Fort Dodge Co-Op. Dairy Mktg. Ass'n v. Ainsworth
| Decision Date | 21 November 1933 |
| Docket Number | No. 42091.,42091. |
| Parties | FORT DODGE CO-OP. DAIRY MARKETING ASS'N v. AINSWORTH. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Webster County; Sherwood A. Clock, Judge.
This is a suit in equity for specific performance of a contract and for alleged liquidated damages for the breach thereof. The plaintiff is a co-operative society organized under the provisions of chapter 390 (sections 8485-b1, 8486 et seq.), Code of 1931. The defendant was for many years, and up to 1932, a member of said society and a contracting party therewith. These relations began in 1922 and continued until June 15, 1932. On the latter date the defendant repudiated the contract and renounced his membership of the association. The plaintiff's charge of breach of contract is predicated upon such renunciation. The plaintiff claimed stipulated damages at $25 per day for 66 days intervening between June 15, 1932, and September 9, 1932, the date of the filing of the petition herein. The trial court allowed the stipulated damages to the amount of $1,625, as for 65 days, and denied injunction. From the judgment thus entered, the defendant has appealed.
Reversed.
Price & Burnquist, of Fort Dodge, for appellant.
Mitchell & Mitchell and D. M. Kelleher, all of Fort Dodge, for appellee.
The members of the plaintiff association were producers of milk. The plaintiff association was formed for the purpose of marketing such milk. Its headquarters were located at Fort Dodge, and its business was transacted therein. The plaintiff performed its functions by selling the milk and causing it to be delivered by the producers, to four certain distributors located in the same city. At the time of the events involved in this controversy, the plaintiff had a membership slightly less than two hundred. Each member contracted with the plaintiff to deliver the milk produced by him exclusively to the plaintiff. The contract provided that it should be deemed to be extended from year to year. The contract gave to the member the right to withdraw at the end of any calendar year by giving notice between November 15, and November 30, preceding. This latter provision was later changed by purported action of the board of directors, which fixed the month of May as the time for the preceding notice. Whether this action of the board of directors created a valid change in the bylaws, we shall have no occasion to determine. One of the distributors to whom the plaintiff society sold its milk was the Sanitary Dairy Company. This company was owned and operated by Gesslin. This concern was in some degree of financial distress. Its property was incumbered by a mortgage for $2,500 held by the plaintiff and maturing on the first of July, 1932. The plaintiff had declined to consider an extension of time. In order to meet the emergency, Ainsworth and one Scheerer came to the aid of Gesslin and loaned the necessary funds to pay off the plaintiff's mortgage. Pursuant to the same contract they became customers of the Sanitary Dairy and sold their milk production thereto. The defendant Ainsworth notified the secretary of the plaintiff society that he was quitting the society and transferring his patronage. Pursuant to this notice he refused any further patronage to the plaintiff. This was the breach of contract sued for. The suit is predicated upon section 6, of the contract, which is as follows:
The foregoing section 6 is contained in the articles of incorporation as a part thereof and as such is incorporated in all the contracts with the members. It speaks in the plural number in the same form as though it were a joint contract made between the plaintiff society and all its members.
Some of the questions which confront the plaintiff, as to the interpretation of this contract, may be stated:
(1) Was the renunciation announced by the defendant on June 15, 1932, and put into actual effect by him, from and after June 15, one breach of the contract, or did it become many breaches by its persistence?
(2) Did the contract fix the sum of $25 as liquidated damages collectible from each member, who breached the contract, or did it provide for the sum of $25 per day?
The contract is ambiguous at this point, and we are confronted with the necessity of interpretation.
[1][2] It is the contention of plaintiff that, inasmuch as the milk of the producer was delivered daily, there was necessarily a daily breach of the contract, and that this rendered the defendant liable for $25 for each breach. In attempting an interpretation of the contract, the two questions here raised resolve themselves into one: Did the defendant's breach of the contract subject him to a liability of $25 as liquidated damages, or did it subject him to 66 times $25? The contract does not in terms provide for a liability of $25 per day. In order to insert into the contract the term “per day” a process of reasoning must be adopted as already suggested and an inference must be drawn therefrom. The contract is drawn from the articles of incorporation and speaks in the plural number of “members” and “contracts.” It provides for a payment of $25 for each and every failure and breach. Does this mean any more than that the provisions of this contract shall apply to each and every member and to each and every contract? Reading this section as a part of the articles of incorporation it would seem to mean that each and every breach of this contract shall subject the offending member to the payment of $25 as liquidated damages. It is the contention of the defendant that such is and was the construction put...
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