Taylor v. Johnston

• Decision Date: 02 September 1975
• Citation: 15 Cal.3d 130,123 Cal.Rptr. 641,539 P.2d 425
• Court: California Supreme Court
• Parties: , 539 P.2d 425 H. B. TAYLOR, Plaintiff, Cross-Defendant and Respondent, v. Elizabeth G. JOHNSTON et al., Defendants, Cross-Complainants and Appellants. L.A. 30355.

Page 641

123 Cal.Rptr. 641

15 Cal.3d 130, 539 P.2d 425

H. B. TAYLOR, Plaintiff, Cross-Defendant and Respondent, v. Elizabeth G. JOHNSTON et al., Defendants, Cross-Complainants and Appellants.

L.A. 30355.

Supreme Court of California In Bank.

Sept. 2, 1975.

As Modfied on Denial of Rehearing Oct. 23, 1975.

[539 P.2d 426] West & Girardi, Daniel W. Gage, Thomas V. Girardi, Los Angeles, Robert E. Courtney, Redondo Beach, Gibson, Dunn & Crutcher, Robert Forgnone and Wayne W. Call, Los Angeles, for defendants, cross-complainants and appellants

Iverson, Yoakum, Papiano & Hatch, Neil Papiano and Donald M. Robbins, Los Angeles, as amici curiae on behalf of defendants, cross-complainants and appellant.

Walter S. Weiss, John Onesian, Long & Levit and Richard B. Wolf, Los Angeles, for plaintiff, cross-defendant and respondent.

SULLIVAN, Justice.

In this action for damages for breach of contract defendants Elizabeth and Ellwood Johnston, individually and as copartners doing business as Old English Rancho, appeal from a judgment entered after a nonjury trial in favor of plaintiff H. B. Taylor and against them in the amount of $132,778.05 and costs.

Plaintiff was engaged in the business of owning, breeding, raising and racing thoroughbred horses in Los Angeles County. Defendants were engaged in a similar business, and operated a horse farm in Ontario, California, where they furnished stallion stud services. In January 1965 plaintiff sought to breed his two thoroughbred mares, Sunday Slippers and Sandy Fork to defendants' stallion Fleet Nasrullah. To that end, on January 19 plaintiff and defendants entered into two separate written contracts--one pertaining to Sunday Slippers and the other to Sandy Fork. Except for the mare involved the contracts were identical. We set forth in the margin the contract covering Sunday Slippers. ¹

The contract provided that Fleet Nasrullah was to perform breeding services upon the respective mares in the year 1966 for a fee of $3,500, payable on or before September 1, 1966. If the stud fee was paid in full and the mares failed to produce a live foal (one that stands and nurses without assistance) from the breeding a return breeding would be provided the following year without additional fee.

On October 4, 1965, defendants sold Fleet Nasrullah to Dr. A. G. Pessin and Leslie Combs II for $1,000,000 cash and shipped the stallion to Kentucky. Subsequently Combs and Pessin syndicated the sire by selling various individuals 36 or 38 shares, each share entitling the holder to breed one mare each season to Fleet Nasrullah. Combs and Pessin each reserved three shares.

On the same day defendants wrote to plaintiff advising the latter of the sale and that he was 'released' from his 'reservations' for Fleet Nasrullah. ² Unable to In January 1966 plaintiff shipped Sunday Slippers and Sandy Fork to Elmhurst Farm. At that time, however, both mares were in foal and could not be bred, since this can occur only during the five-day period in which they are in heat. The first heat period normally occurs nine days, and the second heat period thirty days, after foaling. Succeeding heat periods occur every 21 days.

[539 P.2d 428] reach defendants by telephone, plaintiff had his attorney write to them on October 8, 1965, insisting on performance of the contracts. Receiving no answer, plaintiff's attorney on October 19 wrote a second letter threatening suit. On October 27, defendants advised plaintiff by letter that arrangements had been made to breed the two mares to Fleet Nasrullah in Kntucky. ³ However, plaintiff later [15 Cal.3d 134] learned that the mares could not be boarded at Spendthrift Farm where Fleet Nasrullah was standing stud and accordingly arranged with Clinton Frazier of Elmhurst Farm to board the mares and take care of the breeding.

On April 17, 1966, Sunday Slippers foaled and Frazier immediately notified Dr. Pessin. The latter assured Frazier that he would make the necessary arrangements to breed the mare to Fleet Nasrullah. On April 26, the ninth day after the foaling, Frazier, upon further inquiry, was told by Dr. Pessin to contact Mrs. Judy who had charge of booking the breedings and had handled these matters with Frazier in the past. Mrs. Judy, however, informed Frazier that the stallion was booked for that day but would be available on any day not booked by a shareholder. She indicated that she was acting under instructions but suggested that he keep in touch with her while the mare was in heat.

