Keystone Bus Lines, Inc. v. ARA Services, Inc.

• Decision Date: 15 July 1983
• Docket Number: No. 82-352,82-352
• Parties: KEYSTONE BUS LINES, INC., a Nebraska corporation, Appellant, v. ARA SERVICES, INC., doing business as Educational & Recreational Services, a California corporation, Appellee.
• Court: Nebraska Supreme Court

Page 555

336 N.W.2d 555

214 Neb. 813

KEYSTONE BUS LINES, INC., a Nebraska corporation, Appellant, v. ARA SERVICES, INC., doing business as Educational & Recreational Services, a California corporation, Appellee.

No. 82-352.

Supreme Court of Nebraska.

July 15, 1983.

Syllabus by the Court

Contracts. If the promisor prevents or hinders the occurrence of a condition precedent and if the condition would have occurred except for such prevention or hindrance, the condition is excused.

Harris, Feldman, Stumpf & Pavel, Omaha, for appellant.

Norman Denenberg, Omaha, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, McCOWN, WHITE, HASTINGS, CAPORALE, and SHANAHAN, JJ.

SHANAHAN, Justice.

Plaintiff, Keystone Bus Lines, Inc. (Keystone), appeals dismissal of its action against defendant, ARA Services, Inc. (ARA), to enforce a provision contained in a contract for purchase of certain assets of Keystone. The provision required ARA to pay Keystone $100,000 if ARA obtained specified revenues from busing operations. Keystone alleged that ARA intentionally prevented occurrence of a condition precedent, i.e., attainment of the prescribed revenues, so the court should disregard the condition and order ARA to pay $100,000. The trial court directed a verdict for ARA, finding no evidence that ARA intentionally prevented revenues from reaching the specified levels of sales. Keystone assigns as error the directed verdict and dismissal of Keystone's petition. We affirm.

In March 1976 the Omaha Public Schools (OPS) awarded a busing contract to ARA. This contract, a result of court-ordered busing and integration, involved OPS' busing second, third, and ninth graders.

After obtaining the OPS contract, ARA began searching for bus facilities and in the spring discussed with Keystone possible purchase of its Omaha bus facilities. On July 30, 1976, Keystone signed a contract to sell certain assets to ARA, including its buses and busing contracts. The contract stated that, in addition to the $555,000 purchase price, ARA would pay $50,000 if sales for 1976-77 reached $1 million, and $50,000 if sales for 1977-78 reached $1.2 million. Sales, as defined in the agreement, was gross income from bus service conducted by ARA in Omaha, including charter service for school districts other than OPS and "parent-pay" routes where parents paid for busing their children to school. Specifically excluded from sales was revenue derived from bus service for OPS.

After signing its contract with Keystone, ARA sought drivers for the routes previously served by Keystone and utilized television, newspaper ads, flyers, and the Nebraska Job Service in the search. Outside factors thwarted the recruiting efforts by ARA. Women, fearing violence in the integrated school system, were reluctant to apply as drivers, and many of the drivers recruited by ARA failed the Department of Motor Vehicles' licensing test. Also, ARA faced the problem that recruiting too early could result in losing the drivers before the school year started.

When school began in 1976, ARA was responsible for transportation of OPS pupils and Keystone's obligations, including a Millard school contract and parent-pay routes. ARA did not have enough drivers for all bus routes and made a business decision to allocate its drivers to the OPS and Millard routes. There was some decline in the parent-pay routes, because busing necessitated in the integrated school system supplied free transportation for pupils. Due to the driver shortage ARA was not able to provide full service for the parent-pay routes until the end of October.

For the year 1976-77, revenues from the operations acquired by ARA from Keystone were $760,902, and in the year 1977-78 the revenues were $373,310. According to the...