Osborn v. Commanche Cattle Industries, Inc., 48085
| Decision Date | 25 November 1975 |
| Docket Number | No. 1,No. 48085,48085,1 |
| Citation | 545 P.2d 827 |
| Parties | Loyd OSBORN, doing business as Osborn Construction Company, Appellee, v. COMMANCHE CATTLE INDUSTRIES, INC., a/k/a Commanche Feeding Corporation, doing business as Commanche Feeders, Appellant |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Tryon, Sweet, Field & Petty, by James R. Fletcher, Guymon, for appellee.
Loofbourrow, Loofbourrow & Manske, by Robert H. Loofbourrow, Boise City, for appellant.
An appeal by Commanche Cattle Industries, Inc., defendant in the trial court, from a judgment rendered upon a jury verdict in favor of appellee, Loyd Osborn.
Loyd Osborn brought this action against Commanche Cattle Industries, Inc. (Commanche) in the District Court of Cimarron County, seeking recovery of monetary damages for breach of contract. The case was submitted to a jury and a verdict in the amount of $30,000 was returned in favor of Osborn. The question dispositive of Commanche's appeal is whether Osborn was entitled to recover lost profits.
In 1970 and 1971 Commanche owned and operated two feedlots in Oklahoma: a Texas County lot known as 'Sooner Beef' and a Cimarron County lot known as 'Commanche Feeders.' Osborn's first business dealings with Commanche occurred in 1970, when Commanche hired Osborn, who is a dirt and fertilizer contractor, to periodically haul manure from and perform other services at the Sooner Beef lot. During that year Osborn was also hired to do occasional work at the Commanche Feeders lot and his contacts with its manager led to negotiations for a contract under which Osborn would clean the Commanche Feeders' pens, stockpile and dispose of manure and perform various other functions. These negotiations ultimately led to the execution of a written agreement between Osborn and Commanche on July 1, 1971. The agreement required Osborn to perform substantially the same services at the Commanche Feeders' lot that he had been discharging at the Sooner Beef lot. The pertinent parts of the agreement are as follows:
'For and in consideration of the promises hereinafter made by each party to the other, and the mutual benefit to be derived by each from the performance thereof, the parties hereto agree as follows:
'1. Commanche Feeders now owns the manure that has been piled in the pens for mounds, and will always need mounds left in the pens, the size of same to be agreed on between Commanche Feeders and Osborn.
'2. The pens may be used as stockpiling areas for future manure plus Commanche Feeders will furnish an area acceptable to both parties for some manure stockpiling aging and conditioning, so as not to interfere with the feed yard operation. Commanche Feeders agrees that manure, with the exception of a basic mound will become the property of Osborn to be disposed of as Osborn sees fit.
'3. Commanche Feeders agrees that Osborn shall have access to and egress from the premises to allow its convenient removal of manure from pens from stockpiling area. Weighing of manure on Commanche Feeders scales to be free of charge to Osborn.
'4. Osborn agrees to clean pens at least twice each year, and whenever else Commanche Feeders so requests, if it becomes necessary to promote safe and sanitary conditions required for reasonable and prudent feed yard operations. Removal of manure and cleaning of pens, Osborn agrees, shall be done at a time mutually convenient to Osborn and Commanche Feeders and in a workmanlike manner, but does not necessarily need to remove manure twice a year for sale.
'5. This agreement shall continue, unless terminated earlier as hereinafter provided, for a term of three years beginning 1st day of July, 1971 and ending 1st day of July, 1974. Should Osborn hold over and continue in possession, performance, and as otherwise on the terms and conditions herein specified after 1st day of July, 1974, with the expressed or implied consent of Commanche Feeders thereto, such shall be construed as an extension of this agreement from month to month.
'6. Osborn will provide the following equipment for removing manure from the Commanche Feeders pens:
3--John Deere Elevator Scrapers
The elevator scraper will be valued at $15 per hour and the grader will be valued at $12.50 per hour. Commanche Feeders agrees to pay 50% Or $7.50 per operating hour for each elevator scraper and $6.25 per operating hour for the grader. Hours will be determined by the hours registered on the hour meter of the John Deere elevator scrapers, and turned in weekly to Commanche Feeders. The form will be furnished by Commanche Feeders. Hours for the grader will be kept by Osborn and Commanche Feeders and compared for billing weekly. Payments will be made at the end of each month for that month's work. Commanche Feeders is to be notified when the above equipment is taken from the premises for other jobs. From time to time, both parties will review the costs and expenses connected with their respective operation and if it becomes apparent that some revisions or adjustments are required in this agreement to compensate one or the other for increases in such expenses, both parties will negotiate in good faith in a reasonable effort to meet the requirements of the other.
(Emphasis ours.)
After execution of the agreement both parties reached the conclusion that the Commanche Feeders lot did not require Osborn's services until later that year and consequently agreed that Osborn would commence performance when the manager felt it necessary. Osborn immediately began to purchase equipment in reliance on the contract. At the same time Commanche, without informing Osborn, began negotiations for the sale of the lot. As negotiations progressed it became apparent to the feedlot manager that the lot would be sold and for that reason he delayed plans for Osborn to begin work at the Commanche Feeders' lot. The lot was sold on September 1, 1971. Osborn was never given formal notice of the sale or termination of the agreement and continued to purchase equipment for use at the Commanche Feeders' lot. It is not clear when Osborn finally learned of the sale, but apparently sometime in late September or early October, 1971 the feedlot manager informed him.
After learning of the sale Osborn visited the lot and was told by the new manager that he knew nothing of Osborn's contract with Commanche, that the new management had hired someone else for the work at a cheaper price and that he would take the matter up with his employers.
It soon became apparent to Osborn that no one was going to honor his contract with Commanche and he brought suit for breach, seeking $35,000 in consequential damages to his business and $49,000 for profit he allegedly would have gained over the contract term but for Commanche's breach.
Commanche filed a motion for summary judgment and, at trial, a demurrer to the evidence, on the ground that the contract was terminated as a matter of law when Osborn learned of the sale and that Osborn consequently had no cause of action for breach of contract. The contract unquestionably permitted either party to terminate at any time 'by giving thirty (30) days advance notice.' But it is uncontroverted that Commanche never gave Osborn formal notice. The only basis for Commanche's argument, therefore, is that Osborn received actual notice of Commanche's intent to terminate when he knew that the lot was sold or at least by the time he visited the feedlot and talked with the new manager.
We cannot agree with this contention. When businessmen bargain for an option to terminate their contractual relationship, each is entitled to expect that the other will either perform or terminate exactly as agreed. They are entitled also to expect that they will be compensated for...
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