GERALD D. FINES, Chief Bankruptcy Judge
This matter having come before the Court for trial on a Complaint filed by the Trustee/Plaintiff on June 28, 2002, seeking payment of an account receivable of the Debtor Corporation; the Court, having heard sworn testimony and arguments of counsel and being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
Findings of Fact
At trial in this matter, on November 12, 2002, three witnesses testified. George Greenwood and Paul Belobraydic testified on behalf of the Defendant, and Elton Wagner testified on behalf of the Plaintiff. The Court finds that the testimony of George Greenwood and Paul Belobraydic was credible. This finding is based upon the demeanor of the witnesses and how their testimony related to the documentary evidence, each other's testimony, and the testimony on behalf of the Plaintiff. The Court finds that the testimony of Plaintiff's witness, Elton Wagner, was not credible, based upon the demeanor of the witness, the evasive manner in which he answered many questions, and the conflicts between his testimony at trial and his statements made in a deposition taken on September 25, 2002.
The evidence adduced at trial indicates that, in late August 2000, ADM Grain Company anticipated a large grain harvest which would exceed its storage capacity at its grain elevator located in Oakland, Illinois. As a result, ADM planned to construct two outside storage facilities capable of holding an additional 840,000 bushels of corn. George Greenwood, the manager of the Oakland grain facility, was in charge of the project. As a base for the storage bunkers, ADM sought to purchase finely ground limestone which had been used as a base for storage bunkers which ADM had previously built. The finely ground limestone provided a solid, dry base for the corn and also packed down well, making it possible to drive heavy trucks over it. Additionally, finely ground limestone was used because it would not contaminate the corn upon removal from the storage bunker.
In late August 2000, in preparation for building the outside storage bunkers, George Greenwood contacted Paul Belobraydic, the manager of Ron Smith Trucking, Inc., to see if he could locate ground limestone that was more finely ground than traditional agricultural lime and transport it to the Oakland grain storage facility. Pursuant to George Greenwood's request, Paul Belobraydic contacted Fine Grind Lime, Inc., in Fairmount, Illinois, and spoke with Elton Wagner concerning acquisition of the finely ground lime requested by ADM.
Paul Belobraydic, through Ron Smith Trucking, Inc., had purchased finely ground lime from Fine Grind Lime, Inc. on numerous occasions over several years. Belobraydic was aware that Fine Grind Lime, Inc. produced a product which was more finely ground than traditional agricultural lime and most likely suitable for ADM's needs.
During his initial conversation with Elton Wagner, Paul Belobraydic informed Elton Wagner that the finely ground lime was to be used as a base for the storage of corn at the Oakland grain storage facility. Wagner agreed to provide a test load. Wagner indicated that a total of 1,000 tons of finely ground lime could be made available for the project if the test load was acceptable, and, if the test load was not acceptable, there would be no charge for it. On September 6, 2000, a test load was delivered by the Defendant trucking company to the Oakland grain storage facility, and the test load was inspected and approved by George Greenwood. Based upon the acceptance of the test load, Paul Belobraydic placed an order, on behalf of Ron Smith Trucking, Inc., for 1,000 tons of the finely ground lime.
Between September 7 and September 10, 2000, employees of Fine Grind Lime, Inc. selected lime and loaded it onto trucks owned by Ron Smith Trucking, Inc. Forty three loads were transported to the Oakland grain storage facility. Each of the loads was dumped in a pile approximately 15 to 16 feet in diameter at the base, and 6 feet high. The 43 loads were scattered throughout the area where the outside storage bunkers were to be constructed.
On September 12, 2000, George Greenwood discovered for the first time that there were large rocks in the piles of limestone. Defendant's photographic exhibits Nos. 2 through 6 show numerous large and small rocks in the limestone piles at the Oakland grain storage facility. Having discovered that the limestone supplied by Fine Grind Lime, Inc. did not
2000, George Greenwood contacted Paul Belobraydic and informed him of the problem. On that same day, Paul Belobraydic called Elton Wagner and informed him of the problem.
