Usemco, Inc. v. Marbro Co.

BLOOM, Judge. Appellant, USEMCO, Inc., sued appellee, Marbro Company, Inc., in the Circuit Court for Prince George’s County, for money allegedly due as final payment for an automatic pumping station Marbro purchased from USEMCO for inclusion in a sewage treatment facility Marbro built for Anne Arundel County. Marbro pleaded a “set off and counterclaim” in which it acknowledged that it withheld the final payment but asserted that USEMCO was responsible for delays in completion of the facility that caused Marbro to be assessed liquidated damages by Anne Arundel County in a total amount greater than the $23,500 due USEMCO. ³⁵⁴ The case was removed to the Circuit Court for Anne Arundel County where, after a nonjury trial, USEMCO was determined to be liable for a substantial part of the liquidated damages sustained by Marbro. Appealing from a judgment in its favor for just $1750, USEMCO raises the following issues: 1) Did the lower court err in not accepting as controlling the Standard Terms and Conditions as part and parcel of this contract? 2) Did the lower court err in finding a breach of this contract, resulting from the alleged delay on the part of the appellant? 3) Did the lower court err in assessing damages against the appellant in this matter by using the liquidated damage clause of the contract between appellee and Anne Arundel County? 4) Did the lower court err in its analysis of the facts, and was the error instrumental in the court finding the way it did, thereby resulting in reversible error?

Our answer to each of those questions is “No,” although with respect to the first three of them we take a somewhat different route than the trial court followed to reach the same destination. Facts USEMCO is a manufacturer of pumping stations. Through its Maryland agent, Flow Industries, Inc. (Flow), USEMCO learned that Anne Arundel County was soliciting bids for the construction of sewage systems. Flow obtained for USEMCO a set of the county’s plans and specifications, on the basis of which USEMCO prepared a proposal for Flow to transmit to Marbro and other general contractors interested in submitting bids to the county.

As prepared by USEMCO, the pertinent portions of the document read as follows: USEMCO proposes to offer for sale the equipment described below, subject to the Standard Terms and Condi ³⁵⁵ tions of Sale contained in USEMCO’s Order Acknowledgement Form. USEMCO factory built automatic pumping station with a nominal initial design capacity [followed by detailed specifications and dimensions not necessary to repeat here]. The principal components shall include: PUMPS: 2 rated at 2000 gpm. The pumps proposed are 8 inch, model 8 x 8 x 17, manufactured by Allis Chalmers.

Motors shall be supplied at 30 Hp, 860 rpm, to operate on 3 phase, 460 volts power. CONTROL: NEMA I, Type Bubbler Flowmatcher. PIPING: Suction 12 inch, Discharge 12 inch. [Auxiliary equipment and specially required equipment were also listed.] Price: _F.O.B. factory, freight allowed. Delivery: 24-28 weeks estimated, after receipt of approved drawings.

Flow was instructed to price the proposal and send copies to Marbro and other interested contractors. Based on USEMCO’s proposal, Marbro submitted a bid to Anne Arundel County and sent to Flow, on Marbro’s stationery, an order in the following form: 2 pump station (200 GPM & 200 GPM as per plans to specs) 1 Magnetometer & Recorder as per plans & Specs [This order is contingent upon award, and equipment subject to approval by Anne Arundel County.] Total 72,500.00 According to testimony adduced by it at trial and not contradicted by Marbro, USEMCO then sent to Marbro by mail an Order Acknowledgment form together with a three page document entitled “Standard Terms and Conditions of Sale.” ³⁵⁶ USEMCO’s Order Acknowledgment form thanked the customer for the order, acknowledged its receipt and advised that the order had been accepted and was “subject to our Standard Terms and Conditions, which are attached to our Order Acknowledgement.” Included among the provisions printed on the Standard Terms and Conditions form were the following: 1. This proposal is based upon a design prepared by USEMCO which is similar to the quantities and/or specifications shown by the job plans. This proposal does not guarantee that the product described herein is in exact accord with the job plans. ****** 3.

