ITT Commercial v. Sam's Wholesale Club

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 96-11046
ITT COMMERCIAL FINANCE CORPORATION, Et Al,
Plaintiffs,
BROKERAGE SERVICES OF AMERICA, INC.,
Plaintiff-Appellant,
VERSUS
SAM’S WHOLESALE CLUB,
Defendant-Appellee.
-----------------------------------
BROKERAGE SERVICES OF AMERICA, INC.,
Plaintiff-Appellant,
VERSUS
WAL-MART STORES, INC., doing business as
Sam’s Club-Members only,
Defendant-Appellee.
Appeal from the United States District Court
For the Northern District of Texas
(3:93-CV-2297-H)
March 6, 1998
Before GARWOOD, DUHÉ, and DeMOSS, Circuit Judges.
DeMoss, Circuit Judge:*
Brokerage Services of America (BSA) appeals from the district
court’s final judgment after bench trial, which denied BSA relief
on its many claims against Sam’s Wholesale, an operating division
of Wal-Mart Stores, Inc. (Wal-Mart).1 BSA asks this Court to
reverse the judgment in Wal-Mart’s favor and render a judgment in
BSA’s favor for the hefty sum of $21,000,000. We decline BSA’s
request and affirm the district court.
BACKGROUND
I. The BSA/Wal-Mart Purchasing Contract
In 1990 and 1991, BSA sold computers and computer-related
equipment in the retail and wholesale market. In late 1990, BSA
began selling to Sam’s Wholesale Club, an operating division of
Wal-Mart. When Wal-Mart initiated a business relationship with a
vendor, it required the new vendor to execute a master vendor
agreement. The master vendor agreement defined the material terms
of the vendor’s ongoing relationship with Wal-Mart, including
payment and shipping terms. Additional vendor agreement forms were
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
1
BSA initially sued Sam’s Wholesale Club. BSA named the
parent Wal-Mart Stores, Inc. in its amended complaint. Both sides
most commonly refer to the defendant as “Wal-Mart” and this opinion
will adopt that convention.
2
sometimes executed to update or change information about a
particular vendor or transaction. Any further terms material to a
particular transaction were typically recorded in a purchase order,
which included, on the back of the form, Wal-Mart’s standard
purchase order terms and conditions. Taken together, the vendor
agreement and the purchase order terms and conditions formed the
“purchasing contract” between the parties and defined the parties’
relative rights and obligations.
Wal-Mart’s vendor agreement form contained an integration
clause, which provided:
ALL PURCHASES MADE BY PURCHASER SHALL BE CONTROLLED
BY THE PURCHASER’S PURCHASE ORDER “TERMS AND
CONDITIONS” WHICH IS ATTACHED AS A PART OF THIS
AGREEMENT AND INCLUDED WITH EACH MANUALLY
TRANSMITTED ORDER.
One of the purchase order terms and conditions integrated by the
integration clause provided:
Set-off: Purchaser may set off against amounts
payable under this order all present and future
indebtedness of the Seller to Purchaser arising
from this or any other transaction whether or not
related thereto.
Taken together, the vendor agreement and purchase order terms
and conditions purported to grant Wal-Mart a contractual right to
adjust payments to the vendor by deducting therefrom any debit
balance or indebtedness owed by the vendor to Wal-Mart.
BSA executed the required forms when it began doing business
with Wal-Mart in October 1990. Thereafter, BSA executed several
3
additional vendor agreements. The district court held that the
BSA/Wal-Mart purchasing contract vested Wal-Mart with the right to
continually set off any debt BSA owed to Wal-Mart against debt Wal-
Mart owed to BSA, without regard to whether the transactions were
related. BSA challenges this holding on appeal.
II. BSA’s Assignment of a Security Interest
In January 1991, BSA obtained financing for its inventory and
other aspects of its business from ITT Commercial Finance
Corporation (ITT).2 In exchange for the financing, BSA assigned
ITT a security interest in BSA’s accounts and other intangibles.
BSA and ITT sent notice of the assignment to Wal-Mart. The
top portion of the notice defines the interest assigned. The
bottom portion of the notice is titled “Customer Acknowledgment,”
and contains the following language:
The undersigned, referred to in the above Notice of
Assignment, hereby acknowledges receipt of the
above Notice of Assignment . . . and agrees to make
all current and future payments owed to Assigner
directly to ITT at the above mailing address,
notwithstanding any terms in any agreement,
contract, invoice or purchase order to the
contrary.