Elton Wagner responded that he would contact ADM directly.
Following his conversation with Paul Belobraydic, Elton Wagner did contact George Greenwood at ADM, and the credible evidence adduced at trial indicates that Elton Wagner was informed that the limestone which had been delivered was unacceptable. Elton Wagner was given an opportunity to retrieve the limestone which he, in essence, declined. The evidence indicated that, at some point, Elton Wagner may have tried to find farmers that would be interested in the product; however, it is clear from reviewing the photographic exhibits and the limestone exhibits that the product was not suitable for use as agricultural lime, in that there was no way that this product could have been used to be spread onto farm fields.
Being under the tremendous pressure of the fast-approaching harvest, ADM decided that its best course of action was to spread the lime product provided by Fine Grind Lime, Inc. and then cover it with a layer of ground lime that was suitable for the project. This was, in fact, done at a considerable expense to ADM.
Conclusions of Law
In his Complaint, filed on June 28, 2002, the Trustee in Bankruptcy for Fine Grind Lime, Inc. seeks to have the sale price of $7,002.65 for the limestone product provided to Ron Smith Trucking, Inc. paid in full as an account receivable owed by the Defendant to the Debtor for the sale of 1,077 tons of ground lime. The Trustee/Plaintiff has the burden of proof by a preponderance of evidence to show that the monies claimed are due and owing.
In Illinois, sales of "goods" are governed by the Uniform Commercial Code (UCC) 810 ILCS 5/101, et seq. The lime sold in this case constitutes "goods" within the meaning of the UCC. The term "goods" is defined at 810 ILCS 5/2-105(1) as follows:
"Goods" means all things including specially manufactured goods, which are movable at the time of identification to the contract for sale other than money in which the price is to be paid, investment securities (Article 8) and things in action.
5-2/107(1) of the UCC states:
A contract for the sale of minerals or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for the sale of goods within this Article if they are to be severed by the seller but until severance a purported present sale thereof which is not effective as a transfer of an interest in land is effective only as a contract to sell.
Three different UCC warranties were breached in this case: (1) express warranty (2-313); (2) implied warranty of fitness for a particular purpose (2-315); and (3) the implied warranty of merchantability (2-314).
2-313(1) of the UCC defines an express warranty as:
(1) Express warranties by the seller are created as follows: . . .
(c) 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. 810 ILCS 5/2-313. (Emphasis added.)
During cross-examination of Belobraydic, he was asked if he provided any written specifications with regard to the limestone or if he received any written warranties from Fine Grind Lime. He did not; however, 2-313 doesn't require an express warranty to be in writing.
Express warranties are also created by utilizing a sample. On September 6, 2000, a sample load was approved by the ultimate buyer, George Greenwood. Greenwood conducted a visual inspection of the sample pile on September 6, and took several hand samples from the sample pile and found it to be "finer" than agricultural lime and acceptable. This created an express warranty that the rest of the goods would conform to the sample. It was reasonable for both Ron Smith Trucking Company, Inc. (RSTI) and ADM to rely upon Fine Grind Lime, Inc. to provide additional lime that conformed to the September 6 sample, and, when the remaining loads selected by Elton Wagner didn't conform to the sample, Fine Grind Lime, Inc. breached the express warranty it created in this case.
When the large number of rocks was ultimately discovered in the piles of lime, George Greenwood was adamant that all of the loads, except the test load, were defective.
This testimony was uncontradicted. Clearly, the goods furnished by Fine Grind Lime, Inc. did not conform to the sample load, and a breach of express warranty occurred in this case.
Plaintiff cites 810 ILCS 5/2-327 for a sale on approval or sale on return. However, there was no testimony regarding a sale on approval or sale on return. Elton Wagner testified that he authorized a sample load to be inspected, and, if RSTI didn't like it, the sample load would be "free." If the sample load was acceptable, RSTI was to pay for the remaining lime.
