ARCON CONSTRUCTION CO., INC., a Minnesota Corporation with its principal place of business at Mora, Minnesota, Plaintiff and Appellee, v. SOUTH DAKOTA CEMENT PLANT and South Dakota State Cement Plant Commission; Edwin Gaiser of Rapid City, Roger Prunty of Brookings, Al Sandvig of Aberdeen, Richard Sayre of Sioux Falls, Joe Simmons of Rapid City, Bill Stake of Lennox, and Tom Zeller of Rapid City, the duly appointed and acting Commission members; William Scanlon of Rapid City, individually, and as an employee, officer and agent of Plant and Commission; and Michael Holeton of Rapid City, individually and as an employee, officer and agent of the Plant and Commission, Defendants and Appellants.
Nos. 14139, 14140, 14147 and 14148
Supreme Court of South Dakota
Argued Oct. 25, 1983. Decided May 2, 1984.
See also S.D., 343 N.W.2d 795.
Tom Lehnert and Wayne F. Gilbert of Lehnert & Gilbert and Ronald W. Banks of Banks & Johnson, Rapid City, for defendants and appellants.
DUNN, Justice (on reassignment).
The South Dakota Cement Plant and the South Dakota Cement Plant Commission (referred to collectively as “the cement plant“) appeal a judgment entered against them for their breach of two contracts for the sale of cement to Arcon Construction Co., Inc. (Arcon). We affirm in part, reverse in part, and remand.
The first contract at issue here involved the sale of cement to Arcon for a project on Interstate 29 north of Watertown, South Dakota. The other contract involved the sale of cement for Arcon‘s paving project on Highway 281 near Aberdeen, South Dakota. Both contracts called for the delivery of cement during construction year 1978. However, due to a severe cement shortage in 1978, the cement plant failed to deliver the cement as called for under the contracts. As a result, Arcon was not able to perform work on the projects until the 1979 and 1980 construction seasons.
Arcon commenced its action for breach of contract on April 17, 1980; the cement plant counterclaimed for damages caused by Arcon‘s failure to use certain amounts of cement which were delivered to Arcon. A jury trial began on October 6, 1982. After hearing the evidence and deliberating for eight days, the jury returned a verdict for Arcon in the amount of $1,175,974.00, and a verdict for the cement plant in the amount of $89,089.00 on its counterclaim.
Numerous issues are raised by the parties in this appeal, including the following: 1) Is Arcon‘s lawsuit barred by the principle of sovereign immunity? 2) Is Arcon‘s lawsuit barred by the running of the statute of limitations? 3) Did the trial court properly instruct the jury as to the cement plant‘s contractual and statutory defenses? 4) Did the trial court properly instruct the jury as to the proper measure of damages for contractor-owned idle equipment? 5) Did the trial court abuse its discretion when it taxed costs against the cement plant? 6) Is Arcon entitled to prejudgment
I
The threshold question in this appeal is whether the doctrine of sovereign immunity extends to the cement plant.
The cement plant is clearly an arm of the state.
Even though the cement plant is an arm of the state, Arcon argues that the legislature has waived immunity for suits arising out of cement plant contracts, especially those within the scope of the Uniform Commercial Code (UCC),
First, all transactions in goods clearly fall within the provisions of UCC-Sales.
Second, the UCC provisions expressly apply to the state. In its general definitions, the UCC defines “organization” to include “government or governmental subdivision or agency.”
Third, the UCC grants a buyer specific rights and remedies against a breaching seller, and these rights include lawsuits. commerce. See
Even though, by legislative enactment of the UCC, the people have waived cement plant contract immunity, suit is still potentially obstructed by
However,
It is our opinion that by the provisions of this section the people of the state intended to take the provisions of article 13, § 12, out from the operation of any other section of the Constitution, including the debt limit of one-half of one per cent. The adoption of said section 13 was a setting apart of this form of internal improvement from the provisions regulating internal improvements generally. To hold otherwise would render the language of said section 13 practically meaningless... The clear purpose of article 13, § 13—else there was no purpose—was to give the Legislature a free hand in carrying out the provisions of article 13, § 12, unhampered by any other provision of the Constitution. [Emphasis added]
Id. at 643-644, 177 N.W. at 814-815.
