Albin Elevator Co. v. Pavlica

649 P.2d 187, 34 U.C.C. Rep. Serv. (West) 438, 1982 Wyo. LEXIS 358

• Court: Wyoming Supreme Court
• Decided: July 26, 1982
• Docket: 5651
• Status: Published

Opinions

ROSE, Chief Justice.

Plaintiff-appellee Pavlica brought suit against defendant-appellant Albin Elevator Company charging negligence and breach of express warranty.¹ In his complaint, Mr. Pavlica alleged that Albin Elevator Company had warranted to sell him “spring wheat” but had in fact sold him “winter wheat” which did not produce a crop. As a result, Pavlica prayed that the court award him $9,200 for expenses incurred in attempting to produce a crop, $24,400 in lost profits, and that he be relieved from reimbursing Albin Elevator for the $866 purchase price. Trial was to the court and the plaintiff-appellee was awarded damages in the sum of $10,371 for lost profits and Albin Elevator’s counterclaim for the purchase price of the wheat was denied. Mr. Pavlica took no exception to the award, nor has he presented any argument to us except that the trial judge acted properly in awarding him $10,371 for lost profits. He does not, for example, ask for the expenses incurred in purchasing the seed or raising the crop and so we are bound to assume that his expenses are not the subject of this appeal.

In this appeal, the elevator company is challenging the trial court’s finding that there had been a breach of an express warranty, and it also challenges the court’s award of damages for lost profits. The issues raised by appellant are framed in the following manner:

“1. Whether or not Defendant’s express warranty that wheat sold to Plaintiff on May 7, 1980, was ‘spring wheat’ was tantamount to a warranty that the wheat was also ‘spring wheat seed ’ and suitable for planting.

“2. Whether or not Plaintiff’s proof of damages was so speculative and conjectural that the Court erred in awarding Plaintiff damages for lost profits in the amount of $10,371.00.”

We will affirm with respect to the finding that appellant breached an express warranty and reverse the trial court’s award of damages for lost profits.

FACTS

Plaintiff-appellee, Mike Pavlica, has operated his farm near Burns since 1974. In May of 1980 he called Albin Elevator Company to inquire if they had some “spring wheat” whicfi he could plant that spring and was informed by a company representative that “spring wheat” was available. On May 7, 1980, Pavlica took delivery of 216.3 bushels of “spring wheat” from Albin Elevator and this transaction was verified by a sales ticket signed by one of Albin’s employees, which recited that “spring wheat” had been delivered.

The appellee planted the seeds and within a few weeks approximately 99% of them germinated. Mr. Pavlica continued watering the crop and he sprayed the field with a chemical substance in order to control weed growth. The wheat plants, however, did not produce stalks and remained in a green, leafy state.

The appellee solicited the advice of Dr. Bernard Kolp of the University of Wyoming who traveled to the farm and advised that the plants had characteristics of “winter wheat” rather than “spring wheat.”² He recommended various procedures which Pavlica could follow which, he suggested, might insure the production of a crop. These recommendations were followed, but a harvestable crop was never produced, although Mr. Pavlica did manage to lease the field for grazing purposes for $600.

On the basis of these facts, appellee brought the present action seeking damages for breach of express warranty.

DID APPELLANT BREACH AN EXPRESS WARRANTY?

As noted previously, § 34-21-230, W.S. 1977 (UCC § 2-313), governs claims for express warranties in Wyoming. See: § 34-21-230, supra n.l. A portion of that statute provides that any description of the goods which the parties make a basis of the bargain creates an express warranty, and the goods sold must conform to the description. Section 34-21-230(a)(ii), supra n.l. Also, the statute provides that the seller need not specifically use the words “warrant” or “guarantee” or even intend to expressly warrant in order for the court to determine that a warranty was in fact made. Section 34-21-230(b), supra n.l. Thus, it is necessary to consider whether or not the agreement between the parties evidences any description or promise made by Albin Elevator which became a basis of the bargain. Shepard v. Top Hat Land & Cattle Co., Wyo., 560 P.2d 730 (1977). Secondly, if plaintiff-appellee is able to demonstrate the existence of an express warranty, he must then prove that the warranty was breached and that he was damaged as a result. Kure v. Chevrolet Motor Division, Wyo., 581 P.2d 603, 608 (1978); Colorado Serum Company v. Arp, Wyo., 504 P.2d 801, 805 (1972).

