Court Opinion

ID: 9572237
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:39:56.078928+00
Date Added: 2024-06-11T12:32:06.898088
License: Public Domain

Simmons, C. J.,
dissenting.
I adhere to the former opinion and decision of this court in this case. That opinion is now withdrawn by the court.
In the present opinion, the court finds no fault with either facts or issues stated, or rules of law applied in the former opinion. The former opinion is now set aside on a finding that there was no consideration shown for the contract of February 20, 1947. I shall examine that question later herein.
I disagree with the present opinion in six principal matters:
1. In the findings of fact made in the opinion which appear to become conclusive upon the trial court on. remand for a new trial.
2. In relieving the Seligs from the results of their breach of the contract by the giving of the insufficient fund check.
3. In the holding that both parties had imputed knowledge of the payment of the check.
4. In the holding that Wunderlich was guilty of bad faith on February 20, 1947, when the new contract was executed.
5. In the holding that there was no consideration for the contract of February 20, 1947.
6. In permitting Seligs to accept full performance under the February 20, 1947, contract and then repudiate that contract and recover damages for the breach of the January 15, 1947, contract.
I shall discuss these matters in that order.

Conclusive Findings of Fact Made on Disputed Issues

We are here dealing with a law action with many issues and disputes of fact. The court now remands for a new trial “in accordance with this opinion.” In the *236opinion, the court finds that plaintiffs have “established a cause of action.” It resolves other facts in favor of plaintiffs. As I read the opinion (and I am not advised to the contrary), those findings of fact now become the law of the case, leaving the only issue to be tried that of the amount of damages. That is contrary to the established practice of this court in remand of a law action which is that a remand generally calls for a retrial of all issues.
In Kuhns v. Live Stock Nat. Bank, 138 Neb. 797, 295 N. W. 818, we held: “* * * all matters decided expressly’or by necessary implication by this court in its opinion in reversing the first judgment became the law of the case. This applies not merely to all questions actually and formally presented, but to all existing in the record and necessarily involved in the decision.”
In Master Laboratories, Inc. v. Chesnut, 157 Neb. 317, 59 N. W. 2d 571, we held: “The general rule is that a reversal of a judgment and the remand of a cause for further proceedings not inconsistent with the opinion, without specific direction to the trial court as to what it shall do, is a general remand and the parties stand in the same position as if the case had never been tried.”
What is the trial court now to do if this decision stands?
In the recent case of Gable v. Pathfinder Irr. Dist., 159 Neb. 778, 68 N. W. 2d 500, the judgment was reversed on the sole ground that there was no proper or competent evidence to fix the amount of plaintiff’s damage. On motion for rehearing, plaintiff, contending that the judgment should be affirmed, also pointed out that questions of negligence and proximate cause had been decided in his favor and asked for a remand (if that had to be) limited to the sole issue of the amount of damages. He relied upon Harper v. Young, 139 Neb. 624, 298 N. W. 342. A rehearing was denied and a remand limited to that issue was likewise denied.
Why should there be the difference in treatment?
I see no reason for an exception here.
*237I do not rest my dissent on that ground alone. I disagree with the primary conclusion of the court.

Who Breached the Contract?

Who set up the chain of events that culminated in this litigation? The answer is conclusive that the Seligs did. The contract of January 15,1947, called for “cash prior to shipment $2,000 deposit.” Seligs gave an insufficient fund check for that “deposit.” That act on their part was a material breach. What was its effect?
Corpus Juris Secundum states the rule as follows: “Parties are entitled under the provisions of their contract to that for which they bargained and should not, on breach thereof, be compelled to accept less than that for which their contract called. Accordingly, not only is the party guilty of the first breach of an entire and indivisible contract containing independent covenants and promises precluded from recovering on the contract, * * * but he must answer in some appropriate manner for the loss or injury resulting from such breach to the opposite party, * * *. The party who commits the first breach is also deprived of the right to complain of a' subsequent breach by the opposite party.” 17 C. J. S., Contracts, § 458, p. 943.
In Demateis v. Vezu, 49 Cal. App. 453, 193 P. 793, a payment of $500 was made by a no-fund check upon the execution of a contract for the sale of grapes. The court held: “Where a buyer fails or refuses, without sufficient cause, to make payment of the first installment of the purchase price of the article contracted to be purchased, the seller is justified in repudiating the contract.”
O’Bryan v. Mengel Co., 224 Ky. 284, 6 S. W. 2d 249, was a case involving a sales contract. The court held that the buyer “was not at liberty to break the contract himself and at the same time insist upon performance thereof by the seller. No principle in the law of contracts is better settled than that the breach of an entire and indivisible contract in a material particular excuses further performance by the other party and precludes an *238action for damages on the unexecuted part of the contract.”
These authorities are brushed aside, apparently on the theory that because the check in the instant case was paid upon its second presentation, no breach occurred. Seligs seem to be entitled to one breach “for free.”