The sample load was approved, so the remaining loads were not a sale on approval. Section 2-327 does not apply to the instant case.
The UCC also provides for an implied warranty of fitness for a particular purpose.
Section 2-315 states:
Where the seller at the time of contracting has reason to know that any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select, or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. (Emphasis added.)
Paul Belobraydic informed Elton Wagner during the initial contact that he was requesting fine grind lime for the particular purpose of a base for the grain storage bunkers at Oakland. Elton Wagner confirmed that Belobraydic told him that the limestone was needed for that purpose, and arrangements for a sample load were made. It was critical for ADM that the fine grind lime not have any rocks in it.
When the corn is picked up from storage in the bunkers, a machine scrapes along the base of the lime auguring the corn into a truck. In this auguring process, if the base of lime has any rocks or stones in it, the augur will move the rocks up into the corn and the loads of corn will become contaminated, making it unsaleable in the marketplace. Fine grind lime in the form of a powder prevents the presence of rocks and keeps the foreign material in the grain at acceptable low levels so that the grain can be sold in the marketplace. Therefore, it was imperative that the limestone base be free from rocks or stones.
RSTI relied upon Fine Grind Lime, Inc. to select and load and furnish limestone that was fit for this particular purpose. The rocks in the limestone defeat its suitability for the grain storage purposes and for essentially any commercial purpose. The implied warranty of fitness for a particular purpose was breached in this case.
The implied warranty of merchantability arises in the sale of goods if the seller is a "merchant" with respect to goods of that kind (2-314). The term "merchant" is defined in the UCC at 5/2-104 as follows:
"Merchant" means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
It is undisputed that the Debtor, Fine Grind Lime, Inc., was a "merchant" with regard to the sale of lime. Fine Grind Lime, Inc. has been in business since 1987 and has sold fine grind lime to RSTI over the last 10 years on a regular basis. Section 2-314 of the UCC provides of an implied warranty and states:
Goods to be merchantable must be at least such as
(2)
(a) Pass without objection in the trade under the contract description; and . . .
(c) Are fit for the ordinary purposes for which such goods are used;
(d) Run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved . . .
(3) Unless excluded or modified other implied warranties may arise from course of dealing or usage and trade. (Emphasis added.)
Two different circumstances created the implied warranty of merchantability: (1) a course of dealing or usage and trade of fine grind lime sold to RSTI for 8 to 10 years; and (2) the unfitness of the defective lime as either fine grind lime or ag lime. RSTI is in the lime spreading business. Paul Belobraydic testified that for the past 8 to 10 years, RSTI had purchased fine grind lime (lime finer than agricultural lime in Exhibit 1) from Fine Grind Lime, Inc., and RSTI applied that finely ground lime to farmers' fields to reduce the acidity in the soil and increase its ph factor. RSTI purchased thousands of tons of finely ground lime from Plaintiff and never did that product contain rocks. Belobraydic testified that he specifically asked for fine grind lime as he had received numerous times in the past. Elton Wagner acknowledged that sales of his lime were made to RSTI regularly in the past 10 years, although he terms the material "agricultural lime." This created a "course of dealing" or "usage and trade" under 2-314(3) and RSTI had a right to rely upon and expect finely ground lime. Under cross-examination, Belobraydic admitted that the lime purchased in this case was not to be used as "fertilizer" for field application. However, Elton Wagner claimed he sold "ag lime" to RSTI in the past and the material Fine Grind Lime, Inc. sold to RSTI in this case would not even pass as ag lime, and the implied warranty of merchantability was breached.
RSTI is in the lime spreading business, and Belobraydic identified Exhibit 1 as a sample of agricultural lime. He explained that the product had to be of that consistency and no greater in size because during the spreading process, the lime passes over 4" beveled blades that spray the small pieces of lime 30' to 35' on each side of the spreader for an application 60' to 70' in width. Exhibit 7 is a sample of the rocks Belobraydic took from what Fine Grind Lime, Inc. sold to RSTI. The photos in Exhibits 2 through 6 show large rocks throughout the material. If agricultural limestone consisted of the larger rocks in Exhibit 7, during the spreading process the blades would certainly be broken and the machinery damaged. In addition, the blades would not be able to spray the lime evenly across the field.
