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Keywords

contractbreach of contractplaintiffdefendantdamagesrescission
contractbreach of contractplaintiffdefendantcorporation

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Krebs Hop Co. v. Livesley, 59 Or. 574, 114 P. 944, Am.Ann.Cas. 1913C,758

Facts

The Krebs Hop Company entered into a contract with T.A. Livesley & Co. to sell 500,000 pounds of hops over several years, with specific delivery terms. In 1908, the plaintiff notified the defendants that it had 100,000 pounds of hops ready for delivery, but the defendants refused to designate a delivery location and claimed the contract was not in force. The plaintiff had complied with all contract conditions and was ready to deliver the hops, but the defendants' refusal prevented any delivery from occurring.

Plaintiff alleges that it is a corporation; that the defendants are partners, and, after setting out the contract in extenso, alleges in substance that in previous years the defendants designated the place of delivery, where the hops were accordingly delivered; that, in order to ascertain where it would be expected to make such delivery on October 15, 1908, plaintiff notified defendants it had 100,000 pounds of hops ready for delivery, and requested to know the place defendants desired same to be delivered, to which notice defendants replied by letter, refusing to designate either place or point of delivery, stating that they did not regard the contract as in force, and declining to recognize the same in any way.

Issue

The main legal issue was whether the defendants' refusal to accept delivery constituted a breach of contract, and whether the plaintiff was entitled to damages despite previous judgments related to the same contract.

The principal point relied upon by defendants for the reversal of this case is their contention that the contract out of which this action arose is an entire contract, and, plaintiff having obtained certain judgments against defendants on account of their alleged breach thereof, it is barred and estopped from recovering anything in this action.

Rule

The court applied the principle that a party cannot unilaterally rescind a contract and that the injured party has the option to keep the contract alive and seek damages for breach at the time of the breach.

As stated in L., S. & M.S. Ry. Co. v. Richards, 152 Ill. 59, 80, 38 N.E. 773, 777, 30 L.R.A. 33: 'It is well settled that, where one party repudiates the contract and refuses longer to be bound by it, the injured party has an election to pursue either of three remedies: (1) He may treat the contract as rescinded, and recover upon quantum meruit so far as he has performed; or (2) he may keep the contract alive for the benefit of both parties, being at all times himself ready and able to perform, and at the end of the time specified in the contract for performance sue and recover under the contract; or (3) he may treat the repudiation as putting an end to the contract for all purposes of performance, and sue for the profits he would have realized if he had not been prevented from performing.'

Analysis

The court analyzed the defendants' claims of contract rescission and found that the plaintiff had the right to keep the contract alive despite the defendants' refusal to perform. The court emphasized that the plaintiff had fulfilled its obligations and was ready to deliver the hops, and thus was entitled to damages based on the difference between the contract price and the market value at the time of breach.

The plaintiff in this case has elected to rely upon the second remedy—to keep the contract alive for the benefit of both parties, being at all times himself ready and able to perform, and at the end of the time specified for performance, sue and recover.

Conclusion

The court affirmed the lower court's judgment in favor of the plaintiff for $7,000, concluding that the defendants' refusal to accept delivery constituted a breach of contract.

The judgment of the lower court is affirmed.

Who won?

Krebs Hop Company prevailed in the case because the court found that the defendants wrongfully refused to accept delivery of the hops, which constituted a breach of contract.

Krebs Hop Company prevailed in the case because the court found that the defendants wrongfully refused to accept delivery of the hops, which constituted a breach of contract.

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