may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Huntting Elevator Co.,
Filed June 15, 1999
Mower County District Court
File No. C6-96-1405
Richard W. Sobalvarro, 11 Seventh Avenue North, P.O Box 1433, St. Cloud, MN 56302 (for respondent)
Considered and decided by Chief Judge Toussaint, Presiding Judge, Amundson, Judge, and Huspeni, Judge.[*]
On appeal from denial of his motion for a new trial, Curtis Moeller asserts that (1) the district court erred in granting Huntting Elevator Company's (Huntting) motion for a directed verdict on his express- and implied-warranties claims; and (2) the jury verdict on the negligence claim is contrary to the weight of the evidence. We affirm.
Curtis Moeller is a crop and dairy farmer. Huntting sells and applies herbicides and fertilizers in addition to its other grain and crop-related businesses.
In the spring of 1995, Moeller met with Huntting's manager, Paul Steier, who suggested fertilizers and herbicides that Moeller should use on his fields. Allegedly, Huntting's agronomist, Bob Smith, told Moeller that Accent®, a herbicide, "would work if everything else failed." Moeller agreed to notify the elevator when his fields were ready to be sprayed with herbicide.
Between May 5 and May 18, 1995, Moeller planted corn. On May 20, 1995, he told the secretary at Huntting that he had finished planting and that his fields were ready for spraying. After waiting ten days for the sprayers, Moeller returned to Huntting and again notified the company that his fields were ready for spraying.
In early June 1995, Moeller told Steier that his fields had not been sprayed and that the foxtail weed in his fields was now, according to Moeller, between four and eight inches high. Steier, who looked at Moeller's field about June 5, 1995, told him that Smith, Huntting's agronomist, was out of town. Between June 10 and June 13, Smith also inspected Moeller's fields. Moeller told Smith that he was concerned about the height of the foxtail, because it would be uncontrollable if not sprayed very quickly. Allegedly, Smith told Moeller that "he (Moeller) should go milk and he (Smith) would kill the weeds."
On June 13, 1995, Huntting's staff sprayed 119 acres of Moeller's fields, and, three days later, sprayed the remaining 34 acres. Of these total acres, 119 acres were sprayed with a mixture of Accent®, another herbicide, and a nonionic surfactant. Twenty-five acres were sprayed with a mixture of Accent® and another herbicide. Nine acres were sprayed with herbicides other than Accent®. Moeller paid $5,194.20 for the herbicides and separately paid $638 for the spraying services.
On June 24, 1995, Moeller told Steier that the foxtail was not dead. Four days later, Steier inspected Moeller's fields and recommended that Moeller cultivate the fields first, then apply nitrogen. Moeller began cultivating that day.
In early July 1995, Moeller applied nitrogen to his fields but was unable to complete the task due to the thickness of the foxtail and the height of the corn. On July 5, 1995, Smith and Roger Ries, the Accent® representative, viewed Moeller's fields. According to Moeller's testimony, they said that Accent® had not worked. In contrast, Smith testified that he told Moeller that Accent® had worked; that the foxtail that appeared to have survived treatment were actually "green skeletons" (i.e., dead plants that had retained the green color); and that the live foxtail were later flushes of the weed.
All of Moeller's fields were infested with foxtail during the entire 1995 growing season. That year, he produced 69 bushels of corn per acre. Because the bank required him to sell his entire crop to repay a portion of his loan, he sold his corn in December 1995 for $2.70 per bushel, rather than selling it the following year when the price of corn was $5 per bushel.
Curtis Moeller sued Huntting for (1) breach of express- and implied-warranties arising out of a sale of Accent®; (2) negligence based on Huntting's failure to timely apply Accent®; and (3) negligent misrepresentation that Accent® would eliminate the weeds from Moeller's corn fields.
During trial, the elevator moved for a directed verdict on all three claims. The district court granted the elevator's motion for a directed verdict on the negligent misrepresentation and warranty claims, but permitted the negligence claim to go to the jury.
The jury found that (1) Huntting was negligent in providing services to Moeller's 1995 crops, and its negligence was a direct cause of the damage to the crops; (2) Moeller was negligent in his 1995 corn-growing activities, and his negligence was a direct cause of the damage to his crops; (3) Huntting was ten percent negligent; (4) Moeller was 90 percent negligent; and (5) Moeller's damages were $6,135.