The lime sold by Fine Grind Lime, Inc. to RSTI here could not possibly be "agricultural lime." Elton Wagner testified that he has never operated a lime spreader and his testimony that Exhibit 7 was "ag lime" was not credible. George Greenwood, who has a degree in agri-business, agreed with Belobraydic that Exhibit 1 consisted of agricultural lime and that Exhibit 7 could not be agricultural lime. It was critical that agricultural lime be very small to properly apply it in the field.
Elton Wagner's advertisement also belies his testimony. Exhibit 10 is an advertisement Elton Wagner prepared comparing the fine grind lime of his company with the agricultural lime of Material Service Company. Exhibit 10 extols the virtues of Fine Grind Lime, Inc.'s finely ground limestone. The advertisement, entitled "Don't Make the $15 Mistake," states on the first page:
I have passed out dozens of these pamphlets over the several years and am now realizing that some lime users do not understand how the fineness of the lime affects the soil's ability to utilize the calcium. (Emphasis added.)
Wagner explained that the message conveyed by this advertisement on page 3 is that by using fine grind lime, a farmer can reduce his per-acre cost by $15 and still have the same efficiency in the absorption of the calcium. This advertisement emphasizing the importance of fineness of lime completely contradicts Elton Wagner's claim that Exhibit 7 contains "ag lime" or that ag lime can be any size.
Elton Wagner was impeached on this very point. He admitted that, on page 15 of his previous deposition taken on September 25, 2002, he stated as follows:
Q. Is there a difference between ag lime and fine grind lime?
A. Chemically, no.
Q. Size wise?
A. Size wise, yes.
Despite this testimony, Elton Wagner claimed that there was no definition of fine grind lime, that it was just a company name. He did admit that the material in Exhibit 7 was not finely ground lime as he stated in his deposition.
He also admitted that pep chips were smaller than 3/8" chips, which is "too big" for ag lime. The rocks in Exhibit 7 are much larger than 3/8", so it could not possibly be "ag lime." Clearly, the material sold to RSTI in Exhibit 7 for resale to ADM was defective, and Plaintiff breached the implied warranty of merchantability.
Wagner's testimony that RSTI requested ag lime is also not believable because of price. Other suppliers were selling just "ag lime" for between $4.50 and $5.25 per ton in September 2000, and RSTI agreed to buy fine grind lime for $6.50 per ton because of its extra fineness. RSTI would not have paid a premium of more than $1.25 per ton from Fine Grind Lime, Inc. when regular ag lime was available at a cheaper price much closer to the Oakland destination.
Paul Belobraydic testified that, even if the product ordered by RSTI was "ag lime," it would not "pass without objection" as ag lime to farmers. Farmers would not want rocks of this size in their fields, and it is impossible to spread the lime with even small rocks in the lime. This breached the implied warranty of merchantability (314(c)). He also testified that the lime sold by Fine Grind Lime, Inc. was not fit for the ordinary purpose of ag lime because a farmer would not accept it. This was a breach of implied warranty of merchantability in 314(d).
The wide variations of lime sold to RSTI make it virtually worthless for anything other than fill material. George Greenwood testified that the 43 piles included some lime that was finer than ag lime, as well as many rocks a half inch in diameter to 6 inches in diameter.
Limestone with such wide variations does not run with the variations permitted in the oral agreement between RSTI and Fine Grind Lime, Inc. In fact, even limestone provided for driveway or road use does not have such a wide variation from powder to large rocks. The material sold to RSTI was not fit as fine grind lime or ag lime. The lime has no secondary market value as agricultural lime and is nonexistent.