Imputed Knowledge Not Applicable Here

In the former opinion we held that there was no imputed notice to the parties here. We relied on our holding in Hargadine McKettrick Dry Goods Co. v. Krug, 2 Neb. (Unoff.) 52, 96 N. W. 286, which is as follows: “Notice to or knowledge by an agent is imputed to his principal in those cases only in which it is his duty to act upon it, or to communicate it to his employer, in the proper discharge of his trust as such agent, and it possesses that character in those cases only in which it has a direct relation to the act or business which the agent is employed to do.”
The plaintiffs in their motion for rehearing here do not challenge the correctness of that rule or that holding. They do not mention it. The present opinion ignores the rule and holds that there was imputed notice on the ground that the banks were the agents of the parties.
The present opinion, concedes that neither Seligs nor Wunderlich had actual knowledge of the fact that the check had been paid. It holds that both had imputed knowledge that the check had been paid, because forwarding and paying banks had that knowledge.
Our rule is not (or should I say. was not?) a maverick rule. It is stated in 3 C. J. S., Agency, § 262, p. 196, as follows: “The rule that notice to an agent is notice to the principal is not one of universal application * * * ruie hag no application where the agent is not under a duty to communicate the notice or knowledge to his principal.”
Also the rule is stated in 2 Am. Jur., Agency, § 372, p. 291, as follows: “The notice to, or knowledge of, an agent which is to bind the principal must be of some *239matter so material to the transaction as to make it the duty of the agent to communicate it to the principal, ‡ )) ,
The rule of imputed notice is based on the duty of an agent to communicate material facts to his principal and the presumption that he has performed that duty. 3 C. J. S., Agency, § 262, p. 194; 2 Am. Jur., Agency, § 369, p. 288. Our rule recognized those reasons and states that there is imputed knowledge “in those cases only” in which it is the agent’s duty to communicate his knowledge to his principal. This is not a case where a bank is asked about the payment of a check. By this holding it becomes the bank’s duty to advise as to the payment of a check on its own motion.
Where is there a duty of a forwarding bank or a paying bank, on its own motion, to notify its principal that a check has been paid? The statutory duty to protest-for dishonor is limited to “foreign bills.” § 62-1,152, R. R. S. 1943.
It is common knowledge that banks in America handle daily literally thousands of checks which are forwarded for payment and which are paid. It is now held to be their duty to communicate the fact of handling and payment of a check to the principal for whom they act. Bankers will be interested to know that — and it is the only basis on which imputed knowledge can rest. The necessary conclusion now is not only that the duty to notify of payment exists, but that likewise courts will presume that banks performed that duty. Both the duty and the presumption have no foundation in fact or law.
In the course of our opinion last cited, we held: “It is a harsh and severe rule which imputes to a principal the knowledge possessed by' his agent” and “as it is not infrequently the cause of rank injustice, its operation should be rigidly confined to those cases to which it is strictly applicable.” We limited imputed notice to “only” those cases. I submit that the rule of imputed *240notice, is not “strictly applicable” here — it is not at all applicable.
However, if we are not going to follow the rule which we have twice stated in accord with general authority, then I submit that we should not ignore the rule, but rather overrule it, and notify banks and their patrons that hereafter in this state we walk alone on that matter. We should not confuse in an area where heretofore there has been no dispute.