Given the facts surrounding the sale of the wheat seed, we conclude that the trial court acted properly in deciding that Albin Elevator had expressly warranted to Mike Pavlica that he was purchasing “spring wheat.” The description is plainly reflected in the sales ticket, signed by one of appellant’s employees, where the recitation approves to the effect that Albin delivered 216.3 bushels of “spring wheat” to appellee. According to the testimony, Al-bin was informed by Pavlica prior to the sale that he desired “spring wheat” for planting purposes. These facts establish that Albin expressly warranted to sell Pav-lica “spring wheat” and such assurances were made a basis of the bargain. An express warranty was given by Albin under § 34-21-230(a)(ii), W.S.1977.

It further appears that plaintiff-appellee presented substantial uncontradicted evidence to the effect that the express warranty was breached. At trial, Dr. Kolp, plaintiff-appellee’s witness, testified that, in his opinion, the plants he observed on the farm were “winter wheat” sprouts and not “spring wheat.” Thus, the evidence reveals that Pavlica thought he was buying and planting “spring wheat” when in fact he was sold “winter wheat” seeds. It was also not disputed that “winter wheat” seeds would not produce a crop at the time plaintiff-appellee planted them. Clearly, Albin did not sell plaintiff what it had warranted to sell. Considering the evidence, Albin’s argument that it did not warrant to sell Pavlica “spring wheat seed” but only “spring wheat” requires little discussion. We say this because the facts reflect that Albin delivered “winter wheat” rather than “spring wheat” and that fact in itself was a sufficient basis for the trial court to conclude that Albin had breached the warranty.

DID PLAINTIFF-APPELLEE PROVE HE WAS DAMAGED BY THE BREACH?

In light of our conclusion that there was ample evidence to sustain the finding of a breach of an express warranty, the only question remaining concerns proof of damages.

In cases where a buyer seeks to recover damages for a breach of warranty, § 34-21-293(b), W.S.1977 (UCC § 2-714) instructs:

“(b) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.”

Subsection (c) of § 34-21-293, W.S.1977, also allows the buyer, in a proper case, to recover any consequential and incidental damages. The recovery of incidental and consequential damages for breach of warranty is governed by § 34-21-294, W.S.1977 (UCC § 2-715). That section provides:

“(a) Incidental damages resulting from the seller’s breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. “(b) Consequential damages resulting from the seller’s breach include:

“(i) Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and “(ii) Injury to person or property proximately resulting from any breach of warranty.”

In this case, plaintiff-appellee sought recovery for his lost profits which, he argued, resulted as a consequence of the breach.

The trial court ascertained the loss-of-profit figure of $10,371 by assuming a

“ * * * gross return of Forty (40) bushels per acre on One Hundred Forty (140) acres, each bushel having a dollar value of Four Dollars ($4.00) for a total of Twenty-Two Thousand Four Hundred Dollars ($22,400.00) from which should be subtracted the following expenses incurred by Plaintiff in connection with the crop: Eight Hundred Sixty-Six Dollars ($866.00) for seed grain, Nine Thousand Twenty-Three Dollars ($9,023.00) for electric power to operate the sprinkler system and water well, land preparation, planting, fertilizing and post emergent herbicide spraying, and One Thousand Five Hundred Forty Dollars ($1,540.00) for harvesting * * * ; The further sum of Six Hundred Dollars ($600.00) should also be deducted as the sum received by Plaintiff for use of the vegetation actually produced as cattle grazing; * * * ” (From the judgment of the court.)

The problem that we have with this calculation is the court’s finding that the plaintiff-appellee would have produced 40 bushels of wheat per acre.