After Wal-Mart received notice of the assignment, Wal-Mart paid
sums owed on BSA invoices directly to ITT. Wal-Mart also reduced
some of its payments to BSA by taking certain set-offs against the
2
ITT recovered $355,072.12 from Wal-Mart for improper
adjustments at trial and subsequently settled with Wal-Mart. ITT
is not a party to this appeal.
4
BSA/ITT account.3
III. Wal-Mart’s Sales to BSA
During the course of business, both before and after ITT
obtained a security interest in BSA’s accounts, Wal-Mart customers
would return to Wal-Mart merchandise which had been originally sold
by BSA to Wal-Mart. Wal-Mart would accept the merchandise and
deduct the price of the returned product from BSA’s invoice. This
transaction was referred to as an “original vendor return.”
Original vendor returns for BSA merchandise were routinely set off
against the BSA/ITT account.
Similarly, Wal-Mart occasionally decided to liquidate certain
merchandise from its inventory. In such a case, the inventory
might be liquidated by sale to the original vendor or to a
different vendor. When Wal-Mart’s inventory was liquidated by sale
to a vendor other than the original vendor, the transaction was
referred to as a “third party return.” In the Spring and Summer of
1991, BSA and Wal-mart entered into a series of transactions
involving the sale of merchandise to BSA pursuant to a third-party
return. With respect to each transaction, Wal-Mart’s invoice for
the merchandise sold to BSA was set off against the BSA/ITT
3
The parties designate Wal-Mart’s balance with BSA after
the assignment as the “BSA/ITT” account.
5
account. In addition to original vendor returns and third party
returns, Wal-Mart occasionally adjusted the BSA/ITT account by
various sums for shipping, handling, shipping discrepancies or for
a contractual amount referred to as “price protection.”
When ITT became aware of the various Wal-Mart set-offs posted
to the BSA/ITT account, it voiced objection and wanted to prevent
further compromise of its security interest in BSA accounts. To
satisfy ITT’s concerns, BSA and ITT executed a Supplemental
Financing Agreement in September 1991. The Supplemental Financing
Agreement acknowledged and was intended to accommodate Wal-Mart’s
contractual right to set off its payments to the BSA/ITT account.
In October 1991, Wal-Mart again desired to liquidate
merchandise by selling a substantial number of computers and
computer-related equipment manufactured by several different
companies, including Premier, KLH and Goldstar. BSA agreed to
purchase the merchandise, and the resulting transaction became
known as the “Goldstar agreement.”
BSA and Wal-Mart memorialized the Goldstar transaction with a
separate vendor agreement dated October 25, 1991.4 The parties did
4
The October 1991 vendor agreement form lists “BSA
Computer Corporation” (BSACC) as the vendor, rather than just “BSA”
or “BSA, Inc.” At trial, BSA attempted to defeat Wal-Mart’s right
to set off the BSA/ITT account for the Goldstar transaction by
arguing that BSACC was an entity distinct from BSA, against which
Wal-Mart had no pre-existing contractual set off right. The
district court rejected that argument, finding that the Goldstar
transaction occurred between Wal-Mart and BSA. BSA expressly
declines to challenge that fact finding on appeal.
6
not, however, reduce the operative terms of the Goldstar agreement
to writing by executing a companion purchase order. The operative
terms of the Goldstar transaction were thus established by the pre-
existing contract rights of the parties pursuant to the master and
subsequent vendor agreements and the parties’ oral agreement
concerning price and other terms applicable to the Goldstar
agreement. BSA claims in this suit that Wal-Mart made an oral
agreement not to set off the BSA/ITT account for the Goldstar
transaction, notwithstanding the terms of the pre-existing vendor
agreements and the parties’ prior course of dealings.
Wal-Mart shipped the Goldstar merchandise directly from its
various retail outlets to BSA. Beginning in November 1991, Wal-
Mart set off the BSA/ITT account for all of the units shipped, and
for various other expenses. Wal-Mart’s set-offs eventually totaled
$882,752.12.5 Wal-Mart’s posting of the Goldstar transaction
resulted in a credit balance owed to Wal-Mart, and Wal-Mart made no
further payments to the BSA/ITT account.
Financial pressures caused in part by the fact that BSA was
severely undercapitalized forced BSA to liquidate the Goldstar
merchandise at a “fire sale” for far less than BSA anticipated when
5
Some of these set-offs were later determined to be
unjustified. The district court determined that Wal-Mart was
entitled to set off the BSA/ITT account $527,680 for the Goldstar
transaction, but disallowed $355,072.12 as improperly set off
against the BSA/ITT account. A substantial portion of the amount
disallowed was not directly related to the Goldstar transaction.