Wunderlich Did Not Act in Bad Faith

Preliminary to and as a basis for the finding that there is no consideration shown is one that Wunderlich’s attempted rescission was not made in good faith. This is based on the finding that Wunderlich had, prior to February 20, 1947, negotiated for the sale of some of the items covered by the agreement of January 15, 1947.
There is a rule upon which the texts agree: “An agreement, when changed by the mutual consent of the parties, becomes a new agreement, which takes the place of the old, and consists of the new terms and as much of the old agreement as the parties have agreed shall remain unchanged; in other words, a contract may be abrogated in part and stand as to the residue.” 17 C. J. S., Contracts, § 379, p. 869. See, also, 12 Am. Jur., Contracts, § 433, p. 1013; Restatement, Contracts, § 408, p. 770; 6 Williston on Contracts (Rev. ed.), § 1826, p. 5172. We have held: “The applicable rule in such circumstances is that a contract complete in itself will be conclusively presumed to supersede another one made prior thereto in relation to the same subject-matter.” Price v. Platte Valley Public Power & Irr. Dist., 139 Neb. 787, 298 N. W. 746.
Now what about good faith and bad faith? It is admitted by both parties that there was a conversation on February 12, 1947, between Fontaine and Selig regarding the contract and the dishonored check. It likewise appears without dispute that Wunderlich was. required by its contract to break up and remove ah air*241planes within a limited period of time. Fontaine (for Wunderlich) testified that Selig was given until February 18 to make good the dishonored check, and that Selig promised to have the check to Wunderlich not later than February 18. Selig denies that agreement and says it was February 20.
The present opinion states that Selig was told that “two” of the items, APN-4 radar scopes and I-152-AM indicators, had been sold to another buyer; it states that the record shows that Wunderlich did negotiate for the sale of the radar scopes and indicators with Air Industries prior to February 20, 1947, and that those negotiations were carried on in contemplation of a breach of the agreement of January 15, 1947, with Selig; that Wunderlich’s attempted rescission was not made in good faith; and that it was not based on the alleged failure to make the $2,000 deposit but because of the opportunity to make a much better sale to Air Industries. But that sale occurred one day after the February 18 deadline testified to by Fontaine and after the dishonored check business had arisen and had been discussed between the parties. Can Wunderlich be found guilty of bad faith because Selig denies only the February 18 requirement, when Wunderlich was moving in accord with its understanding of the agreement? Assuming that Wunderlich desired a modification of the contract so as to protect the sale to' Air Industries, the question comes: Was Selig deceived and not advised as to that purpose?
It now becomes necessary to refer to evidence, not in dispute and relied on in the present opinion, and to one fact in connection therewith not heretofore pointed out. On February 19 (one day after the February 18 date testified to by Fontaine), Wunderlich received from Air Industries a firm offer for three items of equipment. Two of the items were those involved in this lawsuit. The third item was “200 marker beacons” as described. Also on February 19, Wunderlich confirmed the order from Air Industries for the three items, subject to the *242receipt of a purchase order and a $750 deposit.
Was the fact of the sale to Air Industries of the three items concealed from Selig on February 20? It was not.
Fontaine testified that he told Selig of the interest of other purchasers and Selig consented to the deletion of the three items (not two) from the contract. Deleted were 200 marker beacons — the exact number involved in the Air Industries order of February 19. Is it reasonable to suppose that Selig did not know why an exact number of marker beacons was being deleted, and did not know that Wunderlich was then protecting against the sale of those three items to Air Industries and that that was their purpose in insisting that the items be deleted before a new contract was made? The specific deletion of “200 marker beacons” from the items covered shows that they were protecting against that sale and that Selig knew it. He initialed the deleted items separately.
Ben Selig testified that “They did not have an offer of a much higher figure on those.” How did he know if he was not told of the offers which Wunderlich had? Selig testified that they wanted “these other items we could make money on.” Quite obviously “marker beacons” was not one of them. They make no complaint about that deletion.
Any question as to Seligs’ knowledge or lack of knowledge is set at rest by their petition herein, sworn to by Stanley Selig, in which it is alleged that on February 20 Ben Selig was informed by Fontaine that Wunderlich had cancelled the purchase order of January 15 and “could not have completed it in any event * * * because part of the merchandise had been sold to others.”
This record does not sustain a conviction of Wunderlich of bad faith and certainly- does not sustain the court’s accolade of good faith of the Seligs in the position which they now take. Both parties made the new contract with knowledge of what had been done by Wunderlich and why the deletions were necessary.
*243Is bad faith now to be bottomed on a full and admitted disclosure of material facts? Is bad faith to be charged because a party refuses to make a contract to sell something which he cannot deliver and which the buyer knows he cannot deliver?
The present opinion holds that the attempted rescission of the contract by Wunderlich was not in fact based on the alleged failure to make the $2,000 deposit, but because of the opportunity to make a much better sale to Air Industries.
That same issue of bad faith was raised in the $500 no-fund check case of Demateis v. Vezu, supra. The opinion recites: “Appellant.claims that the attempted rescission was an act of bad faith prompted by the fact that between the date of the contract and the date of rescission there was a great increase in the market price of blacky grapes. It is true that the market price of grapes advanced within the specified period of time; but this fact is not alone sufficient to compel a finding that such advance market price was the cause of defendant’s rescission of the contract. The court found that the defendant acted in good faith, and that finding is well warranted by the evidence, which tends to prove that defendant rescinded the contract for the very definite and sufficient reason that the check, which he had received on the positive assurance that it was good and in consideration whereof he had delivered the contract, had been dishonored and had so remained for a period of nearly one month.”
That describes the situation here.

