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Smith Machinery Co., Inc. v. C & B Mfg., Inc.

Court of Appeals of Iowa

October 23, 2013

SMITH MACHINERY CO., INC., Plaintiff-Appellee,
v.
C & B MANUFACTURING, INC. d/b/a Hitchdoc, Defendant-Appellant.

Editorial Note:

This decision has been referenced in a "Decisions Without Published Opinions" table in the North Western Reporter.

Appeal from the Iowa District Court for Boone County, Steven J. Oeth, Judge.

Hitchdoc appeals from the ruling finding it breached its contract with Smith Machinery Co. AFFIRMED.

Kenneth R. Munro of Munro Law Office, P.C., Urbandale, for appellant.

Kirke C. Quinn and Jay W. Halbur of the Law Offices of Kirke C. Quinn, Boone, for appellee.

Heard by VOGEL, P.J., MULLINS, J., and SACKETT, S.J.[*]

SACKETT, S.J.

C & B Manufacturing, Inc., d/b/a Hitchdoc (Hitchdoc), appeals from the ruling finding it breached its contract with Smith Machinery Co., Inc. (Smith Machinery) and awarding Smith Machinery $62,500 in damages, plus interest. It contends Smith Machinery breached the contract by providing a substandard product and failing to provide installation drawings for approval. Hitchdoc also contends the court erred in misapplying the parol-evidence rule.

We find substantial evidence supports the district court's finding Hitchdoc, not Smith Machinery, breached the contract. The parol-evidence rule does not apply because the evidence complained of concerns negotiations the parties engaged in after the contract was signed. Because the trial court's ruling is supported by the facts and the law, we affirm.

I. Background Facts and Proceedings.

Hitchdoc is a manufacturing company located in Jackson, Minnesota. Smith Machinery, located in Boone, sells and installs new and used manufacturing equipment. On a recommendation, Hitchdoc contacted Smith Machinery regarding the design and installation of a paint line in its manufacturing plant.

On October 6, 2010, the parties entered into a contract whereby Smith Machinery was to provide and install a paint line system for Hitchdoc at a cost of $298,950. The terms of the contract call for Hitchdoc to pay forty percent of the contract price at the time the system was ordered, thirty percent after approving the installation drawings, twenty-five percent when the parts shipped, and five percent upon completion. Hitchdoc paid $119,580 at the time of purchase, as required.

Brad Mohns, President of Hitchdoc alleges Smith Machinery promised it would have the power and free conveyer system within two to three weeks of entering the contact and that the paint system would be operational by January 2011. James Smith, an officer at Smith Machinery, recalls he informed Mohns that even if the parties had an approved layout at the time the contract was entered into, the earliest the paint line could be completed would be mid-January 2011. The contract does not specify a completion date, but states parts will be shipped twelve weeks after drawing approval.

On December 29, 2010, Mohns left a message stating he was unhappy with the lack of progress being made on the contract. Mohns expressed his dissatisfaction with his own employees as well as with Smith Machinery's performance. The parties met on January 5, 2011, and discussed various changes to the paint line, including changing the line to accommodate larger parts.

On January 12, 2011, Mohns emailed Smith, stating: " To say I am disappointed in SMC is putting it very mildly. After a lot of thought I have decided not to continue to put any more faith in your company." Mohns demanded the down payment be returned. In his reply, Smith noted the paint system layout had not yet been approved and there had been " several changes" in the layout. Smith told Mohns he did not want Mohns to pay for anything until he was " very satisfied." Smith Machinery stopped work on the project while Smith and Mohns continued to exchange correspondence.

The project resumed following a meeting in mid-February 2011. On February 22, 2011, Smith Machinery employee Steve Wilcoxon emailed Mohns the layout for the conveyor path and equipment, asking for any feedback or questions. Hitchdoc continued to make modifications to the design and Smith Machinery continued to send it drawings reflecting those changes. Hitchdoc never gave approval of any drawing Smith Machinery provided. Despite the lack of approval, parts were delivered to Hitchdoc in mid-March. At the time the parts were delivered, Hitchdoc again asked that the design be ...


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