Under the UCC, a buyer may reject goods that, "fail in any respect to conform to the contract." 810 ILCS 5/2-601. When goods have been accepted, a buyer may revoke acceptance when the nonconformity substantially impairs the value of previously accepted goods to the buyer. 810 ILCS 5/2-608(1). Clearly the nonconformity here was substantial and impaired the value of the lime. Revocation of acceptance is considered a remedy available to a buyer in an action for breach of warranty. See 810 ILCS 5/2-608 Uniform Commercial Code Comment 1. The right to revocation of acceptance arises when the buyer accepts goods:
(b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances. 810 ILCS 5/2-608(b).
The rejection of goods must occur within a reasonable time after delivery ( 810 ILCS 5/2-602) or revocation of acceptance must be made within a reasonable time after the buyer discovers or should have discovered the ground for revocation ( 810 ILCS 5/2-608(2)). Section 1-204 of the UCC provides, in relevant part, that:
(2) What is a reasonable time for taking any action depends on the nature, purpose and circumstances of such action.
(3) An action is taken "reasonably" when it is taken at or within the time agreed or if no time is agreed at or within a reasonable time.
The UCC definition of a "reasonable time" suggests that the question of reasonableness is particularly fact sensitive. It follows that whether the conduct has amounted to an acceptance or rejection of goods is a question of fact to be determined within the framework of the facts of each particular case.
Plaintiff suggests that RSTI and/or ADM should have discovered the defective rock sooner than September 12, and that the defects were not discovered within a reasonable time under 2-608. This argument is meritless. The rocks were not readily discoverable within the fine lime, and RSTI and ADM were reasonable in relying on the assurances of the earlier sample pile.
Revocation of acceptance is effective when the seller is notified. 810 ILCS 5/2-608(2) Such notification need not be in any particular form or use particular language and, if seller is aware of defect, he is deemed to have been notified. Malawy v. Richards Manuf. Co., 150 Ill. App.3d 549, 103 Ill. Dec. 355 (1986). In this case, the 43 loads of lime were delivered between Monday, September 7, and Thursday, September 10, 2000. The nonconformity of large rocks was first discovered on September 12. George Greenwood called Paul Belobraydic on September 12 and rejected the goods. Paul Belobraydic called Elton Wagner that same day and RSTI rejected the goods because of the rocks, telling Wagner that the rocks were "unacceptable." Elton Wagner acknowledged that, in so many words, all the material was rejected. Wagner told Belobraydic that he would call ADM.
All the goods were selected and loaded by Fine Grind Lime, Inc. RSTI's drivers performed the transportation service and delivered the 43 loads of lime after the sample load was approved. Based upon the course of conduct in prior years and the quality of the sample load, RSTI had a right to reasonably rely upon Fine Grind Lime, Inc. to provide goods that conformed to past behavior and the sample load. The drivers were not charged with the responsibility to know the details or particulars of the quality of the product they were hauling.
When the loads were dumped, there were no ADM personnel to inspect the piles as they were dropped throughout the bunkers. ADM had no reason to have a man stand out in the field for several days to watch lime deliveries after a sample load had been approved.
It was only when the spreading process began on September 12 that the spreading company, A. J. Adams, contacted George Greenwood about the rocks, and, thereafter, the material was immediately rejected.
Contrary to Plaintiff's argument that revocation should have taken place upon loading, case law supports the view that, depending on the circumstances, several weeks or months may elapse before revocation of acceptance takes place. See: GNP Commodities, Inc. v.
Walsh Heffernan, 95 Ill. App.3d 966, 420 N.E.2d 659 (1981) [two-month delay between purchase and revocation of acceptance of frozen pork bellies was reasonable.] Notice of revocation must be given within a reasonable time after the buyer discovers or should have discovered any breach. See: 810 ILCS 5/2-607(3)(a). The lime here was promptly rejected by RSTI on September 12, shortly after delivery was completed. It was again rejected by ADM on September 14. This was reasonable notice.
If the buyer has taken physical possession of the goods before rejection, he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a "time sufficient to permit the seller to remove them" (2-602(2)(b)). However, the buyer has no further obligations with regard to goods rightfully rejected (2-602(2)(c)).
