Brenner v. Little Red School House, Ltd.

• Decision Date: 02 February 1981
• Docket Number: No. 46,46
• Citation: 274 S.E.2d 206,302 N.C. 207
• Court: North Carolina Supreme Court
• Parties: , 20 A.L.R.4th 295 Ralph N. BRENNER, Jr. v. The LITTLE RED SCHOOL HOUSE, LIMITED.

Page 206

274 S.E.2d 206

302 N.C. 207, 20 A.L.R.4th 295

Ralph N. BRENNER, Jr. v. The LITTLE RED SCHOOL HOUSE, LIMITED.

No. 46.

Supreme Court of North Carolina.

Feb. 2, 1981.

Wyatt, Early, Harris, Wheeler & Hauser by A. Doyle Early, Jr., High Point, for plaintiff-appellant.

Max D. Ballinger, High Point, for defendant-appellee.

COPELAND, Justice.

Plaintiff sets forth several arguments in support of his allegation that the Court of Appeals erred in reversing the trial court's order entering summary judgment in his favor. We have carefully reviewed each of plaintiff's contentions and find that summary judgment could not properly be granted in favor of either party. For the reasons stated below, we reverse that portion of the Court of Appeals' decision which remanded the case for entry of summary judgment in favor of defendant.

Plaintiff-appellant first contends that the doctrine of impossibility of performance and frustration of purpose should apply in this case to bring about a recission of the contract. Impossibility of performance is recognized in this jurisdiction as excusing a party from performing under an executory contract if the subject matter of the contract is destroyed without fault of the party seeking to be excused from performance. Sechrest v. Forest Furniture Co., 264 N.C. 216, 141 S.E.2d 292 (1965). Plaintiff's former wife's refusal to send the child to defendant school did not destroy the subject matter of the contract; it was still possible for the child to attend the school. The doctrine of impossibility of performance clearly has no bearing on this case.

In support of the applicability of the doctrine of frustration of purpose, plaintiff argues that his former wife's refusal to allow the child to attend defendant school was a fundamental change in conditions which destroyed the object of the contract and resulted in a failure of consideration. Judge Harry C. Martin agreed with plaintiff and dissented on this basis, discussing the doctrine of frustration of purpose at length. While we agree with Judge Martin's general discussion of the law concerning frustration of purpose, we hold that the doctrine does not apply to bring about a recission under the facts of this case.

The doctrine of frustration of purpose is discussed in 17 Am.Jur.2d Contracts § 401 (1964) as follows:

"Changed conditions supervening during the term of a contract sometimes operate as a defense excusing further performance on the ground that there was an implied condition in the contract that such a subsequent development should excuse performance or be a defense, and this kind of defense has prevailed in some instances even though the subsequent condition that developed was not one rendering performance impossible.... In such instances, ... the defense doctrine applied has been variously designated as that of 'frustration' of the purpose or object of the contract or 'commercial frustration.'

Although the doctrines of frustration and impossibility are akin, frustration is not a form of impossibility of performance. It more properly relates to the consideration for performance. Under it performance remains possible, but is excused whenever a fortuitous event supervenes to cause a failure of the consideration or a practically total destruction of the expected value of the performance. The doctrine of commercial frustration is based upon the fundamental premise of giving relief in a situation where the parties could not reasonably have protected themselves by the terms of the contract against contingencies which later arose."

If the frustrating event was reasonably foreseeable, the doctrine of frustration is not a defense. In addition, if the parties have contracted in reference to the allocation of the risk involved in the frustrating event, they may not invoke the doctrine of frustration to escape their obligations. 17A C.J.S. Contracts § 463(2) (1963). See also Perry v. Champlain Oil Co., 101 N.H. 97, 134 A.2d 65 (1957); Blount-Midyette & Co. v. Aeroglide Corp., 254 N.C. 484, 119 S.E.2d 225 (1961); Annot., 84 A.L.R.2d 12 (1962).