There Was A Consideration For The February 20, 1947, Contract

I have discussed the “marker beacons” deletion for another reason. The agreement of January 15 was a purchase order whereby Seligs agreed to purchase as well as Wunderlich agreed to sell.
Seligs contend that the agreement of January 15 was to buy all of the items listed in each category. Seligs by the agreement of February 20 were relieved of the *244obligation to buy 200 marker beacons. Ben Selig testified that “they would throw them on us; marker beacons. They never had a resale for them at a much higher figure.” Obviously, Seligs were glad to be relieved of that burden of the contract as to the 200 marker beacons. They accepted and retained that benefit flowing from the February 20 contract deleting that item.
There was a clear and established benefit to Seligs in this modification of the contract on February 20, 1947. We have held: “ ‘A valuable consideration may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.’ ” Asmus v. Longenecker, 131 Neb. 608, 269 N. W. 117.
There is another consideration shown here, the fact of which is recited in the proposed opinion. Its impact on the case is ignored.
I start now with the premise based on the conclusion of the present opinion that each of the parties had imputed knowledge of the fact that the first $2,000 check had been paid. On February 20 no goods had been delivered by Wunderlich to Seligs. Seligs did not then owe and were under no contractual obligation to pay Wunderlich any money. 'Wunderlich had no right then to demand any money. Seligs paid and Wunderlich accepted $2,000 as the consideration for the new contract. It was accepted by Wunderlich only on condition that the' original contract be modified. Seligs paid under that condition. There is no dispute in the record on that matter.
I have always been of the impression that a money payment was an adequate consideration.

Seligs Having Accepted Full Performance of The February 20, 1947, Contract Cannot Now Repudiate That Contract

Following their $2,000 payment of February 20, 1947, *245Wunderlich began to deliver under the new contract. Seligs began to accept under the new contract. When the fact of the payment of the protested check was brought home to Wunderlich, credit was given to Seligs for that $2,000 on goods delivered under the new contract. Seligs, with full knowledge, accepted the credit and continued to accept deliveries under the February 20 contract. Having panned the quick gold out of the items received that “we could make money on,” Seligs now undertake to repudiate and avoid, and desire to dredge more gold. They retain the benefits received from the performance of the new contract and at the same time repudiate it and seek damages for failure of performance of the original contract. Wunderlich performed in reliance on the new contract.
This calls for an application of the rule that where a modified contract has been executed by one party to such an extent that it would work a fraud upon the other party if repudiated, the modified contract will be sustained. United States v. Slater, 111 F. Supp. 418; Agel & Levin v. Patch Mfg. Co., 77 Vt. 13, 58 A. 792; Thurston & Hays v. Ludwig, 6 Ohio St. 1, 67 Am. D. 328. See, also, Restatement, Contracts, § 90, p. 110, followed by us in Fluckey v. Anderson, 132 Neb. 664, 273 N. W. 41; 12 Am. Jur., Contracts, § 112, p. 605; 17 C. J. S., Contracts, § 74, p. 428.