ... which are movable at the time of identification to the contract for sale” and includes “growing crops and other identified things attached to realty as described in the section on goods to be severed from realty[.]” N.C. Gen.Stat. § 25–2–105(1) (2011).
Here, it is uncontroverted that the parties had only an oral agreement for the harvesting and sale of sod. Sod is appropriately classified as a good under the UCC. Thus, under ordinary circumstances, for the contract to be enforceable it is required to be in writing and signed by the parties. However, we agree with plaintiff that an exception to this rule applies in this instance because defendant admitted in its pleadings that a valid contract existed between the parties.
Under the UCC, a contract which does not satisfy the requirements of the statute of frauds is nonetheless enforceable “if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made[.]” N.C. Gen.Stat. § 25–2–201(3) (2011). Here, in its pleadings defendant repeatedly admitted that a contract existed between the parties. Paragraph 2 of defendant's answer states “Defendant agreed on the terms of the a [ (sic) ] contract in April 2003.” Paragraph 4 acknowledges the specific terms of the contract by stating “Defendant agreed to pay Plaintiff 1/2 of net proceeds once merchantable sod was delivered to his buyers and he was paid for it.” Indeed, admitting that a contract existed was consistent with, and favorable to, defendant's counterclaim, which sought payment from plaintiff under the terms of their contract for costs incurred in replacing sod that had died prior to delivery. As such, we hold that the trial court erred in concluding that no enforceable contract existed between the parties, and we remand for determination of the parties' interests with regards to the contract.
B. Accord and satisfaction
Plaintiff next takes issue with the trial court's conclusion that “Plaintiff received payment in full for all sod harvested by the Defendant.” Plaintiff argues that this conclusion was based on an accord and satisfaction but that this conclusion is not supported by the trial court's findings of fact. We agree.
The only findings made by the trial court relevant to the issue of accord and satisfaction concern the three checks tendered by defendant. After finding that the first two checks were tendered on 12 April 2007 and 18 June 2007, the trial court addressed defendant's final payment in its findings of fact 15 and 16, which state:
15. That on or about September 24, 2007, the Defendant tendered to the Plaintiff a check, number 3810, in the amount of $12,525.00. That the memo line of the check reflected payment in full for sod through 8/21/07 through 8/30/07.
16. That check number 3810 was accepted, endorsed and cashed by the Plaintiff.
This Court has held that “the cashing of a check tendered in full payment of a disputed claim establishes an accord and satisfaction as a matter of law [.]” Zanone v. RJR Nabisco, Inc., 120 N.C.App. 768, 773, 463, S.E.2d 584, 588 (1995) (citation omitted). This Court has held that “[a]n accord is an agreement whereby one of the parties undertakes to give to perform, and the other to accept, in satisfaction of a claim ... arising either from contract or tort[.]” North Carolina Farm Bureau, Mut. Ins. Co. v. Bost, 126 N.C.App. 42, 47, 483 S.E.2d 452, 456 (1997) (quotations and citations omitted). More simply put, “an accord can be established by the facts and circumstances surrounding the receipt of the check” but only when “in case of a disputed account between parties ” where one party “ previously voiced reservations about the amount of the settlement. ” Zanone, 120 N.C.App. at 773–74, 463 S.E.2d at 588–89 (emphasis added) (citations omitted).
Here, the trial court did not make any findings of fact regarding the understandings of or discussions between plaintiff and defendant at the time the third check was tendered. Rather, in finding of fact 15 the trial court merely found that defendant tendered the third check with a notation on the memo line that it was to be considered as payment in full for the sod harvested over a certain nine-day period. These findings of fact alone do not support a conclusion that there was an accord and satisfaction, and we remand for more specific findings on this issue.
C. Business records
Lastly, plaintiff argues that the trial court erred in excluding his evidence tending to prove the quantity of sod removed from his mother's land. According to plaintiff, this evidence met the requirements of Rule 803(6) of the North Carolina Rules of Civil Procedure. We disagree.
Under Rule 803(6), “[b]usiness records are admissible as an exception to the hearsay rule if (1) the entries are made in the regular course of business; (2) the entries are made contemporaneously with the events recorded; (3) the entries are original entries; and (4) the entries are based upon the personal knowledge of the person making them.” Piedmont Plastics, Inc. v. Mize Co., 58 N.C.App. 135, 137, 293 S.E.2d 219, 221 (1982) (quotations and citation omitted).
At trial, plaintiff testified that he instructed his mother to keep a “detailed record, of the trucks and pallets that were removed from the farm” only after he became “concerned about the gradual decline in [his] crop yield [.]” We are not convinced that plaintiff's instructions to his mother, to watch and record defendant's activities on the land following suspicions of reduced yield, qualifies as being made in the regular course of business. As such, we conclude that the trial court did not err in excluding this evidence.
III. Conclusion
In sum, we conclude that an enforceable contract existed between the parties because defendant referenced the contract in its pleadings. Further, we agree with plaintiff that the facts do not support the finding of an accord and satisfaction, thus the trial court's conclusion that plaintiff received full payment for the sod is not supported by sufficient findings. Lastly, we conclude that the trial court did not err in excluding plaintiff's evidence regarding the quantity of the sod, as such evidence was not a business record under Rule 803(6). We therefore reverse the judgment and remand for further determination of the parties' interests under the contract and more specific findings regarding accord and satisfaction.
Reversed and remanded.
Report per Rule 30(e).