Bridgkort Racquet Club, Inc. v. University Bank

• Decision Date: 13 October 1978
• Docket Number: No. 77-510,77-510
• Citation: 271 N.W.2d 165,85 Wis.2d 706
• Parties: BRIDGKORT RACQUET CLUB, INC., Plaintiff-Respondent, v. UNIVERSITY BANK, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 165

271 N.W.2d 165

85 Wis.2d 706

BRIDGKORT RACQUET CLUB, INC., Plaintiff-Respondent, v. UNIVERSITY BANK, Defendant-Appellant.

No. 77-510.

Court of Appeals of Wisconsin.

Submitted on Briefs Sept. 12, 1978.

Opinion Released Oct. 13, 1978.

Opinion Filed Oct. 13, 1978.

Charles H. Wheeler and Schmeling, Muraski & Wheeler, Green Bay, submitted brief for defendant-appellant.

Bittner, Petitjean, Hinkfuss & Sickel, Green Bay, submitted brief for plaintiff-respondent.

Before DEAN, P. J., and DONLIN and FOLEY, JJ.

FOLEY, Judge.

The respondent, Bridgkort Racquet Club, Inc. was formed in 1975 to build an indoor athletic facility in Neenah. In August and September, 1975, Bridgkort received loan Closing occurred January 12, 1976. No representative of the Bank came to the closing, but there was no other indication that the Bank did not intend to honor its commitment. Not until January 23 did Bridgkort learn definitely that the Bank was not going to make the loan.

                commitments from several lending institutions including the appellant, University Bank, in order to finance construction.  The commitments were in varying amounts totaling $1,050,000, with the defendant Bank agreeing to loan plaintiff $250,000 at 101/4% Over 15 years.  1  Home Savings & Loan of Appleton had meanwhile agreed to be the lead lender and had extended an interim loan for $1,050,000 to cover costs arising during[85 Wis.2d 708]  construction and prior to the closing date of the final loan
                

After Bridgkort tried and failed to obtain a substitute loan from some 25 different lending institutions, Home Savings finally agreed to lend Bridgkort the $250,000 amount at the increased interest rate of 11%, also for 15 years.

Bridgkort brought this suit against the Bank for breach of contract for failing to make the 101/4% Loan. The Bank answered by alleging their failure to make the loan was justified by Bridgkort's failure to substantially perform its part of the contract by the closing date. Following a jury verdict in favor of Bridgkort, the court entered judgment against the Bank for.$20,988, representing the additional interest costs to Bridgkort of the 11% Loan over 15 years, plus $2,500 for return of the 1% Loan fee paid by Bridgkort and $500 for attorney fees incurred in negotiating a substitute loan. The Bank has appealed from the entire judgment but does not challenge the amounts of the loan fee or attorney fees.

Three issues are raised on this appeal:

1. Was there sufficient credible evidence to support the jury verdict finding Bridgkort was prepared to substantially perform the contract on January 12, 1976?

2. Did the trial court err in submitting one special verdict question to the jury rather than separate questions as to each of Bridgkort's alleged failures to perform conditions required by the contract?

3. What is the proper measure of damages sustained by Bridgkort?

The Bank argues that the evidence showed Bridgkort failed to substantially perform three conditions of the contract. These were:

1. Failure to obtain signatures of all seven personal guarantors by January 12, 1976.

2. Failure to provide satisfactory title insurance by that date.

3. Failure to provide satisfactory fire and extended coverage insurance, also by the same date.

The trial court on motions after verdict rejected these arguments. We believe the trial court was correct. ² There was credible evidence in the record to support the finding that Bridgkort was prepared to provide substantial performance by January 12 of each of the three conditions the Bank contended were not met. ³

Substantial performance means not doing the exact thing promised, but doing something else that is just as good, or good enough for both obligor and obligee. ⁴ In the instant case the concern is not with what was substantially performed prior to January 12, but what Bridgkort was prepared to do by or on that date. Gonis v. New York Life Ins. Co., 70 Wis.2d 950, 960, 236 N.W.2d 273, 278 (1975). Thus the focus is not on what Bridgkort actually did but what they could have done had the Bank attended the closing and made known its objections.