Wal-Mart has not challenged these findings on appeal.
7
it purchased the goods from Wal-Mart. Within thirty days of
receiving the Goldstar merchandise, BSA resold most of the Goldstar
merchandise for $519,739.82, less than BSA would have owed Wal-Mart
for all of the Goldstar merchandise. BSA’s next business decision
proved to be even more imprudent. Notwithstanding the fact that
ITT financed the transaction by way of Wal-Mart’s set off, BSA did
not pay down on the BSA/ITT account. Rather, BSA deposited the
proceeds from its resale of the Goldstar merchandise directly into
the BSA bank account, and then diverted the money to run the
company and to finance a new Wal-Mart transaction.
In December 1991, ITT informed BSA that it would not provide
further financing to BSA until the BSA/ITT account was reimbursed
for the Goldstar transaction. Nonetheless, ITT subsequently
provided BSA with an additional $1.4 million for a Wal-Mart
transaction in January 1992.
BSA was unable to resolve its financial difficulties with ITT
and did not obtain alternative financing for pending purchase
orders. BSA ceased operations and litigation ensued.
PROCEDURAL HISTORY
BSA sued Wal-Mart in Texas state court, alleging that Wal-
Mart’s Goldstar set-offs caused ITT to stop financing BSA, which
caused BSA to incur $21,000,000 in lost profits and business. BSA
stated various grounds for liability, including breach of contract,
8
breach of implied and express warranty, promissory estoppel,
tortious interference, violations of the Texas Deceptive Trade
Practices Act, negligent misrepresentation and fraud.
Shortly thereafter, ITT brought a separate state court suit
against Wal-Mart to recover monies set off against the BSA/ITT
account. After Wal-Mart removed the BSA action to federal court,
the parties agreed to consolidate the BSA action and the ITT
action.
BSA, ITT and Wal-Mart all filed motions for summary judgment.
On June 2 and again on June 20, 1995, the district court entered
lengthy orders disposing of many of the issues raised by those
motions. The remaining issues were tried to the court without a
jury from September 11 through September 19, and October 11, 1995
through October 12, 1995. On January 2, 1996, the district court
entered findings of fact and conclusions of law. The district
court’s January 2 Order reaffirmed its earlier holdings and made
the following additional findings relevant to this appeal:
1. that Wal-Mart enjoyed a contractual right to
set off the BSA/ITT account for returns and
other monies owed to Wal-Mart by BSA;
2. that Wal-Mart’s pre-existing right to set off
the BSA/ITT account was not extinguished by
BSA’s subsequent assignment of a security
interest in its accounts to ITT because ITT
obtained the security interest subject to Wal-
Mart’s set-off right;
3. that Wal-Mart’s execution of the
acknowledgment portion of the BSA/ITT notice
of assignment did not constitute a waiver of
defenses under Texas law;
9
4. that Wal-Mart properly set off $527,680
against the BSA/ITT account for the Goldstar
transaction;
5. that Wal-Mart breached an express warranty by
shipping some non-conforming goods, but that
BSA failed to offer evidence supporting an
award of damages for that breach;
6. that regardless of whether Wal-Mart orally
agreed not to set off the BSA/ITT account for
the Goldstar transaction, the express terms of
the BSA/Wal-Mart contract giving Wal-Mart a
set-off right prevented BSA from enforcing an
alleged oral modification of that contract;
and
7. that the relationship between Wal-Mart’s
breach of an alleged and unenforceable oral
modification to the BSA/Wal-Mart purchase
contract and the substantial damages alleged
by BSA was too remote to justify recovery.
BSA makes four basic arguments on appeal. First, BSA argues
that Wal-Mart had no contractual right to set off the BSA/ITT
account for monies BSA owed to Wal-Mart. Second, BSA argues that
Wal-Mart’s set-off right, if any, was terminated by Wal-Mart’s
acknowledgment of ITT’s interest in the BSA/ITT account. Third,
BSA maintains that Wal-Mart made and breached a binding oral
agreement not to set off the BSA/ITT account for the Goldstar
transaction. Fourth, BSA contends that the district court
erroneously concluded that BSA failed to prove damages with respect
to its breach of warranty claim. Wal-Mart has not cross-appealed.