Both George Greenwood and Elton Wagner acknowledged that a conversation occurred on September 14 with regard to the defective lime. George Greenwood testified (and Elton Wagner did not dispute this testimony) that, during that conversation Elton Wagner indicated that he was not going to make arrangements to come and pick up the lime.
Fine Grind Lime, Inc. abandoned the lime in the middle of the construction project at a time when Elton Wagner knew the harvest season was underway. George Greenwood told Elton Wagner, during this conversation, that ADM had to move quickly to complete the construction of the two bunkers because they were running out of storage space and grain had to be placed in the bunkers in less than a week. The limestone had to be spread out for at least a day or two to cure, harden, and dry out. Despite this knowledge, Elton Wagner admitted that he did not instruct RSTI or any other carrier to retrieve the goods. He did indicate that later on he tried to see if he could find some farmers interested in the product, but, as explained earlier, no farmer would pay the premium price of $6.50 per ton for defective lime that could not be properly spread in the field.
Plaintiff argues that the spreading process had already begun by September 13. Paul Belobraydic testified that he inspected the bunkers and took photographs (Exhibits 3 through 6) of the numerous rocks in the bunker. Belobraydic testified that many of the piles had already been spread out in the bunker, although not all. George Greenwood testified that he did not recall exactly when he directed the defective lime to be spread, but that he placed a phone call to Elton Wagner early in the morning on September 14 to give him an opportunity to retrieve the defective lime. The defective lime could easily have been retrieved on September 14 or shortly thereafter had Elton Wagner wished to do so, according to George Greenwood. Therefore, whether the spreading process had begun on September 13 is of no significance. The lime was defective, Wagner abandoned the lime, the cost to remove the lime exceeded its value, and the lime was do defective it was not commercially usable for any other purpose.
Once Elton Wagner abandoned the goods, ADM had no choice but to cover the lime over with replacement material. It was not economically feasible or realistic for Fine Grind Lime, Inc. to pick up the defective goods, especially since the material was not even suitable for use as ag lime. RSTI charged ADM $5.50 a ton for transporting the lime from Fine Grind Lime, Inc.'s facility to the ADM elevator at Oakwood. Paul Belobraydic explained that RSTI would have charged the same $5.50 freight rate to transport the goods back to Fine Grind Lime, Inc. An end loader would be necessary to scoop the lime up and drop it in the bed of the trucks. RSTI had an end loader for such a loading purpose, and the company's normal charge at that time for loading bulk material, like the defective lime, was $1.00 per ton.
Therefore, the cost of removal and return of the defective lime at least equaled the amount claimed by the Plaintiff in this case.
Elton Wagner had notice of the urgency of the elevator's circumstances and had a chance to remove the lime. When he was told, on September 14, that the elevator was running out of storage space and had to store grain in the bunkers within a week, his response, which he admitted to on the stand, was "And I said well, we will let the lawyers figure it out." The clear message by these words is that Plaintiff was not going to do anything to cure the problem or retrieve the goods. Section 602(2)(c) makes it clear that the buyer has no further obligations with regard to the goods rightfully rejected. Therefore, ADM had to figure out a way to dispose of the defective lime immediately in a manner consistent with the timely completion of the construction of the bunkers.
In the instant case, Elton Wagner did not give any instructions to RSTI or ADM for the disposition of the lime, and his failure to promptly act was unreasonable under the circumstances, since he knew the limestone was scattered in 43 large piles inside the 2 bunkers when ADM was under severe pressure to build outside storage facilities for the large harvest. The defective lime was in the way, and it had to be either removed immediately or spread out and covered with fine lime within a week because the elevator was running out of storage space.
The term quantum meruit means literally "as much as he deserves," and is an expression that describes the event of liability on a contract implied in law, which is predicated upon the reasonable value of property or services performed. Quantum meruit theory of recovery applies where the defendant has received a benefit which would be unjust for him to retain without paying for it. Chapman and Associates Ltd. v. Kitzman, 302 Ill. App.3d 780 (1999).