Although we have never specifically held that lost profits can be recovered for breach of warranty, the general rule is that such profits are a proper element of damages which can be recovered for breach of warranty under the Uniform Commercial Code. White and Summers, Uniform Commercial Code § 10-4, p. 391 (2nd Ed. 1980). See also: White v. Oregon Horticultural Supply, 40 Or.App. 323, 594 P.2d 1321 (1979); Clark v. International Harvester Co., 99 Idaho 326, 581 P.2d 784 (1978); Golden Gate Hop Ranch, Inc. v. Velsicol Chemical Corp., 66 Wash.2d 469, 403 P.2d 351 (1965). However, the rule allowing recovery for lost profits requires that the plaintiff prove such loss with a reasonable degree of certainty through use of the best evidence available. R. E. B., Inc. v. Ralston Purina Company, 525 F.2d 749 (10th Cir. 1975); Lundgren v. Whitney’s, Inc., 94 Wash.2d 91, 614 P.2d 1272 (1980). We discussed the necessity of proving damages for lost profits with “reasonable certainty” in Wyoming Bancorporation v. Bonham, Wyo., 563 P.2d 1382 (1977). There we said:

“The evidence necessary to establish lost future profits with reasonable certainty depends, then, upon the circumstances of the particular case. Notes: Requirements of Certainty of Proof of Lost Profits, 64 Harv.L.Rev. 317, 319 (1950). A court should approach each case in an individual manner and require the claimant to furnish the best proof available as to amount of loss. Vickers v. Wichita State University, Wichita, supra, [213 Kan. 614] 518 P.2d [512] at 517; and McCormick, Law of Damages, § 29 (1935). Absolute certainty in proving loss of future profits is not required.” 563 P.2d at 1385, 1386.

According to these rules, plaintiff-appellee could recover his lost profits under § 34-21-294(b), as long as he presented sufficient evidence to enable the trial court to determine his profit loss with a “reasonable degree of certainty.” Wyoming Bancorporation, supra. In this case, Pavlica could claim damages for lost profits because Al-bin Elevator is chargeable with the knowledge that if it delivered “winter wheat” in the month of May Mike Pavlica could not produce a crop. Section 34-21-294(b)(i), supra.

We call attention to the fact that, in this appeal, we are not dealing with a question involving damages recoverable for loss of a growing crop. Under the “growing crop” theory of damages a plaintiff can recover damages up to the amount of the value of the crop as it stood in the ground at the time it was destroyed, and for any loss in the diminution of the value of the land. We discussed the application of this theory of damages in Reeder Flying Service v. Crompton, Wyo., 470 P.2d 281 (1970), where we upheld the award of damages for diminution in the value of the plaintiff’s lands due to the negligent spraying of the chemical by defendants but held that plaintiff had failed to establish the value of the hay at the time it was destroyed by the chemical. The rule discussed in that case holds that, in seeking recovery for damage to a growing crop, the plaintiff must establish with a reasonable degree of certainty the value of the crop at the time it was injured or destroyed, and this is the prevailing viewpoint. Black v. Ellithorp, Okl., 382 P.2d 23 (1963); Wood v. Woodcock, 276 Or. 49, 554 P.2d 151 (1976); Frankfort Oil Co. v. Abrams, 159 Colo. 535, 413 P.2d 190 (1966). It is important to point out that, in the case at bar, plaintiff-appellee is seeking to recover for lost profits arising out of his failure to produce any spring wheat crop because appellants did not sell him spring wheat seed. In other words, the facts establish that plaintiff is not attempting to recover and could not recover damages under the “growing crops” theory since he is claiming to have suffered damage by reason of the fact that he did not produce a crop at all. In such circumstances there can be no recovery for damages to a growing crop, because there was no crop growing at the time the injury occurred since, in this instance, the injury occurred at the time the ' seed was sold. We add this discussion to insure that no confusion results, and to point out that we are not here concerned with a situation like that discussed in Reed-er Flying Services v. Crompton, supra.

With the above discussion in mind, the only question left for resolution concerns whether or not the plaintiff-appellee’s evidence of lost profits was sufficient to allow the trial court to award them. We hold that it was not.

In our judgment, the rule of damages for lost profit must, in this case, be viewed in the context that the wheat crop in question was in the nature of a new or contemplated business. We suggest this because the plaintiff did not have extensive experience in planting spring wheat on his farm³ and also because the farmer’s income from each and every planting is dependent upon so many variables that every year’s experience takes on the characteristics of a new venture. This does not mean that loss of future profits are not provable (see Shelver v. Simonsen, 369 F.Supp. 4 (1973), but it does mean that that proof is very difficult. Where, for example, in a cattle-raising venture, the plaintiff sought loss of profits, the Federal District Court of North Dakota, Northeastern Division, said:

“*** l conclude that, while in theory, loss of profit is provable as an item of damage, in fact, the element of future profit is usually so speculative that any evidence addressed to proving it will be subject to harsh scrutiny; and no verdict or finding of fact of loss of profit will be allowed to stand unless the proof is clear and unequivocal.” 369 F.Supp. at 5-6.

