Millis Const. Co. v. Fairfield Sapphire Valley, Inc.

• Decision Date: 04 August 1987
• Docket Number: No. 8630SC1209,8630SC1209
• Citation: 358 S.E.2d 566,86 N.C.App. 506
• Parties: MILLIS CONSTRUCTION COMPANY v. FAIRFIELD SAPPHIRE VALLEY, INC.
• Court: North Carolina Court of Appeals

Page 566

358 S.E.2d 566

86 N.C.App. 506

MILLIS CONSTRUCTION COMPANY v. FAIRFIELD SAPPHIRE VALLEY, INC.

No. 8630SC1209.

Court of Appeals of North Carolina.

Aug. 4, 1987.

Smith, Bonfoey & Queen by Frank G. Queen, Waynesville, for plaintiff-appellee.

Coward, Cabler, Sossomon & Hicks by J.K. Coward, Jr., Sylva, for defendant-appellant.

EAGLES, Judge.

I

Defendant assigns error to the trial judge's refusal to charge the jury on the issue of anticipatory breach as requested by the defendant pursuant to G.S. 1A-1, Rule 51(b).

It is the duty of the trial judge without any special requests to instruct the jury on the law as it applies to the substantive features of the case arising on the evidence. Faeber v. E.C.T. Corp., 16 N.C.App. 429, 192 S.E.2d 1 (1972). When a party appropriately tenders a written request for a special instruction which is correct in itself and supported by the evidence, the failure of the trial judge to give the instruction, at least in substance, constitutes reversible error. Bass v. Hocutt, 221 N.C. 218, 19 S.E.2d 871 (1942); Faeber v. E.C.T. Corp., supra. Here, we believe the trial court improperly refused to give the requested instruction on anticipatory breach.

The trial court submitted two issues to the jury on breach of contract: Did the defendant breach its contract with the plaintiff and did the plaintiff breach its contract with the defendant? Breach of contract occurs when a party fails to perform a contractual duty which has become absolute. J. Calamari and J. Perillo, The Law of Contracts section 12-1, at 513 (3d ed. 1987). As explained by the Restatement when performance of a duty under contract is presently due any nonperformance constitutes a breach. Restatement (Second) of Contracts section 235(2) (1981). Breach may also occur by repudiation. Id. at section 236 comment a. Repudiation is a positive statement by one party to the other party indicating that he will not or cannot substantially perform his contractual duties. Calamari and Perillo, section 12-4, at 524; Restatement (Second) of Contracts at section 250 comment a. When a party repudiates his obligations under the contract before the time for performance under the terms of the contract, the issue of anticipatory breach or breach by anticipatory repudiation arises. Calamari and Perillo, section 12-3, at 521. One effect of the anticipatory breach is to discharge the non-repudiating party from his remaining duties to render performance under the contract. Restatement (Second) of Contracts at section 253(2).

[W]hen a party to a contract gives notice that he will not honor the contract, the other party to the contract is no longer required to make a tender or otherwise to perform under the contract because of the anticipatory breach of the first party.

Dixon v. Kinser and Kinser v. Dixon, 54 N.C.App. 94, 101, 282 S.E.2d 529, 534 (1981), disc. rev. denied, 304 N.C. 725, 288 S.E.2d 805 (1982).

Here there was sufficient evidence to support an instruction that the plaintiff's statements during the November 16 meeting constituted a repudiation. In order to constitute a repudiation, a party's statement "must be sufficiently positive to be reasonably interpreted that a party will not or cannot substantially perform." Calamari and Perillo, Section 12-4, at 525 (quoting Restatement (Second) of Contracts at section 250 comment b). For example, if a party to a contract states "I doubt I will perform," his statement, alone, is not sufficiently positive to be reasonably interpreted by the other party to mean that he will not perform. Id. at 524. However, if a party to the contract states that he cannot perform except on some condition which goes outside the terms of his contract then the statement will constitute a repudiation. Id. at 525. Applying these rules to the facts here, we hold that plaintiff's statements on November 16 could have constituted a repudiation. According to defendant's evidence, at the meeting between Coker and Millis, Millis stated that he was "busted," "belly-up" and would be unable to complete the contract unless he received retainage on building number 7. However, according to the terms of the contract, plaintiff was not entitled to retainage until 30 days after building number 7 was completed. At the time of the November 16 meeting building number 7 was not yet completed. Clearly at the time of the November 16 meeting, plaintiff was not yet entitled to any retainage under the terms of the contract. In essence, his statement was that he could not perform the remaining contracts except on some condition outside the terms of the contracts, i.e. that he be paid the retainage before he was entitled to it under the contract.

If the repudiation occurs before the time of performance arises under the contract, the repudiation is anticipatory and the issue of anticipatory breach arises. Here plaintiff's statements were made on November 16, at least one month before completion of buildings 8, 9 and 10 was required under the terms of plaintiff's contracts. The effect of breach by anticipatory repudiation is to relieve the non-repudiating party from further performance under the contract. Dixon v. Kinser, supra. We agree with defendant's argument that had the jury been given the opportunity to consider the issue of anticipatory breach, it could have found that the defendant did not breach its contract with plaintiff but was no longer required to perform under the contract due to plaintiff's anticipatory breach or breach by anticipatory repudiation. Dixon v. Kinser, supra. Accordingly, the trial court erred in refusing to instruct the jury on the issue of anticipatory breach as requested by defendant.

The issue of...