Applying the foregoing rationale to the parallel constitutional provisions authorizing the creation of the state cement plant, we hold that, by supplementing
II
Having determined cement plant contract liability and its exemption from the appropriation requirement, we next examine whether this action is barred by the running of the applicable statute of limitations. This cause of action accrued at the time of the 1978 breach,
Furthermore, as we recognized above, this case involves a sale of goods, a subject dealt with under the provisions of the UCC. Therefore, one must look to the UCC to find an appropriate statute of limitations. The UCC specifically states that “[a]n action for breach of any contract for sale must be commenced within four years....”
Since the UCC‘s four-year statute of limitations conflicts with the one-year statute at
III
The cement plant next contends that the trial court failed to properly instruct the jury as to the cement plant‘s contractual and statutory defenses. These defenses involved the following allegations: 1) the work quotation given by the cement plant to Arcon in 1977, which contained a price quote and the words “shipments will be made according to product availability,” is a part of the contract and thus should remove the cement plant‘s liability for any cement shortages; 2) the “product availability” term was part of the contract by way of course of dealing and usage of trade; and 3) the cement plant was excused from performance due to commercial impracticability.
As for the first defense, it is true that the work quotation sent by the cement plant to Arcon contained a “product availability” term. However, the work quotation expired by its own terms on October 1,
As for the second defense, the facts in this case seem clear that even though there was no express product availability term in the contracts, product availability was a condition in all cement plant dealings with its customers. Therefore, product availability was a course of dealing and usage of trade, as defined in
A review of the jury instructions given by the trial court reveals that the jury was properly informed of this UCC defense argued by the cement plant. The instructions accurately stated the language of
The third defense argued by the cement plant was grounded in
Contrary to the cement plant‘s claims, the instructions did accurately state the law of
IV
The next issue on appeal concerns the question of the proper measure of damages for breach of the contracts. Due to the cement plant‘s failure to deliver the cement as agreed upon, numerous pieces of Arcon‘s equipment which were scheduled to be used on the two highway projects were forced to remain idle. The trial court instructed the jury that fair rental value was the measure of damages for idle equipment. Using that instruction, the jury determined Arcon was entitled to $753,998.00 for equipment idled due to the cement shortage. The cement plant maintains that the trial court‘s instruction required the jury to award damages based upon an improper measure, especially when one considers that Arcon‘s bid figures for equipment costs were much lower than costs calculated using blue book rental rates; these blue book rental rates were allowed as evidence of fair rental value. For example, Arcon‘s bid on the Interstate 29 project includes equipment costs of approximately $143,000.00; however, using blue book figures, the cost estimate rises to $1,188,524.52. The question to be decided on appeal then is this: what is the proper meas-
The law on this question is not clearly settled. On the one hand, there is persuasive authority for Arcon‘s position that rental value is the proper measure of damages when equipment is idled. Of particular importance is Hallett Construction Co. v. Iowa State Highway Comm‘n, 261 Iowa 290, 154 N.W.2d 71 (1967), a case factually similar to the case at hand, in which the court approved the use of a rental guidebook to determine damages. See also Anders v. State, 42 Misc.2d 276, 248 N.Y.S.2d 4 (1964); Garofano Const. Co. v. State, 183 Misc. 1080, 52 N.Y.S.2d 186 (1944); 5 Corbin on Contracts § 1094 (1964).
On the other hand, some courts are not satisfied with the simple application of rental rates as a measure of damages. In L.L. Hall Construction Company v. United States, 379 F.2d 559, 567 (Ct.Cl.1966), the court stated: “Is not the best evidence the actual costs? After all, these rate manuals are only guides and estimates based on national averages and subject to many adjustments.” The court in L.L. Hall Construction Company decided that absent proper records on actual costs, the fair measure of damages for idled equipment is the acquisition cost of the equipment applied to a formula in an ownership expense manual, reduced by fifty percent for idle time. Id. at 568. The Montana Supreme Court, in Laas v. Montana State Highway Commission, 157 Mont. 121, 483 P.2d 699 (1971), stated that the admission of a rental rate book was error since use of the book put the burden on the defendant to disprove that which the plaintiff had not proven. This error was found to be harmless, though, since the jury scaled down the damages by more than one-half. In W.G. Cornell Co., Etc. v. Ceramic Coating Co., 626 F.2d 990 (D.C.Cir.1980), the court applied rental values as the measure of damages, but only as long as it did not result in unreasonable damages.