USEMCO shall schedule delivery at the earliest possible date; all delivery schedules are estimates only, based on the best information available. * j¡c sic * * 9. USEMCO shall not be liable for any losses, damages, or delays due to or caused by transportation difficulties, fire, labor shortages, strike or other labor disputes, civil or military authority insurrection, riot, war, accident, shortage of labor or material, failure of USEMCO to receive brand name parts or other materials necessary for the construction of this equipment, flood, storm, flotation of equipment, or any other cause or circumstance, whether like or unlike the foregoing, beyond USEMCO’s reasonable control or for any delays due to failure of buyer to furnish and/or approve technical data, drawings, etc. Acceptance of equipment on delivery shall constitute a waiver of any claims for losses or damages due to delay, whether or not excused by the foregoing, and a waiver of the right to revoke such acceptance for any reason. Further, under no circumstances shall USEMCO be liable for any liquidated, special or consequential damages or for any penalties, whether direct or indirect. The county’s plans and specifications called for “built-together” pumps with wound rotor motors.

Contending that ³⁵⁷ no company in the United States made wound rotor motor “built-together” pumps and relying upon an “equal or better” clause in the county’s plans and specifications, USEMCO proposed to substitute what is known in the trade as “flex-coupled” pumps, which USEMCO insists are superior in performance to “built-together” pumps. Although the county does not appear to dispute USEMCO’s opinion that “flex-coupled” pumps are equal to or better than “built-together” pumps in performance capabilities, it nevertheless rejected the substitution because “flex-coupled” pumps are so much larger in size than “built-together” pumps that in the limited confines of the pumping station they would be difficult and, therefore, costly to maintain. USEMCO then proposed to alleviate that problem by supplying additional machinery to lift the pumps out of the station for maintenance work, but the county felt that solution would not be practical because maintenance of the lifts would involve additional expense. Finally, USEMCO offered to provide maintenance for some extended period of time, but the county preferred to have all maintenance work done by its own employees who would be readily available in an emergency.

Unable to persuade the county to accept its “flex-coupled” pumps, USEMCO eventually arranged for the manufacture of what the county’s plans and specifications called for — “built-together” pumps with wound rotor motors. Marbro’s contract with Anne Arundel County required completion of the entire system by October 10, 1977, 180 days after work was begun; and it provided for liquidated damages of $150 for each day beyond October 10 the contractor took to complete the project. The county granted Marbro an extension to November 24, 1977. The first set of USEMCO’s drawings and submissions showing a “built-together” pump was delivered to the county on November 16 and approved by the county by November 29, 1977.

USEMCO finally delivered the pumps and stations to the job site on February 10, 1978. Marbro had finished installing the sewer pipe lines by the end of the previous ³⁵⁸ summer and had to wait for delivery of the pumping station in order to complete the project, which involved construction of a building over the station, making pipe and electrical connections to the station and backfilling dirt. All of those activities, originally scheduled for early fall in 1977, were complicated by cold winter weather. Consequently, Marbro did not have the electrical work ready for the Baltimore Gas & Electric Company to supply current until April 18, 1978.

The project was completed and turned over to the county on June 21, 1978. Anne Arundel County assessed liquidated damages against Marbro in the amount of $31,500 for the 210 day period from November 24, 1977, to June 21, 1978. The trial court found that USEMCO had breached its agreement with Marbro by failing to make timely delivery of the pumping station, thereby causing Marbro’s failure to complete the project within the time allowed by its contract. The court determined, however, that USEMCO was responsible for the delay and consequent assessment of liquidated damages only from November 25, 1977, to April 18, 1978, when electricity was supplied and the equipment could be made operable.

Accordingly, Marbro was allowed a setoff of $21,750, leaving a balance of $1750 due and owing to USEMCO. Judgment was therefore entered in that amount. I Appellant’s first and principal contention is that the trial court erred in not accepting as controlling the “Standard Terms and Conditions” as part of the contract between it and Marbro. Of course, if that document were included in the contract there would be no liability on the part of appellant because it absolved USEMCO of any liability for delay for liquidated damages.

