Bennett's, Inc. v. Krogh

• Decision Date: 22 April 1946
• Docket Number: 15457.
• Citation: 168 P.2d 554,115 Colo. 18
• Parties: BENNETT'S, Inc., v. KROGH.
• Court: Colorado Supreme Court

168 P.2d 554

115 Colo. 18

BENNETT'S, Inc., v. KROGH.

No. 15457.

Supreme Court of Colorado, en Banc.

April 22, 1946

Error to District Court, Jefferson County; Osmer E. Smith, Judge.

Action by Bennett's, Inc., against H. A. Krogh, for a declaratory judgment as to plaintiff's right to cancel his written contract with defendant for collection of garbage from plaintiff's cafeterias. To review a judgment dismissing complaint for failure to state a claim upon which relief could be granted, plaintiff brings error.

Where complaint seeking declaratory judgment in regard to plaintiff's right to terminate contract for collection of garbage from its cafeterias set forth facts, showing actual controversy concerning construction of provision in the contract granting plaintiff an option to terminate, and case was otherwise proper for declaratory relief, trial court should have entered judgment declaring rights of the parties under the contract, instead of entering an order dismissing the cause, even though the results were adverse to plaintiff's contentions.

Cause remanded with instructions.

George H. Lerg, of Denver, for plaintiff in error.

Irwin &amp O'Connell, of Denver, for defendant in error.

STONE, Justice.

Plaintiff Bennett's, Inc., which operated cafeterias, entered into written contract with defendant Krogh, whereby the latter was to receive and collect all garbage from plaintiff's cafeterias for a term of five years from its date and pay therefor at the rate of fifty dollars per month, advance payment of $2,000 being made upon execution of the contract. The written agreement contained the following clause: 'It is mutually understood and agreed that the garbage collection service may be cancelled at the option of the first party at the end of six (6) months from date providing the service of the second party is not satisfactory and providing thirty days written notice of such fact is given to the second party together with a refund of the unused portion of the Two Thousand and no/100ths Dollars ($2,000.00) aforesaid,' and time was made essential.

Twenty months after the date of the contract plaintiff served defendant with written notice of cancellation pursuant to the above recited provision of the contract specifying the grounds of his dissatisfaction and tendering a refund of the unearned portion of the $2,000 advance payment, to wit $1,000. Defendant promptly advised plaintiff by letter that he denied plaintiff's right at that late date to cancel under the contract provision above quoted, and plaintiff thereupon brought this action for declaratory judgment setting forth the contract and notice and the resulting controversy, and praying for declaration of rights as to its cancellation and that the contract be declared terminated as of thirty days after service of said notice of cancellation. To this complaint defendant filed motion to dismiss for failure to state a claim upon which relief could be granted and the court sustained that motion with a ruling that the attempted cancellation was not made within the time required by the contract. Error is here assigned to the court's ruling and to its dismissal of the cause.

The cancellation provision of the contract gave plaintiff the right to cancel only 'at the end of six months from date.' It mentions no such right to be exercised Before or after the end of the six months' period, and time was made essential. It was the evident intention of the parties to provide for a six months' trial period, at the end of which time plaintiff could terminate the contract upon giving the prerequisite notice; otherwise, it would continue for the full term.

The cases are not in harmony as to the interpretation of such contracts. In Fred Mosher-Grain Inc., v. Kansas Co-op Wheat Marketing Ass'n, 136 Kan. 269, 15 P.2d 421, 425, it was said that, 'The option to terminate a contract is in the nature of a forfeiture, and it will be strictly construed,' and, where the contract provided that either party might terminate the contract at the end of any contract year, to wit, June 15, upon condition of notice in writing prior to the first day of April, it was held that notice of cancellation given on April 17 was too late and would not terminate the contract, although it does not appear that time...