Testimony revealed that only five of the seven personal guarantors had signed a pledge as of January 12. With only this fact we would hold there was no substantial performance as the Bank was clearly entitled to have its full security. However, there was testimony that the unsigned guarantors were contacted by telephone on January 12 and indicated their willingness to sign either that day or the next. From this the inference is reasonable that had the Bank been present at the closing, and had it communicated its dissatisfaction with two guarantors signing late, Bridgkort could have produced the remaining signatures that day. Under Gonis, supra, this would have been timely performance. (The remaining two guarantors did sign within the week.)

Regarding the title insurance policy, the commitment provided on January 12 excepted potential construction liens. Lien waivers had been obtained. However, the Bank argues that the commitment, coupled with the lien waivers obtained from the subcontractors, was an insufficient substitute. We agree. However, it is not what actually existed as of January 12, but what could have been provided. The attorney for the lead lender, who was also an owner of the title insurance company issuing the policy for this transaction, testified that the lien waivers were obtained for the purpose of issuing a title policy without the construction lien exception. He stated that he was willing to provide such a policy to the Bank. He was present at the closing. The inference is firmly supported that had the Bank attended the closing and made known its objection, Bridgkort could have provided a satisfactory title policy commitment. Such a commitment would have been substantial performance of the title policy condition.

Regarding the fire and extended coverage insurance, there was in existence on January 12 a policy insuring Home Savings & Loan for $1,050,000. This policy had been issued in September to protect Home Savings as the interim lender on Bridgkort construction. In addition, there was a letter from the insurer's agent addressed to a Home Savings officer notifying him of the insurer's commitment to continue coverage once a permanent loan was arranged.

It is disputed whether this letter constituted a binder, committing the insurer to provide coverage to the Bank once it became a permanent lender. The Bank's objection is that the letter did not mention it by name, nor state any amount of coverage. Here again, if what existed was insufficient, it is reasonable to infer that any deficiencies could have been cleared on the day of the closing with a specific formal binder from the insurance company's local office.

In addition, University offered no evidence contradicting the testimony that Bridgkort acted in good faith throughout the transaction. Thus we find the record sufficient to support the jury's determination that Bridgkort was prepared to substantially perform its part of the contract on January 12.

The Bank also appeals the trial court's overruling of its objection to the form of the special verdict. It had asked the trial court to substitute questions dealing individually with each of the conditions Bridgkort was required to perform by its contract with the Bank. ⁵ University argues The material issue was substantial performance and it was satisfactorily addressed by the special verdict question and the instructions. It would be speculation for us to conclude that the jury applied a wrong test. Furthermore, the question of Bridgkort's performance of each of the disputed conditions was extensively litigated during the trial. Thus, it is reasonable to conclude that the jury was aware of the importance of performing every material condition, and thus considered the performance of each individually.

that the form of the question submitted may have led the jury to misconstrue the substantial performance test, applying it quantitatively rather than determining substantial performance of each condition. We approve the trial court's submission of a single question on substantial performance and find no error in the form of the special verdict. The trial court has considerable discretion in framing the special verdict and its decision will not be reversed on appeal if the material issues of fact are addressed. Wisconsin Builders, Inc., v. General Ins. Co. of Amer., 65 Wis.2d 91, 221 N.W.2d 832, 838 (1974).

Additionally, once the Bank became aware of the form of verdict to be used by the trial court, it could have handled its concern of possible jury misunderstanding by requesting additional instructions. This was not done and there was no objection to the instructions as given.

MEASURE OF DAMAGES

Bridgkort contends that the proper measure of its damage is the difference between the interest it will pay on the loan it wrote at 11% And the loan it should have had from the Bank at 101/4%. The difference is 3/4 of a percent over 15 years on the $250,000. It is conceded that this amount was.$20,988. The Bank argued that the proper measure was the present value of.$20,988 and submitted as an offer of proof the figure of $8,632. This figure supposedly represented the amount which, if invested at 7% For 15 years, would generate a total principal and interest sum of.$20,988. The court rejected the offer of proof and no evidence on present value was submitted to...