The court, however, ruled that the document had “no legal relevance to the case” because there was no evidence that Marbro received a copy ³⁵⁹ of the document prior to acceptance of the contract or that Marbro agreed to any of its terms. Appellant’s assertion of error is twofold. It argues first that there was uncontradicted testimony that the document was mailed to Marbro, thereby raising a presumption that the item “ ‘reached its destination at the regular time and was received by the person to whom it was addressed.’ ” Border v. Grooms, 267 Md. 100, 104 , 297 A.2d 81 (1972), quoting from Kolker v. Biggs, 203 Md. 137, 144 , 99 A.2d 743 (1953). That argument, although valid, is over a matter that was never in dispute.

Marbro had not denied receiving a copy of USEMCO’s “Standard Terms and Conditions,” and the trial court’s decision was not predicated upon a finding that the document was not mailed or received. The court concluded that the “Standard Terms and Conditions” form was not sent to Marbro until after the contract was formed; and since Marbro did not thereafter agree to those terms and conditions, they never became part of the contract. That brings us to the second part of USEMCO’s first contention. Its argument is based on the proposition that when a contract or writing refers to another document, that other document is to be interpreted as part of the writing.

Wheaton Triangle Lanes, Inc. v. Rinaldi, 236 Md. 525, 531 , 204 A.2d 537 (1964). Therefore, appellant contends, since its offer — the initial proposal — specifically stated that it was “subject to the Standard Terms and Conditions of Sale contained in USEMCO’s Order Acknowledgement Form,” those terms and conditions were part of the offer that Marbro accepted by submitting its order. Thus, appellant’s argument continues, the contract, by its very terms, not only negated liability for liquidated damages, it also provided that Marbro’s acceptance of the equipment on delivery would constitute a waiver of any claims for losses or damages due to delay. Both parties as well as the trial court proceeded on the basic premise that USEMCO’s initial proposal constituted ³⁶⁰ an offer to sell equipment, with certain terms of the sale to be contained in another document that did not accompany the offer, and that Marbro’s order constituted an acceptance of USEMCO’s offer.

The question thus presented was whether the terms of sale contained in the separate document were part of the contract because, although undisclosed, they were referred to in the offer or whether they never became part of the contract because the offer was accepted before the additional terms were disclosed to the purchaser. The trial court took the latter position. We begin with a somewhat different premise, since in our view USEMCO’s initial proposal did not constitute an offer. It is obvious that what was involved in this case was a sale of goods within the contemplation of Title 2 of the Maryland Uniform Commercial Code (hereinafter cited as UCC), Md.Com.Law Code Ann., §§ 2-101 through 2-725.

As noted in Maryland Supreme Corp. v. Blake Co., 279 Md. 531, 538 , 369 A.2d 1017 (1977), the UCC does not define “offer” so with respect to that term we must look to the common law and the law merchant. UCC § 1-103. An essential feature of every contract being the mutual assent of the parties, it is usually necessary for one of them to “propose to the other a promise which he will make for a certain consideration, or to state the consideration which he will give for a certain promise.” 279 Md. at 539 , 369 A.2d 1017 . ³⁶¹ mere quotation or a statement of a price or prices and an invitation to enter into negotiations, are not offers which may be turned into binding contracts upon acceptance. Such proposals may be merely suggestions to induce offers by others.

See Williston [on Contracts (3rd ed. Jaeger 1957)], §§ 31-33; Am.Jur.2d, Contracts §§ 31-33 (1964); 67 Am.Jur.2d, Sales §§ 73-75 (1973). What this all boils down to is expressed in 17 Am.Jur.2d, Contracts § 33 (1964): ³⁶⁰ An offer must be definite and certain. Peoples Drug Store v. Fenton, 191 Md. 489, 494 , 62 A.2d 273 (1948).

To be capable of being converted into a contract of sale by an acceptance, it must be made under circumstances evidencing an express or implied intention that its acceptance shall constitute a binding contract. Accordingly, a mere expression of intention to do an act is not an offer to do it, and a general willingness to do something on the happening of a particular event or in return for something