10
DISCUSSION
I. Wal-Mart’s Right to Set Off the BSA/ITT Account
BSA argues that the BSA/Wal-Mart purchasing contract does not
provide Wal-Mart with a right to set off the BSA/ITT account for
BSA’s purchase of the Goldstar merchandise. We review the district
court’s construction of an unambiguous contract de novo. Tarrant
Distributors Inc. v. Heublein Inc., 127 F.3d 375, 377 (5th Cir.
1997) (“[B]ut while interpretation of an unambiguous contract is a
question of law, clear error is the standard of review when a
district court uses extrinsic evidence to interpret an ambiguous
contract.”) (internal quotations omitted).
BSA first argues that the rights and duties of the parties are
governed exclusively by the October 1991 vendor agreement executed
with the Goldstar transaction. BSA uses this premise to launch
several contract interpretation arguments, all of which reach the
same conclusion -- that both the integration clause in the vendor
agreement and the set-off clause in the purchase order terms and
conditions are inapplicable to the Goldstar transaction because
Wal-Mart was acting as a “seller” or “vendor,” rather than a
“purchaser.”
BSA is correct that Wal-Mart’s right to set off BSA debts
cannot be derived from the October 1991 vendor agreement. The
October 1991 vendor agreement was not accompanied by a companion
11
purchase order. There is, therefore, no set-off clause to be
integrated by the integration clause. Of equal importance, the
integration clause, and therefore the set-off clause, is facially
inapplicable when Wal-Mart is acting as a “seller” or “vendor,”
rather than in its traditional role of “purchaser.”6
BSA’s argument is flawed, however, because it is blind to the
reality that the BSA/Wal-Mart relationship and the purchasing
contract are defined by more than the October 1991 vendor
agreement. The material terms of the BSA/Wal-Mart relationship are
defined in the master vendor agreement executed in October 1990, as
well as the standard purchase order terms and conditions
incorporated therein. With respect to the October 1990
transaction, as well as many others that followed, Wal-Mart was
acting in its defined role as “purchaser.” Moreover, each of
those contracts granted Wal-Mart an ongoing right to set off Wal-
Mart debt incurred as a result of the subject transaction by BSA
debt incurred as a result of either the subject transaction or
future unrelated transactions. The record contains ample evidence
that BSA sold Wal-Mart a large volume of product, that both the
integration clause and the set-off clause were part and parcel of
the vendor agreements and purchase orders executed by BSA and Wal-
6
The integration clause applies only to “purchases made by
purchaser.”
12
Mart,7 that the parties comported themselves in accordance with
those provisions, and that the Goldstar transaction was set off
against Wal-Mart’s pre-existing debt to BSA for product sold
pursuant to those agreements. We therefore hold that Wal-Mart’s
right to set off the BSA/ITT account does not depend upon, and is
not derived, from the October 1991 vendor agreement. Rather, Wal-
Mart’s right arises from the terms of earlier vendor agreements in
which Wal-Mart was the purchaser. For those purchases, the
integration clause, and the set-off clause integrated by the
integration clause, allowed Wal-Mart to deduct the sums BSA owed
Wal-Mart for the Goldstar transaction from the balance Wal-Mart
owed BSA for earlier purchases. The district court’s construction
7
BSA argues that there is no competent evidence of the
relevant contract terms in the record. BSA does not argue that the
relevant terms do not appear in the purchasing contract or that
better copies would disclose different language. BSA simply
asserts that it should recover because Wal-Mart failed to produce
completely legible copies of the executed vendor agreements. We
disagree. The Court spent considerable time pouring over this
exceptionally contentious record. Having completed that review, we
are convinced that the record contains sufficient testimonial and
documentary evidence to establish the relevant terms of the
purchasing contract. BSA itself introduced a form vendor agreement
illustrating the relevant terms at trial. While it is true that
Wal-Mart’s copies of the original contracts are copied from
microfilm and partially blurred, BSA’s objection that Wal-Mart’s
proof fails for failure to offer better copies is in the nature of
a best evidence objection, which should have been pressed at trial.
The best evidence rule, as the parties must realize, is subject to
a number of exceptions when original documents are, as in this
case, unavailable. See FED. R. EVID. 1002; FED. R. EVID. 1003; FED. R.
EVID. 1004. Moreover, we would in any event decline to allow BSA,
who bears the burden of proof, to base a $21,000,000 recovery upon
Wal-Mart’s failure to tender unavailable documents when neither
party disputes the content of the controlling terms.
