Nelson v. Union Equity Co-Operative Exchange

reasonably be present harm must foreseeable In case the defendant penalized. Sup- user if is to be to the plead did not product GM misuse of the young buff example, automobile pose, cause, proximate nor object did GM to the Hopkins, as R. Jr. makes an altera- M. special inquiry issue 4No. of “producing which, though carburetor unfore- cause,” nor has GM made complaint in manufacturer, could rea- seeable appeal the course of the ground. sonably expected by Hopkins’ one with Further, sought findings GM no per of the knowledge to risk some difficulties in the cent the cause of the accident to be example, his vehicle: for slow operation of attributed misuse. Even if we were flooding sluggish acceleration. starts say that from the standpoint defendant’s suppose this alteration far does But the case was tried on wrong theory (or likely the alteration makes more more: GM might pursued have a different manufacture, design defect theory or the present contention with writ a danger constitutes in the normal which hand), we ing cannot order reversal and operation carburetor, expected of the remand a new trial unless we also find be activated and cause the will vehicle judgment. error in the trial court’s Ha speed out of control. If malfunction Interests, Inc., lepeska v. Callihan damaging reasonably event are not (Tex.1963). S.W.2d user, his misuse should foreseeable Finding judgments no error in the of the recovery. limit his District Court Court Civil Appeals, recapitulate, product To if the is they are affirmed. unreasonably to have been dangerous found placed the defendant it in when the stream YARBROUGH, J., sitting. commerce, if that defect is found to producing been a damag have cause event, if plaintiff has misused product sense as defined charge present case, court in

trial its proximate if that misuse cause of event, damaging the trier of must fact respective percentages

then determine (totalling 100%)by which these two concur NELSON, Petitioner, Carroll bring causes contributed to about ring comparison and This division of event. is not to be confused with the statu causes EQUITY UNION CO-OPERATIVE comparative negli modified scheme of tory EXCHANGE, Respondent. recovery all plain which bars gence No. B-6108. negligence greater than

tiff parties against of the negligence whom re Supreme Court Texas. 2212a, covery sought. Art. Vernon’s March 1977. 1976-1977). (P.P. Ann.Civ.St. defense case, products liability where in a both de Rehearing Denied April contribute to fect misuse cause event, damaging plaintiff’s will limit the

recovery portion damages to that con

equal percentage cause product by the defect.

tributed cause, anticipated light 4. “Proximate cause” defined “that foreseen or of the at- sequence, in its and continuous Ry. which natural tending Dallas Termi- circumstances.” & produces Black, a result that would have occurred 152 Tex. 257 S.W.2d 416 nal Co. v. cause, and which said result reasonably ought been like result have some King, Worth,

J. Fort petition- Steven er. Gooch,

Cantey, Hanger, Munn, Cravens & Johndroe, III, Worth, G. Fort respon- S. dent.