In his attempt to prove damages for lost profits, plaintiff-appellee relied mostly upon the experience of a neighboring farmer, a Mr. Lawrence Anderson. This witness testified that his farm was located some three and one-half miles “as the crow flies” from Mike Pavlica’s farm, and that he had grown many crops of wheat over the years. He testified that in 1980 he raised a crop of wheat that produced an average of 60 bushels per acre and sold for $4.20 to $4.30 a bushel. In his testimony he recounted that he had experienced no severe weather problems and that he knew of none in the area, and Mr. Anderson said that he had an irrigation system similar to the one on the plaintiff-appellee’s farm. On the basis of this evidence, and Dr. Kolp’s testimony that yields can average some 20 to 25 bushels per acre below those experienced by Mr. Anderson, the trial judge awarded Pavlica damages for lost profits in the amount of $10,371.

All that Mr. Anderson’s testimony proved was that his farm, located in the vicinity, experienced a successful return on a wheat crop. No testimony was ever elicited which connected Mr. Anderson’s farming practices with Mike Pavlica’s, nor was there any evidence concerning similar soil types, nutrients, or other conditions extant upon the Pavlica and Anderson farms. In fact, Mr. Anderson admitted that he had no knowledge about plaintiff-appellee’s farming practices, soil conditions, or other variables associated with raising a profitable crop. He was only able to recount his own experience which was never sufficiently related or compared to Mike Pavlica’s probable experience. Thus, although the plaintiff-appellee did not have to show that Mr. Anderson’s yield and price were identical to what his would have been, it became his obligation to at least prove that Mr. Anderson’s crop was produced under conditions similar to his and others in the vicinity so that the trial judge could make a reasonable estimate on the basis of the comparison. Blackburn v. Carlson Seed Company, Mo.App., 321 S.W.2d 520 (1959).

We are further of the opinion that in order for plaintiff-appellee to recover for lost profits it was incumbent upon him to provide the court with evidence supporting his claim that his farm was a profitable operation. The courts generally require some record of profits which allows the reasonable inference to be drawn that a profit would have been experienced but for the breach of the defendant. See White v. Oregon Horticultural Supply, supra. Plaintiff-appellee offered no records or other evidence of past yields even though he had apparently grown a crop of spring wheat on a prior occasion. Evidence establishing pri- or profitable returns with other crops grown by appellant would have been relevant for purposes of proving that appellant’s farming operation had been profitable before, and that, under the conditions then existing, he would expect it would have been profitable again except for the breach. Golden Gate Hop Ranch, Inc. v. Velsicol Chemical Corp., supra.

We conclude then that it was incumbent upon the plaintiff-appellee to produce more than the testimony of a neighboring farmer as to what occurred on his farm. To allow the trial judge to arrive at a reasonable award, it was necessary that there be some evidence going to the similarities which existed between the farms, other than their location, in order for a reasonable comparison to be made. Here, we believe the evidence was deficient in this respect. The award of lost profits could only have been based on conjecture and speculation and must be reversed. Since the plaintiff-ap-pellee failed to prove those damages, he is entitled to no recovery.

Affirmed in part and reversed in part.

1 . Express warranties of a seller or manufacturer are governed by § 34-21-230, W.S.1977, which provides:

“(a) Express warranties by the seller are created as follows:

“(i) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise;

“(ii) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description;

“(iii) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

“(b) It is not necessary to the creation of an express warranty that the seller use formal words such as ‘warrant’ or ‘guarantee’ or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.”

2 . According to the expert’s testimony, the distinctions between “winter” versus “spring” wheat is important because “winter wheat” requires a vernalization period of a number of weeks of temperatures below 41 degrees before stalks will be produced. Absence of such period will allow the seedlings to produce only green foliage. It is undisputed that the temperature levels never got low enough for this reaction after plaintiff had planted his field.

3 . Mr. Pavlica had planted spring wheat on his farm only twice — once in 1975, and the 1980 planting which is in contest here.