13
of the contract is affirmed.
II. Wal-Mart’s Acknowledgment of ITT’s Security Interest
BSA argues that Wal-Mart’s acknowledgment of ITT’s security
interest barred Wal-Mart from setting off the BSA/ITT account for
the Goldstar transaction. BSA first reiterates its argument that
Wal-Mart’s set-off right, if any, must be derived from the October
1991 vendor agreement. BSA thus concludes that Wal-Mart’s set-off
right post-dated and was limited by the January 1991 notice of
assignment. See TEX. BUS. & COM. CODE § 9.318(a)(2) (assignee is
subject to those defenses “which accrue[] before the account debtor
receives notification of the assignment”). We have already
concluded that Wal-Mart’s contractual set-off right does not depend
upon the October 1991 vendor agreement, but is derived instead from
the master and subsequent vendor agreements and the parties’ course
of dealing. Therefore, BSA’s argument that Wal-Mart’s execution of
the notice of assignment preempted accrual of that right must fail.
Alternatively, BSA argues that Wal-Mart’s acknowledgment
effected a waiver of Wal-Mart’s pre-existing right to set off the
BSA/ITT account. See TEX. BUS. & COM. CODE § 9.206(a) (providing that
an agreement to enforce claims or defenses is enforceable). The
relevant provision of the notice provides that Wal-Mart “agrees to
make all current and future payments owed to Assigner [BSA]
directly to ITT at the above mailing address notwithstanding any
terms in any agreement, contract, invoice or purchase order to the
14
contrary.” The notice does not contain the word “waiver,” or
“defenses,” and does not purport to limit Wal-Mart’s defenses to
payment against either ITT or BSA. The notice simply does not
contain the clear and unambiguous type of language that Texas
courts have required to support a finding of intentional waiver.
See, e.g., Jonwilco, Inc. v. C.I.T. Financial Servs., 662 S.W.2d
664, 666 (Tex. App.--Houston [14th Dist.] 1983, no writ) (finding
waiver where note included statement that “debtor will settle all
claims, defenses, set offs and counterclaims it may have against
the secured party directly with the secured party, and not set up
any thereof against secured party's assignee"); see also Conoco,
Inc. v. Amarillo Nat’l Bank, 950 S.W.2d 790, 795 (Tex.App.-Amarillo
1997, pet. filed) (“Waiver occurs when a person, who has full
knowledge of the material facts, acts or fails to act upon a right
which he legally holds, and such act or failure to act is
inconsistent with that right or the intention to rely upon that
right”). Wal-Mart’s execution of the acknowledgment simply bound
Wal-Mart, notwithstanding any agreement to the contrary, to make
payment directly to ITT. Wal-Mart abided by that agreement by
tendering more than $20,000,000 in payments directly to ITT after
receiving notice of the assignment. Wal-Mart’s execution of the
acknowledgment did not waive Wal-Mart’s contractual defenses
against BSA.
When there has been no express waiver of defenses, Texas law
15
provides that the rights of an assignee are subject to the terms of
the contract between the account debtor and the assignor. TEX. BUS.
& COM. CODE § 9.318(a)(1). Thus, ITT accepted the security interest
subject to Wal-Mart’s pre-existing contractual right to set off the
BSA/ITT account. Conoco, 950 S.W.2d at 796-97 (applying the first-
in-time rule to an analogous dispute). ITT could not obtain any
rights greater than those possessed by BSA and BSA cannot now
assert that the assignment to ITT effectively expanded its own
rights against Wal-Mart by modifying the contract between BSA and
Wal-Mart. The district court’s determination that Wal-Mart’s
acknowledgment of ITT’s security interest did not extinguish Wal-
Mart’s contractual set-off right is affirmed.
III. Oral Modification of the Vendor Agreement for the
Goldstar Transaction
BSA claims that Wal-Mart’s decision to breach the Goldstar
agreement by setting off the cost of the Goldstar merchandise
caused ITT to cease financing BSA business, with the result that
BSA lost profits and business in the amount of $21,000,000. The
district court rejected BSA’s theory of the case, finding that the
alleged oral agreement not to set off the BSA/ITT account, if any,
was legally ineffective to modify the express terms of the
purchasing contract, which contained a clause prohibiting oral
modification.