GREENHILL, Justice. question in this The case is one of first impression. It is whether the trial court finding petitioner, was correct that the admittedly a was also a “merchant” meaning within the Texas Uniform Code Commercial Texas U.C. [hereinafter C.], Code, Texas Business & Commerce 2.201(b).1 appeals court civil upheld finding. the trial court 536 S.W.2d We affirm. Equity Co-operative Union Exchange, referred to as Equity, hereafter Union is a corporation engaged in the business of stor- ing, merchandising, exporting grain. damages arising It sued Carroll Nelson for the breach of from an oral wheat “forward” parties entered into contract on Au- gust 1973. A “forward” or “futures” whereby is one agrees contract to sell his future date specified price. Equity alleged that called for this contract Nelson to deliver grain compa- bushels of wheat to the return, August 1973. In ny by for each to receive bushel delivered. $3.56 Annotated, Annotated, Business & Texas Codes Texas Business & Commerce Code 1. Vernon’s Commerce, references herein All § indicated. unless otherwise U.C.C., as codified in Vernon’s are to the Texas further grain company tion fell within Section 2.201(b); that, obligations perform had failed to turn, depends whether Nelson was that it under the had incurred as defined the statute. $6,500 damages amount re- court, Trial was had which found Equity’s damages were sus- sult. Union that the had in fact entered into an its having acquire reason of tained during oral contract the course of a tele- 5,000 August on bushels of wheat the by call phone made Nelson to Union Equity price per then-prevailing market of $4.86 August on 1973. The terms of the con- sharp rise in price bushel. the of tract were found to be those by appears to have occurred because of Equity petition, in its Union and Nelson purchases by the large grain Soviet Union was found to have breached the contract by during period. failing to the promised. deliver wheat as entered a general denial to Union trial court also found as fact that Un- pleaded Equity’s allegations and the affirm- Equity ion had mailed a written confirma- Frauds, ative defense of the of Tex- Statute August to Nelson on tion that Nelson had (a) as U.C.C. Section 2.201. Subsection of confirmation, received the and that he had that section states that for the contracts given objection written of its goods price of purchase sale of $500 days receipt. terms within ten of In its or more not be enforced unless the law, the conclusions of trial court found by writing signed is in contract written confirmation was suffi- charged.2 be Because it was un- person to against cient It Equity. Union further disputed upon that the contract which Un- found that both Nelson and Equity Union writing, sued was not in it Equity ion as that is were “merchants” term used in operation to avoid the of section sought 2.201(b). Accordingly, the contract by relying was enforced against judgment an exception sets out That subsection the grain company. was rendered for of general pro- Frauds rule. Statute vides: After court appeals of civil af Between merchants within a reason- judgment, firmed the trial ap court in writing time a confirmation of the able to this for a of plied Court writ error. In against and sufficient sender contract application he asserted error in the trial receiving party and the it is received finding fact Equity court’s that Union contents, to know it reason its satisfies mailed written confirmation and in its requirements (a) Subsection that he conclusionof law was a “merchant.” against such unless written notice granted application in order We to con objection to its is within contents question sider whether he was a days [Emphasis after it received. ten is “merchant” when into entered the oral added.] contract with Equity. Since the The word “merchant” is defined undisputed they facts are insofar as relate out tion 2.104 which is set and discussed merchant, status as a ques to Nelson’s below. before us one of law court to by applying the

Thus, Equity the ex- decide U.C.C. definition of if Union established contract, to the facts the oral it enforce of the case. istence of could Cooperative Urban, despite Statute of Decatur Association v. Frauds, showing upon that the transac- Kan. (1976); 547 P.2d 323 Sierens 2.201(a) provides: party against 2. Section whom enforcement sought agent or his authorized or broker. A provided Except as otherwise this section writing insufficient because omits or goods for the sale of a contract incorrectly agreed a term way states but the $500 more is not enforceable para- writing contract is not enforceable under defense there is action or unless some beyond quantity graph to indicate that for sale shown in sufficient contract signed writing. made between has been signed by N.E.2d contracts that were Clausen, 60 Ill.2d both Nelson milling (1975). company agent. Nelson sold his 1973 wheat bushels to that “mer- U.C.C. definitions The Texas September per of 1973for company $5.25 appear in “between merchants” chant” and bushel. 2.104(a) states: 2.104. Section means a who person deciding “Merchant” whether Nelson was a mer- In facts, of the kind otherwise under these we are chant aware that holds himself out commonly understood to a “merchant” prac- knowledge or engaged buying person involved in the transaction tices profit, or a commodities knowledge or skill to whom See Webster’s Third business. New retail employment be attributed Dictionary Al- International intermediary or other agent or broker though other courts have referred to the out holds himself meaning ordinary of “merchant” in apply- skill. having knowledge or as U.C.C., Compton, the Lish v. 547 P.2d 1976); Grains, 2.104(c) (Utah Fallis, states: Inc. Cook 223 962, (1965), Ark. 395 S.W.2d 555 we any in merchants” means “Between dealing dictionary here with the defini- respect both to which transaction tion of “merchant.” That term is chargeable expressly knowl- with the parties are 2.104(a), in Texas U.C.C. defined skill merchants. edge or are bound to the statutory and we occu- they facts as relate to Nelson’s The deciding question in the definition before trial court are pation and as found definition, person that a us. Under a a res- lifelong He is undisputed. Oklahoma he (1) goods in land near ident and owns acres of kind, (2) by occupation or his holds himself on grazes Oklahoma. He cattle Mangum, having knowledge peculiar as or skill out to grown has and wheat this land and cotton transaction, involved in the practices or least He does not there since himself out (3) by his holds raises, crops he but sells them consume the knowledge or having skill He one wheat brings for his livelihood. in transaction, in involved or crop he crop year, a and has sold that intermediary an his employs occupa- annually since 1967. having himself holds out as knowledgeable the busi- Nelson is about skill, knowledge or that knowledge and or selling crops, and growing ness of person be attributed to the whose practice usual since 1967 to it his has made question. If the facts show status is that his the best obtainable for determine criteria, any satisfies of the above person a stays abreast the current mar- crops. He person we are bound to hold that then listening reports prices by ket the market a merchant. every day telephoning on radio show The facts that Nelson satisfied the get dealers to the current various criterion above because he deal first did 1, price quotations. August Prior to wheat kind; in wheat. goods of he dealt 1973, the oral contract the basis of the date does not define the Texas U.C.C. term made, Nelson called Union this suit was had “deal,” meaning of which ordinary wheat inquire times to about Equity several traffic; business,” to transact Black’s “to a he had entered into prices. In 1968) Dictionary (4th Law ed. “to Equity contract wheat forward with Union sell,” Ballentine’s Law buy Dictionary was telephone; that contract over the 1969). (3d subject ed. matter broke rescinded when Nelson Equity contract with Union his Nelson’s was perform unable to shoulder He raised years his own obligations. preceding In the five wheat. crop in one He brought year. annually his wheat to