As long ago as 1845, the Illinois Supreme Court has declared any claim for quantum meruit must be reduced by the amount of damages suffered by the other party. In Eldridge v. Rowe, 7 Ill. 91 (1845), the Illinois Supreme Court discussed quantum meruit as follows:
And this doctrine, as laid down by Starkie, in his treatise on evidence . . . "[s]ince he has not done that which he engaged to do, and which is the consideration of the defendants' promise to pay, it seems to be now well settled, that the plaintiff must recover, if he can recover at all, upon the quantum meruit and he cannot recover more than the value of the work and materials to the defendants. And where the plaintiff has executed his work so ill that the defendant has derived no benefit from it, or none which exceeds the value of whatever may have been paid upon it by the defendant, the law will not allow him to recover at all." (Emphasis added.)
More recently, Courts have held steadfast to the principle that a party whose work amounts to less than substantial performance may not recover on the contract, but may recover under quasi-contractual theory for the reasonable value of services rendered less damage suffered by the purchaser. Howard v. Jay, 203 Ill. App.3d 539 (1990); W.E. Erickson Const., Inc. v. Congress-Kenilworth, 132 Ill. App.3d 260 (1985); George Butkovich Sons v. State Bank of St. Charles, 379 N.E.2d 837 (1978). Even when a party shows substantial performance of a contract, the other party is allowed a credit for compensation for the deficiencies as compared to what strict performance would have given him. Broncata v. Timbercrest Estates, 100 Ill. App.2d 49 (1968); Brewer v. Custom Builders Corp., 42 Ill. App.3d 668 (1976).
In the instant case, the defective lime was of no benefit to RSTI or ADM. ADM lost $2,400 ($1,200 per bunker) in spreading costs to spread the defective lime. The replacement cost for replacement fine grind lime conforming to the contract cost $11,500. RSTI remains liable for these costs. The cost of removing approximately 43 large piles of limestone in the 2 bunkers by having an end loader end load several trucks and then transporting the lime plus purchasing substitute limestone that was finely ground without rocks far exceeded the claim of $6.50 per ton by Fine Grind Lime, Inc. Moreover, the lime was so defective, it was not even useful as ag lime.
Fine Grind Lime, Inc. was in no position to pay RSTI or ADM for the end loader cost of loading and transporting the lime out of the bunkers. Since Fine Grind Lime, Inc. stopped production as of July 5, 2000, it was probable that those costs would never be recovered.
Had RSTI transported the limestone back to the facilities of Fine Grind Lime, Inc., RSTI would have charged $5.50 per ton (ADM's contract delivered price of the fine grind lime was $12 per ton, which included Fine Grind Lime, Inc.'s charge of $6.50 per ton) and RSTI would never have been paid. Elton Wagner did not make any arrangements to remove the defective lime in a timely basis, knowing that 43 piles of defective lime were scattered in the middle of the construction project. The removal and transportation of the defective lime would be both costly and time consuming, and Elton Wagner knew that and took advantage of it by doing nothing and later claiming the contract price for defective lime.
Therefore, neither RSTI nor ADM have benefitted by the spreading of Fine Grind Lime, Inc.'s defective lime and covering it over with conforming find grind lime. That mitigated the damages that RSTI would have suffered had the limestone been removed and transported away. Therefore, Fine Grind Lime, Inc. cannot recover under the theory of quantum meruit.
In conclusion, the Court finds that the Trustee/Plaintiff has failed to meet his burden of proof. For this reason, the Court finds that the Trustee/Plaintiff's Complaint must be denied.
ORDER
For the reasons set forth in an Opinion entered on the ___ day of December 2002;
IT IS HEREBY ORDERED that the Complaint filed by Plaintiff, Steve Miller, Trustee in Bankruptcy for Fine Grind Lime, Inc., on June 28, 2002, is DENIED.