Neither the summary judgment record nor the record of trial
16
support the conclusion that Wal-Mart agreed not to set off the
BSA/ITT account for the Goldstar transaction. There is evidence
suggesting that BSA’s President and Wal-Mart’s purchasing agent
were concerned that ITT would be unhappy if and when the Goldstar
transaction was set off against the BSA/ITT account. There is
evidence that BSA wanted to sell the Goldstar merchandise quickly
and pay Wal-Mart back directly so that ITT would not become
involved. There is even evidence that Wal-Mart’s buyer hoped to
purchase additional product from BSA, or to set off the Goldstar
transaction in small increments, to avoid triggering a negative
reaction from ITT. Conspicuously absent, however, is any evidence
that the parties took the appropriate steps to insure that Wal-Mart
would abandon its contract rights and deviate from the parties’
prior course of dealing by foregoing payment until BSA was in a
position to pay directly.
BSA sold the material quickly at a loss or reduced profit and
then failed to use the proceeds to pay either Wal-Mart or ITT.
Trial testimony established that a Wal-Mart representative
contacted BSA President James Crocco for the express purpose of
asking whether ITT was to remain as the payor or factor for
purposes of the October 1991 Goldstar vendor agreement. Crocco
advised the Wal-Mart representative that ITT should remain part of
the deal.
The record does not support the conclusion that Wal-Mart
agreed not to exercise its contractual rights by setting off the
17
Goldstar transaction against the BSA/ITT account. It is,
therefore, unnecessary to consider whether the parties’ failure to
record the alleged agreement in writing would have made the
agreement unenforceable.8 The district court’s refusal to give
effect to the alleged oral agreement not to set off the BSA/ITT
account is affirmed.
IV. Wal-Mart’s Breach of Warranty Claim
The district court held that Wal-Mart breached its warranty to
provide the Goldstar merchandise new, undamaged and in original
boxes. The district court nonetheless declined to award damages
for that breach because it also found that BSA had not produced
sufficient evidence to establish the damages caused by that breach.
BSA contends that the district court erred because BSA’s
former Chief Financial Officer Peter Streit offered sufficient
testimony to support a damage award. Streit testified that
$151,000 was a “fair price reduction” for the non-conforming
character of some of the Goldstar merchandise. Streit’s testimony
was based generally on his familiarity with the market and the
condition of the Goldstar merchandise when received. Streit did
not offer any detailed accounting of how that figure was
8
Although the district court purported to find the alleged
oral agreement unenforceable as a matter of law prior to trial, BSA
concedes that the district court received and considered
substantial evidence concerning the existence of the agreement at
trial.
18
determined. Wal-Mart offered evidence tending to establish that
some set-offs had already been credited to the BSA/ITT account.
We review the district court’s fact finding that BSA failed to
prove ascertainable damages for clear error. Nichols v. Petroleum
Helicopters, Inc., 17 F.3d 119, 121 (5th Cir. 1994). The district
court expressly rejected Streit’s testimony as less than credible.
The district court’s credibility determination is deserving of
great deference. Burma Navigation Corp. v. Reliant Seahorse MV, 99
F.3d 652, 657 (5th Cir. 1996). When the district court decides to
credit the testimony of one witness over another, the resulting
decision “can virtually never be clear error." Id. (internal
quotations omitted). Having reviewed the record and the arguments
offered by the parties, we are not persuaded that the district
court’s refusal to award damages for breach of warranty was error.
CONCLUSION
The BSA/Wal-Mart relationship was defined by the master vendor
agreement executed in October 1990, and subsequent vendor
agreements containing the same terms, as well as Wal-Mart’s
standard purchase order terms and conditions, which were integrated
into the vendor agreement. Taken together, those documents granted
Wal-Mart a continuing right to set off the BSA/ITT account for sums
BSA owed to Wal-Mart, without regard to whether the BSA debt arose
from the same or a different transaction. Wal-Mart’s contractual
19
set-off right was unaffected by its acknowledgment that BSA had
assigned a security interest to ITT. Although the issue was tried
to the district court, the record contains insufficient evidence to
establish that Wal-Mart made any oral agreement not to set off the
BSA/ITT account for the Goldstar transaction. For all of these
reasons, Wal-Mart was acting within its rights when it set off the
BSA/ITT account for the Goldstar transaction. Further, the
district court’s finding that BSA failed to offer sufficient
evidence to support a damage award for Wal-Mart’s breach of express
warranty to deliver only new goods and to refrain from billing
shipping and handling charges is supported by the record and is
without error.
Accordingly, the district court is AFFIRMED.
20