Moeller moved for a new trial on various grounds, arguing that (1) the warranty claims were improperly dismissed; and (2) the verdict was not justified by the evidence. The district court denied the motion and awarded costs to Huntting. This appeal followed.
When reviewing a directed verdict, this court independently determines whether the evidence is sufficient to present a fact question to the jury. Nemanic v. Gopher Heating & Sheet Metal, Inc., 337 N.W.2d 667, 669 (Minn. 1983). A directed verdict is warranted when, viewing the evidence in a light most favorable to the party against whom the verdict is directed, a district court would be obliged to "set aside a contrary verdict as manifestly contrary to the evidence or to the law." Gustafson v. Chestnut, 515 N.W.2d 114, 116 (Minn. App. 1994) (citation omitted).
The district court dismissed Moeller's express- and implied-warranty claims, concluding that the contract was predominantly a sale of services and, consequently, outside the scope of the Uniform Commercial Code (UCC).
Moeller argues that his transaction with Huntting primarily involved the sale of goods because 89% of the contract price represented the cost of the herbicides and merely 11% represented the sale of services. For support, he cites Valley Farmers' Elevator v. Lindsay Bros. Co., 398 N.W.2d 553, 556 (Minn. 1987). We disagree.
The provisions of Article 2 of the UCC apply to transactions in goods. Minn. Stat. § 336.2-102 (1998). Goods are defined as all things that are movable at the time of identification to the contract for sale. Minn. Stat. § 336.2-105(1) (1998). The herbicides were "goods" because they were movable at the time of identification to the contract. Because the contract involves both the sale of herbicides and the sale of application services, however, it is not necessarily a "transaction in goods" that comes within the warranty provisions of Article 2. The classification of a hybrid contract is a question of law. Valley Farmers, 398 N.W.2d at 556.
In a hybrid contract that involves both the sale of goods and services, Minnesota courts use the "predominant factor" test in deciding whether the essence of the contract is primarily a sale of goods or the provision of services. Id. If the predominant purpose of the contract is the sale of goods, the UCC governs; if the predominant purpose of the contract is the provision of services, the UCC does not apply. McCarthy Well Co., Inc. v. St. Peter Creamery, Inc., 410 N.W.2d 312, 315 (Minn. 1987). The "predominant factor" test is as follows:
The test for inclusion or exclusion [from scope of the UCC] is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved (e.g., contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g., installation of a water heater in a bathroom).
Bonebrake v. Cox, 499 F.2d 951, 960 (8th Cir. 1974).
Price allocation between goods and labor is a factor in this analysis. See Valley Farmers, 398 N.W.2d at 556. In applying the "predominant-factor" test to a contract for the purchase of a grain storage system, the supreme court in Valley Farmers reasoned:
[W]e conclude that whatever the extent of the design services or selection of component parts by Lindsay, the substantial or predominant purpose of the contract here was the sale of goods, not the rendition of services. Of the full $504,000 contract price, less than $120,000 can be identified as attributable to `labor.' That factor is not persuasive that the essence of the contract was the provision of services. Services are always required to convert raw materials into a useful product. That some added service is required to install or apply the product does not transform a contract of sale into a contract for services. Moreover, no part of the labor charge included in the contract is designated as compensation for the defendant's alleged design of the system, a factor indicative of the tangential and incidental nature of those services.
Id. (internal citations omitted).
In this case, the major portion of the contract price represents the cost of the herbicides. But the cost of services, although it is far less than the cost of the product, is a separate component of Huntting's charges, indicating that labor is not incidental to the contract. Moreover, there is persuasive authority for concluding that the predominant purpose of a contract is services, despite the fact that the charge for goods exceeded the amount charged for labor, when the essence of the contract is the skill and judgment used in providing the services. See Northwestern Equip., Inc. v. Cudmore, 312 N.W.2d 347, 350 (N.D. 1981).
This court, in Grossman v. Aerial Farm Serv., did not use the price-allocation analysis in deciding that a contract for the sale and aerial application of herbicide was excluded from UCC coverage:
There are several methods by which the Suess Brothers could have applied the herbicide, including ground spraying through use of a tractor and trailer. They selected, however, a method of application which could only be performed by a contractor equipped to handle their specific request. By making such selection, the dominant purpose and character of the contract between the Suess Brothers and respondents became one for services and, as a result, the transaction did not fall within the scope of the uniform commercial code * * * .