This court has never dealt with the precise question raised here, although one decision dealt with a similar matter. In Landeen v. Yonker, Inc., 84 S.D. 600, 175 N.W.2d 50 (1970), we held that one who owns a piece of property, such as construction equipment, has the right to use it; damages are awarded for interference with this right; these damages are usually measured by the rental value of the item involved. It is important to note, however, that Landeen did not involve the question of idled equipment; it dealt with equipment that had been damaged, forcing the owner to rent equipment if he was to keep working. In the present case, Arcon never needed to rent extra equipment to keep operating; Arcon simply could not use its own equipment due to lack of supplies. Also of importance to this issue is
A careful consideration of these authorities leads us to conclude that rental rates, such as those in the blue book, may be used as a guide to show damages resulting from idled equipment, providing they do not result in an unreasonable amount of damages. Of course, determining whether an amount is reasonable or unreasonable is the most difficult question. However, it is safe to say that when the blue book projects a cost for equipment which is ten times the amount of the figure the contractor used in his bid, as is the case here, the blue book amounts are unreasonable. Since the jury award in this case is far more than Arcon would have received for equipment costs under its bid, had it completed the project on time, we find the award to be unreasonable and we reverse on the issue of damages.
In order to give the trial court some guidance on retrial of the damage issue, we suggest the following:
1) Blue book figures may be admitted by the trial court in its discretion if the court determines that this evidence would aid the jury on the issue of damages under the facts of this case.
Keeping these guidelines in mind, the jury should be able to come up with a figure which is not unreasonable, and yet will fairly compensate Arcon for its equipment which remained idle due to the cement plant‘s breach of contract.
As for issues IV through VIII raised in the cement plant‘s brief, our holding on the issue of use of the blue book and the need for retrial on the damages question makes a detailed discussion of these issues unnecessary. We do note, however, that Arcon may on retrial submit evidence as to increased costs incurred in the 1979 and 1980 construction seasons over against what would have been incurred in 1978, as long as such increased costs can be proven with reasonable certainty.
V
The cement plant‘s final contention is that the trial court abused its discretion when it taxed costs against the cement plant. Following the jury verdict, Arcon filed a notice for taxation of costs, seeking reimbursement in the amount of $47,460.34. The cement plant objected to portions of this request. After a hearing on the matter and the filing of supplemental documentation by Arcon, the trial court awarded costs to Arcon in the amount of $20,639.95. The specific items taxed against the cement plant which are in dispute on appeal are: 1) attorneys’ traveling expenses associated with the taking of depositions; 2) witness fees in an amount in excess of that set by statute; 3) expert witness fees in an amount in excess of that set by statute; 4) expenses of obtaining daily trial transcripts; 5) deposition related expenses; and 6) copying and printing expenses.
Our statutes provide that the prevailing party in a civil action may be allowed to recover “costs.”
Of particular importance in the present case is
In all cases where a party is allowed to recover costs the clerk must also tax as a part of the judgment the allowance of such party‘s witnesses‘, interpreters‘, translators‘, officers‘, and printers’ fees, fees for the service of process, filing fees and the necessary expense of taking depositions and procuring necessary evidence.
The cement plant maintains that the costs at issue do not fall within the statute. We
First, the attorneys’ expenses for traveling to take depositions are not taxable as costs. Such expenses are not specifically provided for in
Second, as to fees for both lay witnesses and expert witnesses,
On the other hand, we affirm the trial court‘s award of costs for copies of trial transcripts, deposition fees, and printing fees. All three of these costs are specifically provided for in
VI
On notice of review, Arcon raises the issue of its right to recover prejudgment interest on the damages awarded by the jury. Following the entry of judgment on the jury verdict, Arcon moved for prejudgment interest in the total amount of $590,134.83. This motion was denied by the trial court. Arcon asserts that since this is a contract case in which damages are ascertainable, it is entitled to prejudgment interest. We disagree.