trial, annually sold Nelson Texas, himself; Denton, years under in the five milling company that sold case, sales the trial of this cludes the preceding of a commodity, at least milling to a company. were Under extent shown of necessarily “deal,” meaning of the term plain represents persons to those with whom he He in wheat. was therefore one who dealt knowledge transacts that .,” of the kind . . practices “deals busi- defi he was “merchant” under U.C.C. ness transaction. Yokel, Campbell v. 20 Ill. nition. It should also be that noted the Official Contra, (1974).

App.3d 313 N.E.2d 628 to Section 2.104 Comment states what kinds Schreiner, 294 Ala. & Co. v. Loeb “practices” were envisioned when So.2d was drafted. The Comment states part: The facts in case also show that satisfied the second and crite- third 201(2), Sections 2—207 and 2— 2— statutory definition. should be ria of dealing frauds, 2—209 with the statute of criteria do not that require noted those offers, firm confirmatoryomemoranda and having hold himself out as person actually modification rest on normal business skill; particular knowledge they some ought which are or typical to be that a person hold of and familiar in business. out as himself For purposes these sections almost ev- Thus, inquiry person’s mer- into skill. ery person would, therefore, status under the second and third

chant be deemed be a “merchant” under the statutory per- should criteria focus language “who ... occupa- occupation, and not on whether he son’s having himself tion holds out as knowl- or on any representations his actual made edge peculiar practices or skill knowledge or skill. involved in the transaction practices .” since the argues occupation that his is that are non-specialized transaction busi- farmer, do and farmers not their of a practices ness answering as mail. In having themselves as occupations represent provision, type banks even uni- crops knowledge or skill their versities, well example, may be “mer- in their sales. We practices involved chants.” But even these sections all, experienced First an farm- disagree. apply to a merchant his mercantile did, by occupation as er such Nelson capacity; lawyer or bank president hold himself out as knowl- fishing buying tackle for his own use is edge concerning or skill which [Emphasis not a merchant. subject added]. the oral contract. We were ex- person that a reasonable could believe Nelson, through occupation farming experienced wheat farmer to know pect wheat, selling held himself out as hav wheat, grades qualities the various “non-specialized ing knowledge yield varying of his farmland under as answering mail.” We conditions, pecu- factors that are other therefore hold that he was a “merchant” farming the business of wheat and to liar to meaning within the wheat itself. therefore satisfied he entered into the oral when contract with third criterion above. Equity. See Continental Grain Co. Brown, F.Supp., (W.D. 52 U.C.C.Rptr. 19 v. Furthermore, he cri- satisfied second Wis.1976); Grain v. Continental Co. Har occupation terion also. Nelson’s was bach, F.Supp. (N.D.Ill.1975); 400 695 Sier raising crops; only that of wheat other Clausen, 585, v. 60 ens Ill.2d 328 N.E.2d 559 raised, the wheat which he and to he sold Swisshelm, Grain v. (1975); Ohio Co. 40 as informed to market stayed that end 203, (1973). App.2d 318 N.E.2d 428 Ohio knowledgeable in the busi- prices and was argues selling. Nelson’s Nelson also that he was not a ness raising upon language that of based other clearly in- living. person statutory A whose the Official Comment to defi-

