C-Thru Container Corp. v. Midland Mfg. Co. - 533 N.W.2d 542 (Iowa 1995)

Rule:

The Supreme Court of Iowa upholds summary judgment when the moving party shows no genuine issue of material fact exists and it is entitled to judgment as a matter of law. Iowa R. Civ. P. 237(c). To decide if the moving party has met this burden, the Supreme Court of Iowa reviews the record in the light most favorable to the party opposing summary judgment.

Facts:

C-Thru Container Corporation entered into a contract with Midland Manufacturing Company, whereby Midland agreed to purchase bottle-making equipment from C-Thru and to make commercially acceptable bottles for C-Thru. Midland was to pay for the equipment by giving C-Thru a credit against C-Thru's bottle purchases. The contract further stipulated that if Midland failed to manufacture the bottles, C-Thru could require Midland to pay the entire purchase price plus interest within thirty days. Midland notified C-Thru that it was ready to sell bottles, but C-Thru never ordered any. Midland eventually placed an artisan's lien on the equipment and sold it. C-Thru later notified Midland that the latter had failed to comply with the terms of the contract and that the full purchase price plus interest was due and payable within thirty days. When Midland failed to pay C-Thru the amount requested, C-Thru filed a petition alleging that Midland had breached the contract by being incapable of producing the bottles as agreed to in the contract. Midland filed a motion for summary judgment, contending that the contract did not require that it demonstrate an ability to manufacture commercially acceptable bottles as a condition precedent to C-Thru's obligation to place an order. Midland asserted that the contract merely required that it manufacture commercially acceptable bottles in response to an order from C-Thru. Because C-Thru never placed an order, Midland argued that it had not breached the contract by failing to manufacture any bottles. The trial court granted summary judgment to the manufacturer but the appellate court reversed, holding that the evidence regarding the trade practice should have been considered. Midland appealed.

Issue:

Under the circumstances, should evidence regarding trade practice be considered, thereby rendering the grant of summary judgment improper?

Answer:

Yes.

Conclusion:

Affirming the appellate court, the Court remanded for further proceedings. The Court reviewed the record in the light most favorable to C-Thru to determine if there were any genuine issues of material fact. The Court determined that under Iowa Code § 554.2202, a contract could be supplemented by usage of trade and the contract did not have to be ambiguous to allow the usage of trade evidence. The Court concluded that there was a genuine issue of fact concerning whether Midland had complied with the contract based on the usage of trade to provide samples before an order was placed.