Prejudgment interest is provided for by
Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt. (emphasis added)
Although prejudgment interest is awardable in highway construction contract claims, Northern Imp. Co. v. S.D. State Highway Comm‘n, 314 N.W.2d 857 (S.D. 1982); Brezina Const. Co. v. South Dakota Dept., Etc., 297 N.W.2d 168 (S.D.1980), the exact sum of the damages must be known or readily ascertainable before such interest may be awarded. State v. Ed Cox and Son, 81 S.D. 165, 132 N.W.2d 282 (1965); Beka v. Lithium Corporation of America, 77 S.D. 370, 92 N.W.2d 156 (1958). Moreover, a party is not entitled to prejudgment interest if the amount of damages remains uncertain until determined by the trial court. Fullerton Lumber Co. v. Reindl, 331 N.W.2d 293 (S.D.1983); Ed Cox and Son, supra.
Here it is clear that Arcon‘s damages are neither certain nor readily ascertainable. As Arcon admitted at trial and in its brief, its own records were not usable for purposes of determining actual damages; consequently, Arcon had to rely upon averages, estimates, and blue book
We affirm on the issues of liability and prejudgment interest. We reverse the awards of costs and damages. The case is remanded for recalculation of costs and for retrial on the damage question in accord with the guidelines set forth in this opinion.
WOLLMAN, MORGAN and HENDERSON, JJ., concur.
FOSHEIM, C.J., dissents.
FOSHEIM, Chief Justice (dissenting).
The majority decision starts out on a wrong premise that the UCC is the appropriate authority to find waiver of cement plant sovereign immunity.
A meaningful waiver assumes there is something to waive. That which is already constitutionally provided leaves nothing to waive by statute. While the UCC would ordinarily waive sovereign immunity for cement plant contracts, that purported waiver had been redundant for two generations. The absence of sovereign immunity * which allowed this type of action was constitutionally imbedded in 1918 when the people adopted
Since 1947,
The majority opinion, however, concludes the UCC statute of limitations extends the time for filing suit to four years. When the dispute arose,
Since the two statutes of limitation are in apparent conflict it is our duty not to ignore one for the sake of the other, but to give a reasonable construction to both, construing them together to make them harmonious and workable. If possible, both acts are to be reconciled. Karlen et al. v. Janklow, 339 N.W.2d 322 (S.D.1983); Matter of Sales Tax Refund Applications, 298 N.W.2d 799 (S.D.1980); State v. Myott, 246 N.W.2d 786 (S.D.1976).
The UCC provision is general. It speaks of any contract for sale.
Provisions contained in any chapter of the code may be construed and considered in the light of their codified arrangement.
These guidelines of construction compel the conclusion that the one-year statute of limitations is as applicable now as it was before the UCC was adopted. In enacting the UCC the legislature structured certain suits against the state, but consistent with precedent we must not expand the exposure of the sovereign beyond the preexisting and more restrictive statute of limitations applicable only to the state in favor of a more liberal limitation applicable to all others.
We must be mindful of the case law which holds that statutes in derogation of sovereignty are strictly construed in favor of the state, so that its sovereignty is upheld and not narrowed or destroyed. Duguay v. Hopkins, 191 Conn. 222, 464 A.2d 45 (1983); Andrade v. State, 448 A.2d 1293 (R.I.1982); Greenfield Const. Co. v. Michigan Dept. of State Highways, 402 Mich. 172, 261 N.W.2d 718 (1978). The extent of liability should be definitely fixed by legislative action. Arms v. Minnehaha County, 69 S.D. 164, 7 N.W.2d 722 (1943). We violate that time-honored concept when we fail to strictly construe statutes in derogation of sovereignty. As between the two conflicting statutes, we should accordingly give deference to that statute which least exposes the sovereign.
This construction reads in harmony with the UCC Title.
This title being a general act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided. [emphasis added]
This statute is silent as to prior legislation and we must assume the legislature had full knowledge of
Just as the UCC added nothing to waiver of sovereign immunity on cement contracts, neither did it add anything to the limitation of actions against the State. It was redundant as to both.
I would dismiss the action entirely for want of timely commencement.