384 N.W.2d 488, 490 (Minn. App. 1986). Moeller argues that Grossman is distinguishable because it involved aerial spraying rather than the customary method of ground application. We find this distinction unpersuasive. Moeller testified that he would not have been able to use the herbicides if the elevator had not provided the spraying services, because he was not a licensed applicator. He could not apply the herbicide using either method because he was not qualified to do so.
Moeller also claims that Grossman is distinguishable because it involved injury to other property. But the threshold question is the characterization of the contract to determine whether the UCC governs. The issue of damages is irrelevant in deciding the predominant purpose of the contract.
The evidence at trial supported a determination that the essence of the contract was a sale of services, rather than a sale of goods. Moeller acknowledged that what he really purchased from Huntting were its services. He did not care whether Huntting followed the herbicide plan that had been prepared in the spring of 1995, "as long as he got weed control." He attempted to show that Accent® did not work because Huntting had failed to mix it properly with an additive and failed to apply it timely. This evidence supports the district court's determination that Moeller's primary complaint concerned Huntting's services, not a defect in Accent®, and that the predominant purpose of the contract was the provision of services to eradicate weeds. Therefore, even if we assume that Smith told Moeller that Accent® would work, this warranty provision of the UCC is not available to Moeller because the contract predominantly involves the sale of services. See McCarthy Well, 410 N.W.2d at 315 (UCC does not govern if predominant purpose of contract is rendering of services).
On review, answers to special verdict questions will not be set aside unless they are perverse and palpably contrary to the evidence or where the evidence is so clear to leave no room for differences among reasonable people. The evidence must be viewed in a light most favorable to the jury verdict. If the jury's special verdict finding can be reconciled on any theory, the verdict will not be disturbed.
Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302, 309 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993) (citations omitted). Moeller cites two grounds for his contention that the jury verdict was not justified by the evidence.
First, Moeller asserts the finding that the elevator was only ten percent negligent is against the weight of the evidence because it is undisputed that the elevator failed to mix a nonionic surfactant with Accent® as allegedly required by its instructions. As part of this argument, he challenges the district court's conclusion that there was sufficient evidence that inadequate nitrogen and Moeller's improper cultivation practices caused the infestation of foxtail. Moeller claims that (1) he followed the cultivation instructions on the Accent® label; (2) his fields were not tested in 1995 for nitrogen levels; (3) the defense expert's estimate of the nitrogen levels in his fields was flawed; and (4) the jury did not make a special finding as to whether nitrogen levels were a direct cause of his damages. But the special interrogatory simply asked whether Moeller had been "negligent in the activities undertaken by him to grow his 1995 corn crop." Although "activities" could encompass cultivation, it is possible that "activities" include only fertilization practices. The jury could have found that Moeller was negligent based solely on the testimony that he failed to ensure proper nitrogen levels in his fields.
Defense witnesses testified they observed signs of nitrogen starvation in the corn. Further, a defense expert testified that poor fertility prevented Moeller's corn from canopying, thus permitting sunlight to germinate the foxtail seeds in the soil that produced subsequent flushes of the weed. Moeller's contention that the expert's report is flawed goes toward its weight, not its admissibility. The jury could reasonably find the defense expert more credible than Moeller's expert, who testified that Moeller's application of manure to his fields supplied adequate nitrogen to his crops. Moreover, Moeller admitted that he did not apply nitrogen in the spring of 1995. Rather, he applied it in July, when, according to one witness, it was too late to be effective. There was sufficient evidence for the jury to find that Huntting was negligent in failing to mix properly and timely apply herbicide to Moeller's crops, but the evidence was also sufficient for the jury to conclude reasonably that Moeller's negligence was the greater cause of his damages.
Moeller also challenges the finding that he sustained only $6,135 in damages, claiming that the verdict resulted from confusion, passion, or prejudice. We disagree. In 1995, Moeller produced 69 bushels per acre. Trial exhibits showed that he produced 149 bushels per acre in 1994; 107 bushels per acre in 1996; and 169 bushels per acre in 1997. But other evidence showed that Moeller's average yields, based on his previous production history, had been 91 bushels per acre, 87 bushels per acre, and 76 bushels per acre. The jury was entitled to find this evidence more credible, thus undercutting Moeller's claim that 1995 represented a drastic change in production from other years. Because the verdict was not contrary to the evidence, the district court properly denied the motion for new trial.
[*] Retired judge of the Minnesota Court of Appeals, serving by apointment pursuant to Minn. Const. art. VI, § 10.