Sunday Slippers came into heat again on May 13, 1966. Frazier telephoned Mrs. Judy and attempted to book the breeding for May 16. ⁴ She informed him that Fleet Nasrullah had been reserved by one of the shareholders for that day, but that Frazier should keep in touch with her in the event the reservation was cancelled. On May 14 and May 15 Frazier tried again but withour success; on the latter date, Sunday Slippers went out of herat.

On June 4, the mare went into heat again. Frazier again tried to book a reservation with Fleet Nasrullah but was told that all dates during the heat period had been already booked. He made no further efforts but on June 7, on plaintiff's instructions, bred Sunday Slippers to a Kentucky Derby winner named Chateaugay for a stud fee of $10,000.

Sandy Fork, plaintiff's other mare awaiting the stud services of Fleet Nasrullah, foaled on June 5, 1966. Frazier telephoned Mrs. Judy the next day and received a booking to breed the mare on June 14, the ninth day after foaling. On June 1o, 1966, however, she cancelled the reservation because of the prior claim of a shareholder. Frazier made no further attempts and on June 14 bred Sandy Fork to Chateaugay.

Shortly after their breeding, it was discovered that both mares were pregnant with twins. In thoroughbred racing twins are considered undesirable since they endanger the mare and are themselves seldom valuable for racing. Both mares were therefore aborted. However, plaintiff was not required to pay the $20,000 stud fees for Chateaugay's services because neither mare delivered a live foal.

The instant action for breach of contract proceeded to trial on plaintiff's fourth amended complaint, which alleged two causes of action, the first for breach of the two written contracts, the second for breach of an oral agreement. Defendants' cross-complained for the stud fees. The court found the facts to be substantially as stated above and further found and concluded that by selling Fleet Nasrullah defendants had 'put it out of their power to perform properly their contracts,' that the conduct of defendants and their agents Dr. Pessin and Mrs. Judy up to and including June 13, 1966, constituted a breach ⁵ and plaintiff 'was then justified in treating it as a breach and repudiation of their contractual obligations to him,' and that defendants unjustifiably breached the contracts but plaintiff did not. ⁶ The court awarded plaintiff damages for defendants' breach in the sum of $103,122.50 ($99,800 net damage directly sustained plus $3,322.50 for reasonable costs and expenses for mitigation of damages). 'Because of defendants' wholly unwarranted, high-handed, and oppressive breach of their contractual obligation to plaintiff, the plaintiff is entitled to recover from the defendants pre-judgment interest at the rate of 7% Per annum on the sum of $99,800.00 from August 1, 1968 . . ..' It was concluded that defendants should take nothing on their cross-complaint. Judgment was entered accordingly. This appeal followed.

Defendants' main attack on the judgment is two-pronged. They contend: First, that they did not at any time repudiate the contracts; and second, that they did not otherwise breach the contracts because performance was made impossible by plaintiff's own actions. To put it another way, defendants argue in effect that the finding that they breached the contracts is without any support in the evidence. Essentially they take the position that on the uncontradicted evidence in the record, as a matter of law there was neither anticipatory nor actual breach. As will appear, we conclude that the trial court's decision was based solely on findings of anticipatory breach and that we must determine whether such decision is supported by the evidence.

Nevertheless both aspects of defendants' argument require us at the outset to examine the specifications for performance contained in the contracts. (See fn. 1, Ante.) We note that the reservation for 'one services' for Fleet Nasrullah was 'for the year 1966.' As the evidence showed, a breeding is biologically possible throughout the calendar year, since mares regularly come into heat every 21 days, unless they are pregnant. The contracts therefore appear to contemplate breeding with Fleet Nasrullah at any time during the calendar year 1966. The trial court made no finding as to the time of performance called However, in our view, it is immaterial whether the contract phrase 'for the year 1966' is taken to mean the above breeding season or the full calendar year since in either event the contract period had not expired by June 7 and June 14, 1966, the dates on which Sunday Slippers and Sandy Fork respectively were bred to Chateaugay ⁹ and by which time, according to the findings (see fn. 5, Ante) defendants had repudiated the contracts. There can be no Actual breach of a contract until the time specified therein for performance has arrived. (Gold Min. & Water Co. v. Swinerton (1943) 23 Cal.2d 19, 29, 142 P.2d 22; 1 Witkin, Summary of Cal.Law (8th ed.) § 629, p. 536; see Rest.2d Contracts (Tent.Draft No. 8, 1973) § 260.) Although there may be a Breach by anticipatory repudiation; '(b)y its very name an essential element of a true anticipatory breach of a contract is that the repudiation by the promisor occur before his performance is due under the contract.' (Gold Min. & Water Co. v. Swinerton, supra, 23 Cal.2d at p. 29, 142 P.2d at p. 27.) In the instant case, because...