357 determining particular in relevant whether a The Comment states nition. merchant. It held that the part: was a farmer’s regarding and skill raising Purposes: wheat, plus previous annual cash transac- 1. This article assumes elevators, to local were not sales suf professionals in a tions between to justify holding factors ficient special clear rules which field merchant. The court in Loeb & to be a Co. inexperi- casual or Schreiner, 294 Ala. 321 v. So.2d 199 buyer. adopts a It thus seller enced also considered a farmer’s “profes stating applica- rules expressly policy of important. The farmer in sionalism” against and “as merchants” ble “between farmed approximately case ten merchant”, they wherever are needed crops and had sold his cotton years making depend upon them instead cotton plaintiff annually merchant for the of each case circumstances years preceding five the oral contract. The lays the foundation of This section previous held that farmer’s court annu defining to be those who are policy were sufficient to al sales remove him professionals or “merchants” regarded the “casual category from seller” into that stating when a transaction “professional.” also of the Lish v. to be “between merchants.” deemed (Utah 1976); 547 P.2d Compton, Cook term “merchant” as defined 2. The Grains, Fallis, Inc. v. 239 Ark. concept the “law roots in merchant” here (1965). Contra, Sierens Clau S.W.2d profes- business. The of a sen, 60 Ill.2d (1975); N.E.2d 559 under status the definition sional Yokel, Campbell v. 20 Ill.App.3d specialized knowledge as to based N.E.2d goods, specialized knowledge as specialized argument. knowl- practices, accept We cannot Nelson’s special- edge “profes- as to both and which kind of if the terms Even “merchant” and knowledge may es- synonymous, be sufficient ized sional” we are still con- merchant is indicated hold tablish the status Nelson to be a strained merchant us, provisions. nature under the because facts before was a and not a “casual or