In the present case, plaintiff contracted to pay the tuition for the entire school year in advance of the first day of school. In consideration therefor, defendant promised to hold a place in the school for plaintiff's child, to make all preparations necessary to educate the child for the school year, and to actually teach the child during that period. Both parties received valuable consideration under the terms of the contract. After receiving plaintiff's tuition payment, defendant reserved a space for plaintiff's child, made preparations to teach the child, and at all times during the school year kept a place open for the child. This performance by defendant was sufficient consideration for plaintiff's tuition payment. A school such as defendant must make arrangements for the education of its pupils on a yearly basis, prior to the commencement of the school year. Many of these arrangements are based upon the number of pupils enrolled, for example, the teaching materials to be ordered, the number of teachers to be hired, and the desks and other equipment which will be used by the children. In addition, private schools are often limited in the number of pupils that can be accommodated, so that the reservation of a space for one child may prevent another's enrollment in the school. Had it been advised before the first day of school that plaintiff's child would not be in attendance, defendant might have been able to fill the vacant position. After the start of the school year, the probability of filling the position decreased substantially, thus to allow plaintiff to recover the tuition paid might deprive defendant of income it would have received had the contract not been entered into. Therefore, although plaintiff did not receive the full consideration contemplated by the contract, he received consideration sufficient to avoid the application of the doctrine of frustration of purpose. There was no substantial destruction of the value of the contract.

Furthermore, we find the doctrine of frustration of purpose inapplicable on an additional basis. Although the parties could not have been expected to foresee the exact actions of plaintiff's former wife in refusing to send the child to defendant school, the possibility that the child might not attend was foreseeable and appears expressly provided for in the contract. The contract states that tuition is "payable in advance of the first day of school, no portion refundable." This provision allocates to plaintiff the risk that the child will not attend, and prevents the application of the doctrine of frustration of purpose.

Since the doctrine of frustration of purpose does not apply and the terms of the contract are clear and unambiguous, the courts are bound to enforce it as written. Crockett v. First Federal Savings and Loan Association of Charlotte, 289 N.C. 620, 224 S.E.2d 580 (1976); Weyerhaeuser Co. v. Carolina Power & Light Co., 257 N.C. 717, 127 S.E.2d 539 (1962). This holding is consistent with prior cases in this jurisdiction which state that a contract providing for the nonrefundable payment of tuition is enforceable as written, regardless of the nonattendance of the pupil, where the failure to attend is not caused by some fault on the part of the school. Horner School v. Wescott, 124 N.C. 518, 32 S.E. 885 (1899); Bingham v. Richardson, 60 N.C. 215 (1864). Our decision is also in accord with the majority of jurisdictions in this country. J. J. & L. Investment Co. v. Minaga, 487 P.2d 561 (Colo.App.1971); Missouri Military Academy v. McCollum, 344 S.W.2d 636 (Mo.Ct.App.1961); Annot., 69 A.L.R. 714 (1930).

Defendant argues that even if the contract is not rescinded, this Court should find it unconscionable and refuse to enforce it. We disagree. A court will generally refuse to enforce a contract on the ground of unconscionability only when the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other. Hume v. United States, 132 U.S. 406, 10 S.Ct. 134, 33 L.Ed. 393 (1889); Christian v. Christian, 42 N.Y.2d 63, 365 N.E.2d 849, 396 N.Y.S.2d 817 (1977). In determining whether a contract is unconscionable, a court must consider all the facts and circumstances of a particular case. If the provisions are then viewed as so one-sided that the contracting party is denied any opportunity for a meaningful choice, the contract should be found unconscionable. In re Friedman, 64 A.D.2d 70, 407 N.Y.S.2d 999 (1978); Collins v. Uniroyal Inc., 126 N.J.Super. 401, 315 A.2d 30 (1973), aff'd 64 N.J. 260, 315 A.2d 16 (1974). See, e. g., G.S. 25A-43(c).

After considering all the facts before the trial court, we hold that the contract at issue cannot be declared unenforceable on the grounds of unconscionability. There was no inequality of bargaining power between the parties. Plaintiff was not forced to...