professional, inexperi- He professional seller.” was a enced points out that indi the Comment growing selling crops he the term “merchant” was intend cates that Campbell Yokel, supra. See raised. He “professional apply ed to the in busi hobby not sell his wheat as a or merely did ness,” inexperi and not “casual or pleasure; depended livelihood for on the buyer.” that a argues He enced seller sold, expertise which he as well as himself, such as who sells raised, crops. He was crop year and as to stays once a informed and, therefore, a “merchant.” prices, “profession market is not a current therefore a “merchant.” we argued al” and is It that have un jurisdictions adopt unduly application other have an literal Courts from dertaken reasoning holding statutory ed the farmers definition to the facts of are, however, Decatur There persuasive not to be merchants. before them case. rea Urban, adopting expansive 219 Kan. reading Association v. Cooperative sons First, held (1976), example, 323 “merchant” definition. 547 P.2d broad farmer, language farmed for twen of Section and the had accom that crops to sug sold his text the Official Comment ty years annually panying the oral was years preceding gest the seven that term “merchant” intend others in not a The court to all the most “merchant.” ed to casual Second, inexperienced with a merchant’s sellers. the burden equated professionalism grain is concept pro light; “merchant” seller of status, and stated on the weight do is given object was to be much he must read his mail fessionalism all days within ten to the contents of the con frauds contained On the firmatory 2.201(b) memorandum. other allows an oral contract be- hand, greater it would be far burden on tween “merchants” to be enforced “if with- buyers grain merchant them in a time a writing reasonable in confirma- to execute forward sales with farmers such tion of the contract and sufficient against by using other as Nelson methods than con the sender is received and the receiv- firmatory Allenberg memoranda. Cot it reason to contents, has know its Pittman, 20, 26-29, ton Co. v. U.S. objection unless written notice L.Ed.2d for a discus to its S.Ct. contents within ten days widespread use of forward sion con after it is received.” majority of this Nelson, tracts in the commodities market and farmer, court holds that is a Finally, their reasons use. we holding believe “merchant.” is that with which grain for a it is reasonable dealer to this writer vigorously disagrees. when treat a seller merchant The facts on which the majority relies for large to sell quantity seller has offered its determination contained in its ninth quality, specified at a specified paragraphs. and tenth These facts are: delivery specified at a future price, for Nelson is a resident of Oklahoma and Brown, Co. v. time. Continental Grain owns acres of land. (W.D.Wis. F.Supp., U.C.C.Rptr. 59-60 grazes grown He cattle and has cotton 1976). and wheat there since 1967. reasons, we hold that For the above Nel- He has year one which he a “merchant” when entered son was into annually has sold since 1967. Equity. with Union the oral contract knowledgeable He growing about appeals the court civil judgment of crops made his usual —he affirmed. practice determine the best ob- tainable for them. Dissenting opinion by Justice D. SAM He stays abreast of the current market STEAKLEY, in which Justices JOHNSON by listening reports market on the join. and YARBROUGH McGEE by asking grain radio and dealers for prices. market Justice, JOHNSON, dissenting. D. SAM Prior to the date of the oral con- respectfully This dissent submitted. tract, phoned Exchange Union several Carroll defendant times inquire prices. about crops, wheat, grows two cash cotton He entered into a contract in 1972 with 1,200-acre Mangum, farm near Oklaho- Exchange, which was rescinded by Equity Co-Operative Exchange ma. Union parties. alleging an oral contract sued Nelson previous years In the five sold his yearly crop. By his wheat the sale of (not milling company wheat to a terms of this oral plaintiff issue) by written contracts wheat crop, sold his 1973 estimated signed by parties. both $17,800 bushels, a total sum of and He sold his 1973 wheat crop same by August 31, to obligated himself deliver it milling company (again, plaintiff not there is no 1973. Since written instrument issue) per $5.25 bushel. Nelson, signed by and since sale $500,'recovery facts, facts, such an exceeded oral These are the and all the on usually by majority contract would be barred the which the relies. 2.201(a),

statute of frauds Texas [Section A “merchant” is defined Webster’s Business and Commerce Code Annotated]. (Second New International Dictionary Edi- however, Exchange, tion) asserts it is “any as one making a business of commodities; entitled enforce this oral contract be- a buying to traffick- er; trader; exception the statute of . . . one traffics cause of an to a who on action; who, or scale, foreign (4) employs intermediary coun- large especially] a business; as occupation, who carries on a retail holds himself out hav- tries. One knowledge storekeeper shopkeeper.” or or skill. a such majority, it the facts recited is legally From This evidence insufficient Nelson, a to conclude that is unreasonable Nelson satisfied the first stat- establish that farmer, majority a “merchant.” The being one utory who deals in criterion clear, ordinary meaning violates the opinion in the transac- of the kind involved as the definition con- that word as well previously, As stated the comment to tion. 2.104(a). That Section tained it clear a makes that “mer- states: professional is a does chant” “ or buyer. a who a casual seller means not include ‘Merchant’ or generally of the kind otherwise that farmers who inconceivable having as single crop holds himself out contract a

occupation by written each sell prac- knowledge or skill buyer professionals in busi- year one or transaction tices and therefore “merchants.” Under ness or knowledge determination, or whom such every farmer employment of an course, be attributed state, would be “merchant.” intermediary agent or broker or other definition, Using majority’s own it is out occupation holds himself did indisputable not “deal” in knowledge or skill.” produced wheat wheat. He sold wheat, traffic, buy sell, he did intent of this Section is violated year it. transact business in One sale any other individual who when a commodity produced is less than a of a buyer, seller or is held to be a casual that the of evidence farmer “deals” scintilla This made obvious “merchant.” intent crops. Other courts have so held. in farm 2.104(a), first comment by the Schreiner, Company, Inc. v. Loeb provides: which Grains, (1975); Ala. 321 So.2d Cook Article assumes “This transactions Fallís, Inc. v. Ark. 395 S.W.2d 555 professionals in a field between Cooperative Decatur (1965); Association v. special rules which clear Urban, (1976); 219 Kan. 547 P.2d 323 inexperienced apply to a casual or Compton, (Utah Lish v. P.2d 223 buyer.” [Emphasis seller added.] 1976). In the instant case the evidence shows satisfy does Nelson crite- Nor second producer farmer and His rion. farmer who owns wheat, only per such wheat one time sold land, cattle, grazes year and sells one indication that this farm- year. There no legally written contract is insufficient “professional” in the field of mer- er was a knowledge that he has or skill pe- indicate else; chandising anything evi- involved in the trans- culiar no more than indicate a casual dence does justification is no action. There sale, per year. a sale of wheat one time evidence in this basis case to conclude holding is a majority that this farmer that Nelson’s indicates only spirit violates the 2.104(a), but the law of Section also allowing signed by a letter practice that law. Under the definition letter of binding create a contract if the one 2.104(a), person is a “merchant” nothing. of the letter does The recipient of kind involved in goods the correctly knowledge attributes such statute transaction; (2) by occupation holds the merchants; there is no indication to knowledge out as himself ever intended to attribute such knowl- the peculiar edge farmers. transaction; (3) by holds 2.104(a), criterion of having knowledge or skill The third out as himself the in the trans- the individual’s indicates goods involved peculiar knowledge or skill the contracts, virtues of forward that case involved, applicable is not fact situa- involved a agreement signed written by involving exception tion to the defense both and the opinion does not con- 2.201(b)]. of the statute frauds [Section sider the issue of the respective burdens of term “merchant” is employed The the parties regarding the creation of for- significant provisions thirteen least the ward contracts. Texas Business and Commerce Code.1 Ac- Finally, it is profes- unreasonable cordingly, the definition of “merchant” dealer, experienced sional com- be a one and every must broad criterion of market, modity assume that a farmer may always broad definition single crop who sells a year of wheat a given provision. This is sup-

to a view knowledge professional business ported by following comment to Section practice of employing a memorandum 2.104(a): only signed party one to create a binding The “2. term ‘merchant’ as defined here agreement. ‘law concept roots merchant’ of a The unfortunate result of majority professional profession- business. The only decision that every farmer in al status under the definition be “merchant,” Texas is held to abe but every upon specialized knowledge based as to individual buys who from time to time goods, specialized knowledge as to significant sells household or personal specialized practices, knowl- items, trailers, boats, house or automobiles edge special- as to both which kind also becomes a “merchant.” Each these ized sufficient to es- persons would be “merchant” and would the merchant status is tablish indicated be bound a confirming letter sent provisions.” nature [Em- buyer object or seller if the did not phasis added.] to it. provision suit, involved in this 2.201(b), contemplates an awareness of STEAKLEY, McGEE, Justices practice of em- join YARBROUGH in this dissent. ploying confirming signed memorandum binding one to create a con- tract, notwithstanding statute While the dealing

frauds. act occupation may

or one’s indicate awareness practice, knowledge pecu-

of such or skill cannot. liar II, George OGLE, Appellant, Braddock even undisputed majority fourth criterion Texas, Appellee. is not satisfied. STATE of Clearly, application a literal of the stat- No. 50159. majori- view support

ute does not Appeals Court Criminal of Texas. Further, ty. weighing of the burden on 5, Nov. 1975. bbject to every letter he against buyer the burden on the receives Rehearing On June 1976. signed the return of a contract does await Rehearing April Denied support provide persuasive ma- Although Allenberg jority view. Cotton Pittman,

Co., 26-29, Inc. v. 419 U.S. (1974), 42 L.Ed.2d 195 discusses

S.Ct. 2.103, 2.201, 2.205, 2.603, 2.207(b), 2.605(a)(2), 1. Sections 2.314, 2.327, 2.403, 2.209(b), 2.402(b), 2.509(c),

Case Details

Case Name: Nelson v. Union Equity Co-Operative Exchange

Court Name: Texas Supreme Court

Date Published: Mar 16, 1977

Citation: 548 S.W.2d 352

Docket Number: B-6108

Court Abbreviation: Tex.